USPS strategic Report

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USPS strategic Report

Category: Capstone Project

Subcategory: Management

Level: Masters

Pages: 17

Words: 4675

United States Postal Services Strategic Report
Student’s Name
Institutional Affiliation
United States Postal Services Strategic Report
Introduction
Over the last few decades, the United States Postal Corporation has faced a myriad of challenges that threaten its very existence. The Start of the challenges can be traced back to the 1970s, when the postal corporation threatened to close thousand of its stores in a bid to cut down on costs and some inefficiencies that were greatly affecting its profitability. The impact of the corporation of the American communities, especially in areas considered as rural areas, is huge. Closing down such a corporation affects thousands of people, customers and workers included as the corporation employs over 600,000 employees. The corporation has been saved from total closure by government bailouts that are as a consequence of public outcries. However, if the company does not experience a complete turnaround in the near future, its closure will be a certainty. The growth of the information age has pushed the corporation to the brink of extinction as new informational technologies that offer alternative ways of communications arise. Large private companies offering parcel and mail delivery services such as Fedex have grown and offer efficient delivery services that can match the United States Postal Corporation at its peak. One advantage that has always kept the postal corporation in business is its low-cost services, a feature that is proving a downfall as its debts continue to accumulate (Cote & Takis, 2012). This paper looks to examine the United States Postal Corporation’s strategic positioning and its position in the mail and parcel delivery industry. The paper will also evaluate the various threats and opportunities that are available to the company and how it can take advantage of the opportunities to reinvent itself and remain relevant as well as competitive in a market that is continually being shaped by technological advancements and the Internet.
Technology Advancement and their Impact
The last few decades have seen the technology world reach unprecedented heights. The growth of technology and the influence of the Internet have had a tremendous effect on the mail and parcel delivery business in which the postal corporation operates. Writing letters and physical mails are slowing losing their relevance as the technological advancements are proving too convenient for the ordinary users. The Internet is everywhere and more people are becoming tech-savvy. Transferring information in the technology world today only requires access to a computer and an internet connection. These two factors are readily available and more people have access to them in recent times. Delivery of such information is instant, given that the recipient is able to access the internet as well. The delivery of mails is slowly being phased out as more companies are opting to send their bills to customers electronically as opposed to the physical mails that have been the norm for centuries (United States Postal Corporation, 2015).
The United States Postal Corporation is faced with these challenges that threaten its very existence.These challenges cannot be ignored, nor can the company affect the role of the internet in any way. The corporationhas made various efforts in the recent past to cope with the changing needs. These efforts included changing its modes of operations and reinventing itself.Technological advancements are continually evolving and require a certain level of knowledge to guarantee their safe use. Even though more people are using the newer and faster ways of transferring information, they still need to cope with the fact that the party at the other end needs to have the necessary knowledge to access the information. For instance, sending a mail to parents in the rural areas may prove difficult if the parents do not have the knowledge on how to use a computer, let alone the Internet. While such challenges continue to exist, the Postal Corporation still has a lifeline that it can continue to exploit in the unforeseen future (Cote & Takis, 2012).
USPS Facilities and Services
The United States Postal Corporation is a mega-corporation with a wide network that spurns the whole country and abroad. Presently, the corporation boasts of over 32,000 buildings throughout the country that enable it to perform its services effectively. The buildings enable the corporation to handle mail processing services, retail services, provide administrative offices as well as vehicle maintenance. The corporation main focus in recent times has been the reduction of costs through a variety of ways. Some of these ways include; energy utilization efficiency and the reduction of energy usage per square foot of its operations. Since the year 2003, the corporation has seen its energy use decrease by over 30%.The reduction in energy usage has been facilitated by the adoption and use of energy efficient projects such as the acquisition of energy efficient delivery vehicles as well as electronic equipment in the data centers and in the offices across all the corporation’s buildings.
The company’s sustainability report reveals that the company has gone to great lengths in the reduction of its costs of operations. The company’s services and operations’ successes have always been pegged by the fact that the company would offer affordable services to all regardless of the economic ability of the customers. Rising energy costs sometimes call for the company to adopt measures to counter the effect of the rising energy costs without transferring the effect to the consumers of its services. To that end, the company continues to invest in energy efficient fleets of vehicles that help in achieving the company’s efforts of providing affordable services.A roof management system has also been set up to reduce the corporation’s energy consumption in all of its buildings. Durable roofs ensure that repair services are kept to a minimum and, therefore, reduce the energy consumption of a building (United States Postal Corporation, 2015). The corporation, however, faces stiffer challenges in its efforts to reduce fuel usage in its fleet of vehicles. An aging fleet of vehicles is partly to blame for theses circumstances as well as the rising petroleum costs in recent times.
