Strategy and competitive advantage
The rivalry between UPS and FedEx is growing and becoming more intense and aggressive. The intensity and stiffness of the competition is much contributed by the fact that these firms are similar in many ways which include the products they sell, the production resources, the market and the competitive dimensions they hold (Hitt, Ireland & Hoskisson 166). The two firms however differ in various aspects of operation as discussed. First, UPS store is considerably small compared to that of FedEx. The UPS store primarily serves the small businesses and retail customers who require small packages. The store of FedEx on the other hand is very big and corporately own because their market stronghold lies in the corporate clients who can afford and prefer the sophisticated products. The way the two firms structure their operations is also very different.
UPS usually manage all of its operations through a single operation network while the FedEx uses the strategy of different units of business (Duke, Joanne, Franz, & Hsieh 57). This offers it a distinct competitive advantage to the firm. Finally another difference is seen on the effect of e-commerce between the two firms. It is evident that UPS has greatly benefitted from the online marketing because small package deliveries are usually on higher demand that the large packages. It is however not the case for the FedEx company because online purchases are usually cherished at local and regional levels as opposed to express and the long-haul dealings which the company engages in (Duke, Joanne, Franz, & Hsieh 57).
Despite being so similar in the various aspects of production, marketing and sales, the firms are current putting more stress on different segments as they attempt to make the stakeholder value more superior. This would save the firms from the head-to-head competition which is expensive and cost ineffective to maintain. To start with, FedEx is planning to extend its brand to the customers in a seamless way which would grant them access of the entire portfolio of all the integrated services including the transportation and delivery (Hitt, Ireland & Hoskisson 166). This would expose the customers various access benefits hence becoming a competitive strategy for the FedEx firm. On the other hand, UPS firm has laid out a strategy which would position the firm to be the primary coordinator of the information, goods and funds flow throughout the entire market. In this regard, UPS has agreed to purchase the Hungary-based pharmaceutical-logistics company which shall strengthen the European market (Hitt, Ireland & Hoskisson 166).
FedEx is also restructuring most of dealings and operations with an ultimate aim of increasing efficiency. More emphasis have also been put to enhance the transportation and services of the international markets by establishing independent express and ground networks in a more synergistically manner. Most of these competitive strategies are still under development but much has been achieved through them (Hitt, Ireland & Hoskisson 166). The outcome of the competitive strategies have kept the FedEx firm to be the largest international air shipping firm in the world while the UPS firm becoming the largest package delivery firm in the world.
Considering the different business models that have been embraced by the two similar firms, UPS may be more successful in the future. This is because the modern e-commerce favors most of the UPS’ operations whereby the more revenue is expected. In addition, the UPS firm has already been able to reach the size that of FedEx in terms of the total assets of the company. The likelihood of UPS winning the market in the future is also substantiated by the fact that FedEx is having challenges in adjusting to the modern business environment (Duke, Joanne, Franz, & Hsieh 57).
Work cited:
Hitt M. A., Ireland R. D. & Hoskisson R. E., Strategic Management :competitiveness and globalization 2015, Cengage Learning
Duke, Joanne C., David Franz, and Su-Jane Hsieh. "Evaluating Constructive Lease Capitalization And Off-Balance-Sheet Financing: An Instructional Case With Fedex And UPS." Accounting Perspectives 11.1 (2012): 57-69. Business Source Complete. Web. 21 July 2016.
