More than a century ago, UPS, the world’s largest package transportation firm, was founded. It is led by leaders who never cease to inspire. They think that everyone has the ability to make a difference and that by helping others, you are serving the greater good, propelling everyone forward.
In this case study, we’ll learn about the SWOT Analysis of UPS. Before we dive into that, let’s get to know a little about United Parcel Service.
About UPS
Americas’s own, United Parcel Service (UPS), is a multinational shipping and receiving company founded in the year 1907. James E. Casey was the man who identified the problem of late deliveries and provided a solution for it. It is the world’s largest parcel delivery service and also a renderer of global supply chain management solutions. It has set its foot in over 200 countries and serves 1.5 million customers.
UPS employed 4,95,000 people in the year 2019. Its annual revenue in the financial year 2019 touched $ 74.09 Billion with a profit of about $ 4.44 Billion in the same financial year. UPS is at the top of its game due to its reliable delivery of services and also it has continued to maintain a prominent level of customer equity which has helped the company is growing faster
This blog sheds light on the strengths, weaknesses, opportunities, and threats the brand faces in its everyday work. Here is the UPS swot analysis.
SWOT Analysis of UPS
SWOT Analysis is analyzing what the company’s strengths, weaknesses, opportunities, and threats are and taking actions to work on them so it helps the company in getting maximum returns.
Following we will elaborate on the SWOT Analysis of United Parcel Service.
1. Strengths of UPS
United Parcel Service is a leading company in its sector and it has a lot of strengths. These strengths have helped the company in protecting its market share and also venture into new markets.
- Worldwide Presence
UPS renders its service in more than 200 countries. It has a significant market presence in economically stronger countries. It has made shipping goods across countries easier hence increasing the goodwill of the company. In 2019, the US alone brought in $58.6 billion while other international markets brought in $15.4 billion.
- Outstanding Customer Service
For any company to succeed, the business needs to provide extraordinary customer service. It is of prime importance that they retain their customers and stop them from switching to their competitors. Satisfied customers will be the ones who will spread the good name of your company. UPS has higher customer satisfaction as compared to FedEx.
- Large Service Portfolio
The companies should adapt to the changing business environment for them to sustain and flourish. Hence, UPS offers a wide service portfolio to its customers to cater to their needs. It offers a package delivery system which makes UPS a great supply chain management and logistic partner for businesses. It offers a large range of supply chain solutions and it also provides industry-wise supply chain solutions like healthcare, retail, manufacturing, etc.
- Technology and Innovation Oriented
UPS has consistently worked towards bettering its technology and innovation so that it can provide its customers with a better service. They invest highly in technology, transportation, and also their plants every year.
- Attractive Pricing
There has been an increase in the number of competitors in this particular sector and so price plays an important role in the purchase decision. The most feasible way to retain customers is to offer premium quality service at reasonable prices. Consumers are bound to choose your company if the prices are low as compared to your competitors.
Let us now take a look at the weaknesses of UPS.
3. Weaknesses of UPS
Every company has its weaknesses and UPS has some weaknesses which it can work on and improve.
- Over-dependent on US Markets
UPS is overly dependent on the US Markets for its revenue. Almost 80 per cent of their revenue is generated from the US which shows how dependent they are. If the US faces any economic problems, UPS will be affected majorly.
- Increasing Transportation Costs
The working of UPS is primarily based on transportation costs. It has been noticed that their transportation costs are increasing leaving very little profits. If this continues, it is going to also cause a disturbance in operations.
- Shipping problems during Holiday Season
UPS faces problems during the holiday season. Keeping up with the increasing demands is the difficulty they face. This shows that the company faces difficulty to deliver goods during the peak season. The company needs to hire new employees and adapt to new technology in order to speed up its delivery process and to keep up with the rising demands.
- Research and Development
UPS invests a lot of funds in research and development but they are still low if compared to their competitors. It is still not able to compete with the leading players in the market in terms of innovation. The company is mature and wants to get products with tested features in the market.
- Employee Safety
The company should make sure that its employees are safe and secure. UPS however hasn’t succeeded in making its employees feel safe and secure. There are a lot of instances where the employees have been injured which weakens their morale, competency, and productivity.
Now that we have understood the weaknesses the company faces let us dig deeper into the opportunities the company has.
3. Opportunities for UPS
The opportunities are points where the company can grab onto a new trend, or adapt to new ways of doing certain things which can help the brand to grow and diversify.
- E-Commerce Operations
The E-Commerce industry is growing every single day. Many companies are using e-commerce to strengthen their work. UPS should make use of the e-commerce industry as it has great potential and can help the company in making profits.
- Expansion
Expanding into new business areas can help the brand a lot. UPS has widened its service portfolio which benefitted its customers and the company at large. The expansion would cause the profitability to increase.
- New Technology
UPS has been testing its drone delivery system. They have been delivering lab samples to various hospitals. It could be a breakthrough for them as it would speed up the delivery process and thus increasing the profits of the company.
- Extend Target Market
UPS is a business that delivers its services to various businesses like Amazon. They can expand their target audience by venturing into other channels. There are various businesses like Amazon that UPS can tap to deliver their online products.
- Delivery on all days
UPS has started delivering goods on all seven days of the week. They initially delivered goods on 6 days (Monday- Saturday). The increase in online shopping was the reason UPS started delivering goods on Sunday.
The company can expand into new businesses to increase its revenue. It can expand its target market and also use new technology in delivering its products. The company can prosper by adopting these new practices.
4. Threats to UPS
Last on the list of the SWOT Analysis of UPS, we have the threats. A company needs to get quick solutions for their threats and act upon them faster or it can prove fatal for their company, hence it is a vital aspect of analysis for every organisation.
- Cutthroat Competition
UPS is facing competition not only from several big players like Amazon, FedEx, etc but also from many small brands. They are controlling the market with the service they are offering. Higher competition has resulted in higher expenditure and as a result, the market share and the profitability of UPS have decreased.
- Over-dependent on Amazon
Almost 12% of the profit of UPS comes from Amazon. Amazon is gearing up to compete in the transportation and delivery system. The revenue of UPS is at a risk and so this is a major threat to UPS.
- Laws and Regulation
UPS is spread over 200 countries. They have to keep up with all the policies and regulations in all the countries. Regulations have gotten stiffer in many countries which puts pressure on international businesses.
- Strike of Employees
It has been years since the employees of UPS have gone on a strike but there is a possibility in the future. The challenges of working through the pandemic have fueled the employees with anger.
- 2020 Pandemic
The current pandemic has resulted in destruction all over the world and hence a lot of businesses have been shut down. UPS is based mainly on transportation and with restrictions imposed on international movement, it is a major threat to UPS.
Conclusion
UPS is an American company that looks after the delivery of goods. It is spread in over 200 countries. The brand is fit for growth financially. However, it is dependent on the US for revenue. The sector is filled with big fish. The brand needs to pull its socks up to maintain its market share. It needs to invest hefty amounts in research and development to fight off its competitors. The pandemic is proving to be a real threat presently. UPS enjoyed a dominant position in the past but lately, it has been shadowed by the competitors.
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