Threats to USPS
The corporation faces a number of threats to its operations that also threaten its existence in the industry. Inefficiencies in its service delivery compared to the private corporations have always been blamed for its negative performance against the other private service providers.The major threats to the operations of the US postal corporation include:
Competitors
The USPS, until 1970, operated under the management of the government and its services and operations was greatly influenced by congress and politics including the pricing of its services. However, due to the sensitive nature and its role in the community, the government re-branded he entity in 1970 by creating the USPS. Initially, the entity was known as the US post Office.After the re-branding, the postal corporation became independent of the congress and a commercial entity with a goal of providing affordable mail services to all parts of the country. Other companies entered the industry after that period. These include the FedEx and United Parcel Services. These two companies still continue to offer services that compete with the postal corporation and that limit its expansion in the mail and parcel delivery services. In fact, the competitors such as FedEx have developed a reputation over time as faster in terms of delivering services.In an effort to ward off competition and threaten the affordability of the services, the United States Congress has since monopolized delivery of mail within the United States and given thecorporation the privilege. The corporation also has exclusive access to ‘US Mail’ mail boxes at residential places. This privilege gives the company exclusive monopoly powers over the competition on the delivery of letters. The corporation, however, enjoys these services for letters that are not urgent. For urgent parcel deliveries, the corporation does not enjoy similar privileges.
The company also receives grants from the United States Congress every financial year. The grant is supposed to enable the corporation to deliver free services to disabled customers throughout the country.The corporation also has access to loans from the government and can borrow upto 3billion for a financial year. The financial support he government offer the corporation have enabled it to remain competitive against its competitors. However, competition for faster delivery of urgent parcels have given an edge to its competitors that are always preferred for those services.Thecompetitors are also preferred for heavier parcels where the corporation does not enjoy monopoly privileges.The USPS faces competition from a number of alternatives for correspondence. These include social media sites and email services. For all of its services, the corporation has alternative options competing for its customers.
The Technology alternative
Technological advancements present the biggest challenge to the existence of the USPS. Due to technology and the Internet, letter writing has almost become obsolete. The older generations may still be writing letters, but the younger generation has sinceabandoned it.The Internet is growing every day and its reach is expanding to remote locations including the developing nations. The cost of internet usage used to be a factor, but inventions of new technologies and government investment in infrastructure are making internet usage cheap. More companies are joining the industry to provide internet connection services to both individuals as well as companies.Schools have since incorporated the internet and learning how to use it in their curriculum. Younger generations have been equipped with the necessary knowledge to make use of the internet both as a tool of communication as well as a learning resource.
The emergence of social media sites, smart phones and other technological advancements in the 21st century have taken thecommunication concept to a whole new level. Millions of people now have account profiles on these social media sites where information travels fast and reaches millions of people instantaneously. The social media sites also have features such as instant messaging, they recommend you to people you may know, and help you find your friends or relatives. It is now easier than finding an address in the past before one could send a letter. When people change names, jobs or locations and they update their profiles, their friends and relatives connected to them via the site are instantly informed. It is also easier to verify the identity of a person before sending a confidential message. Smart phones and tablets have elevated the social media concept and revolutionized the information age. It is now possible to find out about an event happening on the other end of the world within seconds of the event happening. That is how fast and convenient the new options can be.
Costs
Increasing costs, especially labor costs continue to threaten the corporation’s ability to provide affordable services as itsmission categorically promises. New federal and labor laws setting minimum wagesand compulsory benefits to workers are limiting the cost structure of the corporation. The rising cost per hour mean that the Postal services corporation has to transfer costs to its customers or find ways to minimize on their costs but still provide quality services. Decrease in volume of deliveries countrywide mean that some of the delivery facilities are not being utilized. Since the year 2006 when mail deliveries reached their peak, the subsequent years have seen several delivery assets such as vehicles and storage locations unnecessary. The company still needs to maintain these locations even though hey are underutilized. The fixed charges have remained pretty much the same while the deliveries have nosedived. The corporation has been seeking for ways to revamp its business and to rebrand itself. These efforts have seen the company take on pilot projects whose profitability has not yet been determined and which may very well add to costs if determined not to be viable.
