Ups Case Study
UV0906
UNITED PARCEL SERVICE OF AMERICA, INC. United Parcel Service of America, Inc. (UPS) had grown spectacularly from its humble beginning in 1907, when 19-year-old Jim Casey borrowed $100 to start a messenger and homedelivery service for Seattle department stores. By 2007, UPS had become a global public company, with a market cap of $74 billion, more than 428,000 employees, $47 billion in revenue, and operations in more than 200 countries. A recognized leader among packagedelivery companies, its growth had been above industry averages and had historically been through geographical expansion. In 1998, UPS changed its business model to Synchronized Commerce and adopted a new growth strategy it called the Four Quadrant model. UPS had hoped to expand its market space from $90 billion to $3.2 trillion by transforming itself into a logistics-solutions company. But eight years after these changes, UPS was generating only 17% of its revenue from its nonpackage deliveries, with only $2 million of its operating profit coming from the new businesses. In the company’s 2006 Annual Report, UPS Chairman and CEO Mike Eskew acknowledged the disappointing results and realized that these results required a response to the public market. Growth History Store locations One can look at the growth of UPS over the past 100 years as an iterative geographical expansion. UPS began as an intracity business in Seattle in 1907, and had expanded to Oakland, California, by 1919. Over the next 58 years, UPS established stores across the United States, opening its first one in New York City in 1930. In this manner, UPS extended its service through its new locations just like any expanding retailer and, in the process, became an intercity package deliverer.
This case was prepared by Edward D. Hess, Professor and Batten Executive-in-Residence. It was written as a basis for class discussion rather than to illustrate effective or ineffective handling of an administrative situation. It was
UNITED PARCEL SERVICE OF AMERICA, INC. United Parcel Service of America, Inc. (UPS) had grown spectacularly from its humble beginning in 1907, when 19-year-old Jim Casey borrowed $100 to start a messenger and homedelivery service for Seattle department stores. By 2007, UPS had become a global public company, with a market cap of $74 billion, more than 428,000 employees, $47 billion in revenue, and operations in more than 200 countries. A recognized leader among packagedelivery companies, its growth had been above industry averages and had historically been through geographical expansion. In 1998, UPS changed its business model to Synchronized Commerce and adopted a new growth strategy it called the Four Quadrant model. UPS had hoped to expand its market space from $90 billion to $3.2 trillion by transforming itself into a logistics-solutions company. But eight years after these changes, UPS was generating only 17% of its revenue from its nonpackage deliveries, with only $2 million of its operating profit coming from the new businesses. In the company’s 2006 Annual Report, UPS Chairman and CEO Mike Eskew acknowledged the disappointing results and realized that these results required a response to the public market. Growth History Store locations One can look at the growth of UPS over the past 100 years as an iterative geographical expansion. UPS began as an intracity business in Seattle in 1907, and had expanded to Oakland, California, by 1919. Over the next 58 years, UPS established stores across the United States, opening its first one in New York City in 1930. In this manner, UPS extended its service through its new locations just like any expanding retailer and, in the process, became an intercity package deliverer.
This case was prepared by Edward D. Hess, Professor and Batten Executive-in-Residence. It was written as a basis for class discussion rather than to illustrate effective or ineffective handling of an administrative situation. It was