UPS (United Parcel Service)
Porter's five forces
Rivalry: there is intense competition within the courier industry. The stiff competition stems from the low number of firms in the industry. The major two competitors control almost sixty percent of the market share with the remaining minor competitors controlling the remaining percentage.
Buyer power: the bargaining power of consumers in this industry is low. Producers have a tendency of threatening companies through forward integration. Producers might take their own retailing and distribution. The industry has many buyers and no single buyer controls the price of products (Khanna & Bullock, 2010).
Threat of new entrants: the courier business is challenging to enter. Entry barriers in the industry are steady and low. Companies operating in this industry rely on skilled personnel. Employees in the delivery department must have a commercial driver's license while delivery systems require high-level capital investment to confirm deliveries and track packages. Such mechanisms are crucial for enhancing productivity and efficiency. From the IBIS world report, the threat of new entrants can be rated as moderate (Lussier, 2012).
Threat of substitute products: within this industry, there is a high threat of substitute products. This has been precipitated with the increase of online services substituting the need for paper documents, which are shipped traditionally. In addition, competition from substitutes exerts an adverse influence in every sector. The rising popularity of e-commerce has greatly affected this industry. Alternative methods like fax and email have likewise continued to increase the speed of business transactions (Khanna & Bullock, 2010). As a result, this has boosted the demand for services produced in this industry. More people are buying items through online sites, hence, a great need for delivery...
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