Courier costs were perceived as costs which could be reduced, evidence in this direction standing the decreasing revenues UPS has registered in 2009 as opposed to 2008 as a result of decreased customer demand.
The second threat is represented by the incremental competitive pressures within the industry. These pressures are fueled by elements such as an increasing access to technologies or the appeal of the industry which generates billions of dollars per year.
Another threat is posed by the continually changing society, in which legislations and other pressures repeatedly modify to often create more pressures for the economic agent. Since United Parcel Service operates at an international level, it is even more sensitive to these changes as it has to respect the regulations and demands imposed by all the United States, the governments of the countries in which it operates and the international community and trade associations. Also, since it operates at a global level, it is also subjected to the threats of fluctuating currency exchange rates. This indicates a necessity for the company to use hedging operations in order to protect itself. The result is that of additional risk, as well as increasingly complex financial operations.
4. Key success factors
The courier industry is one of the most dynamic and quickly evolving industries. Companies in the sector commenced by delivering packages at local levels and the most successful of them evolved into international industry leaders. The nature of the products and services offered has also suffered impressive mutations in the meaning that the once local messengers are now corporations in charge of full logistics operations.
The demand for the products and services in the courier industry is influenced by the levels of consumer spending as well as by the manufacturing output. The success of the industry players depends directly on their ability to create operational efficiencies. The large size courier organizations possess competitive advantages of an increased access to drivers, the possibility to buy bulk fuel at cost efficiencies, increased fleets and account relationships. Smaller size players on the other hand can most effectively complete on niche markets in which they would provide quick turnaround and generally by transporting large size goods. Today, UPS' major competitors are represented by FedEx, Deutsche Post Ag and the United States Postal Service (Hoovers, 2011).
At the level of the company, it could be argued that the key success factors are constituted by the internal strengths which have already been presented throughout the previous section. Nevertheless, more attention is due to the elements which ensure UPS's success. The primary of these elements is represented by the company's integrated global network. The organization believes that its system is the most integrated one in the industry as it ensures the centralization of packages in one location, and the subsequent delivery through air or ground, at international and domestic locations, for both commercial and residential customers.
UPS's integrated global system is composed from the following:
A total of 1,801 operating facilities
100,069 delivery fleet composed from all package cars, vans, tractors, motorcycles; these figures also include 1,949 vehicles fueled by alternative fuels
233 UPS jet aircrafts in total out of which 216 are currently in service
294 chartered aircrafts
936 national daily flights segments and 755 international daily served segments
388 airports served nationally and 378 airports served internationally (Website of UPS, 2011)
The company's overall key success factor can as such be represented by the adequate combination between the integrated global network and the other organizational strengths, such as the global presence, the brand strength, the efficient operations, the innovation and R&D efforts, the offer diversification and so on.
5. UPS's driving forces
The success of UPS is attributed mainly to the specific means in which the company has managed to develop a customized business plan which supports the organization in reaching its objectives, through the full satisfaction of the needs and wants of various stakeholder categories. At individual levels, the elements of the business model constitute the driving forces behind UPS' success and they can be summarized as follows:
The global presence and the integrated network
The brand strength and the commitment from the customers
The diversity of solutions and the ability to offer customers integrated solutions for various logistics and supply chain requirements
The commitment to technologic innovations
The commitment to the full satisfaction of the needs and wants of customers and the subsequent creation of a strong CRM system
The commitment to the satisfaction of the stakeholders' needs and wants in the meaning that the organization is determined to attaining its objectives while also supporting the development of the industry and the global community
A strong organizational culture
Increased resource capabilities, and finally
An aggressive acquisition strategy, combined with the development of numerous international strategic alliances
Some of these driving forces have already been discussed throughout the previous section, meaning as such that the current section would only detail those forces which have not so far been discussed.
UPS has yet to develop and implement a universally available CRM system -- Customer Relationship Management -- but it makes intense efforts to improve the nature of the communications between firm and clients. Additionally, the focus on customer satisfaction and the implementation of CRM policies and practices constitutes a primary driving force behind UPS's success. At the basis of the CRM approach stands the impressive customer database, which is maintained with the help of IBM. The database is constructed with the aid of customers in the meaning that 95 per cent of the information in it is directly introduced by the clients. Most of the company's success has been achieved gradually, through sustained internal improvements, and the focus on customer has embodied a central effort in UPS's strategy (Nassbaum, 2008).
b) Stakeholder commitments
UPS preserves the same organizational goal as one century ago -- the registration of financial gains and the sustained expansion of the business. What has nevertheless changed is the approach to attaining the objectives. In this order of ideas, from 1907 when the method was through package delivery and customer satisfaction, the modern method is through the satisfaction of the needs and wants of various stakeholder categories. In this order of ideas, the company strives to create a fruitful and rewarding working environment, to reduce its negative impacts upon the environment, to support the development of communities and so on.
c) Strong organizational culture
A final driving force is represented by the company's culture. In this order of ideas, UPS has created and consolidated a strong organizational culture, focused on the proper treatment of the staff members and centered on their social well-being and professional formation. This context resulted in high levels of employee morale, motivation as well as loyalty to the employer. Some other culturally defining elements at UPS are the stock options available for the employees or the sustained opportunities for internal promotion, rather than the hiring of external managers (UPS 2009 Annual Report).
Aside from these elements which drive its success, United Parcel Services has itself been acknowledged as a driving force, supporting the development of the communities in which it operated, as well as continually raising the standards within the industry:
"UPS is a driving force for change in our communities. The company and its employees continually raise the bar for United Way's Global Corporate Leaders and are among our most valued partners. Reaching a billion dollars in giving is a remarkable milestone. It not only speaks to generosity that is second-to-none, it's indicative of their tireless and unwavering commitment to strengthening communities and improving lives throughout the world" (Brian Gallagher, quoted by the United Way of Lincoln and Lancaster County.).
6. UPS's international strategic alliances
A highly important driving force in the success of United Parcel Service has been constituted by the development of numerous strategic alliances. In Asia for instance, the company delivers to over 40 countries in the Asia Pacific region and this achievement was possible with the aid of "more than two dozen alliances with Asian delivery companies that supplement company-owned operations" (UPS 2009 Annual Report).
Then, as it has been previously mentioned, UPS draws most of its success from a strong integrated global network, composed from an impressive fleet. But aside from the delivery fleet, the success is also due to its access points, in a total number of 141,000 locations in both the United States as well as internationally. Aside from these locations, United Parcel Service also ensures customer access through an additional 2,700 access points established on basis of strategic alliances (UPS 2009 Annual Report). These alliance access points are mostly common outside the United States and they are characterized by the fact that they allow customers to indirectly contact the organization and place their orders.
Additionally, they were created as part of the campaign to expand UPS's global presence, but also to increase the levels of customer satisfaction. Particularly, the UPS alliance access points represent positions…