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The United Parcel Service’ Imperfect Competition Essay

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Type of Market

The United Parcel Service (UPS) operates in the carrier industry, and it has developed a stronghold in the logistics field, offering supply chain management solutions for companies in different parts of the world. The company is also actively engaged in package delivery to homes across the United States and other parts of the world (Plunkett, 2015). Currently, the company operates in over 200 nations in the world, and it has harnessed the largest market share in the global market (The World’s Most Valuable Brands, 2015). Ups is a franchising company that allows investors to open UPS stores as long as they meet some financial and legal requirements, and this is part of its tremendous success over the years (Shipping, 2015).

Competition

The carrier industry is associated with the presence of several giant companies that compete for market share. UPS faces a monopolistic competition. Despite UPS acquiring the leading status in the global industry, it faces stiff competition from several companies. In the US market, the closest rival to the company is FedEx. FedEx has a relatively large market share locally and internationally, and it has always looked to beat UPS in the business through the provision of quality services at affordable prices (Hesseldahl, 2005). The two companies have a similar business model; hence, their quest for a bigger market share in the local market is bound to continue. In the international market, the European market is dominated by TNT Express and DHL. The two giant companies have established a loyal market share in the region, but UPS also has a stronghold on customers in the region.

Increasing Market Power

In monopolistic competition, companies can increase their respective market power by enhancing the uniqueness of their products and services. UPS should look to differentiate its services to harness a larger loyal market share. The company should ensure that its services are not perfect substitutes for the services offered by other companies in the industry (Monopoly, 2015). It is also advisable for the company to review the pricing system to harness a larger market share. Maintaining high quality in services and ensuring the company delivers packages faster than its rivals is also a viable approach to increasing market power. Most of the competitors in the market increase their competitiveness by providing faster package delivery services; thus, UPS should focus on providing the fastest services.

Patent Licenses

Patent licenses insulate companies from the competition; thus, they give the associated business entities the ultimate market power. This implies that companies holding patents can dictate the prices of their products because alternatives do not exist (Alden, 2015). This is quite unfair to the consumers because some of the products that are patented are found within the basic needs bracket. For instance, pharmaceutical companies patent most of their new inventions, and the associated drugs are always relatively expensive. This implies that despite the presence of drugs that can help people fight serious illnesses, the majority of the people cannot afford them. It is quite unethical to hold a patent and use it unethically; hence, patent licenses should have an expiry to facilitate the entry of cheaper alternatives of the products. The expiry of a patent provides competitors with a chance to develop similar products, and the availability of choices for the products lowers the associated prices.

References

Alden, L. (2015). Web.

Hesseldahl, A. (2005). Web.

Monopoly: Monopolistic Competition. (2015). Web.

Plunkett, J. W. (2015). Plunkett’s Transportation, Supply Chain and Logistics Industry Almanac 2015. Houston: Plunkett Research, Limited.

Shipping. (2015). Web.

The World’s Most Valuable Brands. (2015). Web.

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IvyPanda. (2020, May 17). The United Parcel Service' Imperfect Competition. Retrieved from https://ivypanda.com/essays/the-united-parcel-service-imperfect-competition/

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"The United Parcel Service' Imperfect Competition." IvyPanda, 17 May 2020, ivypanda.com/essays/the-united-parcel-service-imperfect-competition/.

1. IvyPanda. "The United Parcel Service' Imperfect Competition." May 17, 2020. https://ivypanda.com/essays/the-united-parcel-service-imperfect-competition/.


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IvyPanda. "The United Parcel Service' Imperfect Competition." May 17, 2020. https://ivypanda.com/essays/the-united-parcel-service-imperfect-competition/.

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IvyPanda. 2020. "The United Parcel Service' Imperfect Competition." May 17, 2020. https://ivypanda.com/essays/the-united-parcel-service-imperfect-competition/.

References

IvyPanda. (2020) 'The United Parcel Service' Imperfect Competition'. 17 May.

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