Strategic Management Accounting - Essay Example

In this paper the business model of United States Postal Service will be analyzed. USPS is an independent agency of the United States federal government responsible for providing postal service in the United States. The USPS employed 626,764 workers as on January, 2014 and operated 211,654 vehicles in 2013. The USPS is the operator of the largest civilian vehicle fleet in the world. The USPS is legally obligated to serve all Americans, regardless of geography, at uniform price and quality. The USPS has exclusive access to letter boxes marked "U.S. Mail" and personal letterboxes in the United States, but still competes against private package delivery services, such as UPS and has part use with FedEx Express.

The paper will explore different constituents of product and capital markets to understand interaction between both the markets. The United States Postal Service is facing the most urgent financial challenge in its history. Protecting the viability of the nation’s postal system is a complex and difficult task that has no simple solution. The Postal Accountability and Enhancement Act of 2006 (hereafter referred to as the Postal Act of 2006) revised the break-even regulatory model of the Postal Reorganization Act of 1970 (PRA) in favor of a profit and loss model.

An underlying presumption of the Postal Act of 2006 was that mail volume would continue to grow. However, falling mail volumes due to the recession and electronic diversion, combined with the additional statutory burdens that are discussed in greater detail later in this paper, make it evident that the Postal Service’s existing business model does not provide the flexibility needed to meet the new market realities. The tools available to the Postal Service are insufficient to respond to the combined effects of the economic recession, the diversion of mail to electronic alternatives, and the statutory requirement