Competitive Forces of Uber

This article discusses the competitive forces that affect Uber's business and its position in the market. It explores factors such as prices, profit margin, product and service quality, market conditions, and customer demands. The analysis is based on Porter's five forces model.

Business strategy

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK1.............................................................................................................................................1
P1: Describe extrinsic factors of Uber Technologies Inc............................................................1
TASK2.............................................................................................................................................3
P2: Explain intrinsic forces that affect respective business........................................................3
TASK3.............................................................................................................................................7
P3: Define competitive forces of Uber........................................................................................7
TASK4.............................................................................................................................................9
P4: Describe theories and strategic business plan.......................................................................9
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Business strategy is refers as the group of decisions and activities needed for protecting
and securing position & place in market of business entities. In order to achieve objectives it is
essential to apply and implement these activities & decisions if effective and efficient ways.
Business strategies plays prominent role in smooth operation of business, getting competitive
significance and ensuring growth of business (Bayo-Moriones, Galdon-Sanchez and Martinez-
de-Morentin, 2020).
Uber Technologies Inc. is US based vehicle company that offers hire, couriers, food &
package delivery and freight transportation services to general people & business organisations.
It has a partnership with electric bicycles, scooter rental for above services. The company
developed in march, 2019 with its headquarter located at California, United States. Current firm
has $1.1 billion revenues with estimated 110 millions users monthly throughout the world.
The report is based on internal, external analysis of Uber with knowing strength &
weaknesses of business, opportunities for futures growth. Additionally, competitive forces and
theories, models are discussed with suitable plan.
TASK1
P1: Describe extrinsic factors of Uber Technologies Inc.
Pestle analysis is a tool used by the companies to monitor the macro or external environment that
may impact the organisation on which firm has no control. It has huge impact on company's
position within exiting industry or future expansions of business in several countries and many
areas of a particular nation. Pestle of UBER is defined as below:
Political factor: This factor can change because of the policies and actions of the
persuade government at every level. This element includes tax, laws, political stability. UBER
enjoy the advantage of the government solidity (Christodoulou and Cullinane, 2019). This leads
to create growth opportunities for respective organisation and long term sustainability of
business. In this business has required to follow different rules and regulations and with this
Uber follows all the legal formalities as per requirement as with this work is processed with
certain balance and easiness.
Economic factor: This determines impact of the change in economic rate that
influence the operations of the business. This factor includes interest rates, employment and
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unemployment rates, legislations of government, rate of inflations and recession, raw material
cost and foreign exchange rate. US has a adequate rates policies which provide support in the
smooth running performance of the firm and customers are also able to acquire premium services
which increase the profitability of the business and enhance brand awareness among customers
and market. As per the economic recession period working capabilities is reduced as with this
purchasing power of the public also get reduced and with this it is hard for Uber to manage its
working and for this different strategies is processed under which ability to attract more
customers is increases in successful manner.
Social factor : social aspects focus on the family, friends, neighbour, colleagues,
media and social groups which influenced someone's lifestyle, attitude, opinion, geographical
disputes, regional differences that directly have impact on the sales and the revenue earned by
the business. In US, people did not use their personal vehicles so the demand for the cab is high.
In order to fulfil the demand UBER enhance their business productivity (Shtal and et. al., 2018).
However, because of high demand people book cab frequently that results in unavailability of
service that affects the brand image of the entity.
Technological factor: this factor refers to the all externally generated changes in the
technologies and process that is uses by the companies in there operations. US has a rapidly
growing advance technology which will provide the advantage to the UBER in more effective
and efficient running of the business operations as it has its technology based operations. Fast
growing technology also has a negative impact as technology becomes obsolete easily and
required heavy investment. Uber uses advanced technology in its services so as to build unique
image in industry this contributes towards achievement of higher profits and revenues of
business as well as higher customer base.
Environment factor: This is refers to the temperature, food, pollutants, natural
calamities, pollution density, sound, and light that influence living organism. UBER uses the
petrol and diesel cars which produce carbon footprints and carbon emission in enormous quantity
for which it has to pay high penalties as according to the prevention and control of pollution laws
and rules. However, governments also provide the subsidy and compensation to the companies
who are using ozone-friendly process.
