Name: Ngo Thi Thu Hang

Student ID: z3262384 Case Study No5: United Parcel

Class: ACCT 5910 – Tues 10am-1pm Service’s IPO
Question 1 What are the key success factors & risks for UPS given its business strategy?
Answer Key success factors :

 By 1998 it was generating over $3 billion in global revenues, from and within over 200
countries.
 UPS projected that by 2003 online B2C sales in the US would surpass the $100 billion
spent annually on catalog sales.
 UPS began offering suppliers a portfolio of financial services & logistic technology
software applications designed to help them better manage their inventory and shipping
logistic.

Risks:

m
er as
 Competitive challenges from postal monopolies.
Rapidly changing environment at an unprecedented rate

co


eH w
Question 2 How is UPS performing? What factors are driving this performance? Is the current

o.
rs e
performance likely to be sustained? Why or why not?
ou urc
Performance of UPS:
Answer
 Delivering 13 million packages each business day ( 9,000 every minute) to over 200
o

countries worldwide.
aC s

 Having daily contacting with 1,8 million customers (including every company in the
v i y re

Fortune 1000) and making deliveries to 6 million business and residential addreeses.
 In 1999, was recognized as the “World’s Most Admired Global Mail, Package and
ed d

Freight Delivery Company” and “ Company of the Year”.

ar stu

Factors driving:
 Operational and service-excellence culture
 Carefully trained workforces.
sh is

 Accountability and efficient execution at every level of the organization.

Th

 Current performance is likely to be sustained as it is believed that UPS’s

combination of “controls, rules, a detailed union contract, and carefully studied
work methods…help guarantee the customer reliable, low cost service.

Question 3 How is FedEx performing? How, if at all, do its performance and plans affect your
assessment of the sustainability of UPS’s current performance?
Answer Performance of FedEx
 A $ 17 billion global transportation and logistics enterprise.
 By the late 1990s, FedEx moved over 3 million packages each day, with the ability to
reach virtually every business address in the US and almost every country around the

1
This study source was downloaded by 100000831952622 from CourseHero.com on 11-17-2021 06:31:57 GMT -06:00

https://www.coursehero.com/file/12050105/10-United-Parcel-Services-IPO/
 world within 24 hours.
 Achieving success by selectively targeting some of UPS’s most valuable accounts: high-
volume customers in high-density locations.
 Acquisition and rename RPS-> FedEx Ground to take advantage of its own strong brand.
 It may affect the sustainability of UPS’s current performance because of losing customers.
Question 4 Given your assessment of the company’s strategy and the sustainability of its performance,
forecast the key factors for UPS’s stock value.
Answer  UPS’s combination of “control, rules, a detailed union contract, and carefully studied
work methods… helped guarantee the customer reliable, low cost service
 Most of UPS’s equity was held by current & retired employees, founding family and
foundations
 It was anticipated that after the IPO, the current UPS shareowners would own 90% of
the firm’s equity and control about 99% of the vote.
 Value of UPS’s stock could be very high.
Question 5 What is your estimate of UPS’s value and its multiples?

m
er as
Answer Total revenue of UPS was increasing steadily during period 1995-1998 and could keep

co
increase in the next few years.

eH w
Question 6 How do you estimates of UPS’s PE & PB multiples compare with those for FedEx? How

o.
rs e
do they compare with those for the “best of breed” companies’ multiples?
ou urc
Answer  The company’s stock price should be valued at a premium to reflect its superior
performance over other firms in the industry => It’s PE & PB could be higher then those
o

for FedEx.
aC s

 It should be the same situation as of the “best of breed” companies’ multiples.

v i y re
ed d
ar stu
sh is
Th

2
This study source was downloaded by 100000831952622 from CourseHero.com on 11-17-2021 06:31:57 GMT -06:00

https://www.coursehero.com/file/12050105/10-United-Parcel-Services-IPO/
Powered by TCPDF (www.tcpdf.org)