UPS - Business Analysis UPS Was Founded

UPS - Business Analysis

UPS was founded in the early 1900's as a messenger company, and has since grown into a billion dollar corporation that promotes global commerce (ups.com, 2003). The United Parcel Service is recognize as a world leader in interstate commerce and package delivery, and also offers transportation and logistics service (ups.com, 2003). UPS interacts with over 200 countries worldwide (ups.com, 2003). UPS has been a global leader in package delivery services, but faces much competition from Fed Ex. The Fed Ex name is becoming more widely known, and Fed Ex is typically seen as the shipper of choice for swift and reliable delivery internationally and abroad. Fed Ex also utilizes a much broader advertising campaign, and UPS would do well to expand in this area. Though overall UPS is a successful company, it could improve its corporate relations sector as well. Currently Fed Ex has the upper hand in package and letter delivery among corporate entities. Most organizations have a Fed Ex account which they use to ship domestically and internationally. Fewer have accounts readily established with UPS. The company would benefit by expanding in this sector. UPS is analyzed from a profitability and competitive viewpoint in greater detail below.

UPS has three main business operations: United States domestic package, international package operations and non-package operations (yahoo.com, 2003). The U.S. Operation includes delivery of letters, documents and packages in certified time frames within the United States (ups.com, 2003). Internationally the company delivers packages to more than 200 countries. The non-package operations include such organizations such as Mail Boxes Etc. And UPS Supply Chain Solutions Group, where mail services and personalized business services are offered "via independently owned and operated businesses and shipping centers" (yahoo.com, 2003).

UPS has continued to exhibit strengths in gaining revenues and profits in recent years. The organization remains one of the nations leading suppliers of economical letter delivery and package delivery services. At the close of September, 2003 revenues had risen 7% to exceed 2 billion (yahoo.com, 2003). The organization realizes a gross profit per fiscal year of approximately 13.33 billion, and revenues that exceed 31 billion dollars (yahoo.com).

The company currently has 360,000 employees and net income is solid at 3.54 billion (yahoo.com, 2003). UPS has more than double the employees of its competitor FedEx. The companies market cap is 78.67billion, exceeding Fed Ex's 21.64 billion (yahoo.com, 2003). However, it seems that FedEx realizes more net income that UPS. Stock analysts certainly recommend holding on to market shares for UPS. Others recommend purchasing into the company.

In just October of 2003, "the company reported a 28% leap in income, in part due to a strong U.S. packaging operation, and earnings per diluted share increased 27% in the U.S." (ups.com, 2003). The UPS package business is currently realizing better profits due in part to a new Next Day Air program (ups.com, 2003). This is one effort UPS has instituted to compete with Next Day services such as Fed Ex. International export package volume is also climbing at a rate of 8.1% (ups.com, 2003). Non-package revenue has increased approximately 6.2% (ups.com, 2003). UPS however, needs to "focus on expanding distribution and supply chain capabilities," according to Scott Davis, UPS chief financial officer, in order to "feed the success of all parts of our business going forward" (ups.com, 2003).

Non-package revenue is rising, but is the slowest rising aspect of UPS. This is weakness that other companies have attempted to exploit. Opportunities for UPS will include expanding their domestic and international non-packaging business sector. One manner in which they might do so is to provide better prices to customers using such services. UPS can boost profitability by expanding the hours and availability of said services. Fed Ex probably remains the most likely threat to UPS. UPS may also benefit by increasing its advertising campaign.