Business Strategy: Macro Analysis, VRIO, Benchmarking, Value Chain Analysis, Porter's Five Forces

This document provides insights into various aspects of business strategy, including macro analysis, VRIO framework, benchmarking, value chain analysis, and Porter's Five Forces. It explores the importance of these strategies in achieving organizational goals and objectives. The document also discusses the case of Uber as an example of effective business strategy implementation.

BUSINESS
STRATEGY

Table of Contents
BUSINESS STRATEGY............................................................................................................................1
INTRODUCTION...........................................................................................................................................3

INTRODUCTION
Business strategy can be defined as making strategic plans to achieve goals and
objectives of the company. It helps in setting goals, plans and deciding actions to be taken to
complete given work on time (Pahwa, 2020). Uber technology , Inc .is a public company which
was founded in 2009 by Garrett Camp and Travis Kalanice. It's head quarter is situated in San
Francisco , callifonia , U.S . It provides products such as mobile app , web site and services like ,
food delivery , package delivery, courier freight transport , vehicle for hire . In the report Macro
analysis is done in which PESTLE is described, VRIO, benchmarking, value chain analysis is
described. Five forces of porter and balanced scorecard is discussed. Further, porter's generic
strategy, hybrid strategy ,diversification, Bowman's theory and Ansoff matrix is described.
Further, strategic plan is prepared in which mission, vision, aim, objectives, goals is described
(Yuan and et.al., 2020).
MAIN BODY
Macro analysis -PESTLE
Macro environment refers to the external factors that affect company's working and also
profit of the organization. Managers of the company should make plans or strategies to control
the factors and to reduce the risk. These are the factors that are uncontrollable but some plans can
be made to reduce the risk. Pestle is a strategic framework that is used to identify different
factors that can affect company and measures that can be taken by managers to reduce the impact
of factors on company. Pestle analysis refers to political, economic, social, technological, legal
and environmental factors (Park and Mithas, 2020).
Political factor : It refers to the factors that determine the extent to which government and
policies , rules and regulations that are made by government. These factors are decided by
government like, tax policy, trade restrictions, tariffs, bureaucracy, trade barriers, labour law,
environmental law, political stability. As government changes tax policies and other things so it
affects the company's performance. If company want to export or import goods or services then
they have to pay different amount of taxes and there are many trade barriers that can affect
company (Moktadir and et.al., 2020) . As uber company is providing services in all over the

world so they have to pay taxes. In Netherlands uber drivers are nota having tax licences which
creates issue and this affect reputation of company. The government requires license, requiring
uber to provide documentation.
Economic factor : These fa tors include economic growth, exchange rates, inflation rate and
interest rates. These can affect company performance as if interest rates are increased for taking
loan then organization have to take loan at high interest rate and this is loss for company. In uber
they hires drivers to respond to customers quickly and drop them where they want to reach. It is
cheaper than other taxis as other taxis are charging high price and they take time to reach the
location. There is good opportunity for uber company to expand its business and provide good
services to customers so that more people are attached and they use uber taxis (McAdam, Bititci
and Galbraith, 2017).
Social factors : Social factors include cultural aspects and health conscious, growth rate ,
population rate, age, career attitudes. Companies may change policies and procedures according
to the society or environment in surrounding. Uber company provides app on smartphone to use
their services. People can book taxi online by giving their pick up and drop location . Within 15-
20 minutes taxis will reach their and it is safe for people. The prices of uber taxis are less as
compare to other transportation facility like, private bus, auto or any other. Nowadays customers
share their views on social networking sites by giving good feedback for uber taxis. This help in
increasing profit by attracting more customers and builds good image on the market.
Technological factor : Technological factors refers to research and development, automation,
technology incentive and rate of change in technology. There are many barriers like daily new
technology is coming in the market and it is difficult for companies to make changes. Uber
company is providing good services at less prices which creates good image in the market
(Farrukh and et.al., 2020).
Legal factor : The factors include discrimination law, consumer law, employment law, health
and safety law. Uber faces much criticism and bans, company follow technical usage laws,
copyright laws, labor and employee safety laws.

Environmental factors : These factors include weather, climate, and change in climate. It is
easy mode of transportation for people. They can easily book taxis and they have comfortable
ride and they give good reviews on social networking sites.
VRIO
VRIO is an initial framework about resources to determine its competitive potential, value,
rarity, imitability and organization. It is basic strategy process that helps organization in making
good plans and taking decisions that are beneficial for the company. Value refers to important
thing that is necessary and it is an competitive advantage, rarity refers to less resources or
materials that are rarely available.
Value Rareness Imitability Organization
Uber company is
providing good taxi
facility and drivers are
also recruited after
analysing their skills.
The uber company
provides good
services at low prices
and they build good
image in the market.
The resources are
available at low prices
and they are rarely
available. So they
provide good services
to customers and earn
good profit, increases
productivity of
company.
This refers to products
that are available
easily. So taxi is
easily accessible to
customers.
Uber company is one
of the famous
company in world. It
is earning more profit
and has good image in
the market. The
company is expanding
its business by
providing more
services to the
customers and making
new and innovative
products.

