United States Postal Service Case Study Example | Topics and Well Written Essays - 500 words

United States Postal Service - Case Study Example Rather, it creates revenues out of its sale of postage stamps, products and services. Over the last 2 years (2007-2008), the USPS has been hit by increase in cost of postage stamps, cost of deliveries and shipments and the increasing tendency of people to use email to send messages rather than posting letters or cards. It has absorbed a loss of $5.3 million in 2007 and $2.8 million in 2008, leaving it strapped for cash and increasing the possibilities of bankruptcy or business failure. This has been eating into its retained earnings for the period (David, 81). Meanwhile its revenues stand at $75 million and though it has cut back on employees and increased the number of points served, this is not translating into an increase in profitability, mainly due to the rise in costs. USPS clearly needs to follow the lead of its competitors UPS and Fedex, who have leaner and more profitable operations. Its service agreements with them need to be scrapped. USPS also needs to reduce the number of service outlets it has which will reduce the cost of maintaining them. At best one service location per district will work fine. It needs to adopt a centralized system. The internal analysis for USPS shows that it is suffering from many problems. Its employee unions have been successful in bargaining for compensation and benefits, while the employees have been working less hours due to lack of work. As 52 percent of its revenues derive from first class mail, a decline in this volume has affected its revenues. Meanwhile the fact that its Board is appointed by the President and its prices are regulated by CPI, there is a double bind on USPS in that it cannot increase its prices beyond a certain limit. The separation of business into market regulated and Government regulated areas has been the death knell for USPS (David, 83). No organization can be run as a combination private and public enterprise- it is either one or the other. In spite of all its efforts,