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Legal factor: This factor define as a rules and regulations that are made by the
government that impact positively or negatively on the result of market action and decision of
the management of the enterprise (Lopes and et. al., 2018).
US has a literal rules which are made for taxi industry that includes licensing, documentations,
pollution control, drivers accessibility and insurance that impact the smooth running of the
business but also provide the low rate taxes which help in to decreasing cost.
Thus, from the above analysis it is concluded that UBER is facing a negative impact in
terms of social, technological, environmental and legal factor. In this it is essential for the
organisation to formulate strategies after the deep analysis of the macro environment to ensure
sustainable business practices in high treat zone. It allow respective organisation to ensure
smooth running operations in the business. This will benefits for firm in capturing broader area
of market and enhance customer base with effective potential to get higher level of company
revenues etc.
TASK2
P2: Explain intrinsic forces that affect respective business.
Internal or intrinsic environment is composed of aspects within organisation such as-
employees, management and culture of organisation that affects the behaviour of employees and
impacts entire organisation (Hernández and Garcia, 2018).
For successful functioning and operation of business it is important to analyse internal
environment of enterprise. In context of Uber Technologies Inc. VRIO analyse is used to find
micro forces are explained as under:
VRIO Analysis:- This model of internal analysis of Uber look at resources of company
one by one in order to gain sustainable competitive benefits from industry and build effective
market position in order to make itself different from other players. As per VRIO analysis
resources of firm are divided into four categories that plays essential role in strengthen business.
These are defined as following table with suitable evaluation:
RESOURCES VALUABLE RARE INIMITABLE ORGANISABLE COMPETITIVE
ADVANTAGE
Brand
Awareness
Brand
Awareness
- - - Temporary
Competitive
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Advantage
Leadership
Team
Leadership
Team
Leadership
Team - -
Temporary
Competitive
Advantage
Innovation
Capability
Innovation
Capability
Innovation
Capability
Innovation
Capability
Sustainable
Competitive
Advantage
High
Customer
Ratings
High
Customer
Ratings
High
Customer
Ratings
High
Customer
Ratings
High
Customer
Ratings
Potential
Competitive
Advantage
Valuable Resources: It consists of resources that has an immense impact in company's
position and makes able for firm to apply successful or effectual strategies for accomplishment
of business objectives. It helps in observing firm's strength towards expansion and formulating
strong place within market (Torquati and et. al., 2018).
Valuable resources of Uber Technologies Inc. includes brand awareness, financial resources,
distribution network, research & development etc. these are as considered as follows:
 Brand Awareness: Uber invests huge amount on promotion and marketing of its
services at everywhere to access and influence customers to use its services. Thus,
this creates brand reputation of business in global market through expansion of
business in different countries. As per VRIO analysis of Uber brand awareness is
considered as valuable and precious resource of business.
 Leadership Team: Another important valuable resource of respective Company is
its leadership team which helps in getting effective business results through
motivating and influencing employees and staffs. Leaders uses effective strategies
so as to reach highest potential o0f employees that leads to better performance
and productivity.
 Innovation Capabilities: Technological advancements and innovations used by
Uber Technologies Inc. for meeting needs & expectations of potential customers
that represents as valuable resources of business.
 High Customer Ratings: Uber has huge customer base that are loyal towards
services of respective company. Thus, firm is enable to satisfy customers and
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customer give good feedback. High ratings from customer is also an valuable
resource of business according to the VRIO analysis of it. .
Rare Resources: It includes resources that are established in such a way that is hard to
acquire by competitors and contributes towards effectiveness in business goals. Rare resources
are those resources that plays prominent role in strengthen the business and acquire strong
market position (Chiu and Lin, 2019).
In terms of Uber rare resources of business includes- financial resources, employees,
distribution networks of business etc. these are further explained as follows:
 Leadership Team: Leaders of respective company are skilled and experts in their
fields and plays significant role in developing effective teams that contributes
towards effectual results. Thus, leadership team of Uber is rare resource of
business and valuable at the same time.
 Innovation Capabilities: Creativity and innovating capacity of Uber is also high
due to huge investment on digital technology in its services that leads to effective
business outcomes. Innovation capabilities of it are considered as rare resources
of business.
