Strategic Planning

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9-306-002
REV: JUNE 19, 2006

DAVID A. GARVIN
LYNNE C. LEVESQUE

Strategic Planning at United Parcel Service
We fully recognize that it is not possible to develop a true strategic plan more than a few years out and that business plans should have an even shorter horizon. But we are convinced that it is possible and wise, indeed necessary, to develop a set of very long-range scenarios that can form the foundation for our future strategic plans.

— Michael (Mike) J. Eskew, Chairman and
Chief Executive Officer, United Parcel Service (UPS)
As Mike Eskew walked through the long, open atrium of UPS’s corporate headquarters late in March 2005, he thought about his upcoming lunch meeting with Vice President of Corporate Strategy Vern Higberg. Higberg was preparing a presentation for the senior management strategy committee, the Strategy Advisory Group, on improvements to the strategic-planning process. While the company had made major progress in planning for the future over the past 10 years, Eskew had charged Higberg and his colleagues with developing recommendations for moving forward, citing one of his predecessors, who had said, “The future of our company will be no better or worse than the quality of planning we do to prepare for it.”

Company Background
History
In 1907, 19-year-old Jim Casey borrowed $100 from friends to start the small company that eventually became UPS. From its humble origins delivering messages for the city of Seattle, Washington, UPS had grown into a $37 billion corporation (see Exhibit 1 for financial performance). Over the 98 years since its founding, it had transformed itself several times, first into a packagedelivery company, then into an international air transportation company, and finally, in the late 1990s, into a logistics company. In November 1999, after 92 years as a private company, UPS went public in the largest corporate initial public offering (IPO) to date. By 2005, UPS was the world’s largest package-delivery company, as well as a leading global provider of specialized transportation and logistics services. It served more than 200 countries and territories worldwide. UPS Airlines, as of 2005, was one of the 10 largest airlines in the United States. ________________________________________________________________________________________________________________ Professor David A. Garvin and Senior Researcher Lynne C. Levesque prepared this case. HBS cases are developed solely as the basis for class discussion. Cases are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective management. Copyright © 2005 President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-545-7685, write Harvard Business School Publishing, Boston, MA 02163, or go to http://www.hbsp.harvard.edu. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means—electronic, mechanical, photocopying, recording, or otherwise—without the permission of Harvard Business School.

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Strategic Planning at United Parcel Service

The acquisition of Mail Boxes Etc.® had provided the company with over 3,500 retail locations in the United States. With a workforce of 384,000, only Wal-Mart and McDonald’s had more employees.

Organization
In 2002, when Mike Eskew, an industrial engineer and 30-year veteran at UPS, became the company’s ninth CEO, he found a highly centralized, hierarchical organization with a traditional structure at the top. A Management Committee met weekly, with a full-day meeting once a month, to provide the day-to-day management of the company. Various other committees and staff groups assisted the CEO and Management Committee, including a Strategy Advisory Group—a subgroup of the Management Committee—that met monthly to address more strategic issues (see Exhibit 2 for an organization chart).

Within...
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