United Parcel Services: Delivery Packages and E-commerce Solutions Case Study Solution
Problem Statement
This case relates to e-business strategy, IT- business relationships and the evolution and development of the IT infrastructure of United Parcel Services (UPS). In this report, we discuss the operating model of UPS, strategy for the development platform of UPS and the approach taken by UPS for managing IT. In the end, we discuss few alternatives for the next steps that could be taken by the company and that could be supported through the current IT infrastructure of the company.
Analysis
We begin the analysis by first discussing the growth strategy or the operating model of UPS.
Operating Model of UPS
The company has adopted a differentiation business strategy on an industry wide level. The company has never focus on price but it has always emphasized on the quality of its service. The company provides inexpensive service to its customers that could help them to ship their packages anywhere. Although, the prices of the company have gone up in recent years as compared to the closest competitor, FedEx, however, the quality and service delivery has not diminished. The revenues and financial performance has still increased as shown in exhibit 1 in appendices.
The market segment targeted by UPS is wide. With the help of the centralized IT infrastructure and development of goals in e-commerce, the company has established tight linkages with its customers for providing timely, efficient and low cost service. This operating model is capable of enabling huge revenues for the company because of the larger number of customer volumes. The risks associated with this operating model are that the company faces severe competition from its rivals such as FedEx and they can reduce the prices even more to capture the market of UPS.
The industry is also going under rapid consolidation and the combining entities become more powerful to conduct business aggressively. The growth model is also impacted by the seasonal and cyclical fluctuations due to the decreased demand for the services. Because of these models, the company has consolidated with a number of subsidiaries such as UPS Capital Corp, UPS e-Ventures, UPS e-Logistics and many more. These consolidations provide strength to UPS to mitigate the threat that is emerging within the industry because of rapid consolidations of other firms.
UPS’s Strategy for Developing Platform
The evolution and the rationale for the evolution of the current platform of UPS were dependent on the emerging competition within the industry and the advent of IT. During the early 2000, the shipping companies were emphasizing on integrating IT and e-commerce within their business operations and were introducing services such as package tracking.Because of this, the organization evolved and it deployed the enterprise wide IT applications for instance, it had introduced the Delivery Information Acquisition Device (DIAD) in 1993.
Within the e-commerce area, management had developed a tracking application on a priority basis to build tighter linkages with the customers. UPS had started to establish alliances with the key vendors of ERP systems. However, there were many weaknesses during the evolution of the platform such as the UPS software could have been sold externally. However, the company had managed its IT infrastructure and e-commerce quite; well which has led to this rapid evolution of the platform that UPS has today.
UPS’s approach to Managing IT
The approach of UPS to manage IT was highly important because the e-commerce initiatives of UPS were all built based on the IT infrastructure. Standardization and centralization were the two key components that had created the highly cost effective IT operations for the company and leveraged it to become more responsible and flexible to the customer needs................
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