Introduction
This paper discusses external and internal business environment of the United States Postal Service (USPS). This is the same organization that was used in the first week. The USPS is an independent organization under the executive branch of government (The United States Postal Service, n.d.). The organization is more than fifty years old, and has evolved to respond to various changes in the business world.
General Environment
The general environment refers to a set of factors that can have a direct or indirect impact on operations of a company. These factors are mostly beyond the company’s ability to control as explained by Hitt (2020), but the management team can respond by adjusting to changes. Technology and demographics are among the general environmental factors that could have significant impacts on the success of USPS.
Technological Segment
Technological segment requires that organizations improve services and products by tapping into the power of innovation. Many companies are tapping into the power of technology by digitizing, advertising on social media platforms, and using mobile applications that are readily available on mobile phones. Additionally, Yukhananov (2017) noted a decline in usage of mail services. Many people are no longer sending letters, but are using phone applications to communicate directly. The USPS can respond to technological changes by designing apps and providing affordable services that resonate with the needs and preferences of consumers.
Demographic Segment
Demographic factors have a direct impact on success of any company. Factors such as age, gender, profession, level of education, race, family size, location, linguistic background, employment status, ethnic backgrounds, and population affect the success of businesses. According to Hitt (2022), an understanding of demographic factors can help the company to respond to consumer demands. The USPS is a national organization, present in every locality within the country, and its services are direct to clients. In an interview with the Morning Consult in 2017, the managing director of the firm stated that the presence of USPS within every locality in the country has had a direct impact on clients (Yukhananov, 2017). Additionally, USPS impacts communities through partnerships and social support services.
Five Forces of Competition
Forces of competition are available in every business environment. Hitt (2020) defined forces of competition as factors within the company’s environment that determine growth and expansion. Every business has to respond to the forces of competition and remain resilient despite the challenges and costs that have to be incurred. Two of the forces of competition affecting USPS’ operations are competitive rivalry and threat of substitution.
Competitive Rivalry
An increase in the number of competitors in the industry reduces the competing power of a company. Today, USPS is facing stiff competition from rivals such as DHL, FedEx, Stamp.com, and the UPS Store. Rivals in the industry can force the company to lower its prices to attract and retain consumers. Financial data from the United States Postal Service (USPS) (n.d.) indicate that the operational costs have been outpacing the profits in the recent two years. Consumers in the United States have ranked USPS lower compared to its rivals such as FedEx and DHL. The ranking is often based on affordability and quality of services. The USPS can respond by lowering prices for cost-sensitive consumers.
Threat of Substitution
The threat of substitution refers to the possibility of customers finding new ways of doing or carrying out the services that the company has been providing. This force is already having observable impacts on the company as explained by DeSilver and Schaeffer (2020). Even though politicians tend to influence the ranking of USPS, the company is already in a financial crisis because Americans have switched to chatting to using phones and are no longer sending letters. Many people are also using mobile phone devices to communicate directly. Substitutes are often cheaper, and can threaten the profitability of the business.
Future Improvements
The presence of external forces compels the organization to develop a plan that will help it in withstanding future challenges. In this case, the target is to improve future service delivery in increasing the ability to handle large cargo and parcels when required (Sawicky, 2020). The organization should not be efficient during holyday seasons. Instead, it should have an active team of employees ready to serve and deliver parcels on-time throughout the year. There is also a need to revise the pricing authority to reflect the changes in economy.
Greatest External Threat
The greatest threat that USPS faces is the competition from its rivals who are providing cheaper and affordable postal services. Unlike the USPS, the rivals are private companies that are interested in making profits. Competitors are currently engaging in aggressive marketing strategies that could sway consumers away from the USPS.
Greatest Opportunity
Despite the looming threat from competitors, the organization can tap into opportunities in the market. The best opportunity is to capitalize on its national brand. USPS is a household brand among many consumers. The brand gives the company a competitive advantage in the postal service industry.
Strengths and Weaknesses
The USPS saw a significant growth during the pandemic era. A surge in online marketing and sales saw the company engage in shipping activities across the country. Additionally, the USPS has been in the country for more than 240 years. During this period, the organization has developed resilience to changes in the market. USPS will adapt to current changes and will not be swayed by competition.
Financial threat could affect the survival of USPS. Recent data from DeSilver and Schaeffer (2020), USPS is currently making losses in place of profits. Financial challenges prevent the company from coming up with new strategies that could withstand pressure from its competitors. Competitors such as FedEx and UPS have already adjusted to the market and are making profits with justifiable higher prices, while USPS is still making losses.
Strategy or Tactic
Every business needs a strategy to maintain a competitive advantage in the market today. USPS could devise a strategy of merging with other entities to increase service delivery and performance in the market. According to Hitt (2020), independent agencies can derive benefits from mergers to maintain a competitive advantage. The merger will give the agency significant powers over its rivals.
Resources, Capabilities, and Core Competencies
A combination of resources gives the agency the power of competition in the market. Technology, vehicles for ferrying parcels, and an established brand are among the resources that USPS can tap to compete against its rivals. Other resources such as customer relationship management and availability of marketing systems can be tapped to improve capabilities and competencies in the postal service industry (Sawicky, 2020). Capabilities set the company aside against its rivals, while competencies help it in withstanding short-term and long-term challenges. The presence of a mature brand and an established customer relationship management are among the competencies and capabilities that will drive the USPS to new levels.
Conclusion
The future of the USPS lies in how the agency will take advantage of its strengths to respond to external forces and threats. The presence of rivals who are providing cheaper services should be used as a lesson for strategizing the firm in the postal service industry. The company can tap into the power of an established brand to strategize and overcome financial challenges that are currently threatening its sustainability in the market.
References
DeSilver, D., & Schaeffer, K. (2020). The state of the US Postal Service in 8 charts. Pew Research. Web.
Hitt, I. & Hoskisson (2020). Strategic management: Concepts and cases: Competitiveness and globalization (13th ed.). Mason, OH: South-Western Cengage Learning
Sawicky, M. (2020). The US Postal Service is a national asset: don’t trash it. Center for Economic and Policy Research. Web.
The United States Postal Service (USPS) (n.d.). Financials. Web.
Yukhananov, A. (2017). Why UPS and the postal service get high marks for community impact. Morning Consult. Web.