UPS CORPORATE STRATEGY AND OPERATING ENVIRONMENT

Examining the Corporate and Business Level Strategy and the Operating Environment of UPS and its Effectiveness in the Marketplace

Abstract

UPS CORPORATE STRATEGY AND OPERATING ENVIRONMENT The following examines the effectiveness and efficiency of the corporate and business strategy of United Parcel Service (UPS). This paper will also review the operating environment and the approaches to human resource management that UPS is implementing. Sources include the case study and learning objectives in the Human Resource Management textbook as well as online (Internet) sources.

UPS CORPORATE STRATEGY AND OPERATING ENVIRONMENT

Examining the Corporate Strategy and its Effectiveness An overall goal of businesses is to be effective in their marketplace and efficiently serve their customer base. The leaders of companies must come up with a combination of business practices and guidelines that help to achieve the goals that the company sets within the marketplace. The management of the product or service in combination with the management of human capital and resources is critical to the success or failure of a company. This paper will examine the practices and policies that are promoted by UPS throughout its business structure. UPS is using a Cost Leadership Strategy for their corporate strategy. The goal of the company is to become highly efficient. There are several areas that UPS focuses on that exhibit the direct traits of the Cost Leadership Strategy. The first is the aspect of group contribution. UPS uses a team building approach to work. Similar to the Southwest example in an earlier case, UPS workers will manage a few different tasks that help the company reduce costs. Drivers are not simply drivers at UPS. They help catalog, organize, deliver, and load/unload the packages for customers. UPS reduces its costs by not having a separate team for each related task. Next, the company invests in a method of continually improving processes. UPS is not alone in its market and must compete with both the regular postal service as well as direct competitors such as FED EX and DHL. The company must study the processes of all these companies to ensure that they are not offering a service that rivals the quality of UPS. Technology is helping to play a major role in this portion of the business as well. When Internet use became more accessible to the masses, UPS had to find out how to

UPS CORPORATE STRATEGY AND OPERATING ENVIRONMENT leverage the new technology. Prior to the internet there was no tracking of packages online. If UPS had let their competitors develop the idea of online package tracking and had not invested into providing the service for their customers, the company could have been at a huge disadvantage. By strategic planning and phasing, UPS was able to properly leverage the technology and remain competitive in the market. Through the development of general employee skills & cooperation among employees; UPS shows further resemblance to the Cost Leadership Strategy. The company looks to hire workers early in their careers and tailor these employees to fit the company culture. By developing workers early, UPS tends to avoid employees bringing

in personal experiences from other corporations and trying to implement them on smaller office levels. This avoids disarray and contention between employees and prescribed management guidelines. When employees have been shown how a company functions properly from their inception, workers tend to develop a belief in the work processes which keeps the majority of workers on an even keel. This belief results in a cooperative work environment amongst employees and allows for a more effective procedure. Having clearly prescribed tasks is critical to making this company successful. Although UPS workers perform a myriad of different work responsibilities, they take on streamline interrelated tasks to help cut down on costs. As previously mentioned, drivers are not simply drivers. The multiple tasks that they string together directly correlate with the main job they are responsible for completing. It is unlikely that a driver will be expected to perform all of his/her related tasks as well as answer the phones to sign up new business.

UPS CORPORATE STRATEGY AND OPERATING ENVIRONMENT In direct relation to the all of the aforementioned tasks, an efficiency culture is both promoted and created by UPS. An efficiency culture is the combination of various

smaller aspects of the work environment and policy and procedures. UPS exhibits this by continuously working to promote the foundation of their business while being able to adapt and react to various changes in the market. UPS knows exactly what it needs and wants from its employees. Their company does not promote ambiguous tasks that are freelance by employees. The goal of workers is to effectively and efficiently carry out their day to day tasks and assignments. Operating Environment and Labor Approach Based on the description in the case study it is evident that UPS is following the Internal Labor Orientation environment approach. Ideals that consider employees as more than workers and more as business partners help to communicate an idea of inclusion to UPS employees. The Internal Labor Orientation method focuses on the development of it employees from the beginning of their careers and UPS falls in line in this aspect as well. By hiring people early in their careers and developing them; UPS is illustrating to its workers how they are directly related to the company personality, profile, brand, and appearance in the market. This leads into the focus on internal promotions; which is yet another trait of the Internal Labor Orientation environment. When workers see the growth of their coworkers throughout the ranks based on hard work and dedication to the principles of the company; workers feel that the work they are doing is important and is valued. Employees contribute because of a loyalty and belief in the company culture. In turn, UPS provides its employees with a genuine sense of stability and security.

