Industry External Analysis Essay

1222 Words Mar 9th, 2016 5 Pages
UPS Case Study

Considerations of Macro Environment

Market Demographics: The target market is everyone in the world who needs to ship an item. Christmas time is a particularly busy time for shipping items across the world, whereas people need a company like UPS to do the delivering for them.

Economic: Gasoline prices, along with rising energy prices are the major concern. Jet fuel prices are at $2.80/gallon! However, many people would rather have items shipped rather than spend money on gas to go and buy the item.

Legal: International express services can be delayed by government policies and restrictions that can include anticompetitive practices of government-owned or authorized monopolies, licensing requirements,
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Real Threat of Substitute Products or Services: High customer satisfaction earned through conscientious drivers, high reliability, and Internet-based tools has kept UPS at the top. UPS has created an economic advantage by assembling a dense integrated global shipping network that is unlikely to be matched by any but a few global players.

Bargaining Power of Suppliers: The suppliers who provide the boxes and envelopes most likely sale the products in bulk, this is economies of scale and allows UPS to sale them at a cheaper price.

Bargaining Power of Buyers: Businesses can buy in bulk and get a cheaper rate.

Intensity of Rivalry among Competitors in Industry: Faced with rational competitors, UPS continues to enjoy pricing power for most of its service offerings. New entrants are unlikely to build such a globe-spanning infrastructure, then incur the expense of trying to steal share from this established network.

Implications of Competitive Forces and Rivalry: A critical aspect of UPS’ competitive forces lies within the use of its resources to transport urgent packages. World wide shipping volume is increasing as a result of global exchange, e-commerce, and changes in supply-chain management.

Position of Rival Companies with similar products in industry: UPS’ outperforms its closest rival, FedEx, by more than 2.5 times FedEx’s average daily

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