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Assignment 1 - UPS Yongzhe Wang

Introduction UPS was formed in 1907, by 19-year-old Jim Casey. Originally, focused on delivering messages in Seattle. Over the 98 years since its founding, it had transformed itself several times. The corporate has earned $ 37 million till 2005 from its existences and became one of the ten largest airlines. It is the world’s major package-delivery company which serving as a leader in transportation and logistics industry in more than 200 countries. The company possesses 3,500 retail locations with 384,000 employees that make the process of package transportation very easy for the customer. The company is based on the principle of centralization with a traditional hierarchal structure followed by the higher management of the company. The senior management with involving employees from different departments is performing priorities, investment decisions, and innovation. Context The company makes strategic plans on two basic levels, one on the regional and the other on the corporate level. However, provincial business units are not allowed to make decisions on themselves. Currently, the company is facing a variety of difficulties that the company will handle in its coming future. UPS is planning to develop a new technology that serves their information system for its competitiveness in the market. However the company is putting its efforts to tickle its strategic problem that repeatedly asks to grow UPS’s air services business. The CEO of United Parcel Services Michael Eskew wants to develop a strategic process through which the company would remain competitive in the packaging supply and logistic industry. An external strategic planning group has asked to prepare a strategic process, which ensures a continuous transformation of the company as it has been performing since its existence over the past several years. The company is performing this task along with an external organization by evaluating vital processes of UPS. In this evaluation, the company does its strategic development with the help of scenario forecasting procedures. In the scenario planning the company identifies critical elements that includes the upgrading of company’s licenses, strategic organization of individual business entities along with their decision-making criteria and applications.

Q1. What are the strengths and weaknesses of scenario planning? Scenario planning is a process that stimulates imaginative, creative thinking to better prepare an organization for the future. It has been described as a way of rehearsing the future to avoid surprises by breaking through the “illusion of certainty.” Scenario planning entertains multiple possibilities because it investigates several uncertainties simultaneously. Strengths Insights are drawn from many sources, in most cases its internal company task, rich details are being added to foreseen futures, it stimulates organizational learning. Abundant details which beyond the constraints of quantitative models and includes contingencies that are difficult to measure. Develop a series of stories about plausible future states that take into account the dynamic interactions between stakeholders, organization and its role in creating the future. Multiple plausible scenarios are constructed to cover a range of “limits of possibility” of future outcomes and uncertainties; diverse perspectives are taken into account. System dynamics causal interactions are analyzed. Determine long-term opportunities, uncertainties and risk factors in the contextual environment of the organization. Weaknesses No consistency and logical causality scenarios will be just imaginative speculations and science fiction. Non-quantifiable Scenarios are non-quantifiable because of their nature descriptive. There is always a room for considering dominant personality opinions or excluding individual ideas and replacing them by group thinking, another problem could be perceiving current conditions as future possibilities. Possible lack of consensus due to different perspectives and participants opinions there might be a problem with common conclusions and formulating shared strategy. Q2. What is your evaluation of UPS’s 1997 scenario planning exercise? Its Horizon 2017 planning exercise? How do the two compare?

UPS’s 1997 scenario planning provided a common basis to allow investigating growth opportunities and competitive strategies. It overall can be termed as success, although the planning exercise was confusing as it would be difficult to say what would happen in the world. It helped tremendously by allowing the company managers to think beyond the businessplanning horizon. It forced the company to answer several what-if questions and respond to strategic threats. The 2017 planning exercise was necessary for a future further. It was add-on to the1997 in the sense that the basic framework was now laid out and one needed to adjust to newer realities. Differences between these two scenario planning. First, Eskew and the CSG decided to take the scenarios and implications deeper, to regional levels as opposed to a single global picture. Second, extensive interviews, perspective of academics, consultants and etc. Third variation involved participants. As before, participants from operations were excluded. Q3. What are the other key elements of UPS’s approach to strategic planning? In particular, what is your evaluation of: a. UPS charter? b. The Centennial Plan? c. The Strategy Road Map? a)

Charter is very customer-focused and is poised for success as it clearly articulates how UPS makes their customers successful.

b)

Centennial plan provided the themes and broad over-arching direction. Four strategic imperatives were defined: Winning Team Valued add solutions Customer Focus Enterprise Excellence

c)

The strategy roadmap provided took the four elements of the plan and came up with 100 distinct projects to implement the strategy.

Q4. Why was John McDevitt put in charge of “strategic integration”? Should he remain in that role? John McDevitt was put in charge because progress on some initiative seemed to have stalled. He was considered by many to be the champion of strategy execution and had the necessary skills to reach consensus. Without him, Esken would have been the only one to resolve issues at that level. I think he should remain in that role because there are different opinion about what was being accomplished and how to get things done. Because one of the biggest weaknesses of scenario planning is the possible lack of consensus due to different perspectives and participants opinions there might be a problem with common conclusions and formulating shared strategy. So keep John McDevitt in the role can make sure that all teams delivered on what they were being asked. Q5. How does UPS’s strategic planning process compare with the approach at your organization? Strategic Planning process at UPS is different from the companies I have worked at Huaze Aluminum Corporation. I just know the main purpose of my old company is to become one of the top mining industry corporations. But I don’t the other part of scenario planning. I don’t know if there are other parts but just senior managers know or there is no other part at all. I prefer that all the employees should know scenario planning. Conclusion Scenarios are possible views of the world, described in narrative form that provides a context in which managers can make decisions. By seeing a range of possible worlds, decisions will be better informed and a strategy based on this knowledge and insight will be more likely to succeed. Scenarios do not predict the future, but they do illuminate the drivers of change: understanding them can only help managers to take greater control of their situation. Scenario planning is one of many foresight methodologies. It well develop and test across government, business and education. Scenario planning also provides structured process for people to start consciously thinking about the longer-term future and possible implications for strategy today. A creative and shared process that allows time for reflection about the organization and its future. Scenario planning strengthens a manager’s strategic management

toolbox which focuses on the future. It combining both the past the future makes thinking about strategy and promotes more responsiveness, flexibility and competitive advantage. It allows a shared view of the future to be developed and then provide the opportunity for an organization to consider how it wants to position itself in that future. The major drivers of changes are social, technological, economic, environmental and political.