Connecting People and Business

United States Postal

Service

Case Analysis

Prepared by:

Erika Villarreal
Christian Rivera
Cindy Vargas
Martin Robledo

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History:
The first postal service was established in 1692 with a grant from King William and
Queen Mary of England. However, tired of English crown’s dictatorship, in 1775 the
Continental Congress created a Post Office Department and appointed Benjamin Franklin
as the first Postmaster General of that organization. Benjamin Franklin was instrumental
in leading the effort in creating more post offices and streamlining the mailing system.
USPS has seen countless changes over the years. For example, mail used to be delivered
by horses which could take anywhere from 10-14 days. Now mail is delivered using
postal vans with an estimated delivery time of 2-4 days. From having the Postmaster
manually write the postage on a letter, to now being able to print postage on-line, USPS
evolved since 1775 introducing new technology and new services to the nation. USPS
has grown to become the third-largest employer in the United States and has become a
multimillion dollar company.

Services provided by USPS:

USPS is most commonly known for selling postage stamps and delivering express, first
class, standard and bulk mail, as well as packages all over the U.S. However, over the
years USPS has increased the number of services that they provide to their customers in
order to ensure delivery of letters and packages. For example, a customer can purchase
delivery and customer confirmation, insurance, and a return receipt. The Post Office has
also contracted with the Department of State to collect the applications for and assist in
the processing of passports.

With the many advances in technology USPS has made, they have also been able to offer
services that are more progressive, thus providing the customer more convenience. The
creation of their website (usps.com) allows the customer to purchase stamps online or
schedule the pick up of a package.

Problems the company faces:

On March 25, 2009, Postmaster General John Potter went before Congress to inform
them of their financial situation and advise them that they might need their assistance
monetarily. Potter stated, “We are facing losses of historic proportion. Our situation is
critical.” Since 2003, USPS’s net income has steadily decreased. What would cause a
company that was once extremely profitable to begin recording losses in such a short
amount of time? There are various factors that have caused the decline of revenue for
USPS. Unforeseen increases in fuel, competition with overnight carriers, and the access
of on-line bill pay have all contributed to the drop in net income; however, the lack of
communication between all levels of management, as well as the lack of communication
with their customers is largely to blame for the reduction in their revenues. A decline in
revenue could lead to a decline in services, a reduction of mail delivery, and closures of
processing plants. Regardless of the various factors, the fault lies within the company
itself for not communicating efficiently to increase revenues.

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Communication errors that are prevalent:
1. USPS must address their lack of effective communication with their customers.
Because of this lack of communication, customers are rarely informed of the numerous
services or the economical convenience that USPS provides. When one thinks about the
Postal Service one usually does not consider about how affordable, safe and secure it is to
mail a letter across the nation. Many customers have a negative view of the Postal
Service because of the increase in stamp prices, the inadequate customer service they
provide, or the whole “going postal” notion. In fact, many customers don’t even know
that one doesn’t even have to go to a local post office to receive their services. A
customer can go online to purchase stamps or to request that a package needing delivery
be picked up at the customer’s home.

2. The second major problem with USPS is the miscommunication found among all
levels of management. With over 600,000 employees, it is expected that there will be
difficulties for management and employees to all be on the same page. Upper
management may not be aware of the problems faced in smaller post offices, leading to
substantial problems. For example, upper management at the district level may try to
micro-manage post offices three hundred miles away without a true sense of the issues at
hand. It may also be difficult for these small post offices to get a response from upper
management when faced with any issues. District offices add more work and reports for
the Postmaster to get done on a daily basis while simultaneously cutting hours. This can
cause Postmasters to deviate from other urgent tasks to attend to what upper management
finds important. Most of the upper management is made up of older individuals who have
not evolved with the new methods of management and vice versa for lower management.

3. The third major issue involves lower management, where many of these managers do
not accept change very well. Many times, when district is implementing new
standardized operating procedures (SOP) lower management will refrain from
implementing these procedures in their offices. This stalling usually occurs either
because of the misunderstanding of the SOP or insufficient training. This brings us to the
biggest issue we found for the communication problems in Postal Service—the lack of
management experience and training. An employee could be placed into a Postmaster
position and not receive proper training for six months or more. Postmaster training
occurs once a year in January, but it is only for new Postmasters. Even after the training
managers will have to learn many procedures on their own, due to the fact that the
Postmaster training does not cover the entire SOP a Postmaster must know. After this
occurs, neither Postmaster nor upper management ever receives any type of management
training.

Our team’s approach to these communication issues:

We will do extensive research on the internet as well as use a team member’s inside
knowledge to educate ourselves, as well as the general public as to the issues USPS is
facing.

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Analysis of company’s business levels and corporate strategy:
USPS is fortunate to have a monopoly on first class mail. They have been able to prosper
and grow financially for many years. They have made great strides towards advancing
their technological services. However, they have been faced with declining revenue and
face the possibility of having to request the assistance from the federal government to
keep them in business. Many factors are to blame for this outcome. We will concentrate
on the communication issues we feel should be addressed to assist USPS to turn their
business back into a profitable one.

Strengths:
A major strength USPS possesses is their monopoly on most first class and standard mail.
This essentially eliminates competition in this category. Another benefit USPS has is the
financial backing of the federal government should they ever need the assistance.

Weaknesses:
Unfortunately, USPS has many weaknesses. Their hours of operation are not very
customer-friendly, with many of the offices not open past 5:30--a time when many
customers are barely ending their work day. Also, customer service received at many post
offices can oftentimes leave the customer wanting to take their business else where. On
occasion, one can be assisted by a postal worker with wonderful customer service;
unfortunately, (and more often than not) the customer service at USPS is not up to par.
This leads to the key weakness for USPS—their inability to communicate effectively
with their customers. Along with the inability to communicate effectively with their
customers, USPS has a similar problem with their over 600,000 employees.

