A PESTEL/PESTLE ANALYSIS OF UNITED PARCEL SERVICE (UPS)
United parcel Service or UPS had very humble beginnings as a bicycle messenger service in 1907. Since then it has grown into one of the largest delivery services of the world. It is now a global business with operations across 220 countries and territories. It has brought a large and diverse portfolio of services that caters to the needs of a diverse segment of customers throughout the globe. The company has established a strong global logistics network to support its delivery services. However, the brand is more than just a delivery service. It is also a trusted supply chain partner for businesses of diverse sizes throughout the world. It has brought services tailored to the needs of individual customers as well as large and small businesses. To find growth and to better serve its customers, it has always focused on technological innovation. The brand has continued to grow its efficiency by adding to its network and logistics capabilities. Its financial performance has also continued to grow stronger. In 2017, the revenue of the brand increased past 65 Billion dollars. The main market of UPS is US but it also earns a sizeable income every year from the global markets. Since it is an international brand the company is also subject to several kinds of pressures. This is a PESTEL analysis analysing how the brand is affected by these forces. PESTEL is an analytical tool and an acronym for Political, Environmental, Social, technological, Environmental and legal.
Political forces have grown increasingly central to business in the twenty first century. The role of political and government forces and agencies has grown larger and stronger in this century. Governments have grown the level of oversight and international businesses are subjected to higher level of scrutiny than the local businesses. Governments have implemented higher level of control and there are several reasons behind it. From tax evasion to labor related issues, there are several major problems that led to governments growing stricter in their control of businesses. However, in many areas businesses have also complained of overregulation which can stifle growth. Even in case of US businesses have kept complaining of an outdated regulatory structure that has made businesses sacrifice many important benefits. The need for a balanced regulatory structure is being felt worldwide. Moreover, political forces have always played an important role in the operations and growth of businesses worldwide. A stable political environment is critical to stabilizing the economic environment of the nation. Unstable political environment leads to unstable economic situation and disruption of the supply chain and distribution network. This can be harmful for businesses and this is why the role of political factors in the international environment has grown very big. UPS operates internationally and is therefore subjected to trade regulations like the other international businesses. Apart from the trade relationships between US and other major markets of UPS, other factors which influence UPS are the taxation systems of various markets and the local political environment.
The role of economic forces is also equally important in terms of businesses. The world economy has been through a recession just some years ago and that has led to a decline in employment and consumer spending. This in turn leads to reduced trade and reduced sales. Trade around the world has grown since the recession. Now the employment level has also grown higher and with higher employment the level of disposable income in the hands of customers has also gone up. This has led to higher expenditure on online shopping. It is good for the parcel industry and brands like UPS which work as supply chain partners for the e-retail brands. UPS is also a major employer and employs more than 350,000 all around the globe. It employs more than 270,000 in US only and around 80,000 in other markets. Competition is also an important force affecting UPS. Economic changes in the global environment and currency fluctuations also affect UPS and its revenue as well as income. In this way, economic forces play an important role in the operation of global businesses like UPS.
Social factors have kept growing increasingly important in the context of international business. Sociocultural changes are affecting how businesses operate and market themselves. A good social image is important for operating successfully in the international business environment. A good social image means higher trust and higher brand loyalty. UPS has always focused on building great relationships with its customers. It has been able to build a highly reliable social image which is key to its growth and expansion.
Technological factors have also grown important in the context of business. The role of technology has grown increasingly important in the context of business and it has become a major source of competitive advantage for businesses all around the globe. UPS has also focused on technological innovation for business growth and expansion. It has continued to improve its services and innovate its distribution network as well as capabilities so as to provide its customers with better service. It also invests a large sum in IT as well as other technological capabilities including its distribution infrastructure. In this way, the role of technology in the business industry is quite big and in context of UPS too technology has played a central role in its growth and expansion.
Environmental factors have also grown central in the context of business. Around the world businesses are focusing more and more on their environmental impact. Governments have also made the environmental laws stiffer. This is being done to reduce the impact that businesses can have on environment. environmental pollution around the globe has become a major problem that the nations are dealing with. However, there are many more reasons too that the brands are investing in environment and environmental policies. Such brands that invest in environment friendly policies and processes acquire a positive social image which is healthy for business. UPS has framed environmental policies for its employees to adhere. These environmental policies are targeted at several issues like environmental compliance, emissions, resource conservation, waste management, etc. Apart from optimizing its transportation network and investing in fuel saving technologies as well as energy conservation, the brand has invested in several other areas that are good for the environment.
Legal factors have also grown highly important in the area of business. Around the world laws governing businesses are stiffer. The businesses operating in the international environment are subject to thousands of laws. Compliance is important because non compliance can result in major fines. From labor to environment and financial issues, there are laws in every area for businesses to adhere. UPS also stays focused on legal compliance so it does not have to face legal troubles.
United Parcel Service Annual Report 2017