Analyzing the Impact of Macro Environment on UBER's Strategies

This report analyzes the impact and influence of the macro environment on UBER and its strategies. It includes a PESTLE analysis and stakeholder analysis. The report also evaluates UBER's internal environment using VRIO and McKinsey's 7s model. It concludes with a critical evaluation of UBER's strengths and weaknesses.

BUSINESS
STRATEGY
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Table of Contents
INTRODUCTION ..........................................................................................................................2
TASK ..............................................................................................................................................3
Applying appropriate frameworks analyse the impact and influence of the macro environment
on a given organisation and its strategies...............................................................................3
Critically Analyse the macro environment to determine and inform strategic management
decisions.................................................................................................................................7
Analyse the internal environment and capabilities of a given organisation using appropriate
frameworks.............................................................................................................................7
Critically Evaluate the internal environment to assess strengths and weaknesses of an
organisation's internal capabilities, structure and skill set...................................................10
Applying Porter's Five Forces model evaluate the competitive forces of a given market sector
for an organisation................................................................................................................11
Devise appropriate strategies to improve competitive edge and market position based on the
outcomes...............................................................................................................................13
Applying a range of theories, concepts and models, interpret and devise strategic planning for
a given organisation..............................................................................................................13
Produce a strategic management plan that has tangible and tactical strategic priorities and
objectives..............................................................................................................................16
CONCLUSION .............................................................................................................................18
REFERENCES..............................................................................................................................19
INTRODUCTION
Macro environment refers to the forces which takes birth outside the company but effects
internally and externally to the firm at a substantial level. In includes PESTLE Analysis and
stakeholders analysis under its shade(Ansoff, and et.all., 2018). PESTLE stands for Political,
Economical, Social, Technological, Legal and Environmental factors. Stakeholder refers to all
people who is related to the organisation such as Customers, management team, suppliers,
directors, shareholders, etc. are categorised as stakeholder of the firm. In the present report
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PESTLE analysis is been done along with stakeholders analysis. VRIO and McKinsey's 7's
model is also considered in the report for internal analysis of the company. Porter's five force and
Porter's Generic model is also discussed for the company's industry and positioning analysis.
Bowman Strategic Cycle or Extended Model of Bowmen Strategy is also studded. UBER is
taken into consideration in present report for analysis.
TASK
Applying appropriate frameworks analyse the impact and influence of the macro environment on
a given organisation and its strategies.
PESTLE ANALYSIS:
Macro Environment also known as external environment, refers to an impact on
organisations at a large. The environment hinders the conduct of business and its revenues at a
bigger scale and sometimes the environment creates its impact on company as well as on
industry as a whole. Under this environment, firms have no control over the factors and on its
effects (Chepchirchir, Omillo, and Munyua, 2018). Companies has no option other then to adapt
and accept the changes or effects and is required to react according to the environment whether
favourable or not for the company. Macro environment includes PESTLE analysis under its
umbrella. PESTLE stands for Political, Economical, Social, Technological, Legal and
Environmental factors of external environment.
PESTLE analysis for UBER is conducted under:
 Political Factor: This factor includes governmental policies and regulations which are
formulated by the ruling political party in the country. Political stability,taxation policy,
fiscal policy, etc. comes under this category.
UBER initially faced huge problem by not abiding the rules and regulations of
government and not clear about minimum wage rate. This has impact on company's stability and
brand image.
 Economic Factor: This factor includes characteristics such as economic condition of the
country, inflation or exchange rate, unemployment, etc.
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UBER has generated employment through its services as it bridged a gap between drivers
and passengers. The impact of this environment on UBER is favourable for the company as the
economy has provided competent drivers and job seekers to UBER.
 Social Factor: This includes society's perceptions and cultural aspect, demographics, etc.
Since companies and human beings both survives in a society, so society people has a
great impact on performance of the organizations.
UBER has enjoy the society acceptance in terms of the services provided by the company
and the price quoted for rides.
 Technological Factor: This factor includes technological change which takes place in
the environment which can be up-gradation, innovation or degradation. Now a days
world is moving towards the technological enhancement and every company tries to
bring latest technology in its workings to meet the expectations and to offer something
new to its buyers.
