Fedex Vs Ups Essay

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FedEx and UPS are competing to expand in China and trying to achieve a greater market share. In trying to expand in the Chinese market, these firms must consider the opportunities and threat with in the market and compare those to their own strengths and weaknesses. Both firms have been competing in the U.S. and have had a degree of success based on the strategies they implemented. FedEx and UPS have implemented different Business-Unit competitive strategies, and both have been successful with their strategies. FedEx has entered the market as a prospector, they emphasize attaining growth through aggressive pursuit of new product-market opportunities. FedEx operates within a broad product market domain and they value being a first mover in new …show more content…
The financial data of each firm must be considered in order to conclude which firm will be successful. From 2000 to 2005, FedEx sales grew from 8.84 percent to 18.83 percent and FedEx has consistently grown every year from 2002 to 2005. While UPS had sale growth of 10.05 percent in 2000 but their sales declined from this value until 2004 when it rose to 16.40 percent. The EBIT for FedEx rose from 4.99 percent to 71.60 percent while UPS increased from 13.39 percent to 23.13 percent. The EBIT is the operating profit for the firm and it tells us that FedEx has been able to generate earnings from operations at a much larger percentage than UPS. Despite being able to generate more earnings, FedEx has a Times interest earned of 13.58 and Fixed-charge coverage ratio of 1.12 compared to 35.72 for UPS. This means that FedEx does not have as much cash flow as UPS and it can have issues being able to pay its debt. Even though it is a lower number for FedEx it has been steadily increasing for them as well as UPS. Based on the fixed-charge ratio, UPS is more profitable, as they are able to cover charges at a faster rate and is more attractive to

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