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Please read the Mini-Case: FedEx and United Parcel Service (UPS): Maintaining Success while Competing AggressivelyRespond to question : Based on information in the case and from your (other) research, which of these firms do you predict will be the most successful in the future? Please explain your reasons.Notes: 1. The Mini Case is presented to you as a word document as an attachment.2. Please be original, do not copy!3. Reply to a classmate’s discussion.Thank you so much!


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FedEx and United Parcel Service (UPS): Maintaining Success while
Competing Aggressively
Identified recently as one of the 50 greatest or most intense competitive rivalries of all time,
FedEx and UPS are similar in many ways, including their resources, the markets they serve, and
the competitive dimensions that they emphasize to implement similar strategies. These
similarities mean that the firms are direct competitors and that they are keenly aware of each
other and have the motivation and ability to respond to the competitive actions they take against
each other. The two firms are the largest global courier delivery companies in what is a highly
competitive industry on a global basis.
FedEx and UPS compete in many of the same product markets, including next day delivery,
cheaper ground delivery, time-guaranteed delivery (both domestically and internationally), and
freight services. However, the firms concentrate on different segments in attempting to create
superior stakeholder value and to avoid direct, head-to-head competition in a host of product
segments and markets. In this regard, FedEx “intends to leverage and extend the FedEx brand
and to provide customers with seamless access to its entire portfolio of integrated transportation
services,” while UPS “seeks to position itself as the primary coordinator of the flow of goods,
information, and funds throughout the entire supply chain (the movement from the raw materials
and parts stage through final consumption of the finished product).”
Thus, while these firms are similar, they also seek to differentiate themselves in ways that
enhance the possibility of being able to gain strategic competitiveness and earn above-average
returns. In broad-stroke terms, FedEx concentrates more on transportation services and
international markets. (Recently, FedEx was generating 48 percent of revenue internationally,
while UPS was earning 22 percent of its revenue from international markets.) Meanwhile, UPS
concentrates more on the entire value chain while competing domestically. FedEx is the world’s
largest international air shipping firm, while UPS is the world’s largest package delivery
There are many actions the firms have recently taken to sharpen their ability to outcompete their
primary competitor. In mid-2013, FedEx learned that its contract to fly domestic mail for the
U.S. Postal Service had been selected for renewal. UPS also bid on the contract, and thus it lost
this competitive battle to its rival. To support its strength in logistics as part of the entire supply
chain, UPS recently agreed to buy “Hungary-based pharmaceutical-logistics company Cemelog
Zrt for an undisclosed amount in a deal to strengthen its health-care business in Europe, giving it
access to the increasingly import- ant markets of Central and Eastern Europe.” UPS is also
emphasizing trans-border European Union services as a growth engine for the foreseeable future.
To enhance its ability to compete against UPS and other rivals as well, FedEx is restructuring
some of its operations to increase efficiency. Similarly, the firm is increasing its emphasis on
finding ways for its independent express, ground, and freight networks to work together more
Although the rivalry between FedEx and UPS is intense and aggressive, it is also likely that this
rivalry makes each firm stronger and more agile because each has to be at its best in order to
outperform the other. Thus in many ways, each of these firms is a “good competitor” for the
other one.
The companies UPS and FedEx feel like two sides of the same coin. UPS focuses more-so on
the domestic market (although undoubtedly invests in the international market, judging by
22% of its revenue coming internationally). Conversely, FedEx has become the largest
international shipper, as 48% of its revenue comes from the international markets. This
question comes at an intriguing time on a global scale. With trade talks in China breaking
down and threats of war coming from Iran, the international market is susceptible to a
massive change in a matter of moments.
Since FedEx relies so heavily on global profits, they are exceedingly susceptible to adverse
economic effects and trade tensions than UPS. However, when it comes to domestic markets,
FedEx has a stable revenue stream, especially after its contract to fly domestic mail for USPS
was renewed. They have also become mostly immune to any change in Amazon’s size
because they have already mostly cut ties with amazon sellers in the first place.
Unfortunately, their last year has not been so kind to them, as their stock is down 10% since
the start of the year and has not received the profits that they had expected, mainly due to
global factors.
Now, for UPS, they are mostly protected from outside occurrences. If the international
markets spiral downwards as a result of war-time uneasiness, UPS will lose much less
revenue than FedEx. However, 5-8% of UPS’s total volume of packages comes from Amazon.
With Amazon churning out more and more vehicles to deliver packages on their own, UPS is
more susceptible to Amazon’s growing size. If Amazon cuts out a lot of their UPS packages,
then UPS’s profits will be in a world of hurt. Regardless, the company is in a robust financial
position currently. Their earnings have steadily increased in the last four quarters, and since
the beginning of last year, their stock is up by 15%.
Overall, UPS is in a stronger financial position than FedEx as of right now, especially when
considering the overall size of the company, profit revenues, and the direction of the
international financial markets. FedEx tends to continue to blame their problems on the
global market and seems to take responsibility for their actions rarely. With the way things
are going, they will probably be blaming the international market a whole lot more in the
near future. As such, I predict UPS to be far more profitable going forward. If things stabilize
internationally, maybe FedEx can become ultra-successful again in the future ~ I just don’t
see that happening currently.

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