UBER uses the latest technology in its services and provides best to its customers. Th
company has adopted digital payment, ride tracking, live location, push notification services in
rides being offered to its customers.
 Legal Factor: This factor comprises of legislature, legal laws and regulations. Trade
regulation law, health and labour law, safety law, etc. takes shade under legal factors.
UBER has faced problems by not abiding the legal rules and laws into practice. In the
year 2015, the company has suited by two of its drivers for not following minimum wage rate
law for them.
 Environmental Factor: The factor relates to ecological issues in the environment such
as weather conditions, pollution, resources crunch, natural and man made disasters, etc
(Chumba, 2019).
UBER is concern for the environment and provided an option to the drivers who can
request a green ride to its clients just on a single tap of a button. Along with this UBER also uses
new or less carbon emission cars in service in order to support environment.
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PESTLE Analysis
STAKEHOLDER'S ANALYSIS:
Stakeholders are those who are either directly or indirectly related to the success and
failure of the business. The holders can be internal to the organisation or can be from outside the
company Shareholders, management, suppliers, customers, etc. are considered as stakeholders
for the company (Erichand et.all., 2018). Stakeholders analysis is a procedure for measuring
company's stakeholders interest, influence, or impact on the organisation. For every company its
stakeholders are very important. A negative behaviour of the stakeholders may lead company
into losses whereas a positive attitude towards company can lead to achieve success.
Stakeholders Theory
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UBER's stakeholders includes the company's shareholders, management team,
employees, drivers, channel partners and customers. Initially in the year 2015 UBER was facing
a negative behaviour from its stakeholders such as drivers and customers, but later on has solved
the issue and now maintains a healthy and good relation with all its stakeholders.
Stakeholders matrix for UBER along with their interest is mentioned below:
UBER's stakeholder matrix
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Stakeholders Interest Power
Riders High interest Bears power to influence business
Investors High interest Being refereed as owners they have power to modify
company's decisions.
Drivers Medium Interest Power to influence change in drivers fair as the company
depends upon its drivers.
Employees Big interest Power to demand for right remuneration of work done
by them.
Critically Analyse the macro environment to determine and inform strategic management
decisions.
From UBER report it can be analysed that company has a great impact form the factors of
macro environment such as from political and legal aspect which becomes unfavourable for
company. Some factors like technological, social, environmental and economical factors impacts
company in positive manner. In respect of strategic management decision UBER can adopt such
that are in benefit of its stakeholders as well as complies with policies of country's political and
legal matter. This will help UBER in smooth and flawless operations in market which will
increase trust, loyalty and market response.
Analyse the internal environment and capabilities of a given organisation using appropriate
frameworks.
Internal environment also knows as micro environment refers to the impact on
organisation at a small level. The factors are generally arises within the organisation internally.
They are controllable by the companies and have option either to accept or ignore the changes.
This environmental analysis allows the organisation to know its potential and to identify its week
areas in order to overcome them and perform well in the market (Haghi, 2020).
Internal environment analysis includes VRIO model and McKinsey's 7s model which
analysis company's internal resources and its potentials.
VRIO in context of UBER is under:
VRIO stands for Valuable, rare, Imitable and organise.
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 Valuable: This includes the value created by the company for its customers in their
products and services.
 Rare: This includes the uniqueness of the company's resources which are not found in
other companies or among rivalries.
 Imitable: This includes the cost involved and durability in copying the company's
resources by other firms operating in the market.
 Organise: This includes the proper arrangement of company's resources in a way that
can be used to its full potential.
VRIO analysis for UBER is done under:
RESOURCES VALUABLE RARE IMITABLE ORGANIZE COMPETITIVE
ADVANTAGE
High Customer
Rating
√ √ √ √ Sustainable Competitive
advantage
Innovation √ X √ √ Temporary Competitive
advantage
Service Quality √ X √ √ Competitive Parity
Financial
condition
√ √ X √ Sustainable competitive
advantage
Brand
Awareness
√ √ X √ Sustainable Competitive
advantage
VRIO Analysis of UBER
From above table it can be seen that customer ratings done by the ride beneficiaries
provides a sustainable competitive advantage where the ratings are highly valuable by the
company and is rare which is properly organized in the organisation. UBER also enjoys
sustainable competitive advantage in terms of Financial condition and brand awareness in the
market. UBER experiences Temporary competitive advantage or competitive parity in
innovation and in its service quality which is valuable but is not rare can be copied by rivalries
easily in the market.