Recommended actions
Against its top competitors, the USPS has the opportunity to respond in kind in order to remain competitive. Its monopoly that enables it to provide services to remote areas allows it to reach more people. The US mail which is still being used to deliver mails and bills for national corporations such as electricity and water bills is exclusively for use by the United States Postal Services. Its accessibility to a bigger audience and the middle class as well as the lower class gives the corporation an upper hand in convincing its clients to use other services provided by the Corporation. The competitors do not enjoy the financial backing from congress as well as ability to receive loans from the government. Such funds can be utilized in the provision of services and in improving the quality of service delivery. The USPS’s top competitors such as FedEx are known to benefit from a reputation they have earned over the years for fast supply and delivery of‘heavier’ parcels. Delivery of some of these parcels is irreplaceable as the services offered by the USPS are. The corporation, therefore, needs to redirect its focus into those goods that are considered a specialty by its top competitors.
Changes in response to the alternative provided by technology are difficult to respond to due to their ever-evolving nature. However, the United States Postal Services have already laida foundation that should enable it, embrace the technology advancements being witnessed in the world. The Corporation has a website in place where existing customers as well as potential customers can check out and keep track of their commodities and parcels. Online queries can also be responded to fast. Most people use the Internet on a daily basis and are likely to try and find out more information on delivery of parcels across the country. The response and an efficient and fast customer service platform will enable the corporation to create and grow loyal customers.
The cost issue has been the main issue affecting the company’s operations. The high costs of operations have already reached unsustainable levels and urgent actions need to be taken. The company has already taken measures to invest in vehicles and facilities that are energy efficient. This should be able to help the corporation lower its costs and, therefore, increase its profit margins. The corporation has also taken aboard new products and services in a bid to improve its revenue and counter its increasing debts. However, revenues from new products cannot be accurately determined. However, investing in new products and services is the right way to go considering that their basic service is under threat of extinction.Most of the products are pilot projects and their profitability can be determined in the future. For instance the corporation is carrying out a test project for a new delivery service involving delivery of groceries to its customers.The pilot project is expected to be carried out within the next two years and its viability determined. Other projects are geared towards cost reduction and involve gadgets and assets that are energy efficient. The corporation has also invested in a roof management system that is geared towards improving the durability of its buildings across the country and in the reduction of energy consumption costs.
‘Red Ocean’ Opportunities
Within the available market space, the United States Postal Corporation has opportunities it can take advantage of. Some of the opportunities exist in expanding its services portfolio as well as retail services. To this end, the corporation can expand in parcel delivery and specialize in delivering the same. Its competitors have earned a reputation in the delivery of ‘heavier’ parcels while the USPS is known to deliver the light parcels as well as mail, albeit with longer delivery days. Its competitors were able to capture the market with shorter delivery days as well as personalized attention, such as delivery to residences or at work. The USPS enjoys monopoly in the delivery of ordinary mail in the country and most of its revenue resulted from the delivery of such mail (Shapiro, 2012).The USPS enjoys delivery points in all the cities and towns in the country, an advantage that some of its competitors do not have. Such delivery points will definitely give the company an advantage on both the heavier and lighter parcels in those areas. Reducing the delivery times can also help the corporation acquire new loyal customersas it re-acquires the market share it enjoyed in the past.
With technology advancements so do the challenges associated with its use. Hacking and privacy concerns have dogged the use of the internet as a platform for information interchange and as a storage platform for personal details. Some companies have been known to breach privacy of customers and even selling customers’ details to other scrupulous companies.Cases of companies being hacked have become the norm with companies trying to improve their systems against hackers.Companies that offer free email services have been known to be hacked and personal information compromised in the process. Eavesdropping of information as it is being transferred is a common technological problem that comes with the usage of internet information sites.These problemsare rare in the physical mail delivery services. The increase in hacking cases and inability by some systems to protect their clients from intrusion by hackers who may be interested in obtaining their informationfor fraudulent purposes has always underlined the advantages the common mail has over the online services. For this reason,the use of physical mail addresses may still be needed for some time to come, atleast until online transactions are made more secure. Presently, the secure way to make the online accounts secure is by the creation of lengthy passwords that cannot be easily guessed by potential hackers.The more complicated the password is, the more secure a person’s account is assumed to be. However, using complicated passwords makes it harder for users to remember (Shirky, 2011). Therefore, users will prefer to use easier passwords that they can easily remember. Remembering physical addresses is easier and is, therefore, considered more convenient for the older generations that got used to them. These advantages mean that physical mails will always have these advantages over online accounts and transactions (Robinson& Rawnsley, 2002).
