UPS SWOT Analysis

# SWOT ANALYSIS OF UNITED PARCEL SERVICE

#INTRODUCTION:

United Parcel Service or UPS is the world’s largest parcel delivery service that was founded in the year 1907. UPS is also a provider of global supply chain management solutions. Its service spans 220 countries. The brand serves 1.5 million customers and makes deliveries to more than 9 Million customers. In 2017, the brand delivered around 20 million packages a day or a total of around 5.1 billion packages. UPS is in a financially strong position which is evident from its financial performance over the previous years. The brand’s operations are divided into three business segments which are US domestic package, international package and supply chain and freight. UPS’ revenue in 2017 touched 65.9 Billion dollars.  A very large and global distribution network supports UPS’ delivery system. The company employs 454,000 people in 2017. The brand has acquired the position of the best in its industry based on continuously reliable delivery of services. It has maintained high level of customer equity and that has helped UPS grow fast.

UPS SWOT ANALYSIS

UPS 2017 Revenue :- 65.9 Bn Dollars

Net Income :- 4.9 Bn Dollars

Number of employees :- 454,000

Year Founded :- 1907


#STRENGTHS:

  • Brand Equity : – UPS has been able to build very high level brand equity over time. It is known all over the world for its reliable services, service innovation and great culture. The work culture and work ethics of UPS have helped it manage very high level of brand equity. UPS’ drivers always show high level professional courtesy. The brand follows a distinct culture and style. High level  customer orientation has always resulted in high level customer loyalty and  brand equity. The company has always focused on maintaining long term relationships with its customers which is the key to building trust.
  • Global Presence : – UPS serves customers across more than 220 nations.  UPS is the largest market served by UPS. However, in all the major economies of the world it has maintained an extensive and significant presence. It is making global deliveries possible for its customers with ease.
  • Extensive Distribution Network: – It has one of the most extensive distribution networks in the world. Its global package delivery system is among the strongest of all. Its global ground and air network makes it possible for UPS to make deliveries in all corners of the world with ease. Its package delivery system provides all types of deliveries including domestic, international, air, ground, commercial and residential. It also has a highly capable logistics network that includes ground, ocean and air freight as well as additional capabilities that support global transportation. Moreover, the company keeps updating its network efficiency with the help of its advanced engineering system.
  • Broad Services Portfolio : – UPS has a broad services portfolio which caters to the diverse needs of its various segments of customers. It provides several more business solutions including its package delivery system. This makes UPS a great supply chain and logistics partner too for businesses. UPS provides a large range of supply chain solutions. It also provides industry-wise supply chain solutions like healthcare, high tech, retail, manufacturing, etc.
  • Financial Performance : – UPS has maintained excellent financial record over previous several years. Its revenue has risen from 55 Billion dollars in 2013 to more than 65 Billion dollars in 2017. Net Income has increased from 4.3 Billion dollars in 2013 to 4.9 Billion dollars in 2017. Total assets increased from 35 Billions to 45 Billions during the same period.
  • Focus on Technology and innovation: – UPS has also maintained heavy focus on technology and innovation for growth and better customer service. It invests a large sum every year in technology including information technology, Aircrafts, vehicles and plant equipments. It depends on machine learning, blockchain, robotics, and many other cutting-edge technologies to keep its network efficient and ahead of the others.

#Weaknesses:

  • Overdependence on US Markets :- US is the largest market of United Parcel Service and accounts for the largest part of its revenue. However, that leaves the brand too dependent on US for revenue and growth.
  • Rising Operating Expenses :- The operating expenses of UPS have continued to grow over the years. Apart from the maintenance of plant equipment and aircrafts, the brand’s expenditure on labor has also grown. Compensation and benefits are a very large part of its operating expenses. In 2017, its total operating expenses reached 58 Billion dollars when its revenue was 65 Billion dollars.

#Opportunities:

  • Digital marketing opportunities :-  Digital technology has brought excellent new opportunities for businesses all around the world.    Marketing, customer engagement, supply chain and in several more areas digital technology has brought great opportunities for businesses. UPS spends a lot on IT infrastructure. It can use it for better customer relationship management as well as for promotions.
  • Employee engagement :- Digital technology, AI etc present new opportunities for  engaging employees.  While the brand invests a lot in employees, it is important to engage them using digital methods.
  • Diversification:- Diversifying into new and related business areas can also help the brand grow faster. While the brand has grown its portfolio of services a lot, it can diversify into new areas for faster expansion of business and growth of revenue.
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#Threats:

  • Competitive threat :- Competition has grown from both small and big brands. DHL and FEDEX are two major competitors of UPS. There are several other brands too that are competing with UPS and which are competing for market share with UPS. Higher competition has led to higher expenditure on marketing and other things.
  • Regulatory threats: Regulatory environment all over the world has grown stiffer. This has led to higher pressure on international businesses. UPS operates in more than 200 countries. Compliance costs have grown as the legal and regulatory pressures have grown.
  • Economic fluctuations in the international markets:- UPS operates in the international markets which subjects it to economic pressures. Currency fluctuations as well as changing economic situation in various markets can create pressures related to revenue and income.

# Conclusion:

UPS is the largest parcel delivery service of the world. Its services now span 220 countries. The brand is financially fit and in a healthy condition for growth. However, it depends on the US market heavily for revenue. US accounts for more than 70% of its revenue. Competitive pressure in the industry has also grown which has led to higher operational expenses. To grow faster UPS must stay focused on innovation and customer service. Customer’s trust is its most important strength that has helped the brand acquire  leadership position.  In future the role of technology will be bigger. UPS has brought diverse solutions for businesses which has made it a partner of choice for supply chain issues. It must invest more in employee engagement for higher productivity and performance.

Sources:

UPS ANNUAL REPORT 2017

https://www.ups-scs.com/
https://www.datanyze.com/market-share/logistics/ups-market-share
Abhijeet Pratap

I have studied Marketing and English Literature and like to write on topics in Business management, Marketing, literature, latest technologies and other areas. I also like to spend my time learning coding.

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