The SWOT analysis is a strategic planning tool that can be used to help an organization identify and understand the key internal and external factors that affect its ability to achieve its objectives.
This article will provide a SWOT analysis of UPS, one of the largest shipping companies in the world.
Key summary:
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Background of UPS
Established in 1907, the United Parcel Service (UPS) is an international delivery and shipping service company with its headquarters in the United States. The issue of shipping delays was first discovered and then resolved by James E. Casey.
The firm is known to be a worldwide supply chain management that offers solutions to all delivery services. It now has a presence in more than 200 countries and is able to provide services to over one million consumers.
A total of 4,95,000 individuals worked for UPS in 2019. During the financial year 2019, the company’s yearly sales were $ 74.09 billion, with an income of around $ 4.44 billion.
UPS is at the top of its field because it provides reliable service and keeps a high level of trust with its clients. Both of these things have helped the company grow quickly.
Without further ado, the main purpose of this article is to give you an analysis of UPS’ strengths, weaknesses, opportunities, threats, and other internal factors that have contributed to the general development of the company.
Complete United Parcel Service (UPS) SWOT Analysis
UPS Strengths
Strong Global Presence
UPS has upgraded its UPS Express Plus and UPS Worldwide Express services to 40 additional locations in the world and now provides adequate delivery services to companies in 140 territories throughout the globe.
Also, over 220 countries have modest delivery services provided by International Package, the company.
Online Monitoring
When it comes to online delivery tracking, UPS leads the pack with 295 million tracking requests every day. This makes the company different among its other competitors in the same industry
SMART Network
Coordination of its collection and distribution systems is essential to the efficient delivery operations of UPS.
The SMART (Southeast Metro Automated Routing Terminal) was built with a $20 billion investment by UPS to link all of the company’s systems and equipment.
Excellent Customer Service
Businesses must continually provide high-quality service to clients in an attempt to entice, satisfy, and keep them as customers. This is especially true in the delivery industry.
UPS’s customer care is superior to FedEx’s, and it has a greater rate of customer satisfaction.
Highly innovative
It takes a lot of creativity to get packages to their destinations on schedule all across the world. The CIO of UPS won the Forbes CIO Innovation Award for making a smart transportation network that makes sure all packages are delivered on time.
Deliveries are made quickly
On-time delivery is a major strength. UPS uses basic portable devices for communication, scanning parcels, client signatures, and advanced automation like GPS tracking and rerouting technologies to simplify its operations. Because of these operational strategies, UPS is able to outperform its competitors.
Competitive Costs
The best method to attract and maintain consumers is to provide high-quality service at a reasonable price. UPS’s prices for next-day delivery are comparable to those of its competitors in the logistics and distribution business.
UPS’s Weaknesses
UPS has various flaws that it can focus on and improve, just like any other firm.
Reliant on US markets
UPS’s income is excessively reliant on the US market. Their reliance on the United States is illustrated by the fact that about 80% of their income comes from there. UPS will be severely harmed if the United States has economic difficulties.
Transportation costs are rising
UPS relies heavily on transportation costs to run its business. A rise in shipping expenses has left the company with little profit. Operations will be disrupted if this trend persists.
Shipping challenges during the holiday season
During the holiday season, UPS runs into issues. The challenge they face is catching up with the increasingly rapid changes. This demonstrates that at the busiest times of the year, the firm has trouble fulfilling orders. To keep up with the growing demand for its goods and services, the company needs to hire more people and improve its technology.
Research and Development
UPS’s investments in R&D are high but are still lower than those of its rivals. In terms of creativity and innovation, it is still lagging behind the market leaders. When a business is in its later stages of growth, it needs products that have already been tried and tested on the market.
Occupational Health and Safety
It is the responsibility of the business to ensure the safety and security of its employees. UPS, on the other hand, has totally failed in its quest to instill a sense of security among its workforce. A number of employees have been hurt, which has a negative effect on morale, production, and competence.
