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BUSI 690 UPS Case Study
Transcript of BUSI 690 UPS Case Study
● 73,500 retail access points
● Domestic market leaders, $10.2B over FedEX
● Yearly increase in dividends from '09-'13
● ORION Technology: Route Optimization
● Consistent revenue growth: 2009-2013
● Expected revenue increases in '14 and '15
● Air delivery to 75% of US population
● Industry leader in corporate responsibility
● Forecasted increase in domestic & int. freight
● Planned cargo jet fleet increase
UPS’ business philosophy is to grow our business by serving the logistics needs of customers,
utilizing industry-leading technology that simplifies and improves their business processes
, and by offering excellence and value in all that we do.
We strive to maintain a financially strong company-with broad employee ownership-that provides a long-term competitive return to our shareowners.
We desire to inspire our people and business partners to do their best, offering opportunities for personal development and success.
We will lead by example as a responsible, caring, and sustainable company making a difference in the communities we serve worldwide.
UPS’ vision is to create value for customers by using our superior portfolio of logistics capabilities, while continually transforming to strengthen our leadership position and investing to accelerate growth in key markets and new opportunities.
UPS CASE STUDY
UPS was founded in 1907
9.4 Million customers a day
2,700 Operating facilities worldwide
Net income $4.372 billion on $55.438 billion in revenues
Infiltrate the international logistics sector- specifically within China
Related diversification and acquisition strategy
Proposed acquisition of SF Express
This strategy will:
Contribute to revenue and profit growth
Strengthen international footprint
Expand operations in China through SF Express Acquisition
Chinese logistics growing at 76% annually since 2009
Freight and logistics 3PL contracts growing 111%
Chinese e-commerce growth is 120% annually
Provide Ali Baba with logistics services
Ali Baba is the biggest e-commerce website
Bigger than Amazon and Ebay combined
$170 billion in revenues in 2012
Unmanned delivery system
International demand driven by develop. econ.
Global Pharmaceutical logistical strategy
Upcoming growth in Asia-Pacific operating region
Continued repurchase of stock shares
Expansion of My Choice
Move towards alternative fuels
Continued rise in online shopping
Lower LT debt through continued positive profit margins
Increased innov. could lower expenses and incr. offerings
● Initiate UPS branding as a subsidiary
● Furthering out understanding of untapped Chinese markets
Analyze and resolve peak season short comings from 2013
● Further implement UPS logo into SF Express brand (airplanes)
● Research and development to bring drone technology to United States
● Pending FAA approval start soft implementation of drones
● Switching to a unified UPS branding nationwide in China
● Develop longer range drones for more widespread use
90% of the market is absorbed by express carriers
Expected growth of 3.9% over the next 20 years
Forecast indicated a rise in air and freight logistics over the next 12 months
Continue the “We Love Logistics” campaign that began in 2010
Campaign has seen very positive results that lead to increases in the supply chain and freight segment
Revenues did decrease roughly $200M from 2012 to 2013
8.0% growth rate expected annually from 2011 to 2031
Rapid rise in the middle class
Projected to consist of 350 million people by 2016 (32% of the population)
Consumers are looking for luxury and brand recognition
Consumers place high emphasis on prestige in their purchasing decisions when making their decisions
Based upon these trends UPS will utilize:
Social Media Marketing:
Sina Weibo, Renren, Qzone, Youku, and Baidu
● Low international revenue: 25% rev.
● Heavily unionized workforce
● Air Freight and Logistics Index lower in '14
● Lower levels of international cargo volumes
● Increases in LT Debt Ratio
● Inconsistent operating profits: '11-'13
● Low performance during '13 peak season
● Brand has strong reliance on delivery driver interactions
● Cash & Marketable Securities lowered from $ 7,924 to $ 5,245
● Supply Chain & Freight revenue and operating profit decreased by 2.3% and 7.5% respect.
Amazon's plans for unmanned delivery drone
International governing bodies could prevent int. expansion
Unexpected decreases to discount rates w/ benefit plans
Rising age of truck drivers, increased retirement
Labor and fuel costs are highly volatile
Difficulty to improve profit margins because of econ. recession.
Generally rising fuel prices since 2002
Loss of market share to some regional shippers
E-retailers are looking for cheaper, faster shipping options
Major customers are building infrastructures to ship themselves
SEE COMPREHENSIVE WRITTEN ANALYSIS REFERENCE PAGE
EXPECTED RESULTS STRATEGY CHART
NET PRESENT VALUE
Freight and Logistics company based in Shenzhen, China
As of January 2014, S.F. Express has nearly:
7,800 service centers in main land China and overseas countries
Currently owns and leads the drone based logistics sector
Growing at a rate of 76 percent annually since 2009
Altitude up to 328 feet
Withstands 6.7 pounds
Delivers within 2 meters
COST OF CAPITAL