Contents


Introduction


Comparison of the internationalization process of firms   


Globalization process of UPS


The role of e-commerce


How did e-commerce change the global business model of UPS?


How can e-commerce facilitate the ongoing internationalization of UPS?


The role of ICT


How did ICT change the global business model of UPS?


How can ICT facilitate the ongoing internationalization of UPS?


 


  


 


Introduction


A variety of services is limited to small packages and emphasizes expedited handling, often next-day delivery. Many of the parcels are extremely small. Some are envelopes containing documents, such as blueprints and payroll or other financial records, weighing a pound or two, although most of the services will take a package up to 50 pounds, and in some cases 70 pounds. Typical contents are computer chips, medical supplies, videotapes, merchandise samples, and replacement parts for machinery (2001). Until the early 1970s, this type of service, also generally known as air express as distinguished from air freight was a relatively small and somewhat neglected facet of air transportation. As far back as 1927 the airlines had an arrangement with the Railway Express Agency (REA) whereby that nationwide, railroad-connected agency would perform pickup and delivery service for the small parcels that were then the only type of cargo carried on the small aircraft of the day. REA continued this air express service until it went out of business in 1975, but in its later years it was greatly overshadowed by the much more rapidly growing air freight service, which the airlines began in 1944 and which is oriented to larger shipments ( 2001).


 


Competition for the small-package trade was offered to REA before its demise by air parcel post and by several air freight forwarders, notably United Parcel Service, which at that time elected to confine its activities to parcels under 50 pounds. Many other carriers offer expedited small-package service. One of these, United Parcel Service, operates a large fleet, including some 747s. The U.S. Postal Service has entered the competition for overnight delivery with Express Mail, and found it popular. The line between small-package service and air freight has become blurred, as the maximum size for a shipment tends to go up due to competitive pressures and perhaps to a growing need to fill space on the large aircraft (2001). Federal Express and United Parcel Service today state no maximum weight limit for their services. Companies such as Emery and UPS, which prior to deregulation held air freight forwarder authority with no right to operate aircraft, have since acquired large aircraft fleets and are considered integrated carriers United Parcel Service has a cargo code sharing agreement with the Japanese carrier, Nippon Cargo Airlines. It is possible for a carrier in a passenger alliance to form a cargo alliance with members of a rival passenger alliance (2001).


 


An advantage to shippers and forwarders from cargo alliances is improved service through dealing with a large system offering a great number of destinations, with coordinated connections. Given the sensitivity of air cargo to speedy and reliable delivery, especially in an era of just-in-time (JIT) services, shippers and forwarders have a motive for favoring cargo alliances (2001). United Parcel Service is one of the largest companies that deliver packages to individuals or business. It is undergoing various changes due to globalization and it has upgraded its services into providing logistics and other transportation related services. The paper will discuss about the case study of UPS and its strategies for Global E-commerce system.


Internalization process of firms (Question 1)


Firms internationalize and commit a package of tangible and non tangible resources abroad. Tangible resources such as capital are required to pay for supplies. Non-tangible resources include non–human-related resources such as patents, trademarks, copyrights and registered designs, trade secrets, data base, trust, goodwill, trade name, credibility, reputation, image, and the firm’s relationships. In addition there is know-how about suppliers and organizations, about culture and organizational and managerial practices, and about routines and human resources (2001). An important factor is the uniqueness, or the niche, that the firms attain by combining their tangible and non-tangible resources. An internationalization process is caused by the underutilized resources in a firm. These resources can be used to generate value for the firm. But the transferability and mobility of the domestically based resources abroad is restricted in time and space. The process of going abroad is slow and gradual one ( 2001).