Opportunities for UPS
New trends and new methods of operating can help the organization develop and expand its business. These are the places where opportunities arise.
Operation of E-Commerce
Every day, the e-commerce market expands. Increasing numbers of businesses are relying on e-commerce to enhance their operations. The e-commerce business has enormous potential, and UPS should take advantage of this opportunity to increase earnings.
Expansion
The brand will benefit greatly if it expands into new markets. As a result of this expansion, UPS’s clients and the firm as a whole will surely benefit from it. There would be an improvement in profitability as a result of the firm’s expansion.
New Technology
UPS has been experimenting with a drone delivery service. They’ve been providing samples to hospitals around the country. It could be a big deal for the business since it would speed up shipping and make more money for the business as a result.
Expand the Target Market
UPS is a company that provides delivery services to a wide range of companies, including Amazon. Their audience can be expanded if they enter new channels. Amazon and other online retailers may use UPS to ship their goods.
Delivery on all days
Every day of the week, UPS is now delivering items to customers. Earlier, it took them six days to deliver packages (Monday- Saturday). On Sundays, UPS begin delivering products because of an increase in internet purchasing.
Threats Faced by UPS
The variables that put the operations of a company in danger in the future are known as threats. As the world’s largest shipping company, UPS confronts a number of risks.
Competition
Despite UPS’s current dominance in the market, its rivals aren’t too far away. FedEx and DHL, to name only two, are fierce competitors of UPS.
In the event of a modest drop in UPS’s revenue, another business may become the leading company in this industry very soon.
Political Unrest
UPS’s operations might be badly affected by the international political crisis, given that the company transports couriers all over the world.
Due to the current political upheaval in the region, UPS has gone out of business in Russia, Ukraine, and Belarus.
Political strife poses a threat to UPS, resulting in a drop in revenue and a loss of market share.
Different Laws in Different Countries
UPS, like every other international corporation, has to deal with the danger of differing laws and regulations in different nations. In addition, because UPS works in over 220 countries, common activities may be illegal in other nations.
Global Pandemic
Almost every business has suffered because of the COVID-19 outbreak. There has been a drop in revenue turnover for most companies, excluding medicine.
UPS saw a decrease in profits as a result of the outbreak. UPS’s first-quarter profit fell by 13 percent in 2020 due to the pandemic, which halted all operations. As a result, such pandemics pose a serious danger to the firm’s financial stability.
FAQs
What is UPS competitive advantage?
The overnight shipping service offered by UPS is known worldwide for its competitive pricing. Online tracking, the company provides all customers with a highly sophisticated tracking system. This software monitors more than 200 million daily deliveries.
Who are UPS top competitors?
The top competitors of UPS are listed below;
- FedEx Logistics
- Expeditors
- DHL Supply Chain
- C.H. Robinson
- DB Schenker
- Ceva
- Kuehne + Nagel
- Hub Group
Final Thought on United Parcel Service (UPS) Swot Analysis
After conducting a thorough SWOT analysis of UPS, we have determined that the company is, in fact, the industry leader in package delivery around the globe. The increasing level of competition, the pandemic, poor working conditions, strikes, and management issues are among the most greatest barriers. UPS should use its resources to expand its business and market portfolio, as well as to address employee concerns.
Resources Used for This Analysis
- https://www.forbes.com/sites/peterhigh/2019/12/11/ups-tech-chief-wins-forbes-cio-innovation-award-by-developing-a-global-smart-logistics-network/#4f6335b1a923
- https://www.wsj.com/articles/upss-20-billion-problem-operations-stuck-in-the-20th-century-1529072397
- https://www.globenewswire.com/news-release/2019/10/21/1932846/0/en/UPS-Strategy-Transforms-E-Commerce-Through-Alliances-And-Agreements.html
- https://bstrategyhub.com/ups-swot-analysis/
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