Informational Report On Fedex And Ups Commerce Essay

The delivery and logistics industry is growing by leaps and bounds and customers these days are looking for the companies that can provide the fastest delivery of parcels, packages, documents and goods around the world. As a result of Internet, the players of this industry have started their online businesses so that the customers can have access to detailed information about their travelling items with utmost ease. In today’s world, the logistics world has become popular and an integral part of many corporations as they allow them to undertake their global transactions easily and conveniently (Ellis, 2010).

Every player in the respective industry has received huge amount of popularity and there is a lot of publicity about the attitude of the industry towards the attitudes of the corporations working in the sector and they have taken right steps for highlighting the fulfillment of their Corporate Social Responsibility (CSR) actions that are proving to be beneficial for the society as a whole (Li et al., 2006).

Brief Background of FedEx and UPS

Frederick W. Smith started the Federal Express Corporation in 1971 as part of its inheritance worth $8 million. It has its headquarters in Memphis, Tennessee, USA. When the company started its operations, there were two competitors in the market i.e. U.S. Postal Service and United Parcel Service (UPS) that provided the only medium of delivering packages and letters quickly.

The primary reason the owner decided to initiate his products and services was that the companies present in the industry took too much time for delivering the items on time. Under FedEx, there are many subsidiaries such as FedEx Express, FedEx Freight, FedEx Kinko’s, FedEx Ground, FedEx Supply Chain, FedEx Office, FedEx Trade Networks, FedEx Services and FedEx Custom Critical (“FedEx Corporation”, 2012).

United Parcel Service (UPS) is the global leader in the package delivery sector and has an excellent quality supply chain services that is offering a highly exceptional range of alternatives for synchronization of the movement of funds, goods and information. The company is headquartered in Sandy Springs, Georgia. It started its operations in 1907 Seattle, Washington and has been meeting the expectations of the customers at an accelerating rate.

UPS is offering its services to more than two hundred countries worldwide and is operating as a huge franchise of supply chain. The companies owned by UPS are UPS Mail Innovations, UPS Capital, UPS Supply Chain Solutions, UPS Airlines, UPS Store, UPS Professional Innovations, UPS Express Critical, UPS Freight and UPS Logistics (“UPS Company History”, 2012).

Important facts and figures of FedEx and UPS

A snapshot of the important facts and figures of FedEx and UPS are shown in the following table:

Comparison factors

FedEx

UPS

Annual Revenue (FY 2011)

$42.7 billion

$53.1 billion

Number of employees

More than 300,000 worldwide

397,100 (75,000 International and 322,100 in U.S.)

Average Daily Volume

Above nine million shipments for freight, ground, express and expedited delivery services

15.8 million packages and documents

Service Areas

More than 200 countries

More than 220 countries

Air Operations

663 fleet serving more than 375 airports globally

531 air fleet for package operations and 704 for supply chain operations; 705 airports are served

Ground Fleet

About 90,000 motorized vehicles for freight, ground, express and expedited delivery services

UPS Freight has 6,047 tractors and 20,783 trailers

Package operations has 95,125 package vans, motorcycles, tractors and vans along with 2,522 alternative-fuel vehicles

Website performance

There are more than 32 million unique visitors on monthly basis that comprise of more than 6.5 million daily requests for package tracking and more than 20 million labels that are generated via Ship Manager on monthly basis

21.8 million visitors visit the page on daily basis and there are 32.1 million requests for package tracking on daily basis

(Source: “FedEx Corporation”, 2012; “UPS Worldwide Facts”, 2012)

Vision and Mission of FedEx and UPS

The mission statement of FedEx is “to produce high quality financial returns for the shareholders by focusing on development and maintenance of a high value supply chain, business, transportation and other vital information related services by creating companies who work as a collective unit and are managed collaboratively for enhancing the brand image of FedEx. Our customers are our utmost priority and we strive to provide them the highest quality service in accordance to their requirements. All FedEx companies will ensure that they develop cordial and appropriate relations with the partners, suppliers and employees. In all of our operations, safety is the key factor and all operational activities will be conducted in ways that are compatible with the preeminent professional and ethical standards” (“Mission, Strategy and Values”, 2012).

On the other hand, the mission statement of UPS is “we sustain as a financially strong company that is providing a long-term competitive return to the shareholders and we have always been able to fulfill our promise. Our returns have been driven by the exceptional abilities of our employees who know how to transform our company to make it compatible with the changing demands of the industry” (“UPS Company History”, 2012).

After analysis of the mission statements of the two companies, it can be concluded that FedEx has developed a well-thought and effective statement that is highlighting its core values along with its responsibility towards each stakeholder. However, UPS’s mission statement is too concise and there is no detailed information about the vision that it is willing to achieve in the long-run. FedEx has emphasized that it will ensure that it proves to be the finest logistics company that will meet the expectations of the customers, shareholders, community and every stakeholder.

