The United Parcel Service (UPS) is a multinational ...



Evaluation of Trade Policies and Economic Variables at UPSNameInstructorCourseDateEvaluation of Trade Policies and Economic Variables at the United Parcel Service (UPS)Executive summary The United Parcel Service (UPS) is a multinational organization that operates in the cargo delivery industry. This paper highlights aspects of the organization’s operations with respect to its external and internal environments. The introduction section covers the origin of the organization and how it has grown to operate in more than 220 countries. The topic pertaining to cost reduction through the use of economies of scale has been discussed in detail. The positive effects of economies of scale such as the reduction of costs have been presented, together with the negative effects of economies of scale such as lowered customer satisfaction levels. The second topic that has been discussed is the domestic and international issues related to labor and wages. The EEOC has been cited as being influential in the implementation of regulations that ensure that no form of discrimination will be subjected to the employees regardless of their age, gender, sex, disability status, nationality, religion, culture, or ethnicity. The third topic that has been discussed has to do with the tactics and strategies affected by technology. In particular, the ability to track orders by customers, and the company’s introduction of fuel-efficient vehicles has been as a result of technology. UPS has made use of technology to enhance customer satisfaction and corporate sustainability practices. The fourth topic covered discusses how globalization has affected international business operations. It has been determined that globalization has brought about the assimilation of cultures as developing nations have adopted certain cultural aspects from the developed nations. The introduction of English as an international language has also been spurred by globalization. However, the adverse effects of globalization such as the stifling of the developing economies have also been pointed out. Finally, four recommendations regarding how UPS can improve its operations while solving its challenges have been presented.Introduction The United Parcel Service, Inc. (UPS) is a package delivery company that was formed in 1907 to serve a small neighborhood, and it has grown to deliver packages to more than 220 countries from all over the world. The company delivers more than 15 million packages a day to more than 7 million customers. The company’s main business operations include the delivery of documents and packages. The company has divided its business operations into three segments. The first segment entails domestic operations, international operations, and supply chain and freight operations. UPS’ domestic package delivers documents and packages all over the Unites States. UPS competitors on a domestic level include the United Postal Service and FedEx. However, UPS’ main competitive advantage is that its distribution centers are strategically located, which results in the efficient and timely delivery of documents and packages (Crew, & Kleindorfer, 2013).UPS’ international package caters to more than 220 countries. The widespread of UPS’s services in many countries has led to increased market share, a factor that has contributed to its success and sustainability in the mail and parcel delivery industry. Although there is no other multinational organization that has as many centers as UPS, the organization faces competition from online delivery companies. The global community has recently shifted from physical mails to electronic mails, a factor that has reduced the organization’s demand for mail delivery. UPS also faces pressure from international organizations to adopt greener alternatives to its high levels of fuel consumption (Crew, & Kleindorfer, 2013)..UPS supply chain and freight operations are available in more than 175 countries. The company provides the capability to provide quality services to retailers and wholesalers by delivering products to consumers. The growth of online retailers and wholesalers has brought about the need to satisfy customer demands for speedy delivery of products that has been ordered online. UPS works hand in hand with businesses to ensure that the distributive function of the business is left to the suppliers. This way, the organization assists other business organizations in reducing costs while maintaining high customer experience. More specifically, the company makes use of advanced technology, logistics expertise, and shipping services to provide other businesses with the required tools needed to deliver products to the customers (Crew, & Kleindorfer, 2013).The express parcel service is one of the sectors that have experienced massive growth. Fast, door-to-door, and worldwide movements of shipments are experienced within the domestic regions and across the international borders. Currently, the cargo shipment industry directly supports more than 4.5 million jobs, and it is expected to support more jobs due to the development of the industry