Business Strategy

Business Strategy

                                                          Competitive Strategy 

Competitive strategy can be defined as the way an industry separates itself from their competition within a given market. This is their competitive advantage an is the business model in which the company will run and operate. The table is broken down into four parts. First the company must decide if they are targeting the whole industry (Industry-wide), or one segment of a specific market (Focus). The final part is the "advantage" part, the company must decide if their product or service will be cost lower than their competition or focus on providing a better product or service than the competition offers.

UPS separates it's products by Differentiation Industry-Wide. Rather than focusing on price, UPS focuses on having the best service across the industry. We offer a relatively inexpensive service that can help customers ship packages practically anywhere. We promise great customer service and timely deliveries. Our prices have gone up in recent years in comparison to our closest rival FedEx, but our quality and service has not been diminished. With new technology  we have been able to deliver products faster and more efficiently to your front door.

UPS is located in over 220 countries and territories worldwide. Therefore, the market segment for UPS is industry-wide because of the wide variety of customers and various locations. Although UPS offers its service in countless locations, we remain a reliable company and provide the best service throughout the industry. USPS and FedEx have lowered their rates for deliveries and now are positioned at a lower cost than us at UPS. However, we handle a larger volume than they do and we guarantee satisfaction. We have taken great strives to deliver customers packages on or ahead of time and have branched out on a global bases. With our growing business going global we now make it easier for our customers to reach out and do business with foreign markets. Here at UPS we offer great value and help connect people and products through advance logistics. So the real question you need to ask yourselves is "what can't brown do for you?"    



                                           Porter's Five Forces Model Analysis 
According to Michael E. Porter a company is faced against five forces that can effect a businesses profitability and sustainability within a given industry. The five forces are Bargaining Power of Customers, Threat of Substitute Products, Bargaining Power of Suppliers, Threat of New Entrants, and Competitive Rivalry within an industry. The five forces help a company realize their strengthens and weakness. Bringing your own companies weaknesses or potential threats is very beneficial to a company because they can use the information to adjust and make the necessary improvements to eliminate or minimize the weakness or threat.


                         



Bargaining Power of Customer- (Low)
Bargaining Power of Customers is the influence that the customers have over a company or business. For UPS the power of customers is low because we have  such a larger number of loyal customers and there are less than a handful of other companies that can provide the same services as us. Also if the customer does business globally they have even less power because we are so well established around the world, there are not many places we can not deliver to. 

Threat of Substitute Products- (Low)
Threat of Substitute Products refers to a replacement product or service the consumer can use instead of the businesses product or service. For UPS the Threat of Substitute Products is low because there are not many substitutes for shipping a product across the country. If you need a product shipped to a different location, there is no other substitute. A company could have an employee drive the package or product to the intended destination, but that is very costly and a very inefficient way to deliver an item. UPS provides a service that many companies and individuals use daily and rely on a day to day bases. 

Bargaining Power of Suppliers- (Medium)
Bargaining Power of Suppliers is the influence that suppliers have over a company or business. or UPS the suppliers power is medium because UPS's suppliers have power over some aspects of UPS's operation.  UPS does not own all of its trailers and package delivery vehicles, so companies like Swift Transportation and Budget have bargaining power when UPS is looking to rent vehicles. In some cases when we need to ship a package in one day we deliver via airplane. A big supplier of airplanes for UPS is The Boeing Company. UPS has signed a contract with Boeing so they can not raise the price of an airplane on us because that will be a violation of the contract. Boeing still has a medium power over us because if they  wanted to void the contract we would have to find a new supplier of airplanes. The new company may charge us a higher rate than Boeing currently does. Another big supplier we have limited control over is the gasoline companies. We provide our service with the use of delivery trucks, so filling up the trucks with gas is a big expense. The supplier of the gasoline has medium power on UPS, because the suppliers are also restricted on how much they can charger per gallon of gas. 
                            

Threat of New Entry- (Low)
The Threat of New Entry is the level of difficultly for a new company to enter the industry. For UPS the Threat of New Entry is low because of barriers such as high investment cost to start up and economies of scale available to UPS. A large amount of capital is required to start a delivery company such as UPS. Because of the economies of scale UPS can afford to charge a lower rate on packages because we handle so many per day, a much smaller delivery company who handles a small volume of packages would not be able to compete.  

Rivalry Amongst  Existing Competitors- (Medium)
Rivalry Amongst Existing Competitors are competitors in one specific industry that offer the same product or service. For Ups the Rivalry Amongst Existing Competitors is medium because though there are few competitors, the rivalry is intense between UPS, FedEx, DHL and USPS. However, UPS still remains as the "flagship" or leader of the industry. The well established company Amazon even outsources its shipping process to UPS, because we are more experienced and can handle a larger volume of products than DHL or USPS could.