UPS (United Parcel Service) SWOT & PESTLE Analysis

Strength

1. Strong Proven Financials: UPS clocked a commendable adjusted EPS growth of 14.3% and Return on Invested Capital of 28% in 2015. It also has a healthy free cash flow ($5 billion in 2015) and comfortably leads its industry peers Fed-Ex and DHL in operating margins. Also the dividend return of UPS comes to 10% CAGR since its IPO and has been growing for 47 years. Its financial strength enables it to invest in organizational development, technology and infrastructure, give appropriate return to its shareholders and pursue strategic investments and opportunities to develop the business further.

2. Global Network: UPS has an integrated global network of air and ground services which is one of the best in class and most extensive across the industry. It has advance hi-tech technology and infrastructure systems in place which helps it to efficiently optimize its network and deliver high utilization. UPS helps its customers leverage its broad set of logistical capabilities available globally to gain competitive advantage in their respective businesses wherever they operate.

3. Fortune 100 Company with Strong Brand Reputation: UPS ranked #48 in the Fortune 100 rankings in 2016. It has managed to build a trusted brand popular amongst the consumers over the years and positions itself for “quality service, reliability and product innovation”.

Weakness

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Weakness

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Opportunity

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Threat

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Political

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Economic

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Social

1. Online retail growth to boost e-commerce deliveries: Online retail has seen a tremendous growth over the last decade as retailers are changing business models in line with shifting consumer behavior and expectations. Further, cross-border shopping is expected to increase to $627 billion by 2022, commanding a share of 20 percent of e-commerce. These trends present major business potential for logistic majors like United Parcel Service. The company is working on more innovative ways to delivergoods ordered online and enhance its digital capabilities to meet consumer expectations.

Technological

1. Big Data and analytics for efficient supply chain execution: In a tough competitive environment organizations are looking to increase efficiency and profitability in supply chain execution. Companies like United Parcel Service which handles millions of shipments daily generate massive of data which can be analyzed for potential insights. The company in this regard has created an analytics platform for route optimization called ORION, which is an acronym for On-Road Integrated Optimization & Navigation. The software combines customers’ shipping requirements with customized map data that gives drivers precise routing instructions that reduce miles and our carbon footprint. The data generated further helps United Parcel Serviceand its clients explore untapped opportunities and increase supply chain effectiveness.

Legal

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Environmental

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