Competitive Forces (Porter's 5 Forces)
Analysis with the competitive environment can be done making use of Michael Porter's 5-forces type of UPS and FedEx. Porter's theoretical platform allows us to determine the overall earnings and sustainability within the industry (Laudon & Laudon 2006, pg. 99; Hubbard 2005, pg. 211). We think that in such a case, the competitive forces for both UPS and FedEx are very related because they are at the same market.
В•Power of substitutes: Communications technologies including Email, send, and PDF FILE pose significant threats because substitutes to FedEx's and UPS's overnight letter delivery business. Whilst these technologies will erode the revenues FedEx and UPS's enjoy, they will not manage to displace industry entirely. The overnight notice delivery business will make it through as long as buyers have essential documents to deliver and marketing and sales communications technologies will not offer completely reliability. Further, the complexities and costs of networked technologies are not able to completely replace the simplicity and inexpensiveness of the packing fall. Besides these, there are simply no other forms of substitutes that may match the efficiency and effectiveness of FedEx and UPS.
В•Customers bargaining power: FedEx and UPS face significant competitive pressure from corporate and business buyers in the overnight delivery market. This kind of pressure is most evident in FedEx's and UPS's relationship with large corporate clientele. These buyers have a lot of bargaining electric power attributable to the best volume purchases they make. Negligible switching costs also contribute to buyers bargaining ability in the market. Buyers possess a great deal of negotiating power as a result of large volume of purchases they make from FedEx and UPS. We think that purchasers of large volumes lead significantly to the bottom line of companies. We also feel that a buyer group is powerful if it faces few switching costs. This competitive pressure definitely constrains FedEx and...