UPS shares 5 Keys for Global Business

Package delivery giant United Parcel Service has come a long way since David Abney arrived in 1974 as a part-time employee loading and unloading packages.

At the time, the company was still struggling to reach all corners of the United States. Today, UPS has grown into a Fortune Global 150 company with 415,000 employees in about 200 countries and territories. Each day the company handles more than 15 million packages, representing about 2 percent of the world’s gross domestic product.

Abney also has come a long way. The former part-time truck loader now works as chief operating officer at UPS. Abney talked April 6 at Thunderbird School of Global Management about lessons learned along the way for creating sustainable prosperity through global trade.

He said UPS faltered at first when the company expanded into Canada and Europe in the 1980s. “We assumed that what worked in the United States would work everywhere else,” Abney said. “We stumbled greatly with that type of approach.”

For example, Abney said the company’s trademark brown uniforms created problems in Germany, where people associated the uniforms with the Nazi party. “A lot of things can be different from place to place,” he said.

He said UPS learned quickly to make adjustments and be flexible. He shared five rules for global business that apply in any country.

1. Long-term vision determines long-term success
Abney said companies first need a long-term vision that guides daily operations. Companies that abandon their vision in turbulent times sometimes achieve short-term success, but he said they pay a penalty down the road.

Abney said UPS stuck to its long-term vision in Europe, even when the company lost money in the region year after year. The decision started to pay off by the end of the 1990s with the emergence of the European Union, which has greatly reduced trade barriers on the continent.
“One of our competitors chose to pull out of Europe,” Abney said. “But we stuck with it and made it work. Today Europe is one of our strongest regions.”

2. Relationships matter
Abney said relationships matter in any type of business. But human interaction and trust become even more important as global supply chains expand into increasingly remote and distant locations.
He said the success of UPS in China shows the value of building relationships of trust at all levels of government and beyond.

“You need relationships with the central government and across each province,” he said. “You need to go city by city, sometimes department by department.”

Abney said the key was convincing Chinese officials that UPS would empower local companies and provide jobs for local workers. “We had to convince people that we were an enabler,” he said, “not a barrier.”

UPS also reached out to local communities with philanthropic projects such as the construction of computer laboratories in rural, remote villages. By 2008, UPS had enough clout in China to step forward as a sponsor of the Beijing Olympic Games.

“We could not have done that without those relationships,” Abney said.

3. Your values are your brand
Abney said companies also need to stick to their core values as they expand into new markets. He said bribes and payoffs are standard practice in some countries, but UPS refuses to participate in any form of corruption. “We’ll pull out of a country if we have to,” he said. “What you can’t do is let short-term gains compromise your values.”

4. Flexibility is a must to mitigate risk
Abney said global companies such as UPS must remain flexible to survive. He said natural disasters, disease outbreaks and market shifts anywhere in the world can affect daily operations. “You can’t plan for everything,” he said. “But you’ve got to be prepared for as much as possible.”

5. Be a voice for open trade
World governments have responded to the global financial downturn with new measures to protect local interests. Abney said this spike in protectionism has led to strained relationships among governments, and global companies such as UPS often get caught in the middle.

He said business leaders must fight this trend and be a voice for open trade. “Protectionism creates barriers to trade,” he said. “Yet trade has lifted millions of people out of poverty. It’s a job creator.”

 

[This article has been reproduced with permission from Knowledge Network, the online thought leadership platform for Thunderbird School of Global Management https://thunderbird.asu.edu/knowledge-network/]