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McKinsey's 7 s Model:
The model comprises of seven differential internal elements which helps the
organisation in achieving effectiveness and improves performance of employees. The seven
elements includes Strategy, System, Structure, Skills, Style, Shared value and Staff (Marques
and et. al., 2017). The discussion on these seven elements is done under:
 Strategy: This is a blueprint of the organisation's plans and objectives which companies
makes and follows in order to have a competitive advantage over its rivalries in the
market. UBER continuously makes its strategies and plans for effective working in the
company and to win over rivalries.
 System: This includes the activities and procedures which employees and technological
software follows in their work. UBER maintains a proper system in its organisation as
their software are solely systematised to provide better offerings to its customers and the
employees also follow a proper chain of system in their tasks.
 Structure: This describes the company's organisational structure as how the departments
are classified and how the management is placed. UBER follows hierarchical
organisational structure in its company.
 Skills: This includes the competencies and abilities of the employees of the company
who actually works in the organisation. UBER appoints experienced drivers who bears
good driving skills in the segment of Cars, Autos and Bikes.
 Shared Values: This includes the values of firm, its vision, mission and objectives which
they possess in their culture and work. UBER has a mission of providing transportation to
everyone in the society across the nation. UBER shares its values in terms of cheaper,
safer and reliable transportation for its customers.
 Staff: This comprises of the work force who works in the company to bring success and
who brings reality to the penned plans in the organisation. UBER's staff is committed for
the company and majorly includes the drivers who provides safe and easy transportation
to the customers. Style: This element is backed by the culture which presents the workings, its way of
conducting business, etc. The leadership style posses by a leader in the organisation is
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categorised under this element. Rambo style of leadership is being adopted by the leaders
in UBER which makes the company successful and established brand in market.
McKinsey's 7's Model
From the above analysis of McKinsey's 7's model it can be concluded that continuous
strategic planning along with application of technological innovation in UBER brings a greater
efficiency in its operations which allows company to enjoy competitive advantage. Following
hierarchical structure in management comprising of experienced and and highly skilled
employees brings development to the firm. Uber's staff members are strongly committed towards
organisation which adds some values to services that are being offered to company's potential
customers in order to provide them best quality value added services. The McKinsey's 7's model
provides scope of development and growth for UBER which also assists company in getting
competitive advantage over rival firms in market.
Critically Evaluate the internal environment to assess strengths and weaknesses of an
organisation's internal capabilities, structure and skill set.
The SWOT analysis for UBER company is conducted under:
Strengths
 UBER appoints experienced drivers
who have legal license to drive. UBER involves very less cost in its
operations as majorly its services are
Weaknesses
 The idea of company can be easily
copies by another firm so will lack in
having healthy competition.
 The cars involves huge maintenance
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through its mobile application which
saves many cost.
cost and its drivers does not earns that
much.
Opportunities
 Company has an opportunity to
commence its services in those
countries where cab services are not
available or is very low in availability. UBER can hire electric cars in develop
countries which involves less cost.
Threats
 Drivers can shift to rival firm's services
who offers them high compared to
UBER.
 UBER faces threat form some countries
in respect of their political and legal
policies which creates problem for
company.
Applying Porter's Five Forces model evaluate the competitive forces of a given market sector for
an organisation.
Porters five forces model refers to an industry analysis done by the companies in order to
know their self potential in the related industry and the competencies of rivalries. The model
comprises of five segments such as Competitive Rivalry, Supplier's Power, Buyer's power,
Threat of Substitution, Threat of New Entry (Meyer, and et.all., 2017). Each component is
described below:
Porters Five Force Model
 Competitive Rivalry: This component includes the competitors number and their
potential they posses in their firm. The kind of product offered by the rivalries are also
analysed under this component. When a company is having huge number of competitors
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in the market it faces tough competition whereas a less number of competitors allows
firm to enjoy high market share and more sales.
Since UBER offers its services in many countries at multinational level so it faces
different type of competition in different operating countries. In some countries the company
faces tough level of competition whereas in some UBER enjoys its market share and position.
