Canada Post Essay, Research Paper

Executive Summary

Canada Post Corporation will face many difficulties in the future stemming from two present concerns:

?Customer Perception- Customer perception is fairly negative and is either associated with problems evident in the past or those associated with the United States Postal Service.

? Unionized Labour- Unions are a constant problem for any company associated with them.

To remedy these situations we propose the following:

?Divestiture- CPC should break into strategic business units. Each unit would then be responsible for individual quality control, sales, personnel as well as research and development. This divestiture will help them to reduce the detrimental effects of CPC?s union as they will be contained in only one or two of the strategic business units and not the whole of the company. This will also facilitate CPC?s drive into e-commerce as they will be able to hire technical experts into a strategic business unit without the consent of the union.

?Improve customer awareness- Incorporate an active advertisement campaign aimed at improving customer awareness of CPC?s improvements in operations and service.

Introduction

CPC is the fifth largest employer in Canada, employing almost 64,000 personnel to maintain daily business operations within Canada and abroad. The corporation is a Federal Crown Corporation responsible to customers, stakeholders, government, Canadian Union of Postal Workers(CUPW), and employees. In 1982/83 Canada Post incorporated. Since then it has operated a customer based organization that has recorded an increase its revenue by 138% since its incorporation. CPC boasted revenues of $5,380 million for year 1998/99.

CPC currently owns a significant portion of Purolator Courier Limited (95.8%) which is a leading domestic courier company within Canada. CPC also holds shares in International Post Corporation (IPC) which provides international consulting services for the mail distribution industry.

Over the years CPC has developed a customer-based philosophy improving their daily mail operations, customer relations, public perception, professionalism, and the relationship between management and CUPW. To solidify Canada Post as a corporation that cares for its customers, they have introduced an ombudsman to act as a third party mediator in customer satisfaction complaints. Unfortunately, consumers ma not be aware of the improvements that the CPC has made of the last few years.

?We are in business to serve all Canadian, businesses and organizations, through the secure delivery of messages, information and packages to any address in Canada or the World, at a level of quality and value that makes customers want to repeat the experience.?

-Canada Post mission statement

Canadians have had little choice as to their mail carrier, however, with an increase in mail couriers, technological advancements in e-mail and on-line shopping Canadian customers now have more choices. Increased competition and technology has forced Canada Post to apply innovative and technological improvements to remain in business and grow. Canada Post has made milestone improvements since their incorporation, however, important issues still plague the Canadian company. Some of these factors will be reviewed in detail within this analysis and will include such issues as:

?Public Perception – Evidence shows that Canada Post Corporation has made effective improvements in the level of service quality they provide to customers, however, the corporation is still plagued with poor customer perception. Canada Post was considered unreliable, overpriced, inconsistent and monopolistic in nature. As well, mail customers felt their service complaints fell on deaf ears. Customers associate the name ?Canada Post? with these poor public perception traits and it is a stigma that even threatens Canada Post Corporation to this day.

?Union Relations – Poor relations between management and the CUPW inhibit corporate growth, innovation, technology as well as overall business operations. It is a relationship that affects public perception of Canada Post employees and the companies associated franchises.

?Bureaucratic – Canada Post Corporation employs almost 64,000 people and must be accountable to government, stakeholders, CUPW, employees, and its customers. As a result, Canada Post is highly bureaucratic in nature making it difficult to quickly apply innovative and technological advancements to effectively compete with environmental and corporate changes.

?Courier Hold – As indicated earlier, Canada Post Corporation owns almost all of Purolator Courier Limited. Purolator currently holds only 18% of the small parcel delivery service within Canada. This percentage is low considering only having a handful of organizations that compete within this segment of the delivery service. This industry is expected to increase substantially due to increased of on-line purchases through the internet.

Situational Analysis

External Environment

Opportunities

Canada Post has the opportunity to capture a greater share of the small parcel delivery market. They must also use price point and quality service to win back a better share of the market.

There is a vast opportunity for Canada Post to capitalize on e-commerce. There is a large untapped market for ?Secured e-mail? transactions online, Canada Post can lead the way for this market world wide. Canada Post can also utilize the internet to provide better quality services (where is my package, parcel pickup, etc?) as well as marketing their current services and products. The addressed letter mail market is slowly shrinking, but the unaddressed bulk-mail market is increasing opening business opportunities such as ad mail and surveys. In addition there is a growing market for magazine and catalog delivery.

People seem to hold an image of what Canada Post was like ten to fifteen years ago. Canada Post has made strides to improve the problems that affected their service in the past but they have done very little in improving the public?s awareness of CPC?s efforts. CPC has the opportunity to make consumers aware of its improvements and thus improve consumer?s opinion.

Canada Post with continued innovative management can continue as well as increase its international consulting business.

Threats

CPC is a crown corporation and as a result changes in government policies shape the way the company operates. This is an external threat that may arise at any time. The Government may pass laws, which affect the organization, and Canada Post has little or no control over them. This may create hold-ups that can lead to uncertainties within the organization.

The perception of Canada Post has been historically poor. Over the years customers have developed a negative image about the corporation. These criticisms have arisen due to misdirected and slow mail. During the last few years Canada Post have made many positive changes to address consumers concerns. Despite these changes, the customers continue to think of CPC as inefficient. This is due mainly to a lack of consumer awareness about the improvements. Hence customer perception of Canada Post continues to be low.

The Canada Post Corporation has expanded vastly over the years. More and more outlets have been opened to provide consumers with easy access to Canada Post. However this rapid expansion has led to Canada Post exercising less control over the quality of service provided by these franchises. This may lead to possible bottlenecks and decrease service quality.

