Ups vs Fedex

339 Words2 Pages
1. What happened to FedEx’s and UPS’s stock prices in early 2004? Why did they rise? Why did one outpace the other? In an efficient market, how are we to interpret FedEx’s 14% increase in market value? • The stock price of both companies rose. Because the air transportation agreement between United States and China and the market opportunities of this deal in China for FedEx and UPS. • FedEx stock prices outpaced UPS because FedEx had a larger presence in China by having 11 flights weekly and serving 220 cities in china with direct flights to important cities such as Beijin and Shanghai. FedEx was also more innovative and had better operation. • FedEx increase in market value is because in efficient market, all investors have access to information and in this case they believe that FedEx, due to its current market share and operations in China and being an innovative and entrepreneurial company, it has a better chance of benefitting from this agreement. 2. Why didn’t UPS create overnight delivery? How did FedEx get away with successfully entering this market? • Because of high cost to build an air fleet. FedEx was able to enter this market because they were an innovative company and invested a lot of capital in purchasing their own planes. The hub and spoke distribution method also helped them to enter this market. 3. What’s going on in this industry? How are these two firms competing? What are the competitive prospects for the foreseeable future? • It’s a very competitive industry. Every company (UPS, FedEx, USPS) mimics the other company’s service and promotions. There is a lot of potential market for both companies because of China’s industrial, economic, export and import advantages. Especially after the agreement between China and U.S was reached. Therefore their competitive prospects are very strong. • Each firm has its own

More about Ups vs Fedex

Open Document