Dhl’s American Adventure

As the world’s largest package delivery company and a leading global provider of specialized transportation and logistics services, UPS, continues to develop the frontiers of logistics, supply chain management and e-commerce combing the flow of goods, information and funds. This past October UPS Logistics Solutions was voted #1 logistics provider by Logistics Solutions. When conducting an industry analysis, it is important to explain the competitive forces model (CFM) of UPS. The first component of competitive forces model are the customers. Their customers consist of business organizations, and the general public. The second CFM component is competition. UPS have a lot of competition in its field, but the most competitive company is FedEx. Since FedEx provides the same services as UPS; both are neck to neck in competition, but UPS has an established history, and because of that, they have more loyal customers, and they are worldly known. They have established them-selves as the elite, with their commercial on television. Showing how they can deliver from one place to another with same day delivery and

Threat of new entry is low because the barriers to entry are high. Newcomers to the industry would require an enormous amount of up front capital to set up the distribution networks and infrastructure, such as establishing hubs, and acquiring aircraft and a large amount of ground transportation vehicles (vans, trucks, ect). Economies of scale are significant and would deter new firms from entering because initial sales volumes would be low do to the fact that existing brands already have strong brand identification, and there are no cost advantages to entering, like government

There are two different types of competitive advantage: low cost and differentiation. We will develop them in this part I.

3.How these strategies are related the performance of these companies over time? Why? What is going on in terms of industry competition and markets that makes one strategy outperform the other at any point in time?

Globalization in the airline industry may seem to be a natural flow of the business model. However, some companies have a better fit, or culture that lends itself to a smooth and prosperous integration into the global market. In comparing this integration into the global market one might take a historical look at American and Northwest. Both carriers were formed just after World War I, as mail carriers (3,4). Eventually both evolved into passenger carriers. Americans roots are traced to Charles Lindberg and the cities of Chicago and St Louis (4). Northwest also has its roots in Chicago, but their first routes went north to Minneapolis / St Paul (3). Northwest eventually evolved into Northwest-Orient Airlines and expanded its routes into Japan, being the first airline to make a profit in the Asian market without subsides (3). Northwest continued to globalize with their alliance with KLM Airlines and eventual expansion into the Netherlands (3). American, on the other hand, concentrated their growth in the Americas. With an extensive route system into Central and South America (4), American Airlines seems to have centered its expansion in the United States. A possible result of American’s expansion, or lack of expansion outside the U.S., might have reduced the artifacts that could have otherwise further enhanced their global culture mix and thus created a better

Differentiation strategies refer to the strategies that are adopted by businesses in a bid to gain competitive advantage in a given industry and over their competitors. Through differentiation, the company’s products or services stand out among other products that are offered by their competitors. Therefore, differentiation in essence refers to a scenario whereby, a company offers products or services which are unique or have features which are unique and which makes them stand out among its competitors. The airline industry is termed as an industry that experiences rapid and volatile changes amidst growing competition among many competitors in the globe. With this in mind, different airlines have to adopt different strategies that are to differentiate them among the many competing airlines in the world. This paper will focus on Southwest Airlines in the discussion of the differentiation strategies that it has adopted. Also, recommendations will be made will be done in reference to Southwest Airlines.

Rivalry among established companies: This industry is highly consolidated with only 3 major players - somewhat an oligopoly. The industry is also characterized by numerous price wars between the 2 giants, namely, UPS and FedEx. Rest of the companies generally follow the trends set by these two firms or fall out. The exit barriers to this industry are high. This is due to the investments in hubs, vans, jets and other capital extensive infrastructure.

The threat of new entrants is very unlikely for UPS. This would be an intimidating market to attempt to infiltrate with UPS and its trailing competitors. Whereas the lack of new entrants is a key advantage, the threat of substitutes in place of other industries products is very high. As mentioned before, UPS has three major competitors that offer similar products at a similar price. This is an area that management has to constantly evaluate. UPS evaluates what they have to offer the customer verses their other delivery needs counterparts and the customers have a no bargaining power whatsoever. If the customer is unhappy with the service or the pricing, UPS acknowledges that DHL and the FedEx will be waiting with open arms to assist them and attempt to win their loyalty. The bargaining power of the suppliers is also very low due to cut throat competition. If low prices are what the customer wants and they can easily take their business elsewhere, UPS must try to maintain reasonable fees to keep the customers happy as well as be profitable. With examining four out of five forces, we can assume that the rivalry among current industry competitors is intense and management must be aware of what each competitor has up its sleeve at any given time. UPS has successfully managed to defray a lot of their costs by having such a successful website. Customers can do a number of things on the website from their home without having to call and

United Parcel Service (UPS), is the world’s largest express package delivery firm that handled more than 4.7 billion packages and documents in 2015. This global transportation and logistics service provider operates in more than 220 countries, and offers an array of supply chain management solutions (UPS Fact Sheet, n.d.). The firm has diversified its products and/or services to include freight forwarding and logistics services via air, ground, rail, and sea. U.S. Domestic Package operations, International Package operations, and Supply Chain and Freight operations are the three operating segments UPS. Through technology advancements UPS delivers online package tracking, e-commerce services, and specialized

Airborne Express the current underdog in the express mail business has been able to compete with market leaders due to innovation and optimization strategy. The company built on cutting cost and emphasizing reliability now faces pressure from the leaders UPS and FedEx to change their pricing strategy. This change from standard rate pricing to distance-based pricing puts Airborne in a dilemma in which they must choose to match the competition which will make them lose what sets them apart in the market or stay with the current strategy. Changing will increase their flexibility and could open them up to new consumers while staying the same

In differentiation strategies, the emphasis is on creating value through sustainable uniqueness. This can be achieved through product innovations, superior quality, or superior service, which is then sustained and leveraged through creative advertising; brand-building and strong supply chain relationships. Another requirement for a successful differentiation strategy is that customers must be willing to pay more for the uniqueness of a product or service than the firm paid to create it. A differentiation strategy will lead to higher firm performance only if buyers value the attributes that make a product or service unique enough to pay a higher price for it or if they choose to buy from that firm preferentially. If

It is a no-frill carrier. They were able to cut cost by operating a no-frill carrier i.e. they don't use tickets or travel agents.

Barriers to Entry: The threat of new entries in this industry is equally low as the threat of substitutes. There are few major players involved here, and it shows that for a new one to even exist they would need to have the capability of covering a large amount of cities in the United States. In order to have a main convenient center of business, as well as aircraft and an extensive amount of vehicles calls for a high capital investment. This would be extremely difficult for any new entries to be accountable for and would take years of hard work and sustainability

Where PepsiCo. entered into India as a Joint Venture with PAIC and Voltas, there are other numerous ways a company can enter a foreign market. They include, Exporting & Importing, Licensing & Franchising, Contract Manufacturing, Foreign Direct Investment, Equity Purchases, and Strategic Alliances.

To conclude, I would like to say that CDL has immense opportunities and necessities for global expansion considering their good financial position and high domestic competition. CDL has been the market pioneer in number of its businesses in the past and should continue with the trend to stay as a market leader.