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Case Study: Why Did US Postal Service Want To Enter The Third-Party Logistics Market

929 Words4 Pages

1. Why did US Postal Service want to enter the third-party logistics market? The US Postal Service wanted to enter the third-party logistics market as a response to competitors activities, whether or not valued was added it did not want to risk the reduction of value based on their position (Maital & Seshadri, 2012).
2. What were the three options available for entering this market? What were the advantages and disadvantages of each?
1) The first option that the US Postal Service arrived at was the build option which “create third-party capabilities from within the Postal Service and make it a new line of service offering, similar to that of UPS and FedEx” (Maital & Seshadri, 2012, p. 504).
a) Advantages would be seen in better service, better …show more content…

Moreover including the substantial involvement of various types of capital such as dollar, legal, and political (Maital & Seshadri, 2012). With a traditional cost analysis there was no positive cash flow until three years into the operation of this venture (Maital & Seshadri, 2012). This is seen as a disadvantage based on the company’s measure, from the marketing department, of when positive cash flow had to occur for a new service venture (Maital & Seshadri, 2012). Even the options to reduce the cost of this venture was considered a loss when it came to the “total distribution flexibility for the customer” (Maital & Seshadri, 2012, p. 505). Especially in contrast with the fact that the US Postal Services competitors current build installments were already better than their cost reduction option for …show more content…

Subsequently highlighting the overall benefits and reasoning to US Postal Service’s abrupt (in terms of the case study) choice to go with the partnering strategy for their third-party logistics delivery service venture (Maital & Seshadri, 2012). Additionally developing a competency curve over a learning curve is more ideal in attracting a third-party logistics firm to partner with then one that was stuck on a learning curve (Maital & Seshadri, 2012).
4. How did the Postal Service go about finding an appropriate partner? The approach that the US Postal Service took to go about finding an appropriate partner was similar to that of research methods. They cast a wide net to twenty of the major third-party logistics firms within their industry with a detailed letter of intent. They then narrowed it done to the five best matched companies that met US Postal Services needs followed the work of a team of professionals that carried onsite visits and in-depth interviews (Maital & Seshadri, 2012). The US Postal Service then picked a partner after a five month period of these assessments and deliberations (Maital & Seshadri, 2012).
5. What financial analysis was carried out to compare the three

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