McKinsey 7's
The McKinsey 7s framework is a management strategy that helps in making strategies
and plans for earning profit and creates good reputation in the market. The model defines that
how an organization is performing and there are many elements that help in identifying factors
which lead to success of company and make plans for achieving goals and objectives of the
organization. There are 7 elements in McKinsey model i.e., strategy, structure, systems, staff,
style, skills and shared values.
Strategy - It refers to strategy that can be used by company to earn more profit and helps in
increasing productivity of company. In uber company managers are using pentration pricing
strategy in which initially prices are kept low to attract customers and earn more profit. After
sometime prices are increased to build competition in the market.
Structure- It refers to organizational structure that is used by the company for smooth running
of the business and helps in earning profit. Uber company is using hierarchical organizational
structure that helps in proper working of company and accomplishing goals or objectives of the
company.
Systems - It can be defined as system use by company like, process and procedures of the
organization which helps in taking decisions that will help in growth of the company. The uber
organization is making rules and regulations that is followed by the company .
Staff - It refers to employees that are recruited for organization and motivate workers to achieve
goals and objectives of the organization. Employees should be selected taht are having skills and
essential knowledge.
Style - It refers to leadership style that can be used by company to accomplish goals and targets
of the organization. Uber company is applying democratic leadership in which employees are
having right to speak and take decisions for the benefit of company and helps in earning more
profit. It helps in boosting morale of employees and boosting confidence of workers.
Skills - There are some necessary skills that are essential in the organization and nowdays every
company want new and talented candidates that help company in achieving goals and objectives

of company. Skills that are required at workplace are, communication skills , teamwork skills,
leadership skills and other qualities that are required at the workplace.
Shard values- It refers to the staff is adventurous , values and teamwork that helps in increasing
productivity of company. Uber company is using strategy or plans to increase profit of the
company and staisfy workers to give their best in accomplishing goals and objectives of the
organization.
Benchmarking
It refers to the practice of comparing company with the process and performance of other
companies to check that whether employees of organization are working properly or not.
Benchmarking is define as the process of measuring products, services and processes of
company. The four main types of benchmarking are internal, external , performance and practice.
It helps in determining performance of employees and they make improvements in the policies
and procedures so that productivity can be increased and more profit is earned. In uber company
managers are using tools and techniques that are used by organization to compare or measure the
performance of employees with the set standards.
The managers of uber company set standards and according to that they measure
performance and make improvements in strategies so that goals can be achieved and generate
more profit. It helps in comparing performance and then make changes in procedures for smooth
running of business and increase profit of the company. Uber company is providing best services
to its customers and they are taking less prices as compare to other companies. All the employees
of uber company are given training and instructions are given to them. It is the responsibility of
managers to check that whether employees are working properly or not and make improvements
in plans or strategies so that organizational goals can been achieved (LESTARI and et.al., 2020).
Value chain analysis or cost benefits
Value chain analysis helps organization in identifying internal activities of company. It
helps in determining activities within the company and manages all the work of organization. It
provides competitive advantage and it defines primary objective of company and analyses the

performance of employees by comparing it with standard that are set. In this company uses
different pricing strategy to gain competitive advantage and attract more customers. Uber
company is using penetration pricing strategy in which initially prices are kept low as compare to
other companies to attract more consumers and then after sometime they raise prices. It helps in
creating good image in the market and increase sales of the company. The managers of the
organization try to reduce the cost of production and reduce cost of material which will increase
profit. It is important for company to reduce cost of material and production cost to increase
profit of company and enhances morale or confidence of employees. It helps uber company in
identifying all the expenses and according to that they manager their work (Fraser, 2019).
Porter's five forces
It is a model that helps companies in identifying competitors that are present in the
market and helps in attracting more customers . Their are five sources that helps company in
making plans and strategies for future growth of the organization.
Competitive rivalry - it refers to competitors that are selling same type of product .in this
companies make plans and strategies after analyzing the market and determine what type of
strategy is being used by the competitors . Their are some potential factors of competitor are ,
level of advertising expense ,firm concentration ratio , sustainable competitive advantage by
producing new products and using indicative techniques for marketing. Uber company is having
many competitors like autos, private buses or any other mode . Uber is providing best services to
the customer and has creat a good image in the market (Maniora, 2018) .
Power of suppliers - bargaining power of suppliers can be refer to as industries or person that
are supplying raw material, components , labor, and services that are useful for the company. If
person charges high price for supplying or giving raw material then it is a loss for organization .
Managers should make good relationship with the suppliers so that they give material on time
and at low price. Some potential factors are , presence of substitute products in the market,
competition , degree of differentiation and changes of price. Uber company maintains good