UPS CORPORATE STRATEGY AND OPERATING ENVIRONMENT

When a company uses the Internal Labor approach; they create an environment to aid in becoming more effective and efficient. One of the ways they do this is by saving money. By growing employees, UPS reduces expenses through all forms of recruiting efforts. Costs decrease because of less capital placed into recruiting, interviewing, and the hiring process. Another way the company becomes more effective and efficient is the focus on the development of employee skills and capabilities. Retaining and building employees allow UPS to effectively plan based on the skills that they know will be available for the company in the future. A final example of how these HR actions foster effectiveness and efficiency is through relationship building. Strong relationships are forged between UPS and its employees, as well as between coworkers, when employees share a belief in the company and its goals. This builds higher employee morale and a more effective work environment will be created. Common HR Strategy Common HR strategies are another way that HR managers look to develop their business culture. UPS is using the Loyal Soldier HR strategy. Their business practices and objectives align with the labor orientation method & strategic direction that create the foundation for the Loyal HR strategy. As stated in the case study; current management has held a myriad of different functional areas within UPS throughout their careers. This coincides with the Loyal Soldier strategy because it shows how employees have broad roles and have experience for a number of different tasks. Due to the diverse set of workers and shear size of the workforce, UPS makes the effort to satisfy the needs of employees. This helps to reduce the amount of turnover and retain employee skills that the company has honed for their advancement of their business goals. The internal

UPS CORPORATE STRATEGY AND OPERATING ENVIRONMENT promotion aspect helps to illustrate how the Loyal Soldier HR strategy is embedded within the UPS company structure. Employees will normally move from part time workforce to management positions, this shows the commitment UPS has to developing its workforce. Operation Canada

Expanding a business into a new country is a challenge and is one that needs to be met with careful and strategic planning. There are a number of factors that a company needs to address and be aware of before beginning to make a major push in a new market and country. One of the most critical challenges is for management to realize and seriously take into account that Canada is as diverse as the US. It is important for managers to not make the mistake of believing there is one solid Canadian culture to which a general format of rules and policies should be implemented. Although the company wants to stress and implement its vision, culture, and standards; taking a cookie-cutter approach to how an office is managed in Toronto and imposing that on a Quebec office could lead to very big problems. The Global Business Media Ltd. website provides some tips for conducting business in Canada. One of those is recognizing that Canada is officially a bilingual country, which helps to demonstrate the diversity that can stream throughout the business culture. Another important factor to consider is the currency exchange, pay & compensation as well as benefits package throughout various regions of Canada. While in the US companies would be greatly concerned with the type of health care benefits that they provide their employees, in Canada this is not necessarily the case. Management

UPS CORPORATE STRATEGY AND OPERATING ENVIRONMENT needs to learn how they fit in with the universal health care system that Canada provides and whether this will be a savings to planned budgets. If savings are found, in comparison to the US market, HR managers should strongly consider the best ways to

reallocate these funds in the form of overall pay & compensation. The company needs to learn the cultural expectations from employees in a given region. Just as Americans toil over what companies to work for based on benefits; it is possible that Canadians do the same based on outlined incentive programs. In the Cottrill (2008) article, it is noted that embracing new technology such as webinars and video conferencing may work well with the Canadian business environment. Integration of the companys culture into the new market culture is critical as well. Management has to strike a balance on being sensitive to a new cultures needs and customs and assimilating to the point of obscuring the companys goals. There has to be training and teaching of employees that both makes them feel as though theyre culture is included within the business scheme but also ensure that the company communicates the standards and expectations it holds for every employee. This can be a delicate playing field as some of the home countries policies may collide with cultural norms. The important thing is to find a middle ground, display an understanding to those sensitive areas, and show how a combination approach is beneficial for both the company and the employee.

UPS CORPORATE STRATEGY AND OPERATING ENVIRONMENT References

Global Business Media Ltd., (N/A). Doing Business in Canada http://www.worldbusinessculture.com/Business-in-Canada.htm Cheryl Cottrill (December 15, 2008). Workplace Trends - 24/7 Business Culture http://www.wincanada.org/blog/archives/workplace-trends-247-business/ Matt Townsend - Bloomberg Press (Oct. 28, 2009). Canadas Currency Weakens as Equities, Crude Oil Post Losses
http://www.bloomberg.com/apps/news?pid=20601082&sid=aSZMCXrlfDCM