United Parcel Service's IPO
Question 1: What are the key success factors and risks for UPS given its business strategy? In the package-delivery industry timely, accurate and competitively priced services are the key success factors. With over 13 million packages delivered each business day, UPS had drastically invested in technology, which had played an important role on its growth. UPS’s well developed computer systems had ensured to UPS customers an excellent service which fulfils its customer parcel needs. Moreover, the ability to provide low cost access to customer’s information about the location and contents of packages is an important success factor.
The competitiveness in the package-delivery industry pushing prices down and squeezing margins is a major risk for UPS. Yet, since UPS depends on its workers for deliveries, there are some risks associated with the human factor that must be considered. There are risks that the delivery may be late, wrongly delivered, damaged packages, lost packages, or even strikes when workers refuses to work. Moreover, UPS strategy of expansion to other countries may be threaded by changes in political alliances between the countries involved in the shipping process (sending/receiving). Tariffs and other political barriers may be created as retaliation or protectionism to the national industry in the “receiving country”.
Question 2: How is UPS performing? What factors are driving this performance? Is the current performance likely to be sustained? Why or why not? UPS is presenting a great performance. With over 340,000 employees, 149,000 delivery vehicles, 500 planes, and $25 billion in annual revenues, UPS is the largest parcel delivery company in the world. The company delivered nearly 13 million packages each business day, UPS had drastically invested in technology, which had played an important role on its growth. In 2006 the results of UPS reported earnings increase of $0.89 and this was an increase of 14.1%...
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