Competitive Advantage and Business Models

This assignment provides a comprehensive analysis of competitive advantage and business models. It includes a list of references to academic articles and books, as well as online resources. The assignment is suitable for students who want to learn about strategic management, value chain analysis, and innovation in business. A model to gain competitive advantage is also provided, along with a PESTEL analysis example from the waste-to-energy industry.

COMPETITIVE ADVANTAGE
FROM INNOVATION

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Analysis of the business environment, industrial survival and success factors of Uber........1
Analysis of the organisation's strategy...................................................................................3
Analysis of the organisation's culture, structure, management systems and HR strategy......7
Critical appraisal of the strategy to assess the sustainability of the firm's competitive
advantage................................................................................................................................9
VRIN model.........................................................................................................................10
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Businesses are highly reliant on the addition of new and innovative ideas. These
innovations play a crucial role in different things either it is increasing business value, improving
brand image, getting brand recognition, etc. There exist a lot of factors that are entailed to be
considering before executing any new idea in an organization. Focus on each and every segment
leads to effectiveness in the changes brought to the company that ensure attainment of
organizational goals and objectives. In the present undertaking report, the ideas implemented by
Uber Company in gaining competitive advantage will be discussed. The significance of these
executed innovations to the business will be discussed in the present essay.
The selected organization Uber Technologies Inc. is headquartered in San Francisco,
California, United States. It is an international taxi technology organization that develops,
markets and functions the Uber car transportation in 633 cities of the world. It is a privately held
company belonging to transportation industry. The selected entity was founded 8 years ago in
year 2009 by Travis Kalanick and Garrett Camp.
MAIN BODY
Analysis of the business environment, industrial survival and success factors of Uber.
Uber is regarded as the business having revolutionary idea that has changed the
stereotypes of hiring taxis for transportation (Schroeder and Kotlarsky, 2015). However, there
exist some external environmental factors that can impact upon the chosen organisation. The
analysis of these components will assist in framing suitable frameworks to increase the business
value. For this examination, Uber can make use of PESTLE analysis which is as follows:
 Political factors: The selected organisation is proved to have maximum threat from the
political factors. An additional scrutiny was faced by Uber worldwide. It has been
observed that large number of cases are filed based on antithetic issues in varied nations.
For instance: France has lodged case against the entity for the advertisements,
Netherlands has filed case against Uber for having drivers without licences, etc. Also, the
company has faced critics on the discussions about the minimum wage laws in the taxi
industry.
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 Economic factors: The financial aspects has highly supported the entity due to the fact
that it operates in shared economy (Abdalla, 2015). The entity has grown effectively in
terms of finances after its launch. However, it should be recognised that many countries
are having their decisions pending for the promotion of Uber based on the economic
growth aspect by the cited taxi system or the traditional taxi driving.
 Social factors: The entity is operating in different nations and gives effective services as
per the region in which it operates. Also, Uber promotes cheaper pricing structure with
amazing offers to maintain the interest of customers.
 Technological factors: In the present era of digital; advancements, the tool of booking
and getting a taxi from smartphone is the main feature that has brought success to the
doors of Uber. The way organisation cope up with the recent technologies is appreciable.
 Legal factors: The selected organisation has faced various criticism for not complying
with the laws. There are certain regulation which entity should pay attention on, such as
labour and employee safety laws, usage laws, copyright laws, etc.
 Environmental/ ecological factors: The impact of Uber on the environment is variable
based on the traffic, fuel usage and congestion (Gu, and et.al , 2017). The entity should
concentrate on the usage of cars that emits less pollution.
These the far external factor which are impacting the business. There are also some
elements which are directly associated with the entity. These components highly influence the
Uber's functioning. They can be analyse by making use of Porter's five force analysis:
 Threat of new entrants: Uber is following that business structure which does not require
much cost of investment in starting up and hence, there exists a high threat of new
entrants in tyhe business.