in emerging economies. The increased demand for cargo delivery has been brought about by the demand for speedy and guaranteed delivery of shipment. The parcel service delivery is essential for modern commerce (Crew, & Kleindorfer, 2013).. Cost Reduction through the use of Economies of ScaleAn increase in production output decrease costs per unit. An economy of scale is one of the reasons that have led to UPS’ provision of low prices to its customers for the delivery of shipments. For instance, the company delivers its parcels through the use of trucks that transverse the domestic and international regions. If the company buys a large quantity of vehicles, the manufacturer is likely to provide UPS with price discounts, a factor that reduces the costs associated with delivering the shipment to the owners. UPS also benefits from cost advantages that are associated with the delivery of shipment. The company provides a larger volume of shipment, which consequently results in the lowering of cists. A case in point is where the firm delivers a truck full of shipment to multiple suppliers. The unit cost of delivering one shipment is lower as costs are divided among the multiple customers (Crew, & Kleindorfer, 2013). One of the advantages of economies of scale is that it might result in lower service quality. UPS prides itself on being able to deliver the products to customers within the right time. If the company focuses on economies of scale, then it might have to wait for the delivery trucks to get full before it can deliver the products. Meanwhile, the time taken for the shipment to get to the customers will be lengthened, therefore decreasing customer satisfaction.Domestic and International Issues Related to Labor and WagesGlobalization is associated with reduced wages. According to Krueger (1996), some of the greatest concerns around the workplace are the minimum wage, a monopolistic labor market, discrimination, pay equity, working conditions and child labor. These are issues faced in both the domestic and international markets. Globalization is regarded as having a positive impact on wages as employee can look for work opportunities that will provide higher wages. Increased competition for qualified international staff could also lead to increased wages as companies aim at having a competitive advantage by attracting the best pool of workers. Companies must balance adequate wages with maximum employment and efficiency.The Equal Employment Opportunity Commission (EEOC) disallows discrimination based on race, age, gender, religion, sexual orientation, disability status, nationality, or ethnicity (McMahon & McMahon, 2016). EEOC’s regulations could have an impact on how UPS conducts its activities. For instance, the company is prohibited from discriminating against an individual based on their inherent characteristics. Additionally, the law indicates that equal pay should be provided for equal work. As a result, pay equity among genders should be instituted if the individuals perform similar duties and responsibilities that require similar skill levels. UPS would have to comply with EEOC’s regulations against discrimination, and the laws on pay equity in order to avoid litigation.UPS has been on the receiving end due to its negative effect on the environment. Critics say that the company consumes a lot of fuel as it delivers shipment through road or air carriages. The effect of the company’s activity on the environment has been highlighted as being one of the factors that are enhancing global warming. As indicated by Muller (2016), the explosion of e-commerce is rapidly changing the way UPS operates. Instead of dropping off a stack of boxes at regular business customers each day, UPS drivers today spend more time delivering stuff ordered from Amazon, Nordstrom, and Williams-Sonoma to individual homes. That means 2 billion stops a year, and fewer packages per stop, which translates into more miles driven, more fuel consumed and more emissions. As a result, the company’s activities are associated with increased adverse effects to the environment.Tactics and Strategies Affected by Technology UPS has made use of technology to result in customer satisfaction. The company has introduced the parcel tracking software to assist in the tracking of shipment. Leonard et al (2016) indicate that the parcel industry utilizes various modes of transportation to deliver goods. UPS is among the companies that make use of technology to assist customers to track the progress of their shipment. The customers have to input the code associated with the shipment, and they will be notified on the progress of the delivery. Secondly, UPS makes use of fuel efficient delivery vehicles that lower the emissions associated with its vehicles. The technology is aimed at enhancing the firm’s corporate sustainability efforts. According to Fleet Equipment, fleet industry leaders are rushing to comply with the U.S. Environmental Protection Agency (EPA) and the National Highway Traffic Safety Administration (NHTSA)'s Greenhouse Gas Phase 2 regulations requiring increased efficiency and fuel economy in the medium- and heavy-duty