 High Customer Ratings: Due to better services respective business has amount
of loyal and trustworthy customers thus, it gets higher rates from customers that
are considered as rare resources of firm and not easy to acquire by others.
Inimitable Resources: It consists of the resources that are difficult to copy by business
rivalries and strengthen the business within industry. These are important for nay organisation in
order to make it unique & specific through its resources that are essential and create competitive
advantages for business. Inimitable resources of Uber Technologies Inc. include distribution
network, financial resources, employees of firm etc. Decried as under:
 Innovation capabilities: Uber's capabilities of using new technology in its
services so as to attract more customers which is not easy for competitors to take
its innovative strategies. Thus, it reflects as inimitable resource of company.
 High customers Rates: It is also an inimitable resource of Uber Technologies Inc.
that creates prominent impact on firm's market position. It enables company to
earn higher profits, increase market shares of business as well as formulates
effective brand image globally.
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Organisable resources: Last resources as per VRIO analysis is based on the statement
that above resources are not create competitive advantages alone proper organising is also
essential (Bruijl, 2018).
In terms of Uber organisable resources of business includes human resources, financial
resources, customers rating etc. are explained below:
 Higher customer ratings: Due to effective use of promotional strategies of Uber
build trust and loyalty among consumers that contributes in getting higher ratings
of business from its customer. Thus, this shows effective brand position which is
not easy to beat by competitors and players within the industry.
Although from above analysis of Uber Technologies Inc. it is observed that company has
variety of resources that are valuable, rare, inimitable and organisable for firm that reflects the
strengths of business. This help in application of effective business strategies as per the
requirement of different situations.
BCG matrix:- It is defined as the strategic tool that helps in analysing & identifying business
position within market and potential of a business in order to offer effective or better products
and services to target customers in order to fulfil their needs or wants. With respect to Uber it
helps in implementing effective strategies for business. Following are the strategies of BCG
matrix:
Stars: Financial services of business come under the category of starts according to the
BCG matrix of respective company. It follows effective strategies for finance of business and
operates in markets that show future potential for business. Thus this leads to maximise profits as
per potential of strategic business units.
Cash cows: In terms of Uber Technologies Inc. Supplier management service strategy of
business comes under this category. Market share of Uber is high but overall market is declined
as it manages their suppliers themselves unlike outsourcing. Thus, respective business should
stop further investment within firm and keep operating this strategy for as long as profitable for
firm.
Question marks: As per BCG matrix of Uber it is observed that local food strategic units
of business lie under question mark category of organisation. recent trends within food market
shows that people focuses more on local foods and due to low market share of Uber in this
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segment it is suggested to invest on marketing research & development of new and innovative
products in order to bring profits for firm.
Dogs: The last category of BCG matrix of respective business includes use of plastic
bags. This declines the profits of business from last five years due to greater environmental
concerns of industry. Thus, in terms of rectifying this drawback through using effective policies
for divest plastic bags strategic business units that help in minimising the loss and balancing it’s
position of firm within market.
TASK3
P3: Define competitive forces of Uber.
It refers as the factors or elements that affect business position in market and makes firm
enable to build effective area within industry. This includes prices, profit margin, product and
service quality, market conditions, demands of customers etc. that impacts a business in bothy
positive and negative ways. Porter's five forces analysis is used to identify competitive aspects of
Uber are defined as follows:
Porter's five force analysis:- It is used to identify competitive factors that enables
business to chose effective strategies according to demand of situations. It is based on five
factors described as follows in context of Uber Technologies Inc.
Bargaining power of suppliers: It is an important factor of Porter's five force analysis
that has wast impact on business organisations. Suppliers are the people who evolved in
manufacturing and producing of goods and services. If there are n number of suppliers available
in market then their bargaining power is low in-opposed where there are few suppliers are
available leads to high bargaining power of them (Pervan, Curak and Pavic Kramaric, 2018). In
terms of transportation industry bargaining power of suppliers are is high due to requirement of
professional drivers. Gas and oil suppliers of Uber are major provider and fluctuation in their
prices may create a risk for respective organisation. Thus, high bargaining power of Uber's
suppliers impacts its position in negative ways which leads to competitive disadvantage for
business.