 Threat of substitution: The selected business is not only having the threat with the direct
competitors rather it is also affected with the companies based on the similar business
model offering same convenience services to the customers (IDey, 2016).
 Bargaining power of suppliers: The major supplier on which Uber relies are the drivers of
its cars. They have a high bargaining power and also, Uber is entailed to take effective
care of its suppliers as they are directly associated with its brand image.
 Bargaining power of buyers: There exist a wide range of means for transportation that
consumers can choose from. This availability is a threat to the selected organisation.
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Also, there are organisations having similar concepts and thus, Uber is facing high
industrial rivalry.
The selected organisation Uber transportation Inc. has developed highly advanced system
to promote the contemporary era of technological aspect. Having an online tool that can be easily
accessed by the smartphones for the transportation has become a new trend of the society for the
effective convenience facilities (Holgado, and et.al 2016). This idea of online transportation
services is very effective to deal with the present day demands of customers. This factor has also
rendered a competitive advantage to the firm. However, it should be recognised that a number of
rivals are getting increased daily in this sector. In the very short span of time, so many
competitors have been developed such as Ola, Zoom, etc. In this way, to survive in the
competitive era Uber is entailed to bring innovative changes in the services it provides. For this,
the company is suggested to implement recent technologies in the system so that consumers can
maintain their interest in the services offered by Uber. Also, to attain the desired business value
by increasing the number of customers, firm should provide exciting offers to them. It is further
required for the Uber to pay attention on the customer relationship, cost structure, value
proposition, etc. to achieve the desired success. Further, internal business environment is needed
to be improved paying attention to the business culture, HR management, compliance with the
legal frameworks, etc.
Analysis of the organisation's strategy
In order to attain the organisational goals and objectives all type of organisations does
follows a suitable strategy as per their business. In the present era there exist a high level of
competition in each and every sector that demands for the companies to gain competitive
advantage (Gereffi and Fernandez-Stark, 2016). There are two forms of competitive advantages
that can be achieved by the organisations: cost and differentiation. In context to the selected
establishment, the strategy can be explained by studying the resources, capabilities,
differentiation, business model canvas and the value chain analysis. These details and models are
as follows:
Resources and capabilities: In context to the resources and skills of the entity, the technology
implemented by the Uber is first of its kind. The entity has entrant advantage which assisted it in
establishing a brand image and reputation. In addition to this, it has a strong customer base due
that has grown by the impelling services it renders. This is a globally renowned company having
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capability of user-friendly application without dispatcher. The company is also regarded
effective in word-of-mouth marketing (Darmawan, and et.al, 2014). These resources and
capabilities of Uber are its distinctive competencies that enables innovation, efficiency, quality,
efficiency, and most importantly customer responsiveness. These distinction competencies of the
firm further assuists in gaining differentiation advantages.
Differentiation: The organisation has differentiated itself by being a technological company
rather than just being a car rental entity. This platform is proved as a loyal mediator between the
can drivers and customers. This whole procedure of the company's business is carried without
any investment made on the ownership of the cars. It just keeps drivers on contract by sharing 75
percent of the rent with them (Sørensen, 2016). However, it should be recognised that the
businesses with the similar concepts are growing rapidly in the sector such as Lyft and Sidecar
that are giving Uber a head on competition. Thus, it is harming the differentiation technique used
by the chosen company. Despite of its, the entity can sustain in the business world by executing
tactics keeping customer loyalty and user experiences in central area.
Business model canvas:
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Illustration 1: A model to gain competitive advantage
(Source: Sørensen, 2016)

Key partners:
Driver Partners.
Investors
Developers and
insurance
companies
Key activities:
It provides taxi
services to the
customers without
owing any car and on
the contract basis with
the cab drivers.
Value
Proposition:
The value
proposition of
the entity lays in
the instance
gratification
service to the
customers. The
render a unique
cab experience
from mobile
hailing,
broadloom
payments, no
tips and driver
ratings
(Hollensen,
2015).