vehicle sector from 2019 to 2027. Based on the new regulations, UPS plans to meet efficiency standards through the use of technology. Other than the reduction of poisonous emissions from its vehicles, UPS has made an effort to reduce inventory levels. Currently, the firm delivers same-day services, even on an international level, that are aimed at reducing inventory and ensuring that the shipment are sent to customers without requiring them to be stored in warehouses. The reduction in inventory not only lowers costs, but is also improves efficiency within the organization. UPS has made an effort to reduce inventory levels and improve order response time for the region/customers served by the specific warehouses. The higher number of shipments, the faster the customer may receive their goods (Crew & Kleindorfer, 2013).How Globalization Has Affected International Business Operations Globalization has led to the adoption of international languages that are used to communicate when engaging in international business operations. Currently, English is one of the languages that are used to communicate when conducting international transactions. Other languages such as those spoken by non-English speaking countries could decline in popularity. Robertson (1992) also indicates that globalization has brought about a blend of cultures, as non-dominant cultures have started adopting aspects associated with mainstream cultures. For instance, due to globalization, developing cultures have adopted the language, dressing style, and leisure aspects associated with the developed cultures. Businesses and communities alike have been affected by international trade and social expansion. Globalization has spurred the growth of other sectors in the economy in native countries, therefore bringing about increased growth in employment levels. Using UPS as an example, the company delivers shipments to more than 220 countries, and as a result, the delivery of shipment requires the shipment to be handled by people who process documentation of the shipment, and other who deliver the shipment to their rightful owners. If it were not for globalization, companies such as UPS would not have expanded their activities into other countries, and as a result, there would not have been an increase in employment (Crew & Kleindorfer, 2013)..Globalization could also have a negative effect on native countries. As indicated by Talley and Mauldin (2016), there are fears that modern globalization may be approaching an impasse. While there are noted benefits of globalization, it is also important to highlight the negative effects of globalization on international business operations. For instance, globalization has resulted in increased competition from multinational companies, a factor that may phase out domestic companies from the industry. For instance, UPS’ operations in other countries may create a competitive environment, and the domestic players may opt out of the market as they cannot compete with UPS due to the superiority of its services or the low prices provided due to the benefit of economies of scale.Recommendations and conclusion UPS’ short-term and long-term operations will be affected by future economic conditions and government trade policies. In the event that the economy suffers a recession, the company’s performance could be affected as people’s incomes would be reduced, therefore resulting in lower sales, especially from retailers and wholesalers. In such an event, UPS would be affected by reduced revenue streams. The government could also impose tax increments associated with cargo delivery companies. An increase in tax would also result in an increase in production costs, a factor that would increase costs and reduce profitability (Crew & Kleindorfer, 2013). UPS would be forced to transfer some of the extra costs to its customers, and it is expected that reduced revenue would be observed. As a result, UPS would be unable to reach its financial objectives, a factor that would consequently affect its future goals and objectives. The government would also alter trade policies such that sanctions can be put against some countries, a factor that would affect UPS’ activities as it conducts its operations in more than 220 countries. In such a scenario, UPS would be forced to pull back on some of its activities in the sanctioned countries as the majority of its transactions with foreign countries are as a result of international trade. If international trade activities are reduced, UPS would also reduce some of its activities in those areas as it will be impacted by a reduction in the number of shipments to and from the country. Closer monitoringIt is recommended that UPS should closely monitor the countries in which it currently operates so that any changes in government policies can be detected before they are implemented. Doing so would ensure that the company’s activities will not be negatively affected, and that the company can adjust its operations based on the new laws (Crew & Kleindorfer, 2013). The action plan for the organization would be to gather all the pertinent information associated with the