Bargaining power of buyers: If bargaining power of buyers is high it will make low
profits for firm or if buyers are low it leads to high profits and earnings for business. In context
of Uber bargaining power of customers if relatively high due to availability of competitors such
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as- local taxis, DHL, Tesla etc. customer can easily switch due to increment in waiting times
which contributes to create threat and barrier for respective business. The power of distribution
channel for Uber is low that leads to become dominant player in market. Thus, bargaining power
of buyer is high that impacts the sales and revenues of business but, at the same time distribution
network of Uber is effective. It leads to retain customers of business from switching to others.
Threat from substitutes: It is another important competitive force that impacts business
in terms of its position in target market and affects the sustainability of business existing
industry. It is biggest fear faced by organisations and impacts the entire organisation. Threats
from substitutes in high within transport industry, there are several companies that offer similar
services from Uber. In terms of dealing with this force respective company focuses on
differentiating their services from others which includes- uses of eco-friendlily and user friendly
services, ride sharing so as to attract customers and build effective and effectual brand reputation
in industry. This leads to make firm enable to deal with competitors effectually and efficiently.
Threat from new entrance: It is also a significant factor that has an immense influence
over transportation companies. Uber is well established company with having large number of
customer base that are loyal and trustworthy for firm. It has global presence that reflects huge
brand awareness and shows higher market shares of business. In transportation industry threats
from new entrances is low due to requirement of huge investment, time and efforts (Anwar, Azis
and Ruma, 2019).
Thus, this factor has a positive impact on respective company; it is not easy for new entrants to
beat the position of well established and effective brand of Uber. Its policy offers using effective
software to control the cost of business in order to make effective operation of business. This
makes enable firm to attain higher business revenues through reducing costs and expenses of
business. Uber has no threat from new entrants that has prominent impact on respective business
in terms of getting competitive advantages over industry.
Rivalry among existing competitors: The last element of Porter's five forces model is
related to threat from existing competitors within industry or market. All industries are not equal
in terms of competition, there are some factors affects it includes- similarities in size of
organisations, innovation capabilities, customers and products & services. Threats from rivalries
are strengthen for completion in transport industry. In transport industry competition from
rivalries are increased as compared to past few years and currently transport companies compete
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on both car drivers (suppliers) as well as customers. Due to operation of Uber in various
countries throughout the world its competition varies from nation to nation. In United States
Uber faces stiff competition from existing rivalries such as - Lyft who has similar business
model as Uber. It makes it difficult for respective organisation to in-distinguish business
procedures and ideas from Lyft. This leads to threat for respective company towards competitive
position within industry.
Thus, from above discussion on five forces of Porter's model impacts the Uber in
dynamic ways that creates competitive benefits as well as barriers for business towards
strengthen market position and future growth of business. In terms of making effective stand in
potential market Uber Technologies Inc. should focus on few aspects such as making creative
and effective services that leads to build distinct from other players. This will helps in fighting
from existing competitors and helps in generating the income and revenues of business as well as
immense brand existence.
TASK4
P4: Describe theories and strategic business plan.
Porter's Generic Strategies:- Michel Porter provides strategic model guides senior
managers in explore business opportunities and helps in minimising threats that creates barriers
in effective implementation of business strategies. In context of Uber Technologies Inc.
following are the strategies that provides significant competitive merits for firm:
1. Cost leadership strategy: This strategy is suitable for companies who need to
become lowest manufacturer and producer within entire industry. It is based on
lowering the prices of products and services so as to take competitive benefits
with aim as to enhance sales and customer base of business. It is easy, simple and
cost effective strategy which doesn't create huge risk over organisation. It is
significant approach for getting customers attention and encouraging them for
assessing goods and services.
Differentiation strategy: It is considered as relevant tool for increasing brand image and profits
of business. In this strategy huge investment if required for developing specific goods and
services for attaining loyalty of customers and building trust among buyers towards the quality
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(Dombrowski, Krenkel and Wullbrandt, 2018). This leads to attainment of higher profits and
revenues of business through setting premium prices.
2. Focus strategy: Final stage of above method is based on focusing on one of the
element from cost leadership or differentiation at a time. Focusing on both may
fails to solve problems arise in business organisations?