Letter-mail volumes, which still provide the bulk of Canada Post?s business, face competition from courier services and electronic alternatives such as fax, electronic mail and electronic funds transfer. The dominant users of Canada Post’s letter-mail services are banks, utilities, credit card companies and other businesses. These companies are likely to adapt to more innovative electronic alternatives. This situation poses an acute threat to Canada Post Corporation unless they are able to innovate.

In the distribution market, multinational courier companies, such as United Parcel Service (UPS) and Federal Express, have used their massive United States networks and advanced technology to expand into Canada and provide stiff competition to Canada Post.

Internal Environment

Strengths

One of the key strengths that Canadian Post Corporation has is that they are a monopoly in the Canadian postal service market. For over a century Canada Post has successfully met the needs Canadian citizens by the delivery of letters and parcels. Time has allowed them to refine and sophisticate the mail processing and distribution system. Today, they are one the highest rated postal services in the world. Canada Post Corporation also conducts International Consulting operations and the system they have in place acts as a model for the postal service needs of other countries.

About ten years ago CPC made a strategic decision to purchase a large part of Purolator Courier. This allowed them to diversify their business into an area that was relatively familiar to them. This strategic move in today?s world of e-commerce and parcel delivery, will allow them to capitalize on the new evolving retail markets online. Canada Post has recognized the need to improve customer relations and modernize company image. They have extended the company?s philosophy to be ?In Business to Serve.? Recognizing the need for change is hard for companies to do, but it will be worthwhile in the long run.

Over the years, Canada Post Corporation has remained constant in the area of revenues. Last year alone they increased their net profit by $14million resulting in an annual net income of $50 million dollars.

Weaknesses

Many of Canada Post?s weaknesses are found directly within the organization itself. With over 46,000 employees belonging to the CUPW, the concern of the union places great stress on the corporation. There is a constant battle between the corporation?s need for labour stability and operating flexibility as well as the unions need to improve their members working conditions and terms. Actions, such as a strike, can be detrimental to the survival of Canada Post in this highly competitive industry as evidenced by a $100 million loss of revenues in 1998 directly related to a union strike. In addition, by having a unionized corporation, Canada Post is limited in its hiring policy.

The mail distribution industry is constantly changing with innovation and the increase in technology. Canada Post is slow to adapt to this fast pace of a changing environment. They have the capital and resources to be able to compete in this environment, but always seem to be one step behind everyone else in the market.

Canada Post realizes the importance of customer acceptance, but they haven?t been able to making customers aware of their superior service. Throughout the years, Canada Post has made significant changes and improvements to their service, but has done little to make the consumer aware of them. Marketing is a major weakness of Canada Post.

Strategic Alternatives

Most long-term alternatives are derived from both the opportunities and weaknesses of the corporation.

?Canada Post Corporation has many alternatives that revolve around e-commerce. With a majority control of Purolator and a basic monopoly in the letter delivery business they should focus on capturing a larger share of the small parcel delivery market. With long-term marketing plans pushing the use of Puralator and Canada Post the two could increase substantially their hold on this market.

?Canada Post Corporation should look to create strategic alliances within the e-commerce world and market themselves as the delivery vehicle within Canada for the internet.

?An additional focus of the CPC could be that of un-addressed mail. The junk mail market is increasing rapidly and should also be a focus of CPC.

?Secure document transfer market should be a major focus of CPC. This is a virtually untapped market and can be easily marketed across borders. CPC needs to perfect this technology and market itself as a world leader in this field.

?Create strategic business units to flatten CPC business structure and minimize the detrimental effects of unions. This will also facilitate CPC?s ability to react quickly and be more innovative.

Recommendations

CPC will benefit by doing the following:

?Management should remain liquid and constantly readjust and evaluate the direction of their company and the industry.

?With CPC as the parent corporation, strategic business units should be created to flatten the business structure. Other SBU?s could be added as new opportunities arise or create first mover advantage in an emerging market.

?Allow each SBU to be independent for development, maintenance but have all SBU?s responsible to CPC and accountable.

?Offer comparable wages to allow for SBU?s non-union labor personal to be as good, if not better than the competitions.

?Expand the e-commerce capability buy offering existing products as well as new innovative services and products. Examples: Package pickup (utilizing Purolator more blatantly), garnering strategic alliances with additional companies to secure more small package deliveries.

?Incorporate a secure email delivery system appealing to differing degrees of security required. The cost to the consumer will be a fraction of current costs and can be accomplished with less hassle (bank and bill statements, documents requiring signatures, etc?). The costs for CPC in utilizing this strategy will be a significant cost savings compared to that of regular letter delivery. CPC should then see a steeper decline in the use of regular letter deliver. CPC will then be able to reduce costs by using less unionized labour (costs) while making a larger profit margin on the secured delivery.

Conclusion

The Canada Post Corporation has recognized the need and importance of being innovative and responding to change. Today they are trying to keep up with the pace of technology as well as trying to improve their public image. We have identified that a major obstacle that presently faces them lies within union and management. We found that the union is holding them back with respect to the rate of change and as a result we recommended that they should limit the unions influence by diversifying into separate SBU?s. In order to be successful tomorrow, we have also recommended that Canada Post expand operations to include e-commerce and strategic alliances as well as secured email delivery. The Canada Post that you know today will not be the same tomorrow, if they can put words into action we wouldn?t be surprised to see them shake off the reputation and come out a solid leader in the years to come.

Information sources:

Canadapost.ca

Yahoo news sources

Public opinion