Managerial Economics Project
Introduction (US Postal Service)
The united states postal service or popularly known as USPS is an independent agency that is responsible for providing postal services in the United States. It also provides these services to other associated states and insular areas and has become one of the most recognized agencies by the federal government. USPS was founded in 1775 during the second continental congress. Benjamin Franklin was its first postmaster general. A postal service act was passed in 1792, supporting the services that this agency was supposed to provide. By 1872, it was transformed top cabinet-level department and to a postal reorganization act in 1970. By this time, it was made an independent agency. Ever since a lot of tax exemptions and subsidies have been served to those that use USPS, some have even been eliminated and reduced. This agency has served as a career foundation for many and a salary provider to many. It has a lot of employees, both career and non-career employees. The USPS is supposed to serve all Americans without regarding the geographical location or race. They provide quality and uniformity in the price for all American citizens. There is exclusive access to the letterboxes and personal letterboxes that have been marked US mail. Despite being there for all these years, they still have to compete with other private package delivery services. However, this has not hindered their excel and the massive services they offer to people in the united states. In 1970, the postal workers in New York City held a strike due to low wages and poor working conditions. This also included the poor treatment they got from the civil rights movement. The first strike involved only the postal workers, but with time, it gained a lot of state department postal workers all over the country. The strike ended without any concessions from the government, but the workers could at least draft a contract that was meant to give the workers what they wanted. They were also able to sign the postal reorganization act that was signed by President Richard Nixon, which took effect in July 1971.
Company’s product line
The USPS is one of the most prominent organizations that have offered employment services to people. It ranks in third place when it comes to creating employment opportunities apart from the federal government and Walmart. Daily. United States postal services can deliver about 660 million pieces of mail and to about 142million delivery points. It has about 30,825 post offices and locations all over the states and delivers about 149.5 billion mail copies each year. It operates the largest fleets of cars in the world. Its estimated working vehicle number stands at 227,896 (Wattles, 1973, pp89-97). These are easily identifiable since most of them are the Chevrolet, one of the long-life machines ever known to man. Initially, these vehicles did not have anti-lock brakes, airbags, air conditioning, or enough space to carry around large pieces of mail. However, this has gradually changed as there has been a serious argument to make upgrades on these cars, which will make them even better than before. There has been the production of prototypes, which had made it abit hard for them to get into a contract with a reliable dealer. To date, there has not been a guaranteed contract for the replacement of these trucks.
Even though there is serious competition in this industry, USPS has been able to- maintain and handle the demand curve. Daily, the average American citizen is bound to receive atleast one mail. This, therefore, increases the demand curve for the postal services. They have been able to deliver since they recognize and manage their organizational demand for their services. Coming up with a demand management structure has been one of the most significant steps they have made to ensure they fully attend to demand. There are, however, various issues that affect demand, that is both the external and internal factors. It might be almost impossible to take note of all demand drivers, but some which are noticeable are manageable.
External factors
Market and economic conditions. This is a big demand driver in the daily USPS activities each day. These conditions may include strikes, recessions, changes in technology ad future expectations of interest rates. These conditions may profoundly affect the mailing services. For example, the rampant changes in technology have profoundly influenced the use of emails, which is now considered a traditional way of communication. Today people use mobile phones, can access emails on their phones or computers. Today, rarely anything is hardcopy, and people prefer using soft copy. This is one thing that can easily lower the demand curve for USPS services.
Competitors. USPS has competitors that may, at times, tend to inconvenience them or develop even better ways to kick the united states’ postal services out of business. In every market segmentation, whatever a competitor does, is all bent on attaining customers and that profit as a result (Metters, 1996, pp27-37). This means that everyone is working towards raising their brand. USPS is not exempted and has to deal with competitors to ensure that they maintain their demand curve. This may include, for example, having better customer service, fast deliveries as well as lower prices and discounts from time to time. These actions may profoundly influence customers to use this service rather than going through the competitors.
