External Analysis of UPS
In any business organization, the external environment encompasses aspects that affect its operations from outside hence influencing the decisions, productivity and plan of actions. These are aspects that an organization has no control over and it can only adapt to changes that arise from them. External environment can be broken into two: micro-environment and macro-environment. Components of a macro external environment include political, economic, socio-cultural, technological, the natural environmental and legal, which are commonly abbreviated as PESTLE. Micro-environment entails customers, suppliers, distribution channels, marketing intermediaries and producers.
Furthermore, for any profit-making organization, there are strategies put up to ensure the company can keep up with the global business trends; it can outdo its competitors and has diversified its operations in the best way possible. Competitive strategies are a long-term plan which aims are ensuring a company gains a competitive advantage over its rivals. Analysis of competitive strategy is done by evaluating what organization A has that B does not and which makes it have an advantage over B.
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Global strategies, on the other hand, are meant to expose an organization into the global world which means that it can operate from anywhere around the globe and distribute and provide services all over the world. Finally, diversification strategies are those that give a company the push to venture and operate in markets and product lines that it had never tried before. United Parcel Service, a package delivery and supply chain organization, has successfully been able to incorporate all the above strategies with its operations and the external environment.
A PESTLE analysis of UPS shows that the company has been able to adapt, but with the changing needs of the external environment, they need to be on the run. Dwelling on the natural environment, the company faces a problem of extreme weather conditions, flight restrictions and natural disasters (Fern Fort University, 2018). These kinds of natural extremities affect the delivery time of the packages or even cases of packages not reaching the intended client. They include heavy raining hence floods, winter snowing earthquakes, terrorist attacks among others. Flight restrictions are situations where the airports restrict flights to and from the country due to various emergencies such as unfavorable weather conditions, air force operations and fire cases.
Focusing on the legal factors, the company has ensured that it follows up and operates with the given rules and regulations in the specific country that they operate in. All employees of UPS also ensure that they abide by the laws for the good of the company’s image and reputation. This is by upholding honesty, probity, and standard of providing services. If any of the policies are foregone, they are supposed to report. Other legal factors of importance encompass the issue on patent protection where the company has full rights of what they own legally, confidentiality of clients’ data, customer protection, labor laws and laws on air and freight services (Fern Fort University, 2018) This means that they have a full time job of being on the outlook for compliance.
Technologically, for operations to be efficient, UPS has been on the run to acquiring the best infrastructure for distribution. To execute that, it has been able to come up with a program by the name ORION which stands for On-Road Integrated Optimization and Navigation. This is a program that connects the client’s shipping needs with the map (SWOT&PESTLE.com, 2018) .
Delivery drivers can reach them in a shorter span of time by being provided with directions. Economically, UPS faces factors such as fluctuation in currencies, inflation and interest rates in the macro environment. These affect the revenue and income earned by the company. Economic forces of the host country determine the performance of UPS accordingly. In the micro-environment, it faces competition from other companies such as FedEx hence it has to come up with competitive strategies continuously.
Looking at a social perspective, UPS ensures that their employees understand clients from the different countries in which they operate in knowing their culture by knowing there behaviors and expectations as well languages. The employees in UPS should be skilled enough to handle the consumers too for a good social image. Lastly, focusing on the political factors, UPS is exposed to many components such as political instabilities, trade regulations, corruption levels, price regulation, and taxation among others. It is, therefore, the company’s role to be on the outlook for the emergence of the above and act accordingly.
UPS has strengths that it uses as a competitive advantage over its competitors. The most specific factor that it uses is the supply chain focus. It has a comprehensive supply chain and logistics that has heightened the level of its operations as it can be able to handle big orders, track them and deliver packages in time (Bhasin, 2018). UPS has also established a network where it operates in more than 200 countries, implying that it is an international business already. The level of technology that the company uses is quite advanced too to ensure that they have the best infrastructure for efficient deliveries. Its target population is mainly business customers. These are people who are often transacting which mean that at no single point will UPS experience a depression (Bhasin, 2018). Diversification strategies by Ups include providing services to a wide range of customer segments, acquisition of other companies such as Coyote, a logistics company that offer transport and logistics services as well as diversifying in how they transfer their deliveries for example by use of drones (Bhasin, 2018). Global strategies by UPS are generally aspects both in the competitive and the diversification strategies such as venturing in other countries, franchises, and distributing to countries all over the world. The connection between the external environment and the strategies is vivid in that they interlink due to their dependent nature.
References
Bhasin, H. (2018). SWOT analysis of United Parcel Service. Marketing91 . Retrieved from https://www.marketing91.com/swot-analysis-of-united-parcel-service/
Fern Fort University. (2018). United Parcel Service, Inc. PESTLE & Environment analysis. Retrieved from http://fernfortuniversity.com/term-papers/pestel/nyse4/3235-united-parcel-service--inc-.php
SWOT&PESTLE.com. (2018). UPS (Uinted Parcel Service) SWOT & PESTLE Analysis . Retrieved from https://www.swotandpestle.com/united-parcel-service/
