Case 4

Due to the fierce competition and one another’s desire to one up the other, UPS and FedEx increased investment expenditures significantly. Between 1992 and 2003, capital expenditures for both companies rose at an annual rate of 34.76% and 36.78%. The main developments that impacted UPS from 1992 through 2003 were:

* making UPS stock available through a public offering,

* offers guaranteed 8 A.M. overnight delivery, and

* contracts with Yangtze River Express for package delivery withing China.

The main developments that impacted FedEx from 1992 through 2003 were:

* launching a Web site for package tracking,

* establishing a Chinese headquarters, and

* expanding home delivery to cover 100% of the U.S. population.

From a growth perspective, our team has concluded that FedEx has a outperformed UPS. From our groups analysis of the CAGR in exhibits 2 and 3, FedEx has out performed UPS by:

* 4.21% in Sales,

* 1.69% in Book Assets,

* 10.95% Net Income before unusual gain (loss),

* 16.68% in Net Income, and

* 10.95% Operating Income.

From a revenue perspective, our team has concluded that UPS has outperformed FedEx. Exhibit 7 shows U.S domestic, international, and consolidated revenues and assets from years 1992 to 2003. UPS outperformed FedEx in revenue by:

* $135,399,000 domestically and

* $131,411,000 in consolidated revenue.

UPS outperformed FedEx in identifiable assets by:

* $54,778,000 domestically,

* $7,626,000 internationally, and

* 62,409,000 in consolidated assets.

By looking at exhibit 4 both comapines have showed a past history of competitive development.

* Both launching website for package tracking in 1994,

* establishing development in Latin America, and

* implemting a more efficent delivery method.

These past events demonstrate a direct correlation of both companies ideas for expansion in China. China being the second largest growing economy in 11 years and projected to be...