The global leader of the freight industry
UPS’s wide and unparalleled distribution network is key to its success in becoming the global leader of the freight industry. It has an advanced network of vehicles, sorting facilities and hubs, supported by a sophisticated IT system that allows high reliability, efficiency and speed of delivery. Its ability to also secure air agreements nationwide and forge partnerships with supplier companies has led to increases in their customer’s touch points worldwide.
Furthermore, UPS’s human resource policies of employee development, strict rules and controls and also having a detailed union contract resulted in having a highly disciplined and loyal employee base. These factors provided UPS with the ability to perform premium services at competitive prices thus earning UPS a reputation as a top service provider of freight services through its cost-effective and efficient product fulfillment management. UPS faces both internal and external risks due to its business strategy.
UPS’s unionized labor forces and heavy reliance on IT may lead to the possible internal risks of employee strikes and IT lapses. This may have an adverse impact on their reputation in providing reliable services to their customers. External risks can arise from events such as unforeseen rises in fuel prices which may cause huge fluctuation in its business costs.
In addition, government regulations and bureaucratic red tapes may affect UPS’s supply of freight services. Increasing competition from new entrants and also the digitization of documents coupled with US’s current poor economic outlook may decrease the demand for UPS’s services.