Exclusive rides
at affordable
prices.
On demand
availability and
conveniences
are some factors
of value
proposition.
Customer
Relationships:
The entity
possess strong
relationships
with its
customers by
fulfilling their
needs from the
service.
Customer
Segments:
Customers
willing
affordable/luxur
y rides.
Cost effective
rides.
Pay more for
ride now.
Share the ride to
reduce cost.
Travel with a
group.
Key resources:
It's technology.
Human resource
(drivers)
Channels:
The products
itself.
Accelerates:
Restaurants and
night life,
weather, sports.
Social media.
Partnership.
Events.
Stunts
Cost structure: Different prices for
antithetic type of services.
Revenue Streams: The bottom line revenue model
is followed by the Uber.
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Value chain analysis: It should be noted that resources, capabilities and differentiation of a
company assists in creating the desired value (Olson, 2014). This value is highly reliant on a set
of activities considered as value chain. In order to gain the competitive advantage, the
organisation is required to pay attention on one or more value creating activities explained
further:
Primary value chain activities:
 Inbound logistics: There are online tools that can be access easily by buyers even on
their smartphones. The company receives orders on the Uber app.
 Operations: The entity allows the applications of hiring from customers and makes taxis
available from them.
 Outbound logistics: The selected organisation entails driver partners for making their
services available to the consumers (Meaton, and et.al.,2015). Also, investors, developers
and insurance companies plays a crucial role in it.
 Marketing and sales: The selected entity opts social media and partnerships for
promotion. Also, exciting offers are given to customers. It sales it's services by making
sue of the following tools: UberPool, UberX, UberTaxi abd UberBlack (premium). Service: The company gives online service that can be readily available. Also, feedback
are taken from customers regarding their experience so that suitable modifications can be
done.
Secondary value chain activities:
 Procurement: It hires drivers owning their cabs so that company investment can be
reduce.
 Technology development: The company is based only on the digital advancement. All
the process of booking the cab is online and can be proceed by smartphone.
 Human resource management: The organisation is not much concerned with the
recruitment of employees (Song, Sun and Jin, 2017). However, the compensation and
development policies of Uber are effective.
 Firm infrastructure: All the business activities are based on the stored information of
drivers and customers. The tool connects the right customers to the right drivers.
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Analysis of the organisation's culture, structure, management systems and HR strategy.
For the effective functioning of any establishment, it is essential to possess impelling
internal conditions so that external can be managed properly. In context to the selected
organisation Uber, the internal environment of the entity can be expressed as follows: Culture: The internal culture of the business has build globally. The company celebrates
the differences by promoting diversity at workplace (Balasopoulour and et.al, 2016). The
selected organisation is also focused on the customers. In addition to this, ideas are
welcome from each and every employee of the firm stating the significance and
recognition Uber renders to its employees. Also, a healthy working culture is promoted at
the company so that it can achieve the desired performance.
 Structure: The selected organisation Uber follows an effective hierarchical structure with
the top level management by the group of directors. Under this board, CEO and the
directors of the company regulate the organisation. The CEO of Uber thus controls the
various departments which are products, security, CTO, Legal, operations, growth and
policy and community. These departments are further provided with different set of roles
to be followed.
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 Management systems: For the effective management of the customers, Uber has
implemented a Content management system that is controlled by the web agency which
they have hired for their services (Mkude and Wimmer, 2015).
 HR strategy: The selected organisation involves employees from the diverse background
so that company can effectively on the different grounds (Foss and Saebi, 2017). Also, a
high level of effectiveness and positivity is maintained in the business so that workers can
work effectively. However, it should be recognised that the Uber is required to pay
attention on the hiring of employees. An improvised method is selected for the
recruitment so that capable drivers can be involved in the entity.
