Impact of Macro Environment on Uber's Strategies

This study discusses the impact of macro environment on the strategies of Uber, including political, economic, social, technological, environmental, and legal factors. It also includes a stakeholder analysis and an analysis of Uber's internal environment and capabilities using VRIO and McKinsey 7S model. Additionally, it evaluates the competitive forces in the market using Porter's five forces model.

Business strategy

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
P1 : Impact and influence of macro environment on the strategies of Uber ...............................3
P2 Analysis of internal environment and capabilities of Uber ...................................................6
P3 Porter's five forces model and evaluate competitive forces of the market.............................9
P4 Theories and models and design strategic plan for the organization....................................11
Conclusion ....................................................................................................................................15
REFERENCES................................................................................................................................1

INTRODUCTION
Business strategy means planning which is done by companies in order to be successful
in the future. Strategies can be related to management, customers etc. company also make
strategies by seeing their competitors strategy. Strategies are made so that company can achieve
growth and competitive advantages. Forming strategy is not easy and strategies are made by top
level people of the organization. uber is the multinational company which provide ride services
to the people. Under this customers can book ride via app. Mission of company is to make
transportation available for everyone. Objectives of company is Transportation should be smart,
cheap and safe. Company has started with the aim to provide services which are effort less and
can be taken from anywhere. As uber ride can be booked from anywhere. This study will discuss
impact of macro environment by applying pestle frameworks and stakeholder analysis. Internal
environment and capabilities will be evaluated by using VRIO and MC Kinsey model. Further
porters five forces will apply to analyse competitive forces and also strategic plan will develop
which will give information about the strategies which is developed by the company.
MAIN BODY
P1 : Impact and influence of macro environment on the strategies of Uber
Macro environment is known to be the collection and summation of all those factors, who
can affect the business in positive and in negative way. In other words, macro environment refers
to the external environment of the company who can give threat and opportunity as well to the
respective company (Perera, 2017). As Uber is pioneer brand in self-driving cars, food
deliveries, package delivery and transportation so Uber has to face high competition as well apart
from this there are various macro environmental factors which affects the revenue and the
profitability of the company. There are some factors such as political changes, up- gradation in
technology, changes in the taste of the society etc. which affects the strategies of the company.
Pestle analysis of Uber

Political factors
As Uber is operating globally, and for that the company has already taken endless debts
from different resources so the government of different countries is not issuing license to Uber in
their country. Besides this, Uber has become a threat for other traditional taxi drivers this is also
a reason in different countries through which government is not allowing Uber to operate in
their country. Even in US, the company is facing lawsuits that they should treat their drivers as
an employee not as a contractor, thus the company is facing licensing issue in US(Christodoulou,
and et.al, 2019). On the other hand in South Africa, government has initiated to seize the cars of
Uber as the drivers don't have proper taxi permit. So the political norms and changes have a deep
impact on the business of Uber.
Economic
Due to Uber economy of many countries moved in positive direction as its has generated
employment opportunity on a large scale for those who are searching for employment. So Uber
has discovered ample of employment opportunities for car drivers in all those countries where it
is operating. Apart from this, Uber has bound other traditional taxi services to cut down their
prices. On the one hand, Uber has generated immense competition in car driving services.
Social
Illustration 1: PESTLE framework
source: What is PESTLE Analysis? An Important Business Analysis
Tool., 2021

Social aspect is one of the concern for Uber, because to get success it is very important
for the company to win the heart of customers and provide them best services (Nandonde, 2019).
Due to smartphones and mobile- phones, customer as they can easily put their pick-up and
dropping point and timing on the app of Uber. Even the charges of Uber is also less than other
taxi services. Due to its quick and best services Uber has become a fist choice of customers.
Technological
Technology is a mediator between rider and driver and to give best services Uber has put
some unique feature in its app. With the help of technology Uber can sent their cabs to the
customer wherever they want or at any time because it becomes difficult for the customer to get
the taxi in few minutes at their place, and Uber has made it possible due to advanced technology.
Environmental
It has found that Uber has increased traffic and pollution due to Uber cabs people are not
using public transportation. To recover this issue, Uber has launched pilot project through which
the customer can take green ride.
Legal
Uber has faced many legal charges which are related, apart from this Uber has gone
through to the Human resources issues as well. Before a couple of years, Uber has been charged
by the legal laws as its driver get less salary and did not get the salary which was promised to
give, therefore Uber has faced many controversies as well (Simões, 2020).
Stakeholder analysis
Stakeholders are known to be all those people who have keen interest in the project or are
involved in the project (Eskerod and et.al, 2018). Stakeholders can be investors, employees,
customers, competitors etc.
High power, high interest – Those stakeholders who have high interest in the project, Uber
should give them priority and make them satisfy as theses stakeholders can be investors who
have invested their money in the project. Examples – investors, customers and employees.
High power, low interest - This kind of stakeholders have strong influence in the company but
on the other hand they don't show much interest as well, this can be higher management of the
company who have strong influence in the company. Examples - suppliers.
Low power, high interest - To handle such inventors, Uber has to inform them and check them
on regular basis and ensure that they don't have to face any issue from the project and if they are