Internal factors
Product innovations or readjustments
USPS is a big company that is bent to make innovations and renovations in their company as a way of making their services even better. Some of the things that they change may highly inconvenience their customers, who may decide to look for other options. On the other hand, some innovations and renovations might seem enticing to customers, which will make them use their services even more. For example, USPS makes deliveries even during the Christmas holidays, which is the busiest time of the year for them. This makes them reliable. All the more, every innovation or change that is made in the organization will directly affect the demand curve.
Pricing strategies
Higher prices will send the customers off while coming up with favorable prices that will entice them to stay and use the services. USPS has harmonized prices that do not make its customers feel violated, therefore building a healthy demand and supply curve.
In the future, USPS might be entirely out of business since there are so many factors that may throw them out of business today. For example, the highly increased innovations in technology. In the next years to come, it will be hard for the company to make any deliveries since most people will be too much into technology.
There are a lot of factors affecting the supply of products and services. USPS requires doing a lot of calculations before coming up with a good strategy of how they will do their amount, depending on the demand for their services and the factors that will affect supply. For example, the shipping costs. The shipping costs or rates may not directly affect the profitability of an organization. Still, they might also be the reason as to why customers will always be walking away each time they hear the shipping rates. The supply for your services will go down if this happens regularly, and you are unable to keep up with the competition. Below are some of the factors that may affect the USPS supply of products.
Distance
The departing and destination of the goods are an essential consideration to make. The one rule that drives this is that the further the package travels, the higher the cost of shipping and the much time it will take before it reaches it, clients. To make reasonable shipping costs depending on distance, one should use to use an online calculator that will help you know the approximate distance and what amount would be fair to both of you. The online calculator will require the sender’s address, the receiver’s address, and the package weight and dimensions. By doing this, USPS will be able to come up with favorable supply terms for their clients.
The future outlook of the supply curve would be that there will be a lower supply in products. Again using a factor, such as distance, a person may prefer using their phone to receive an email and pay less for it rather than have the hardcopy delivered and spend lots of cash for it (Bard, Binici, Desilva, 2003, p745-771.). Technology being the most significant negative factor here will profoundly influence the supply curve. In substitute for the demand of the product, USPS can come up with online means or software that customers can use to get their emails faster and more easily. Also, they could look forward to making online payments with fewer transaction charges for their clients. To complement the product and demand, they can incorporate a new product into their organization, for example, venture into the printing of billboards and brochures for businesses and make deliveries. They can also make these online as well.
The demand for postal products in the future will be inelastic. For example, the price will increase if the revenue increases. The similar will happen if the postal prices decrease, the postal service revenue will decrease. This might be due to the widespread use of discounts. With the great recession in technology, there has been reduced demand. The demand elasticities have significantly been affected but remain price inelastic. The postal prices will and are not in flux, which makes the demand for the products decrease. In the short run, the demand for the product will be inelastic and elastic in the long run. USPS is labor-intensive as it highly depends on laborers and employees to make deliveries as well as most of the organization’s work. Technology in producing this product is, however, important for making work easy. It will also help save on costs that will be used for other purposes. Mailing Services will remain an essential factor in the market structure, especially for the areas that have not advanced much in technology as well as for people who find it hard to use this upcoming technology.
Conclusion
In conclusion, the United States that postal services should consider going the technology way to make more profits. This will help them increase demand and supply and help them maintain their status in the market. The company’s prospect might be down due to the daily technological innovations which might highly affect them. Even though it highly employees, there is a high round of job cuts, early retirements, and construction freeze.
References
Bard, J. F., Binici, C., & Desilva, A. H. (2003). Staff scheduling at the United States postal service. Computers & Operations Research, 30(5), 745-771.
Metters, R. D. (1996). Interdependent transportation and production activity at the United States postal service. Journal of the Operational Research Society, 47(1), 27-37.
Wattles, G. M. (1973). The rates and costs of the United States Postal Service. The Journal of Law and Economics, 16(1), 89-117.