Business Model Comparison Essay

The transportation and logistics industry is a six hundred and seventy billion dollar a year industry according to SJ Consulting Group. A logistics company helps transport people, cargo, and merchandise, by land, or sea. It consists of many channels of transportation, which include freight trains, cargo ships, and planes. Logistics and transportation companies are an important part of everyday business and life. The need of exports and imports on an international scale can only happen through a transportation company. If a family decides to move cross-country or over seas, it is planned through a transportations company. What has made the difference in most popular logistics companies is the difference in their business models and what logistic purpose they are here to meet. Locally we have two carriers that are an everyday household name; lets understand the difference if any in there set up, and business matrix. When people think of transportation delivery services there are two na mes that come to mind and that is UPS and FedEx. These two brands are leaders and competitors in the transportation industry and have built a sustainable competitive advantage. When looking at these companies they seem to operate in the same manner, but there are differences that separate them in business. Business Model Forms Business model for FedEx is something that has shown to have controversy within the industry. FedEx currently uses the contractor base business model. This is where each employee is basically a contractor for FedEx. FedEx is largely credited with having pioneered the â€Å"independent contractor† work model in the logistics industry. Under this system, workers function as self-employed drivers with their own routes, covering the costs of their own trucks, gasoline, uniforms and so forth. While corporations claim the contractor system gives drivers flexibility and strong incentives as â€Å"small businesses,† critics say it’s simply a way to shift the costs of employment onto workers and avoid payroll taxes and workers’-compensation costs. (  Reagan Appointee ‘Unravels FedEx’s Business Model’ In Court Ruling) United Parcel Service (UPS) has been in business for 66 years longer than FedEx. Its longevity gives the company seniority in delivery services over FedEx. When looking at UPS you can see their ability to partner with businesses throughout the years across the globe being their key source in transporting their products. â€Å"For a global book wholesaler, green business is good business. When the company wanted to reduce the amount of paper it used in its supply chain, it turned to long-time provider UPS to find the answer. UPS developed the world’s first paperless solution for generating international shipping documentation digitally, which not only helped the company meet its environmental goals but also improved the wholesaler’s order accuracy while saving time and money (â€Å"There Is Huge Competitive Advantage in Logistics†, 2010). † Staying innovative is UPS’ competitive advantage. FedEx is a business that operates with over 300,000 employees and has managed to grow this big in less than half a century. With its recent approach towards bettering the environment with using eco-friendly products throughout the company FedEx is showing a care for the world as a competitive advantage. They are using equipment that produces less pollution along with staff that strategically planned shorter routes to minimize equipment use. The products used to ship products, such as boxes; envelopes and FedEx office store supplies are recycled and reused. Advantages and Disadvantages Two companies like Fed Ex and UPS are the biggest type of ownership in business. They are both publicly traded companies and have a huge part on the stock market. Let’s take a look at some advantages and disadvantages of this type of ownership. Going public is an expensive, time-consuming process. A corporation must put its affairs in order and prepare reports and disclosures that comply with U.S. Securities and Exchange Commission regulations concerning initial public offerings. Taking your company public increases the potential liability of the company and its officers and directors for mismanagement. By law, a public corporation has an obligation  to its shareholders to maximize shareholder profits and disclose operational information. The capital of a public company is generally raised from the public. People belonging to all walks of life throughout the country can buy shares, which are priced at low levels. The liability of members of a public company is limited. They have to face limited risk. The shares of a public company are freely transferable. This makes investment in the shares liquid and an investor is not bound to remain with the company. There is unlimited scope for growth and expansion of business. New shares can be used to raise additional capital. Experts can be employed to manage the increasing business activities. Conclusion Longevity and innovation is definitely the name of the game in any type of business model. Both FedEx and UPS have met their match in the logistics industry. FedEx gives a more liberal way of business by giving the drivers a small business set up, and UPS is looking to stay a few steps ahead of the game with trends like being environmental friendly, saving natural resources, cutting costs, and using technology to make logistics run more efficiently. Combined parcel carriers like FedEx and UPS are growing vigorously because of solid matrix models and the need of their existence. It is imperative in the scope of businesses that its components are solid, smooth sailing, and always one step ahead of the game. References A Better Future. (1995-2012). Retrieved from http://earthsmart.van.fedex.com/ This is a hanging indent. To keep the Reagan Appointee ‘Unravels FedEx’s Business Model’ In Court Ruling) There is Huge Competitive Advantage in Logistics. (2010). Retrieved from http://www.ogilvy.com/News/Press-Releases/September-2010-New-UPS-Campaign.aspx U.S. Securities and Exchange Commission: Going Public http://www.preservearticles.com/2012022823825/what-are-the-advantages-of-a-public-company.html