If I ask you to send a package halfway across the globe in a very short period of time, how would you manage to do that? Of course, teleporting could be used, but unfortunately, we are not a part of a Hollywood science fiction film. I regret that every day.
Although teleporting is not possible, still transporting a package to any part of the world in a very short time is possible through UPS. This helps in erasing my regret.
UPS is an abbreviation for United Parcel Service; according to the market cap, it is the largest parcel courier company globally. UPS is a multinational company known for providing its services to shipping and receiving couriers across the globe.
Looking at how UPS has managed to spread its operation worldwide successfully, which helps it in making huge sums of profit, we felt the need that UPS SWOT Analysis should be conducted to critically analyze the company’s position since SWOT analysis provides a complete picture of strengths, weaknesses, opportunities, and threats a company faces.
The majority of the people reading this article would have sent or received couriers through UPS at any point in time. Of course, those of you who haven’t availed of the services provided by UPS would have at least heard about it since UPS is now a household name, especially in the US but do you know how it all started? Don’t worry, we’ll tell you.
To know how it all started, we have to go back in time, back in 1907 when two young entrepreneurs established a package delivery company in a basement of Seattle. The company’s initial operations were funded through a loan of $100 that was taken to support the startup.
The company spread all over the US within a few years. In 1985, UPS was operating in all the states of the US; besides that, UPS also initiated its first intercontinental service between the US and Europe.
Once the seeds of UPS were sown, from there, it kept on growing. Today, 25.2 million packages are delivered each day under the name of UPS. In addition, the company, which was once started by two people, now provides jobs to more than 534,000 employees globally.
UPS has seen immense growth over the years, which is actually commendable. According to the fact sheet published by the UPS, the courier transporting company had generated total revenue of $84.6 billion by operating in more than 220 countries in 2020.
UPS continues to dominate its competitors in every area of business. For example, UPS is the leading courier transporting company and has the biggest aircraft fleet consisting of 595 aircraft.
A SWOT template of UPS will help us identify the strengths, weaknesses, opportunities, and threats that affect the growth of UPS. After reading this article, you’ll also understand how to conduct a SWOT analysis.
Before this article proceeds further towards the detailed SWOT analysis of UPS, we’d recommend you guys also go through some of the examples of SWOT analysis so that you understand this article well.
Any company that survives in the market must have many strengths that keep it going. Strengths are the factors that provide a company with a competitive edge and distinguish it from its competitors.
Presence All Across the Globe
What’s one thing common in all the continents? UPS. The international presence of UPS amazes almost every business analyst. Who had thought that a company started in a basement would be operating in more than 220 countries?
Such presence all across the globe helps UPS in generating revenue from all over the world. For example, in 2021, UPS generated almost 24.5% of its revenue from countries other than the US. This means besides the US, UPS is generating billions of dollars from all over the globe.
Like any other top company competing in the market, UPS is very technologically advanced, due to which it has a competitive edge over its competitors.
UPS has hired approximately 5,200 technology employees that make sure that UPS is making full use of technology to carry out its operations. In addition, each year, UPS invests more than $1 billion in technology to make its operations more efficient.
The technological advancement of UPS is largely acknowledged as UPS has won a number of technology awards for its technological developments over the years.
Excellent Customer Service
Happy customers are always a top priority for any business since that’s the only thing that will keep the business running in the long run.
UPS has satisfied its customers for more than a century by providing excellent customer service. As a result, UPS was once ranked number one in the customer satisfaction index of the entire courier transportation industry.
The happiness of its customers is being translated into UPS’s financial and geographical growth.
Although UPS dominates the package transportation industry yet, other companies like FedEx and DHL give tough competition to UPS in the market. UPS has to play its top game to compete with such big competitors.
Despite being the market leader, UPS offers reasonable prices to its customers, which UPS can capitalize on its market. UPS knows if it raises its prices higher than its competitors, consumers will switch to other companies providing the same services.
Like any other company in the world, UPS has both strengths and weaknesses. Identifying weaknesses is very important for any organization to grow. If the weaknesses are identified, only then improvements can be made to convert them into strengths.
Highly Relied on the US Market
You must have heard something like, “Never put all the eggs in one basket.” Well, that actually makes sense since when you put all the eggs in one basket, the risk increases.
Over the years, UPS spread its operations in more than 220 countries, but still, almost 75.5% of its total revenue of UPS is generated solely from the US market. Such high reliance on one market can lead to severe financial problems if the revenue generated from the US starts to fall for some reason.