Opportunities:
Possibly one of the easiest ways for USPS to slowly begin increasing their revenues is to
dramatically improve their customer service. By having a positive attitude, postal
employees have the opportunity to make a customer feel welcome, allowing them to relax
and open up awareness to the additional services provided by the post office. This is a
great opportunity to not only try and sell additional services, but to communicate more
deeply with the customer and identify customer needs. Another suggestion would be to
either extend or adjust the post office’s hours of operation to accommodate more working
customers. Staying open later one or two nights a week would provide more access for
customers needing to utilize the services of the post office. An excellent opportunity that
would benefit all involved would be to open a temporary post office location inside a
local mall during the holiday season. This would give customers, shopping for Christmas
gifts for out-of-town friends and family, a convenient and practical opportunity to mail
out their gifts the same day.

Threats:
The major threat to USPS is the internet. The increase of on-line bill pay greatly affects
the number of bills that would normally be sent using USPS.

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Porter’s Five Forces Model:
1. The risk of new entry by potential competitors: With regards to most first class mail
and standard mail, USPS has a monopoly on these services. However, there is always the
potential of new companies establishing themselves as an overnight/package delivery
services.

2. The degree of rivalry among established companies within an industry: There have
been several delivery services that have made an appearance and have not succeeded
(Airborne Express to name one). However, UPS and FedEx have enjoyed strong staying
power and continue to be the main competition for USPS.

3. The bargaining power of buyers: Currently, several company websites offer

convenient services that used to be handled by USPS. Most banks or utility companies
offer on-line bill pay, which eliminates the need for mail delivery of bills. Many
customers enjoy the convenience of these services, eliminating the cost of a stamp and
possible driving time to mail the bill.

4. The bargaining power of the suppliers: Suppliers to USPS really don’t have much
bargaining power. USPS outsources to various businesses to obtain the supplies they
need to efficiently run their company. Suppliers realize what a huge contract it is to have,
so it is in their best interest to keep their products low-priced.

5. The threat of substitute products: As listed above, one threat of a substitute power
would be on-line bill pay. Another threat would be on-line greeting card websites. They
eliminate delivery of cards for various types of celebrations.

The opposing viewpoints:

While USPS acknowledges their financial shortcomings and the many economic
obstacles they have had to face; they do not acknowledge their communication
shortcomings. With Vision 2013 they propose good business strategies; however, they do
not address their communication issues which we feel are at the heart of the problem.

Present solutions/recommendations:
USPS emphasizes the importance of their customers in Vision 2013. However, we have
not seen improvements made to their customer service. We hope with the
recommendations below, USPS will be able to implement them to strengthen their
company and restore it to the profitable business it once was.

Solutions/recommendations:
1. USPS needs to look at their marketing operations because it is rare that you see them
advertising any of their services on television, radio or newspapers. In order to survive
the economy and maintain itself as a vital competitor in parcel shipping, USPS must
change their image and improve their Retail and Marketing Operations. USPS is a
government entity that needs to develop and learn from other companies how to
affectively advertise, provide excellent customer service while operating an efficient and
cost-effective post office. Advertisements should include topics such as economical, safe

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and secure mail delivery by addressing the issue of the growing online identity theft that
has plagued this nation. This can help deal with the increasing use of paying debts online.
In addition, USPS needs to make customers aware that they can receive free shipping
supplies at their doorstep when using Priority or Express mail services. In rural delivery
areas, mail carriers are like post offices on wheels, with competitive costs in shipping
parcels, compared to competitors of USPS. Advertisements should be done on television,
radio or newspaper because although some of the things mentioned are already advertised
by mail, USPS needs to realize that most mail advertisements are not even read by
customers. Another way to educate customers on their services and to keep customers
returning to USPS is to provide exceptional customer service. Training mail carriers and
retail associates on how to speak with customers when encountering them can bring in
more revenue by up-selling and increasing customer satisfaction. Furthermore, USPS
needs to make their retail area more appealing to the eye. That could be done with proper
lighting, organization of retail merchandise with price displays, and quicker service that
makes a visit to the local post office short and pleasant.

2. The best solution we see for USPS in regards the communication problem among
management is enhanced management training. There should be annual certifications
that should be implemented to ensure management is up-to-date in different management
methods needed to run an efficient office and to ensure management understands any new
SOP implemented that year. Proper operating procedure audits in post offices that ensure
correct procedure is being followed need to be implemented in all post offices.

3. In addition, there should be surveys across all levels of management that address
issues, such as how Postal Operations are being run by superiors. Suggestions or
concerns management might find important could also be addressed in this manner. This
could help make upper management aware of issues occurring in the Post Office and
address them accordingly.

Conclusion:
USPS is a vital entity to many Americans. It is essential that they work on the
communication issues discussed above to ensure they maintain their ability to provide
services to their customers. In order to truly succeed as a company, USPS must also take
corrective measures to improve communication from within. Should USPS take into
account the recommendations above, they would be able to see revenues begin to
increase as well solidify their unity as a company.

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 Works Cited

Buzzle, April 2009

http://www.buzzle.com/articles/history-of-the-united-states-postal-service.html

United States Postal Service, April 2009

http://usps.com
http://ww.usps.com/strategicplanning/cs07/cs2007.pdf.

Wikipedia, Inc., April 2009

http://en.wikipedia.org/wiki/United_States_Postal_Service#History
http://en.wikipedia.org/wiki/United_States_Post_Office#Service_level_choices

Yahoo!, Inc., April 2009

http://news.yahoo.com/s/ap/20090325/ap_on_go_ot/postal_woes/print