 Supplier's power: This incudes the bargaining power of the suppliers of raw material or
other equipments used in the company in their product or services. It includes the number
of suppliers in the market and the chances of increasing the price of material by them.
The large number of supplies provides an option to companies to choose cheapest and
best one whereas small number of suppliers posses power of charging high prices (Öz,
2019).
The suppliers of UBER posses high power of bargaining because the cars used by the
drivers are of their own, those are not in the names of company so the drivers have high power as
their role is the biggest in making company success.
 Buyer's Power: This includes the power with the buyers or service uses possess for the
product or service in the market. This involves the number of buyers who can bring the
prices down for the product or the switching cost involved while shifting to rival
company's product or service (Wolf, and Floyd, 2017).
The service users or customers of UBER carries high power in bargaining the prices as
there are number of competitors available in the market who may offer same service with lesser
price. These is less cost involved in switching to rival company's service.
 Threat of Substitution: This involves the concept of finding identical product or service
by the customers in the market or industry. Large number of competitors provides various
options to buyers and provides their product at cheaper cost with easy substitution.
There is a presence of threat of substitution for UBER as its rivalries provides same
services with cheaper cost and provides easy substitution for the customers worldwide.
 Threat of New Entrants: This provides a risk of new entry into the industry which is a
threat for existing companies. New entrants will take their share in market which will
reduce existing company's share and leads to less sales. This answers to few questions
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such as how easy is to entry into the industry, how frequently businesses enters, etc.
(Zambrano, and et.all., 2020).
UBER bears a threat of new entry because the cost of establishment in the industry in
which UBER is operating does not involves huge amount and can be easily established by any.
So there is a more chances of entry of new firm in the market.
Devise appropriate strategies to improve competitive edge and market position based on the
outcomes.
From the above analysis it can be said that UBER can work upon differentiation strategy
in which it can bring a new service range or line with a new touch into it. This will attract more
customers towards company can will be able to achieve competitive advantage in industry along
with higher revenue generations. UBER will be able to offer different segment services or even
can launch any product under its brand name to market with an innovation that will be accepted
by society and its customers sin high demand. This will provide a competitive edge and great
market position in a form of its outcomes that brings success along with greater profits to firm.
Applying a range of theories, concepts and models, interpret and devise strategic planning for a
given organisation.
Strategic planning refers to a planning done by the management for developing various
strategics needs to be followed by employees in the organisation to achieve its objectives and
plans. It plans out the direction which guides company to works upon. Porter's generic strategy
and Extended model of Bowmen's strategy takes shade under the umbrella of Strategic Planning
(Soni, 2020).
Porter's Generic Strategy:
Porters generic strategy is a framework which companies use to know its potential in
industry and to have competitive advantage above its rivalries. The strategy shows the financial
profitability of the firms in industry. It shows the level of profitability of a company which can
be below or above the average of industry. The framework comprises of three grounds upon
which the whole framework exists that is Cost, Focus and Differentiation. Porter afterwards
segregated the basis into parts categorised as Cost Focus, Differentiation Focus, Cost Leadership
and Differentiation (Soulard and et.all., 2018).
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Porters Generic Strategy
Each component of strategy in the context of UBER is described below:
 Cost Leadership: This includes offering of company's product or services which posses
high demand in market but at the lowest feasible prices. bank of baroda
UBER does not wins over cost leadership in the industry as the company takes a small cut in its
cost which varies form only 5% to 20%. But cuts cost in maintenance of its infrastructure as the
company does not have any car on its won name so does not require maintenance of care. The
one who has a car and wish to earn money by offering ride can easily become driver of UBER.
 Differentiation: This includes offering of product or service which carries high demand
in market but is unique in its characteristics and features.
UBER offers its services to its customers by involving technological differentiation in services.
Providing Convenience to its customers in paying fare and rating ride is the differentiation which
allows company to gain competitive advantage.
 Cost Focus: This includes offering products and services in opportunity or niche market
supported by lowest feasible prices.
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UBER includes this element in its offerings by including both that is providing service in niche
market with lowest price to its potential customers.
 Differentiation Focus: This includes offering company's products or services in niche
segment market but by adding some unique feature or attribute in it.