relationship with the suppliers which help them in making good quality products and deliver to
customers on time.
Power of buyers - it can be define as the ability of customers to buy the product . It helps the
company in identifying that how much a person can spend for buying the product and needs of
customers . Some potential factors are buyers switching cost , information available to customers
, availability of substitute products in market , uniqueness of product . Customers want good
quality products at reasonable prices. They want new and innovative products and services that a
company should provide to satisfy needs of buyers (Cubas‐Díaz and Martinez Sedano, 2018) .
Threat of substitution - In today's world Their are lot of competitors in market, so it is difficult
for and organization to build good image among people. Their many substitute products
available in market so buyers can switch to substitute goods if company increases prices of
goods or services. As uber company is providing best services at low prices but if the company
increases its price then customers will switch to other services like they will start using other
mode of transportation for traveling .
Threat of new entry - with the increase in demands and needs of customers many new
companies are entering in the market which is not good for uber company. It is not easy to enter
into new market as there are already organizations that are working from many years . If any new
industry enter in the market then it is a threat for existing company because customers will be
attracted towards buying new products . Their are some barriers to enter in new market i.e.,
demand of customers, government policies and rules, capital requirements and customers
switching cost. If uber want to expand its business then they have to face these barriers and find
solution for this (Bai, Cordeiro and Sarkis, 2020).
Balance scorecard is a strategy that helps in measuring the performance of employees . The
main aim is to check that whether employees are working properly or not, improve Thier
performance by giving them training . Some elements of balance scorecard are financial
perspective , internal business, customer and learning perspective . It helps in making proper
structure for how to complete work and make strategies for achieving goals and objectives of the
company. The strategy is communicated to all the employees of the organization so that they
focus on completing their work on time (Lieder and et.al., 2017) .

Porters generic strategy
In this there are three strategy that helps in achieving goals of organization and give
competition advantage (Rehman and Anwar, 2019) . Three generic strategies are cost leadership,
differentiation and focus .
Cost leadership strategy is the easiest strategy that helps company in accomplishing goals by
setting low prices of product as compare to competitors . This helps uber company in attracting
more customers as they keep low prices and provide good services to customers.
Differentiation refers to making new and innovative products to attract people and increase
sales of the company. Uber is making changes and trying to provide better services to consumers
to capture the wide area .
Focus strategies refers to making plans regarding focusing on a particular area of customers and
try to attract them to. It creates more competition in the market and there are limited resources.
This strategy is more focused on prices because there is lot of competition in the market and to
compete with it organization should make changes in plans and produce new products , deliver it
to consumers at low prices (Bentley-Goode, Newton and Thompson, 2017).
Ansoff matrix
The Ansoff matrix is a strategic tool that helps company in making plans for future
growth and earning more profit. Managers of company uses this tool to generate new ideas and
think for expansion. It consists of four elements i.e., market penetration, market development,
product development and diversification. Market penetration refers to grow the business by using
its existing products and they expand business in existing market. This includes makret share
with making existing products (Suoniemi and et.al., 2020). This can be accomplished by
decrease in price, increase in promotion. Market development refers to expand into new markets
using its existing offering. This can be achieved by different customer segments, foreign
markets, new areas or regions of the country. Product development can be defined as creating or
making new products to attract customers and achieve goals of the organization. These products
can be achieved by investing in research and development, joint development or partnership with
other companies.

Uber company is thinking of expanding business by providing more better services to customers
and at reasonable price.
Bowman's theory
It is a model that helps in exploring more opportunities or options for the company i.e.,
how to decide position of product to gain competitive advantage. The purpose of Bowman's
theory is to illustrate that business is having many options to position a product on two
dimensions that is price and perceived value. Uber company is applying this theory as they can
identify opportunities and expand their business.
Strategic plan
Vision To make transportation reliable for everyone
and easily accessible.
Mission To provide good services to customers
Objectives Objective of uber is to provide easily available
services of transportation. It want to expand its
business by providing services in other
countries. To take over cab industry by being
cheap and provide easy ride across the world.
Strategies Uber company can use competitive pricing
strategy in which they can decide prices
according to the competitors and helps
attracting new customers.
Tactics Uber company can use promotional strategy
like they can give advertisement on social
media to attract more customers.
Implementation or control Managers of uber company should measure
performance and make changes in policies for

effective performance of company.
Evaluation Managers should evaluate the performance of
employees and make improvements if required.
CONCLUSION
From the report it can be concluded that, macro environment affect company's working
such as, political, economic, social, technological, legal and environmental is described. VRIO
analysis, benchmarking, McKinsey 7's, value chain analysis, cost benefit is discussed. Porter's
five forces , balance scorecard ,porter’s generic strategy is described. Further, a strategic plan is
made in which vision, mission, objectives, strategy, implementation and evaluation.

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Online

Pahwa, A., 2020. Business Strategy. [Online]. Available Through:<
https://www.feedough.com/business-strategy-definition-levels-examples/> [Accessed On March
14, 2021].