‘Blue Ocean’ opportunities
The USPS does enjoyopportunities to grow and expand its portfolio in services not traditionally offered by the corporation. For instance, the corporation is carrying out atest project to survey he viability of the service. The test project was started in 2014 and is expected to last for two years until 2016. In the service, the company plans to start provisioning of groceries for residential homes across the country. If successful, the corporation is expected to include the grocery deliveries as part of its service to try and revamp its declining revenues due to decline in demand of its major revenue earners such as declining demand for first class mail services (Hill, 2015).
The company already offers online customer care services through its online website. Since technology offers the biggest challenge to its business, the corporation can think of joining the online business and offer online services as well. In recent times, all businesses are going online, a postal corporation that depends on mailing services should also naturally move online.The company can start offering services similar to email services where the company can offer free services to online clients. The email accounts can also be used to track progress of existing orders or they can be used to provide notification ofparcels sent. The postal services can also use the accounts to send notifications on new offers and prices incase there is a change in rates. The corporation can also use the platform to inform the customers of information of interest to them such as mails they have received in their accounts, or to remind them to make annual payments for the maintenance of their physical addresses. The online business will allow the company to evolve and join the online platform where all modern businesses have turned to due to its wide reach.
Future plans and positioning
Even though the postal corporation is facing a lot of challenges, there have been concerted efforts by management toturn round the fortunes of the corporation. Some of these efforts are likely to yield long term solutions while some may not yield positive results in the long run.The corporation needs both short term solutions as well as long term solutions because it is consistently making losses beginning in the year 2006.Some of the projects that management has invested in recently include:
Going Green
The corporation recognizes recent trends globally by making deliberate efforts in conserving the environment.Global resources are fast dwindling due to mass extraction and emission of pollutants into the environment and gasses into the atmosphere iscausing massive global warming.Most businesses are incorporating business practices that are considered green or environmentally friendly.The USPS is at the forefront of the issue asthey seek to make their operationsmore eco-friendly. Every day, they keep integrating business practices into their operations that ensure that they contribute to a sustainable environment. Since the year 2008, the company has engaged in the reduction of gas emissions and has succeeded in the reduction of these gasses by 12 percent.The corporation has also converted its solid wastes for recycling uses. The company also plans to recycle 95% of its solid wastes and is making plans to accomplish the plans. The plans are expected to be met in five years. The company has also decreased he use of energy since the year 2003. A reduction of over 33% has been achieved through a combination of more energy efficient operations, facility infrastructure and the mobilization of more than 1300 employees with green agendas. Going green and taking deliberate steps to further the green agenda serves to further endear the corporation to the American public. The going green agenda shows the company’s intentions towards ensuring the safety of the environment and sets apart from its competitors. The green agenda will definitely work for the company in the long run as more customers who respect the global efforts to go green will seek its services (Crew & Brennan, 2014).
Celebrating the American culture
The USPS is the most recognized institution in the United States with operations in all the parts of the country. The cars are easily recognized and have employees in all the towns moving from home to home.In the latest edition of stamps,the corporation unveiled a stamp program that promotes the American culture. The limited edition of stamps is geared towards reminding the American public of their proud history and culture. Some of these subjects include, but are not limited to, the 1812 war, Harvey milk, Medal of honor, as well as Celebrity Chefs.The American people, especially the older generations that can relate to some of those historical moments. The USPS is a highly visible entity in the American public and its show of appreciation to the American culture helps Americans relate the institution as a great representation of the efforts done by great American heroes.Such actions help to improve the affection and the loyalty of the American population that makes use of the mail delivery service.
Charity
The corporation has participated in a number of community programs that are aimed at providing charity to the needy. These actions have helped the organization to exemplify the community spirit. Such programs include the national association of letter carriers’ food drive that is meant to feed the homeless and the needy in the society. The corporation also regularly joins forces with local businessesand organizations in these charitable organizations to promote the spirit of the community and in an effort to help in the community to better the lives of the people in need (Sherman & Frierman, 1991).
These three acts have helped the corporation to shape itself as a caring institution that cares for the environment in which it operates as well as the people living in the communities it serves. The actions have also helped the corporation’s brand name to be engrained in the American hearts. This is probably the reason as to why the corporation cannot be left to be extinct by the United States Government of the congress. These actions have also helped the company to develop and establish its brand in the American market.