UBER follows this element in its services as it offers its rides to niche customer market segment
by adding a differential touch in terms of technology.
Extended Model of Bowman's Strategy:
The model shows a position of company's product or service in competitive market in
against of rivalries of the firm. The model is backed by two dimensions which sets as a base for
the analysis that is Price and Value which is perceived for buyers (Vargas-Hernandez, and
Gonzalez, 2018). It is a cyclic strategy which posses various eight positions in the market that is
Low Price and Low Value Added, Low Price, Hybrid, Differentiation, Focused Differentiation,
Risky High Margins,Monopoly Pricing and last is Loss of market Share. Three positions out of
eight in the cycle that is Risky High margins, Monopoly Pricing and Loss of Market Share gives
an uncompetitive advantage to the firm where perceived value is placed below the prices (prices
are high).
Bowman's Strategic Cycle
The strategy in case of UBER positions high in the context of differentiation as it
provides better technology to is customers with low price rides compared to competitors values.
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UBER does not provides low value services to its customers. Company does not enjoys
monopoly pricing as there is a presence of rival firms in the market and monopoly means
operation of single firm in industry but this is not present here. If the company will charge high
for rides then there is a greater chances of loosing its market share as customers will easily shift
to the services of rival firms and by this the market share of UBER will decrease. The more
value is added in services provides an option for generating high revenue by the firm.
Produce a strategic management plan that has tangible and tactical strategic priorities and
objectives.
A term strategic planning refers to a plan that comprises of company's objectives,
operations, required resources, and all other such activities that are required in order to complete
task. Through effective planning all the employees are directed towards company's common
objective that takes business to see success. A strategic plan for UBER which will help company
to have effective and efficient execution of its strategy is mentioned below:
Mission:
UBER has a mission of developing opportunity having a motion of most trusted
transportation across globe.
Vision:
UBER possess vision of providing transportation reliable similar to the flow of water for
every individual at every place.
Objectives:
The objective of UBER is to offer instant available ride services to required customers
along with an expansion at global level through its services in each city. UBER also carries an
objective towards becoming an industry leader through its low fair and easily available services.
Tactics:
Tactics is a concept for strategic planning that involves efforts of short term nature which
are made for achieving organisation's objectives. The various tactics which are being flowed by
UBER is connecting drivers to customers directly through its app. Company will continue with
its app service as it is easily accessible by individuals without any professional knowledge.
UBER will develop a plan for its marketing mix which will help them to enhance its market
share and position.
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Price UBER operates with lowest fair for its ride different of each type that is bike rides
are cheaper than Auto or Car rides.
Product UBER provides car, auto and bike ride as well as rental services and also
outstation services via car.
Promotion UBER promotes its services through advertisements in print media, television or
radio ads, short ads on mobile apps, etc.
Place UBER does not have any physical store it operates via mobile application that
connects passengers with drivers.
Implementation:
It is very necessary for UBER to execute the plan supported by various resources that are
needed in order to achieve targets. Company can disburse its funds with an collaborative efforts
of marketing and finance department. UBER can have a budget which can measure its actual
outcomes with targeted one.
Evaluation:
Evaluation is a process of analysing the results with estimated in order to have the record
of plan's performance and take corrective actions when found any diversion into it. UBER will
going to evaluate and measure the performances of its marketing team which is being required to
have a plan.
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CONCLUSION
From the above essay it can be concluded that UBER offers better quality of services to
its customers in market as compared to its rival firms services. Some macro environment creates
a positive and favourable impact on company's performances whereas some hinders the
operations of firm. Company adopts latest technology in its offerings which gives UBER a
competitive advantage. UBER's customer rating, financial position and brand image acts as
company's core value which gives a wining position in industry competition. However, drivers of
UBER can easily shift to other company at their convenience in market because they are not
owned by the firm rather UBER depends upon its drivers. UBER has a bargaining power by its
suppliers that is drivers as well as by its customers, they both can easily substitute to other firm if
not supported by the company. UBER provides high quality technological updated services to its
customers with low prices in market but has a risk in entry of new firms which offers an easy
entry into the industry. Company differentiates its services which acts as an competitive
advantage to the firm.
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