Strategic Management (Case Analysis) Business Thesis

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"Our growth strategy is to increase the number of customers benefiting from repeatable supply chain solutions, particularly in the healthcare, high tech and retail sectors, and to increase the amount of small package transportation from these customers. We intend to leverage our small package and freight customers through cross-selling the full complement of UPS services" (UPS 2008 Annual Report).

Focus on environmentally friendly operations -- UPS has already declared a supporter of environmentally friendly operations and in order to prove this standpoint they have already purchased 200 hybrid electric and 300 compressed natural gas vehicles. The move not only increased their fleet to the largest private fleet in the industry, but also made a strong statement. UPS has also invested in the purchase of hydraulic hybrid automobiles, a new technology that promises to reduce emissions and fuel consumption (UPS 2008 Annual Report).

3.2. Available Strategic Courses of Action

Given the current status quo, the company has four alternative courses of action that need consideration. Before a decision is made however, they must consider the present state of the economy in which demand for their services is decreasing. In this light of events, the first strategic course of action is then the implementation of a prudential approach that strives to reduce operational costs in order to ensure that UPS is able to overcome the challenges imposed by the contemporaneous economic crisis. Then, the second alternative would be that of responding to the crisis by striving to increase demand for their products and services in order to generate more revenues that help overcome the financial difficulties. This basically means that the package delivery organization could implement aggressive growth strategies through which it would expand to new regions. The third alternative is that of further diversifying its offering. UPS has already launched such strategies but the revenues generated by financial and logistics services still hold a reduced percentage in the overall income. Finally, the fourth strategy sees a recognition of the employees as the company's most valuable assets and revolves around investments in the training and retention of the best staff members. This course of action is based on the rationale that the human resource is the one that directly interacts with the customers and is able to satisfy them in means that creates customer loyalty and sustainable organizational revenues.

4. Strategic Recommendations

Out of the four proposed courses of action, the managerial team at United Parcel Service has to identify that which best serves their current needs. Otherwise put, it is crucial at this stage to reveal the main interest of the company and identify the strategy which is best able to serve the purpose. In this order of ideas, the objective followed by UPS is that of successfully overcoming the financial crisis and achieving sustainable growth. The table below presents the advantages and limitations of each of the four proposed strategies as well as their ability to reach the proposed goals.

Pros

Cons

Ability to meet goals

Prudential Strategy

No additional costs

No real gains

Reduced

Aggressive Growth

Increased number of customers, brand recognition, increased revenues

Financial investments, risks of failure

Depending on success; if successful, high ability to overcome crisis; if unsuccessful, minimum ability

Diversification

Maximization of gains and minimization of losses

Additional financial investments and risks of failure; estranges the company from its initial operations

Increased due to advantages in column 2 but also due to the fact that the population will require financial assistance and this could generate growing demand for the UPS Capital services

HR Investments

Satisfied an drained employees perform at increased levels, satisfy the customers and generate increased revenues

Additional investments and the consumption of financial resources that could be otherwise used

Medium as employees can only impact customer satisfaction and not demand in times of economic crisis

Based on the analysis in the table above, it becomes clear that the strategies which are best able to achieve the established goals are given by the continued diversification of the services offered -- mainly the financial and insurance services offered through the UPS Capital subsidiary -- and the aggressive growth strategy through which the company will be able to address new markets and generate more revenues.

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In this order of ideas, the first move that will have to be made is that of assessing the current performance of the financial subsidiary and identifying new means of increasing this performance. Internal strategies will be developed and implemented in order to improve the capabilities of UPS Capital. For instance, new financial specialists will be hired to develop more products -- most important is that the products offered are not necessarily new, but that they are able to satisfy the needs of the population affected by economic recessions. Examples of such products and services would include loans, savings promotions and insurance. Then, as the financial services are developed, the company would also hire marketing specialists who would develop campaigns aimed to familiarize the population with the financial services of UPS and attract clients. The marketing campaign would promote UPS Capital as the subsidiary as UPS in order to benefit from the latter's successful history and presence in the international market, but would also introduce new elements to distinguish the two entities and ensure that UPS Capital is specialized in high quality financial services. All these efforts would not impact with the delivery services of UPS.

Implementation of the growth strategy would begin with an assessment of the international markets in which United Parcel Services currently operates. The analyses would be centered on performances relative to market size, customers served, revenues registered or marginal profitability. Further investments would be made in regions with increased potential, such as China. UPS entered the Chinese market as an expansionist strategy and based on the large size of the country and the large numbers of potential customers. Their results in the region were however limited. Suggestions to improving the situation could refer to reducing retail prices in order to address wider arrays of customers or introducing aircraft services to China -- they now only deliver packages in China with vehicles and this weakens their position relative to competitor FedEx, also present and even stronger in the Asian country (Dickerson and Massott).

All in all, given the present situation and the objectives followed by the managerial team at United Parcel Services, it is recommendable that they implement a combination of expansionist and diversification strategies. Each of these courses of action will further support organizational sustainability by allowing them to enter new markets, address new customer, offer new services and register more revenues......

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