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Critical appraisal of the strategy to assess the sustainability of the firm's competitive advantage
In the above tasks the internal and external factors of the selected company have been
analysed by making use of relevant models. Mainly porter has defined three ways to sustain the
competitive advantage of company which are also mentioned earlier (Wagner, 2013). These
significant strategies are mentioned above: Cost leadership: At the time low financial growth in industry, company who able to
provide services at a much lower cost as compared to its competitors etc (Molnár and
Lendvay, 201 6). Uber also aims to deliver its services at low prices at time financial
crises in order to increase its sales volume and become a low cost leader. It requires a
high investment to achieve the prepositions and economies of scale. Differentiation: In order to sustain a competitive advantage, Uber have applied the
strategy in which they will introduce new and unique services for their customers at
lowest possible prices in order to hold a dominant hailing position in industry (Yunna and
Yisheng, 2014). Further, they will also keep safety arrangement for female passengers
and employees to remove the allegations which are made by Susan Fowler in her blog
post. They also use new technologies to increase the fastest communication with their
customers.
 Focus: This strategy will enable the company to dominate the Niche market. As result of
development and promotion of niche market services, Uber will be attract the high share
of customers in that market segment than its rivals (Sutherland, 2014).
Innovations are regarded as the most significant factor that needs to be considered by an
organization in order to achieve organizational goals and objectives. In the present era of
developments and tremendously increasing technologies, companies are entailed to pay focus on
technological advancements (E. Dobbs, 2014). In this way, they should adopt suitable
modifications or changes in the existing strategies, procedures or policies to make their work
more productive. Changes in the organization become crucial if any flaws are observed in any
department or any area. It should be recognized that business is integration of different
components such as human resource management, leadership, internal organizational culture,
etc. Thus, in order to make an establishment effective, it is significant to control all these areas.
Internal consistency is being achieved by the company Uber through used differentiation
are strategies in order to make a different their ways of business operations and also make them
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able to reduce influence the other competitors who working with the same business model across
the different parts of the countries (Rothaermel, 2015). They have been recommended to use the
steps for changing its work culture at workplace like review of pay practices to its employees,
changing the ways' performance review, analysing clearly the requirements of promotions
practices and also development of safe and participation work culture for the female employees
at workplace. Through removal all those managers who are engaged in that scandal, the new
CEO has become able to develop a new corporate culture.
VRIN model
This framework of model implies that the there are some specific requirements of
elements in resources of organisation, if they are considered as source of sustaining the
competitive advantage in future business operations (Cannon and Summers, 2014). These
important elements are mentioned above: Valuable: It clearly states that resources which are held by company, needs to have or
create value among its customers (Bashir, and et.al, 2016). Uber has some major
resources and capabilities like Qualified Human capital, Strong brand identity, Wide
technological support and High financial strength in industry as well as wide range of
services. These resources will help the organisation in influencing its rivals and
increasing customer base. For example: Uber has financial strength of around $70 billion
which is not been easily achieved by others. Rare: Resources and capabilities possessed by Uber are considered as rare because there
is lack of availability of large number qualified personnel and financial strengths among
its rivals who are having same business model like Lyft (Sørensen, 2016). Inimitable: It is also analysed these competencies and resource are can be reproduced by
the any other company in market (Foss and Saebi, 2017).
 Non substitutable: Uber has achieved the resources and capabilities which will not be
easily substitutable by other business firms in same industry but if efforts are being made
by other rivals then they will be able to influence its competitive advantage (Kavadias
and et.al 2016).
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CONCLUSION
From the present report, it can be concluded that innovations plays a crucial role in
increasing business value of an organization. There are various other advantages which are
associated with the innovative ideas added in the establishment. The present report has shed
lights on the antithetic components that plays role in improving conditions of an entity. All the
internal and external factors that can impact upon the functioning of Uber are analysed in the
present work. These investigations are carried out to understand the present day situation of the
firm to gain competitive advantage. In addition to this, the outcomes obtained from the analysis
are also evaluated with the help of VRIN model and their sustainability is checked.
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