United Parcel Service (UPS) was founded by James "Jim" Casey in 1907. UPS was previously named the American Messenger Company in Seattle, Washington. It was also known as the largest Initial Public Offering (IPO) in U.S. history. The package delivery industry in the U.S offered two basic products- air and ground. UPS was the market leader in the $17 billion ground segment with competition coming from FedEx Corporation and USPS as well as other private regional delivery services. This paper will be focused on two main sections- qualitative analysis including business strategy, key success factors, and SWOT analysis compared to FedEx etc., and quantitative analysis including financial analysis, profitability, discounted free cash flow valuation models, and target prices etc. This will then be concluded with a summary of recommendation for the price offer and UPS's financial prospects compared to FedEx. The different alternatives will be used to analyze in order to select the best solution.
I. Qualitative Analysis.
i. UPS's Key Success Factors:.
* Low cost strategy.
* Fast and timely delivery.
* Competitive prices-no differences between air and ground operations.
* Accurate and productive services.
* Safe delivery and reliability.
* Excellent reputation.
* Broad delivery locations.
* Innovation technology to have a better control of daily operation.
ii. Comparative Advantage.
UPS enjoyed a loyal workforce with an operational and service excellence culture. Employees were extremely loyal. In addition, under company's Management Incentive Plan, 15% of profits were set aside each year for stock awards to supervisors and managers. On top of having awarded, the employees were encouraged to hold the stock as long as they stayed with the company. The company was a decentralized corporate culture. The executives were willing to listen to the employees regardless of the sources to implement the best ideas.