STRATEGIC MANAGEMENT

Strategic Change at United Parcel Service

Strategic Change at United Parcel Service

Introduction

UPS (United Parcel Service) was initiated by Jim Casey in 1907 with a borrowed amount of USD 100. The company was originally focused on the segment of message delivery in Seattle, US. From early beginnings to the current business situation, the company has undergone many strategic transformations. The company changed its focus from message delivery to package delivery segment. The company went global from local and in 1990s it transformed a logistic company. This level of transformation was not possible without a vision. The company history provides a keen insight into strategic management as a long term strategic tool. The transformation had created a company worth USD 37 billion by 2006. Today, UPS is considered as a leader in specialized logistics and transportation. Company operates in around 200 countries with more than 3,500 retail locations and employs around 384,000 people. The company also operates a large airline.

Main Drivers of Change in 1990s (Compulsory Question 1)

Strategic planning was not new to the company before 1990s. However, the strategic planning was undertaken by a small group of senior managers. The strategy was focused towards developing feasible projects. The change was coming, and in 1991, the company stated its strategy statement and corporate mission, “Goal to serve customers, employees and the community.” The industry was getting competitive, and the competition meant creative strategies.

In 1996, the CSG was established, by Jim Kelly, to assist future planning. CSG assisted the company is building its own strategic process, and in 1997, a scenario planning session was held (Lindgren & Bandhold 2003, pp.42). The focus has shifted towards long term planning and company contacted consultants from Global Business Netwrok to assist in development of scenario planning workshops. The second achievement through CSG was drafting of UPS Charter, in 1999. The draft defined UPS as an enabler of global commerce from leadership in package delivery (Garvin 1991, pp.4).

The participants of the workshop developed four scenarios, which will affect future of the company (Ringland 1998, pp.8). The participants defined two axes of uncertainty. The horizontal axis represented the market environment and the Vertical axis represented demand characteristics. The market environment presented market issues such as trade barriers, highlighted national and regional market and issues of flow of funds and goods across the border. The demand characteristics included traditional consumers vs. Prosumers, types of delivery and goods and nature of consumers. After the analysis of both axes, four scenarios were identified.

Tangled Paths

Regressive World

Global Scare Prevails

Brave New World

Tangled paths focused on a variety in products, strong national and regional regulations and high competitive business environment. The Regressive world scenario assumed traditional supply chain, traditional set of consumers, competitive landscapes, and strong national and territorial regulations. 'Global Scare Prevails' Scenario assumed traditional industry consolidations and consumers, and stable demand leading to slow adaption of technology. The last scenario 'Brave New World' assumed rise of mass customization of services and deregulations in global markets. The fourth scenario also assumed new forms of organizations ...