 


As a firm internationalizes, it accumulates resources from the foreign markets and combines them with its own. In this process a dynamic evolves. Three dynamic processes are important, namely, the internal education effect, the rationalization effect, and the quality-improvement effect. Through these processes the resource base of the firm is altered. Some resources are enhanced and others are not. Thus, in the process of internationalization, firms, on the one hand, exploit their own resource base to generate value. On the other hand, firms also enhance their resource base (2001). The value of the current resources is improved through new combinations. The new combinations supply resources for future internationalization. The internationalization process of firms is a continuing process of resource creation, resource accumulation, and its subsequent exploitation by the firm. A disruption in the resource creation-accumulation-exploitation process in a firm will terminate its internationalization process. Internationalization provides one growth outlet, and it is an aspect of the growth of the firm. If the domestic market is already saturated, going abroad is the only option left. At the initial foreign market entry, the manner in which the firm interacts with its foreign clients is the same as the one it uses in the domestic market (2001).


 


The internationalization process of service firms focus on acquiring world class information on how to provide better service. In the internationalization process of service firms, companies make their employees attends seminars, symposiums, workshops or the like to learn service techniques that can compete with the service strategies of international companies. Service firms also gather world class techniques and use it as they deliver services to their clients. The internalization process of manufacturing firms focuses on acquiring materials and equipments that can help create world class products. The materials and equipment pass certain standards and are used by other international manufacturing firms. The people who operates the equipment are well trained and given enough instructions.


Globalization process of UPS


Globalization is the process of increasing integration between world civilizations. It is a social process in which the constraints of geography on social and cultural arrangements recede and in which people become increasingly aware that these constraints are receding. In a sense, globalization implies a borderless world. Globalization is also considered as the intensification of world-wide social relations which link distant localities in such a way that local happenings are shaped by events occurring many miles away and vice versa (2002). .With the shift towards a more integrated and interdependent world economy, the emergence of a global marketplace where firms compete fiercely is apparent. This globalization of markets has facilitated the globalization of production which makes it possible for firms to source goods and services from dispersed global locations. Globalization of production enables firms to buy the highest quality product at the lower cost. Globalization initiates competitiveness both at the firm and national level. At the national level, governments all over the world are under pressure to internationalize their economies to satisfy the requirements of multinational companies (MNCs) and foreign investors ( 2002).


 


Liberalization of economies creates competitiveness for local firms. With intensified competition organizations are making efforts to meet international competitive standards on the three Ps that include price, productivity and profits. Globalization is generally measured subjectively and encapsulates many different aspects of change, notably: structural changes in trade, economics, products and technology; the decline of national and regional state regulation, often involving privatization; the emergence of international or global companies; and different recipes for restructuring organizations. In this way, globalization is a summary term for a set of inter-related changes rather than a single development (2002).Globalization is affecting the businesses world wide. It is giving information to business about the trends and the changes in the environment. Through globalization businesses are becoming more aware of the things that are happening in other parts of the world and business are becoming more adaptable to changes. Globalization also introduces global delivery systems to business.


 


Global delivery systems helps in ensuring that a business’s product gets to reach more people. It saves the company’s time in delivering products and making sure that the right product reaches the right client. For clients it meant faster delivery of services and less problems in delivery of products.  The globalization process of UPS concentrated on funding start ups, buying other companies and engaging in partnerships with strong companies. The company made sure that although it engaged in such globalization process, it still relates to the transportations of goods, funds or information. UPS used globalization to keep itself on the right track to success at the same time gather new information that can give them advantage over their competitors. UPS used globalization to anticipate changes in its environment and invest for its future


The role of E-commerce


Practitioners, theorists, and futurists alike concur that the challenge for businesses that want to maximize their global presence involves structuring relationships in such a way as to ensure that the right information is delivered to the right people at the right time. In all these views, information technology (IT) and e-commerce initiatives play critical roles in the strategy of global competition. If there is a common denominator to the global view of IT initiatives and e-commerce, it is that companies reap the biggest benefits not by superimposing computers on top of old work processes but by restructuring those processes and the corporate culture (2002). This strategy, over time, develops entirely new business capacities. E-commerce encompasses all business-to-business and business-to-customer transactions that involve the buying and selling of goods and services and the transfer of funds through digital communication. It also includes all the inter- as well as intra company functions such as manufacturing, marketing, finance, and selling that enable commerce and electronic data interchange, file transfer, facsimile, and interaction with a remote computer ( 2002).