facing any, then company should find out some solution for them(Rai and et.al, 2018).
Example- Customers
Low power, low interest – Uber can simply aware them about the necessary and relevant
information as these investors don't have power and interest as well in the company.
Balance score card - it provides the performance matrix which recognize, improve and
control the functions of the business. Balance score card measures the main aspects of
business.
P2 Analysis of internal environment and capabilities of Uber
Internal environment of Uber, comprises all the elements such as its current employees,
management, employee's behaviour etc. These are the very important feature of the company
because in the absence of any of them company can't perform its regular day to day operations
(Dos and et.al, 2017).
VRIO analysis
This analysis will help the Uber to know its internal resources which can help Uber to
gain competitive advantage.
Valuable
With the help of VRIO analysis Uber got to know that the financial resources of the
company are highly valuable and assist the company to grab the upcoming opportunities to
reduces the threat of the company(Lacaze, 2020). Apart from this, the food product and delivery
services of Uber is also valuable. Besides this, the employees of Uber are very valuable as most
of the staff and workforce of the company are highly trained specially in Uber cab, all the drivers
are trained and generate more profit for the company. Apart from this distribution network of
Uber is very strong, more and more customer can find out the Uber cabs at their destinations.
Along with this IT department is valuable asset of the company as the entire business of Uber
cab is based on their app only, so it is must for the company to update their app and also provide
unique feature top the customers.
Rare
The research and development department of the company is rare apart from this the
company has invested ample of money in technology so that they can provide good and high
quality services to the customer. On the other company has invested in the distribution network

of the company as well. These resources of the company is very rare and hard to copy for the
competitors. Patent of the company is also rare and hard to imitate.
Imitable
The financial and research & development resources of the company is hard to imitable
apart from this the food products of the company is also low cost which have attracted many
customers. But the employees of the company can easily imitate by the competitors.
Organisation
From the analysis of VRIO it has been found that the distribution network of the
company is well managed and organised(Gökdeniz and et.al, 2017). On the other hand the
patent of the company is not properly managed, which means that the company is not using the
patent right properly.
Resources
&
Capabilities
Valuable Rare Costly to imitate Capabilities of
exploiting
Competitive
performanc
e
Financial
resources
Yes Yes Yes Yes Yes
Employees Yes No No Yes Yes
Patent Yes Yes No Yes Yes
Distribution
network
Yes Yes Yes Yes Yes

Mckinsey 7S model for Uber
As per Mckinsey, there are 7 models which describe the overall performance of the
company.
Strategy – Uber has adopted cost leadership strategy, in which they are providing low cost cab
services and food services as well to attract the customer and provide high level of customer
satisfaction. Example – providing rides on low cost in developing countries.
Structure – Uber follows an organisational hierarchy in different departments, and all the
employees have to work as per the hierarchy so that all the skilled and talented people get a
chance of promotion.
System - There are different systems such as recruitment and hiring system, development of
team and orientation, intelligence system, knowledge system etc. which the company follows.
Uber strongly believes that the well managed system reduces the situations of conflict at the
workplace. Example – providing training and development so that they can get promotions
and growth in the company.
Source : The McKinsey 7-S Framework,2020

Shared values – The core value which Uber follows is that the employees must communicate to
each other so that the creativity, transparency, accountability, and trust remain in the organisation
and company can focus to earn their pre-determined targets (Buzatu and et.al, 2019). Apart
from this, Uber focuses on conducting all the activities in ethical way and also it should follow
the norms and standards of the company.
Style – Uber follows participative leadership style in their company and it involves its
employees in decision making process and also takes help, suggestion and views from the
employees so that company can take a favourable decision. As the company has strong belief
that participative leadership style very much effective to accomplish the goals of the
company,therefor they provide equal chance to each andf every employees.
Staff – Uber has suficient staff as they hire employees through internal and external process
(Razmi and et.al, 2020). Uber tries to hire those employees who have sufficient skill and talent
as it operates globally so the want the best talent in their company.
Skills – Employees who have been recruited by Uber, they all are highly qualified and talented
apart from this Uber provides them training and development so that they can perform their job
efficiently. Example - to improve the skills company provides them different learning
opportunities by conducting sessions from the experienced employees.
P3 Porter's five forces model and evaluate competitive forces of the market
Porter's five forces model:
It is the technique which is used to understand the competitive forces in the market of
Uber. It has 5 elements which are:

Bargaining power of buyers:
It is the ability in which customer influence company to lower the prices. It is high as there are
many options in the market and alternate taxis are available but the prices which is offer by the
company for ride is reasonably low (Bruijl, 2018). Choices are easily available so customers can
easily switch. Uber is very easy to operate customer just have to install the application and book
ride so it has become easy for customers to choose within many options as to use all cab
application is free. Example: if customer will get ride in less price as uber then their bargaining
power will increase.
Bargaining power of suppliers:
It means that company got influenced by the supplier. In this case bargaining power of supplier
is low as Uber does not have its own vehicles, so they can face problem only in case of
availability of drivers. The nature of the company is they are dependent on driver's own car.
Divers also have many choices as there are many rivalry companies in the market, so they can go
in that company where the payment is more. The distribution channel power is also very low as
everything is done by one single app only. Example, If Uber dominate the market with the good
network than that can beneficial for the company as compare to competition and get transport
services advantage.
Illustration 2: porters five forces model
Source: Strategy: Porter’s Five Forces explained
(with example Uber)., 2021

Threat of new entrants:
The ability of company gets affected by the new entry into the market. It is pretty low as
developing the application is easy but scaling up is not easy task and getting consumer which
Uber is having is not easy and generating demand for the services is difficult. The company have
to invest millions for the advertisement and Uber also have capacity to fight hard with the new
entrants (Johannsdottir and McInerney, 2018).
Threat if substitute:
It means that substitute goods and services can be used and not using companies goods and
services is threat. Threat of substitute in Uber case is low. Although people can go for the
traditional taxi services which also offer pick and drop services and in the taxis also one can get
ride sharing options which will become cost effective to the customers. It can be happened that
because of rise in prices by the company customers can get shift to the other option.
Rivalry among competitors:
It means the fear from competitive companies in the market. Level of fear of rivalry depends on
countries to countries like in Asia there are many companies and those companies compete on
the basis of prices, reliability, customer services etc. Countries where options are not available
then the fear from rival companies are low and company can get chance to make good profits
(Song, Wang and Zhu, 2018). example, more competition in the taxi service rise is becoming
threat for uber.
P4 Theories and models and design strategic plan for the organization.
Porter’s generic strategies:
Porter's generic is used to know the company behaviour and also used to gain the
competitive advantage. It has 4 strategies.
Cost leadership strategy:
In this business reduce costs to deliver products and services to the consumers to increase the
market share (Islami, Mustafa and Latkovikj, 2020). Uber also follow the strategy of low price
in order to take competitive advantages. The company reduce the price to attract more customers.
Differentiation leadership:
It is done by company with the aim to look attractive by launching different products and
achieving competitive advantage. Example, Uber does this and came up with Uber eats so that
apart from riding facility the company can also give food delivery facility.

Cost focus:
Cost focus means those companies who want to get low cost advantage but it works only when
the market segment is small. The range of products under this are very basic and same as the
other products which are sold in the markets. Customer also accept such products and company
make reasonably good profits.
Differentiation focus:
in differentiation focus, company develop products which are different and innovative but only
for the small market segments (Hales and Mclarney, 2017). As the organization focus on small
groups so that will be easy for them to fulfil needs and demands of consumers easily as compare
to those organizations which aim to focus on wide population then differentiation focus is
difficult for them.
Ansoff matrix:
It is the framework which is used by the company for growth purpose. It has four
quadrants which are as follows:
Market penetration:
In this strategy company try to sell more products in the current market in order to increase the
sales by increasing the market share. Uber do massive advertisement so that the company can
deep penetrate in the market. Example, In the countries where the competition is more there
Uber opt for low pricing strategies. They attract customers by providing free rides.
Product development:
In Product development strategy company manufacture new product for the same market.
Company can develop complete new product or can add variations in the existing product. As
Uber is operating in multiple countries so company improvise its services and also provide
advanced transportation technology.
Market development:
In this strategy product remains the same but company go in different market to sell the product
and services (Chintalapati, 2020). Uber geographically expand the company as company started
business from US and now expanded internationally and company provide services to every age
group, individual etc.
Diversification:

In diversification strategy market and products both are different. Here company have to do
research about the target market and also which innovative products have to produce to satisfy
them.
Strategic management plan
strategic direction:
it means plan which organization should implement so that their goals can be achieved.
Purpose:
Market development is the main objective of Uber as market expansion will help to increase
sales and which will eventually increase the profits of the company. Market development will
also helpful for company in getting brand recognition globally and through that company will get
loyal customers.
Vision of Uber:
Transportation as reliable as running water, everywhere for everyone (Berger, B, 2020).
Mission statement of Uber:
The mission of the company is to provide easy transportation by giving easy access of vehicle to
the people. The objective of the company is to provide safe and affordable travelling which can
give job opportunities to the drivers.
Objectives:
 To raise market share up to 30-40% by the end of the year.
 To increase number of sales in 6 months.
 To increase number of customers.
Analysis:
Situation analysis is done to evaluate the internal and external environment that affect the
company and here pestle analysis is to be done to understand external environment of the
company.
Pestle:
It is the technique through which company come to know about the external factors which affect
the business operations. It has six factors which are as follows:
political factors:
Political factors which include rules and regulation by the government. Uber has faced many
problems when talk about this factor (Loredana, 2017). As Uber has decided for market

development so increase in the Uber business results in reducing the market share for traditional
taxis that is why company did not get approval at many stages by the government.
Economic factors:
These factors denote the economic performance which affect the company, it also includes
inflation rate, foreign exchange rates etc. Uber is successful in providing employment to large
groups of people and which is helpful for the country in reducing the unemployment rate.
Social factors:
It refers to social environment of market. Customer is happy with the services of the company.
Phones are the blessing for company as using phones customer can easily book a ride, cancel
ride, track ride etc. and price of Uber is also highly competitive. Social media is helpful for
company in the brand promotion and recognition.
Technological factors:
Technology plays major role in the business of Uber, the application of the company is working
is only because of advanced technology and due to this company has come with ride sharing
option which is convenient for customers.
Legal factors:
It refers to the laws which affect the business like consumer laws, labour laws etc. company have
to follow laws of the government otherwise they are entitled for fines. In some countries Uber
has faced the issues related to workers where government said that Uber cannot consider their
workforce as temporary they should consider them permanent workers.
Environmental factors:
Uber is taking sustainability into consideration, here company have to take care about the
environment aloes while doing market development (Perera, 2017). Checking taxis on regular
intervals so that can be make sure that they are not polluting the environment.
Strategies:
Uber can come with the strategy of quality control through rating option in which customers can
give rating according to the experience. To provide good customer experience, company should
ask the customers that what else they are needed to get better experience. Further it is explained
by using marketing mix.
Marketing mix:
product:

Uber provide taxi ride to the customer by just booking it from the mobile. Uber has become
successful in providing better transportation services.
Place:
Uber is present globally and have offices in many countries. It is the safer transport and people
can book using electronic gadgets.
Price:
The price of each ride is pocket friendly and less as compare to traditional taxis this is the reason
that consumers are preferring Uber over other cab facilities.
Promotion:
Uber is a successful company and get promotion through word of mouth but company is also
doing promotion via social media (Wu and Li, 2018). through social media company are doing
promotion which is cost effective and also covering large audience.
Performance indicators:
Sale by region: Uber has analyzed regions which they had targeted and found that the objectives
are met their and increase the sales.
Customers: company maintain customer relationship by taking their feedbacks hence increase
number if customers.
Market share: company is providing ride at low price which increase the market share. Company
is also providing comfortable ride to their customer which result in getting more customers.
Conclusion
After analysing the above report it is concluded that this report speaks about the business
strategy of the company and how the company can make appropriate strategies so that they can
avoid losses and take the advantage of upcoming opportunities. In this report various internal and
external environment of the company has been defined and how the company can use Pestle,
VIRO and porters five forces model to evaluate the risk and how this factor can be an
opportunity for the company as well. Besides this, the impact of of macro environment on the
company has also mentioned in this report and. How a company can take advantage from VRIO
analysis, porter's generic and ansoff has elaborated in this report. Along with this, different
models and strategic planning of the company has been mentioned in this report so that the
company don't have to bear any kind of loss in near future.

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