Strategy of FedEx and UPS

According to FedEx Mission, Strategy and Values (2012), FedEx has a unique and innovative operating strategy that seems to work perfectly for all of its business operations. The main elements of its strategy are that all companies of FedEx compete collectively by ensuring that the brand creates one image worldwide; operating independently by focusing on the independent networks so that various customer needs can be easily met; and ensuring collaboration by working together as a team so that loyal relationships can be sustained by gaining support from the investors, customers and employees.

UPS is following a focused strategy by ensuring that all of its efforts are supportive for its business expansion activities. The main aim of UPS is to serve about eight million customers on daily basis via its highly integrated structure of network. According to Greg (2007), the company has a highly efficient and cost-effective model that is profitable and environmental friendly as well. Since it has a network that is developed with latest technology all goods such as domestic, ground, air, commercial, international and residential can be easily processes and it even ensures that the company is able to maintain its competitive edge in the market. It has proven to be beneficial for the company as it has allocated its resources in highly efficient manner.

Management Style at FedEx and UPS

There is a huge difference between the management styles of UPS and FedEx as the management teams of both companies have entirely different perspectives on running their businesses. The primary reason for such a variation in the management style is evident from the strategy implemented by the companies in managing their operational activities. FedEx has an innovative culture within its business as it believes in giving leverage to their employees and making them an integral part of the company. The innovation culture is evident from the fact in which unique and innovative products and services are offered by it to meet the changing needs and demands of the customers (“FedEx Innovation”, 2012).

On the other hand, the management style in UPS tends to be a more authoritative style as the management team is concerned about its business efficiency rather than trying new things. The main aim of the management team is to provide pre-defined set of rules to the employees so that they are aware of the goals that the organization is targeting for year-end. Although the corporation has undergone drastic changes to make it compatible to the changing demands of the business environment but it still has the same management style that is dominated by authority and power (Ellis, 2010).

Past Challenges faced, strategic moves and important decisions of FedEx and UPS

When the companies get deviated from their original mission or purpose of existence, there are huge chances that their business sales get affected to a greater extent. FedEx was the pioneer company in logistics industry that introduced the concept of e-commerce as it allowed it to keep a close look at the demands of its customers and offer them the products and services that will best meet their demands. It took complete advantage of this aspect in the industry and even introduced e-business solutions so that its commercial customers can avail its premium quality services that are easily accessible by everyone (Brewester & Dlazell,, 2007).

However, FedEx started losing its market share when UPS developed and implemented its own e-business strategy so that it can recover its lost market share from FedEx. When FedEx became too much captivated in enhancing its IT infrastructure, it lost track on the business traditional aspects i.e. overnight delivery service. However, it soon realized its mistake and started focusing on the competitive edge that it had created in the market by offering the preeminent solutions to the customers of logistics industry (Li et al., 2006).

FedEx also faced problem when it introduced Zap Mail in 1984; soon it realized that the concept is not accepted by the customers and stopped these services. However, it had to face huge loss from the investment made in the system. Afterwards, the management team to make every decision wisely and strategically. The strategic move made by the company was focusing on innovation aspect of logistics industry by offering superb quality IT solutions for the customers.

UPS has always followed a strategic approach by keeping a strong focus on it business and operational activities. When its market share was hit by entrance of FedEx in the market, it decided to alter its business operations by redesigning its strategy that emphasized the need of developing an e-commerce strategy so that it can recapture its lost market share (“UPS Worldwide Facts”, 2012).

The management team responded to the competition by entering into the e-commerce segment by setting itself apart by focusing on development of Supply Chain solutions. The strategic move made by the company was to expand into the Supply Chain network of the logistics industry and help the corporations in enhancing the efficiently of their complete Supply Chain networks.

One mistake that was made by UPS was violating the Equal Employment Opportunity Law as there were many issues regarding equal treatment of employees. For instance, a black lady was fired because she failed to report on time for job on her first day of work; she was terminated because she was a black woman.

In 2012, UPS was alleged for violating the federal government employment law when it allowed its workforce to discriminate against and harass Arabs and Muslims. Hence, the company has negative reputations when the working environment is discussed. However, it is trying to avoid such situations by developing policies that suppress such behaviors in the firm.

Future Challenges for FedEx and UPS

Since both FedEx and UPS are operating in the logistics and delivery industry, the main challenges that will be faced by both companies in the future are continuous increase in the fuel prices that can impact their cost and might force them to increase their products and services fees; UPS has a trade union and it will have to fulfill all their rights because otherwise it can hamper its operations to a greater extent; and the biggest threat is from USPS and DHL who have started going green marketing strategy as they have emerged as low cost service providers in the market who ensure that the customers are provided required services in an environmental friendly way (Morgan & Stanley, 2007).