 


Recently, the scope of e-commerce has expanded to the business-to-customer relationship, including trade through the Internet as well as all other ways of doing business over digital networks. Historically, e-commerce evolved from electronic data interchange (EDI) that facilitated electronic exchange of ordinary business documents in grocery and transportation industries in the 1970s. It has expanded through other industries driven by the cost-saving requirement that resulted in development of data transmission conventions enabling computer-to-computer exchange of data (2002). As the world ages so thus the changes in business and technology, one change is E-commerce. E-commerce is creating various changes in the environment. It provided a new way for business to improve on their service to clients. E-commerce has continuously widened its range.  E-commerce is something that is constantly evolving and being improved over the course of time. It grows and adapts to the changes in the society. As time goes by E-commerce is changing its different techniques in providing service to the clients and in making business transactions be done in the shortest time possible.


 


UPS made use of E- commerce as an alternative tool to provide service to its clients. UPS made use of its web site to interact with clients and help them transport the different goods, funds and information. The web site offered solutions to improve the different transportation process; improve customer service and reduce cost for both the company and the clients.  The different services offered by the web site includes tracking the shipped product, rates for each transportation of product, time in transit and address validation of the destination of the product. E-commerce can facilitate the ongoing internationalization of UPS through it providing newer techniques for the company to deliver the goods, funds and information. E-commerce can also find alternative means to deliver the product.  


Role of ICT


Change management consultants will need to be there with the appropriate interventions to help both old and new organizations become more streamlined and flexible. Additionally, they must become more capable of improving themselves continuously in response to trends in the economy, the work force, and the technology (2000). There is, however, every indication that many organizations are not aware of these practices; still others will resist the help that change management consultants can offer them. For example, despite the attention given to the growth of e-commerce in an economy that knows no boundaries, many organizations have not begun to prepare themselves to be active players in e-commerce and are not prepared to organize into networks or to successfully manage strategic alliances. But these are the organizations of the future, and they will, with the assistance of change management specialists, invent entirely new entrepreneurial structures capable of exploiting new ideas and technologies quickly (Hart & Prakash, 2000).


 


The full impact of the information and communication technologies (ICT) revolution clearly has some distance to go and a fourth phase of global integration is now visible in the growth of electronic commerce. Reflective of the underlying movement in the technology trajectory from hard to soft, and the growing importance of network markets, especially telecommunications, this new world of cyberspace literally eliminates borders so that the term domestic policy could become an oxymoron ( 2000). Convergence-harmonization of domestic policies and institutions and the erosion of national sovereignty-will be fed by locational competition for investment and regulatory arbitrage by MNEs; global rivalry for finance and markets; and rapidly changing communications modes which are transforming market power dynamics and creating newly empowered global actors (2000).Information and communication technologies are something that is constantly evolving and being improved over the course of time. It grows and adapts to the changes in the society. As time goes by ICT is changing its different techniques in providing service to the clients and in making business transactions be done in the shortest time possible. UPS made use of ICT to have better internal and external communications.


 


UPS uses ICT to have better communication with different departments and divisions in the firm. This leads to better procedures in delivering funds, goods and information. The different ICT tools make sure that data will not only be transferred from one part of the firm to the other but it can protect data from those who wants to steal it or use it maliciously. UPS also uses ICT to protect the data divulged by clients, this data maybe used against the client or it maybe used to gather other information from the client.  ICT can facilitate the ongoing internationalization of UPS through it assisting in determining strategies that will make the services of the company globally competitive. ICT can facilitate the internationalization of UPS through it helping make the services of the company better than its competitors.



Credit:ivythesis.typepad.com


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