Embracingchange
The USPS understands the need to evolve with the changing times. Even the business of delivering letters is fast becoming irrelevant, it does not mean that the services that work to provide the mail delivery experience have to be. To this end, the corporation has launched a point of sales program in its post offices.The mobile point of sale is intended to ensure that the wait-in-line time is significantly reduced. The program was started as a pilot program in 2014. The program has turned out to be a success so far.The launching of the product was also supposed to be a response to the changing times and needs. The customer experience would be slightly altered to make it more interesting and to give it an overall upgrade. The Mobile Point of sales program was created to solve the wait-in-line problem. Lobby assistants would be able to help some customers by just swiping. Retailers can also sell priority mails at flat rates using the mobile point of sales systems.
In order for the corporation to evolve to be a good fit to the modern environment, a majority of its old habits needs to change. The environment and the industry also need to change. The USPS has enjoyed congressional support and a monopoly over direct mail since the1970s. Change is inevitable, even though the company has monopoly power over direct mail. The pieces of legislation that govern the operation of the USPS were legislated in the 1970s (Campbell et l., 2015). Most of the regulatory framework is irrelevant in the modern times and seriously needs major revision.The revision should address the current challenges facing the corporation and seek for ways to save the corporation from the challenges it is presently facing.Some of these challenges are threatening the existence of the corporation and the legislation need to keep this in consideration. Additionally, laws governing the postal corporation are biased. The laws were created to give the corporation an upper hand in the 1970s, while mail delivery was still popular.The laws do not apply to the firms that compete with USPS in the delivery business across the United States. Streamlining the laws and the regulations will provide a level playing ground ad enable a healthy competition between the corporation and its competitors. The laws will also help the corporation to expand its portfolio of services (Crew & Kleindorfer, 2013).
Conclusion
The United States Postal Services played a pivotal role in the American evolution for decades and still plays asignificant role for some people. However, times have changed and the major service, physical delivery of mails is fast becoming irrelevant.The Internet and the emergence of social media have had amajor impact on the transfer of information in the modern times. People can now communicate instantly via text messages on their phones, or instant messaging through an online portfolio.Some of these features including the convenience afforded by some of these services have slowly made the mail business irrelevant. Since 2006, mail delivery businesses has slowed, leading to a massive revenue loss for the USPS. A decline in demand for its major revenue earner,First Class mail, has led to smaller revenue while the cost of the service delivery remains high. The corporation has opportunities to exploit areas such as specializing in delivery of bigger parcels as well as reducing the delivery times in order to effectively compete with its competitors that have created a reputation for fast delivery times. Old laws and regulations also restrict theorganization from modernizing its operations to better reflect the changing times and to better serve its customers.
References
Campbell, L. J., Cook, J. L., Chamberlain, C. R., McGrath, M. J., & Schoen, I. (2013). U.S. Patent No. 8,484,479. Washington, DC: U.S. Patent and Trademark Office.
Cote, L. M., & Takis, W. M. (2012). THE US POSTAL SERVICE: An Assessment of Options’. Managing Change in the Postal and Delivery Industries, 25, 342.
Crew, M. A., & Brennan, T. J. (Eds.). (2014). The Role of the Postal and Delivery Sector in a Digital Age. Edward Elgar Publishing.
Crew, M. A., & Kleindorfer, P. R. (Eds.). (2013). Reforming the Postal Sector in the Face of Electronic Competition. Edward Elgar Publishing.
Hill, C. (2015). Strategic Management [11e]. Retrieved from http://www.coursesmart.comRobinson, A., & Rawnsley, D. (2002). USPS Finances. In Postal and Delivery Services (pp. 331-354). Springer US.
Robinson, A. (2009). Examination of potential postal business models. report for the United States Postal Service by Direct Communications Group, October.
Shapiro, R. J. (2012). The Basis and Extent of the Monopoly Rights and Subsidies Claimed by the United States Postal Service. Diabetes Research.
Sherman, R., & Frierman, M. R. (1991). Competition in postal service. InCompetition and Innovation in Postal Services (pp. 191-218). Springer US.
Shirky, C. (2011). The political power of social media: Technology, the public sphere, and political change. Foreign affairs, 28-41.
United States Postal Corporation. (2015). What we are doing. Retrieved from http://about.usps.com/what-we-are-doing/green/pdf/2013-sustainability-report-print.pdf