Prices Dependent on Transportation Cost
If you look at the services provided by the UPS, you’ll figure out that the entire business of UPS is dependent on one thing: transport. Therefore, prices offered by UPS highly depend on the International cost of fuel.
In case of a hike in fuel prices, the transportation cost of UPS will increase. This increase in transportation costs will be transferred to customers in the form of an increase in the price of services offered by UPS.
Lack of Employee Safety
Employee safety is considered very important in business since it can earn a business both good or bad name. Unfortunately, UPS has a bad reputation when it comes to employee safety.
It is to be said that UPS doesn’t provide enough safety to its employees, which is why several accidents have taken place where the employees have got injured while working for UPS. This has created a bad reputation for UPS among workers and customers.
Unable to Provide Services During Holidays
UPS remains closed on national holidays, whereas customers want to avail the services of UPS to send packages to their loved ones during holidays.
UPS should consider the options to remain open on national holidays to cater to the needs of its customers during holidays. Moreover, UPS can increase its revenue and gain customer loyalty by delivering their couriers on holidays.
The letter O in the acronym SWOT represents opportunities for a business to increase its market share and grow in the future. Although UPS is leading the market at the moment, many opportunities lie ahead of UPS to further dominate the world market.
Use of Drones
UPS has been working to introduce drone technology to carry out its operations. For example, previously, UPS used drone technology to successfully deliver medical samples to a hospital.
The usage of drone technology holds a great opportunity for UPS to cut down its transportation cost. Furthermore, it’ll also decrease the salary expense of UPS since drones don’t need drivers or pilots.
Expansion Through Mergers and Acquisition
UPS has to face a lot of competition worldwide. But, instead of fighting off every competitor, UPS can expand into new markets through mergers and acquisitions.
This policy of mergers and acquisitions will help UPS to grow and increase its market share in markets all across the globe.
At some point in time, diversification becomes a need of every business for further growth. UPS is considered a giant in the courier transportation industry, but UPS is not involved in any other business other than transporting couriers.
To diversify its operations, UPS can get involved In B2C eCommerce retail sector; this way, UPS can support small and medium-sized businesses and expand its revenue stream.
Increase Days of Operations
Although UPS has now increased its working days to seven days a week, UPS remains closed on other national holidays such as the Christmas holidays.
UPS has the potential to increase its revenue and market share by continuing its operations on holidays. This could add to UPS’s unique selling point, which would attract more customers to avail the services provided by UPS.
Threats are the factors due to which an organization’s operations are at risk in the future. UPS is undoubtedly the largest company in the courier transportation industry, yet it faces some external threats.
Although UPS is dominating the market at the moment, its competitors are not very far behind. UPS faces tough competition from its competitors like FedEx and DHL.
These competitors keep UPS on their toes since a slight decline in the revenue of UPS can make some other company the market leader.
Since UPS has to transport couriers worldwide, political unrest internationally can adversely affect its operations.
Due to the current scenario of political unrest between Russia and Ukraine, UPS has suspended its operations in Russia, Ukraine, and Belarus. Such political unrest can be considered a threat for UPS since it will lead to a fall in its revenue of UPS and decrease its market share.
Different Laws in Different Countries
UPS faces the same threat of different rules and regulations in other countries as every multinational company. Moreover, since UPS operates in more than 220 countries, practices that are considered normal may not be regarded as lawful in some other countries.
UPS needs to stay aware of the laws of all the countries where it has its operations. Otherwise, UPS can face serious consequences such as heavy fines and bans.
The COVID-19 pandemic has affected almost every business negatively. Most companies’ sales, except pharmaceuticals, have decreased, resulting in low revenue turnover.
The pandemic had a negative impact on the earnings of UPS. Since everything was on halt because of the pandemic, UPS also experienced a fall of 13% in the first-quarter profit in 2020. Such pandemics can lead to severe financial losses for the company, hence acting as a threat.
Okay, now let us summarize what we have learned in this article. Basically, we started off by telling you a bit about UPS. Then, we looked at where it started and how it grew over time to dominate the world’s courier transporting industry.
Then we conducted a SWOT analysis to see what internal and external factors impact the growth and operations of UPS.
The detailed SWOT analysis helped us identify some of the strengths that USP possesses and some weaknesses that hold back UPS from further growth. This article also highlighted some of the opportunities ahead for UPS and some threats that should be countered timely.
The findings of this SWOT analysis can be used to form a SWOT Matrix so that readers can go through all the elements of UPS’s SWOT analysis in the shortest possible time.
We hope that this article has made you aware of the internal and external factors affecting UPS and made you understand the function of SWOT analysis.