Opportunities and Challenges for Uber in Russia

This paper explores the opportunities and challenges presented by the external macroenvironment for Uber company in Russia’s transport industry. It discusses the PEST factors, opportunities, and challenges that Uber faces in Russia. The changing consumer tastes and preferences and technological support and advancements are identified as opportunities, while competition and regulatory framework are the challenges.

Opportunities and Challenges for Uber in Russia 1
Opportunities and Challenges for Uber in Russia
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Table of Contents
Introduction......................................................................................................................................3
PEST Factors...................................................................................................................................3
Opportunities...................................................................................................................................4
Challenges........................................................................................................................................5
Conclusion.......................................................................................................................................6
References........................................................................................................................................7

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Introduction
Uber is a network of transport that connects drivers with passengers (Cramer & Krueger
2016). The main tool that is used by passengers to access the services offered by uber include,
mobile apps, and websites. As recent as 2015, apps and websites that could be used for
accessing these Uber transport services were already operational in more than 58 countries in the
world. The main business model used by Uber company is being in a position to have a network
of vehicles. It is quite important to note that Uber does not own any vehicles of its own, but
drivers and owners of different vehicles register with the Uber network so that they can connect
with customers (Nistal & Regidor 2016). Like any other corporation, Uber still seeks to upscale
its services in different countries. The purpose of this paper is to explore the opportunities and
challenges presented by the external macroenvironment for Uber company in Russia’s transport
industry.
PEST Factors
 Political analysis – Refers to an assessment of the role of the government in the economy,
what interventions has the government undertaken in terms of supporting or restricting
the economy? Further, this refers to the goodwill that the country provides to different
organizations regarding their investments (Scherer & Palazzo 2011).
 Economic factors – They include inflation rates, exchange rates, interest rates, tax rates.
These factors greatly influence the operational decisions made by a company in any
country. For example, interest rates affect the ability of a company to seek for capital in
financial institutions to expand their operations (Liñán et al., 2011).
 Social factors – Issues such as cultural issues, age, population growth, and changes in
consumer preferences may affect operations of a company in a particular country (Nga &
Shamuganathan 2010). For instance, a country with older people might have a slow

Opportunities and Challenges for Uber in Russia 4
economic model as compared to a country that has a lot of young people. These factors
greatly determine the demand for a product or service.
 Technological factors – These are the incentives available to support technological
changes. Technology significantly contributes to determining efficiency in production
and quality of product and services.
Opportunities
The changing consumer tastes and preferences will offer a great opportunity for Uber
company in terms of the demand for their service. Ideally, consumers taste, and preferences are
determined by trends and the obligations that one has to accomplish; further demographics also
play a huge role in the kinds of services a population prefers. Russia, for instance, has a modest
number of both young people and old people. From this statistic, we can see that Uber company
can adequately position itself to capitalize on this demographic structure. Young people may not
own vehicles but could regularly want to move from place to place. Old people, on the other
hand, they might own their vehicles, but due to health conditions or higher fatigue rates they may
opt to use Uber service instead. More to this, consumers preferences in Russia are changing over
time, some segment of the population that use taxi services want to ride on a different type of
vehicle which ideally is not provided by some taxi company. Uber can capitalize on this niche
since it can provide a huge range of cars for its clientele to choose from.
Technological support and advancements is another opportunity that Uber has regarding
capitalizing on business in Russia. The main platform that is tangent on Uber's business strategy
is the use of technology (Smith 2016). Uber majorly depends on the use of mobile apps and
websites for their clientele to request for their services. Primarily it is worth noting that, Russia
has shown great developments in terms of supporting technological knowledge and
developments. In practice, a huge population of Russia is comfortable with using mobile apps.

Opportunities and Challenges for Uber in Russia 5
This evidence means that if Uber decides to launch their business in Russia, it will fully fit in the
current environment since the environment is more technology oriented.
Challenges
One of the main challenges that uber will face in their aim to explore Russia is
competition from existing companies that offer transport services (Rogers 2015). Normally,
market penetration for new firms is always a big challenge. Uber company is of no exception as
it seeks to go into a new market in Russia. The main reason for this difficulty in market
penetration is because of already established businesses that are providing the same products and
services as the new market entrant. Uber, for instance, offers transport services. In Russia, they
already have taxi service operational, and some customers are more familiar with this taxi
services. Hence they will need to use a lot of resources in designing their service and advertising
it so that they can increase outreach and establish themselves in the market.
Uber may also experience a great challenge with regards to Russia’s regulatory
framework. Ideally, there are rules and regulations that every country has in place for different
investments to undertake before they can launch their business in a country. A regulatory
framework is defined as a system of rules and laws that determine what a company can or cannot
do (Carroll & Shabana 2010). Further, Russia has permits and licenses that every company needs
to conform to before they can legally operate in the country. It is worth noting that sometimes
conforming to the regulatory framework maybe be costly for a company. Uber should adequately
invest in determining what kind of regulations they are subjected to before fully launching their
business in Russia. In cases where a company is found to have violated any rules or laws, they

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are subject to huge legal fees or sometimes expelled from undertaking business in that specific
environment.
Conclusion
The purpose of this paper was to highlight the opportunities and challenges that Russia’s
external environment possess for Uber company. The paper identifies changes in consumer
preferences and technology as the opportunities and regulatory framework and competition that
Uber company faces if they seek to expand their business to Russia. It is quite imperative for
Uber to design a strategy that will adequately tap into the highlighted opportunities and
consequently respond to the probable challenges. This strategy will ensure stability with regards
to Uber operations.

Opportunities and Challenges for Uber in Russia 7
References
Carroll, A.B. and Shabana, K.M., 2010. The business case for corporate social responsibility: A
review of concepts, research and practice. International journal of management reviews,
12(1), pp.85-105.
Cramer, J. and Krueger, A.B., (2016). Disruptive change in the taxi business: The case of Uber.
American Economic Review, 106(5), pp.177-82.
Liñán, F., Rodríguez-Cohard, J.C. and Rueda-Cantuche, J.M., (2011). Factors affecting
entrepreneurial intention levels: a role for education. International entrepreneurship and
management Journal, 7(2), pp.195-218.
Nga, J.K.H. and Shamuganathan, G., (2010). The influence of personality traits and demographic
factors on social entrepreneurship start up intentions. Journal of business ethics, 95(2),
pp.259-282.
Nistal, P.D. and Regidor, J.R.F.,( 2016). Comparative study of Uber and regular taxi service
characteristics. In Proceedings of the 23rd Annual Conference of the Transportation
Science Society of the Philippines, Quezon City, Philippines, August (Vol. 8).
Rogers, B., (2015). The social costs of Uber. U. Chi. L. Rev. Dialogue, 82, p.85.
Scherer, A.G. and Palazzo, G., (2011). The new political role of business in a globalized world:
A review of a new perspective on CSR and its implications for the firm, governance, and
democracy. Journal of management studies, 48(4), pp.899-931.

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Smith, J.W., (2016). The uber-all economy of the future. The Independent Review, 20(3), pp.383-
390.