changes so that it can identify areas of its activities that will be affected. Secondly, UPS should consult industry experts and its internal analysts in order to determine whether their continued investment in the area would be worthwhile. Based on the results of the consultations, the company would determine whether to exit from the countries or not.Environmental conservationThe second issue that could affect UPS has to do with the environmental effects of UPS’ activities. The company has been in the spotlight for its role in enhancing the degradation of the environment associated with the emissions of its delivery trucks. Since cargo delivery is UPS’ key activity, the company cannot eliminate the delivery of cargo by using vehicles (Crew & Kleindorfer, 2013). As a result, the best thing to do would be to make use of vehicles that would emit less fumes, therefore reducing harm to the environment. The global world is increasingly becoming sensitive to environmental issues, and UPS should work on reducing its emissions if it aims on being sustainable in the market. The action plan would entail the documentation of the exact emissions emitted by its vehicles and to find out ways of reducing damage to the environment. Environmental bodies can be brought in to try and find a solution to the challenge or reducing emissions. Compliance with employment lawsThe third recommendation has to do with the avoidance of litigation. The EEOC has specified that employers should follow employment laws pertaining to pay equity and lack of discrimination. Various countries may have different policies regarding pay equity and wage discrimination. As a result, Ups should ensure that all the laws are upheld, and that it will avoid litigation associated with the infringement of the laws. It us recommended that the company should make use of legal experts, who will advise the company on employee laws in the various countries. Secondly, the organization should conduct regular assessments of its policies so as to ensure that they are aligned with the relevant laws in different countries (Crew & Kleindorfer, 2013). The action plan for avoiding litigation associated with the employment laws entails a review of all the employment laws pertaining to the 220 countries where Ups conducts its activities. After that, the organization shall have uniform employment policies that are aligned with its objectives. This will ensure that the policies implemented by the organization reflect its objectives. Secondly, the organization should ensure that the laws in every country are customized to correspond with the regional laws.Maximization of economies of scaleThe fourth recommendation has to do with maximizing on the organization's economies of scale. As determined by the discussion above, one if the adverse effect of economies of scale is that it reduces customer satisfaction as the customers may face shipment delays as the company attempts to accumulate as many products as possible so that the delivery trips will be fewer. UPS can ensure that its customers are not affected by economies of scale, through proper management of inventory. Effectively planning can ensure that the compact can reduce transportation costs while increasing customer satisfaction (Crew & Kleindorfer, 2013). The action plan for the realization of enhanced customer satisfaction should entail a study seeking to identify aspects of cargo delivery that ate preferred by customers. If timely delivery is selected as one if the aspects, the company should seek to know the time duration between cargo dispatch and receipt. This way, the company can arrange its delivery schedules in a manner that saves on costs while enhancing customer satisfaction. ReferencesCrew, M. A., & Kleindorfer, P. R. (Eds.). (2013). Postal and Delivery Services: pricing, productivity, regulation and strategy (Vol. 41). Springer Science & Business Media.Fleets, industry leaders react to new fuel efficiency standards. (2016). Fleet Equipment, 42(9), 25Kopczak, L. R. (1997). Logistics partnerships and supply chain restructuring: survey results from the US computer industry. Production and Operations Management, 6(3), 226-247.Krueger, A. B. (1996). Observations on international labor standards and trade (No. w5632). National Bureau of Economic Research.LEONARD, D., Soper, S., Brautlecht, N., Weiss, R., & Matlack, C. (2016). Planes, Drones, and Automobiles and Ships and Bikes and Trucks Self-Driving and Segways. Bloomberg Businessweek, (4489), 46-51.McMahon, M. C., & McMahon, B. T. (2016). The National EEOC ADA research project: History, available data, and basic findings. Journal of Vocational Rehabilitation, 44(3), 333-342.Muller, J. (2016). UPS Is Conducting a Vast Rolling Lab Experiment to Create the Clean Truck of The Future. , 1Robertson, R. (1992). Globalization: Social theory and global culture (Vol. 16). Sage.Talley, I., & Mauldin, W. (2016, October 7). Worries Deepen That Globalization Is Hitting the Skids. Wall Journal (Online). p. 1. ................
................

In order to avoid copyright disputes, this page is only a partial summary.

Google Online Preview   Download