Fedex Corp. vs United Parcel Service, Inc Case Study

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I. Executive Summary In this report we focus on the two main competitors in the package delivery industry: Federal Express Corporation (FedEx) and United Parcel Service of America, Inc. Studying FedEx, UPS and their competitive relationship in the decade from mid - 80's to mid - 90's gives a good insight for the companies' and industry's future. The two companies have different strategic goals and are operating in the same industry but in different main markets: FedEx is working on "producing outstanding financial returns" and focuses on the overnight air market while UPS is looking for "earning reasonable profit" and its core business is the two-day ground delivery. However, by 1981, the two companies started to have a strong sense of…show more content…
II. 3 Financial Performance Analysis FedEx experienced volatility in its stock price and earnings per share during the studied decade as shown in Exhibit 1. One reason was the fierce competition among the industry as well as the company's entrance in the international market through the acquisition of Tiger International that lead to a loss of $194 million. On the other hand, UPS proved to its owners its ability to fulfill its mission statement by its increasing fair market value and earnings per share (Exhibit 1). A brief examination of the available financial ratios gives a clear picture about each company's financial situation. A further analysis can be found in the Appendix of our report. As we can see through an Activity analysis, the average days outstanding in FedEx reflects an acceptable average of 45.8 days throughout the period of 1985-1994 whereas the working capital turnover was fluctuating. On the other hand, UPS indicates better average days outstanding of 18.23 days which indicates a faster cycle while its working capital turnover fluctuates. The Liquidity analysis for FedEx shows that the company has low liquidity ratios and difficult cash positions that would discourage suppliers and financial institutions for providing credit. However, UPS's liquidity position seems to be tighter than FedEx's. Although its current

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