Although it is analysed that Uber already has a loyal customer base that shows effective
operation and capability to sure customers as per their requirements. Company faces huge
competition from rivalries. Thus respective firm needs to focus on differentiation strategy for
making different brand image in industry. In this Uber make supportive usage of cost leadership
strategies and with this design and develop certain strategies that is completely in favour of the
business growth and its attractiveness.
Ansoff's Matrix:- It is defined as the successful model that helps in deciding effective
strategies for demand of situations and conditions for effective implementation of business
towards achievement of objectives. In terms of Uber following are the elements of this model:
 Market Penetration: This is the method suitable in condition when position of a
business firm if going down due to lesser promotion of goods and services. As per
this strategy promotion activities are rise in for existing goods and services for
successful running of business.
Diversification: It is another strategy that is based on development of new products and services
and entering into new industry or market that leads to expansion of exploring business (Martins,
2020). This plays significant role in achievement of effective goodwill in industry with large
market shares and revenues. It is associated with huge risk and investment. Higher profit and
global presence is major significance of it.
 Market development: This is a strategic option for business entities which is
based on situation where existing products and services are promoted into
different markets. This contributes to rising coverage of business and increasing
sales and customer base of business. It is less risky, costly and time consumed
but not effective in all situations and conditions.
Product development: The last and final strategy of Ansoff's model is related to development of
new product and services for existing market that contributes to broadening the market coverage
of business (Schawel and Billing, 2018).
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 It has significant advantages of earning profits and rising customer base of
business. It is little expensive and risky approach that creates negative aspects of
it.
Thus, it is observed that Uber should focus on product development strategy as per
Ansoff's analysis on it. This will helps in enhancing product portfolio, market customer base of
business as well as brand reputation within the country. In support of this strategy working
sufficiency of Uber is enhance and with this ability to enlarge working portfolio and its customer
base both get increases in productive manner.
Strategic Management Plan:- It is the framework or blueprint of actual project that
helps in guiding how to evaluate and implement each and every activity related to the project
(Ansoff and et. al., 2018). It is pre-estimation of projects and programmes. In terms of Uber
management plan for adopting product development startegy are discussed as below:
Vision: In terms of implementing product development strategy for Uber Technologies
Inc. so as to become no. 1 transport services company of US the vision of it is “To bring
transportation for everyone at everywhere” . This reflects the main function of business that is
transportation service provider in case of Uber.
Mission: It defines the work, functioning, employees and entire organisation. The
mission of Uber is “To create smarter, reliable and convenience services”. It helps the business
in creating awareness among general people and business users.
Values: in terms of implementing new product development for business Uber's values
are engaged taking care about the time, efforts and affordability of customers in order to serve
them with effective, affordable and effectual ways. It leads to offer fast, quick and cheaper
transportation for general public and business customers who needs to deliver products (Lynch,
2018).
Strategic priorities: For Uber strategic priorities for business are includes delivering
hygiene products in order to protect customers from impact of current pandemic Covid-19. In
terms of making product distinct from its competitors as per porter’s five force model it is
essential to give specification priorities.
Finance: In terms of fulfilling the above mission of business Uber required 60% fund
from external sources such as- bank loans, public finance and 40% of internal sources such as-
reserve capital, selling of assets etc.
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Customers: For Uber target customers of business should includes general people,
individuals, professionals as well as business users to fulfil the objective of developing new
products for rising market share and profits of business.
Resources: For above purpose resources of Uber includes human resources, equipments,
machineries, renewable sources of energy and water resources etc. As per making new product
innovative and unique it should focus on new technology that is unbeatable by competitors.
Monitoring: In terms of Uber should focus on directing of the estimated plan so as to
meet effectiveness in project and implement needed changes. This leads to efficient and effectual
application of plan.
Controlling: It is related to measuring the plan from comparing it with actual outcomes
that leads to effective implementation of plans and activities to reduce unnecessary times and
cost of business.
CONCLUSION
From above discussion it is observed that different forces that have prominent impact on
business performance with respect to strengthen the organisation. Here distinct models and
theories for analysis of micro and macro forces of business are considered for making firm
enable to explore growth opportunities and diminishing threats. Further, various competitive
factor that impacts organisation in significant ways are explained in order to find out ways for
effectiveness & efficiency of business. Moreover, management plan for business is discussed for
effective application of strategies which makes firm enable to take successful decisions and helps
in achievement of business objectives and goals.
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