International Business Strategy of Uber

This article explores the international business strategy of Uber and its growth potential. It discusses Uber's strategies, including market penetration, market development, and diversification. It also analyzes Uber's position in the industry and its generic strategies. Additionally, it examines the challenges and consequences Uber may face in the future.

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International Business Strategy-Uber
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Introduction
Uber is a mobile application that aims at connecting drivers to individuals that need a
ride. With certainty, it can be said that the organization has implemented a number of interesting
strategies. The strategies, whether sustainable or not, has assisted Uber to achieve incredible
success. In reality, the organization has successfully enhanced the development of its platform
through reliance on third parties. In addition, Uber has also decided to remain on the hedge,
proclaiming war both to the legislative institutions that are in support of the taxi lobby, including
its competitors who are currently teaming up to hinder Uber’s expansion. Irrespective of Uber’s
many mistakes and not always just conduct, the organization is an attractive option to the
investors, and it has got striking growth potential. In spite of Uber’s potentials, the company still
is required to overcome several challenges: obstacles arising from the market within which it is
competing as well as those challenges that are self-inflicted as a result of the company’s arrogant
strategies. To better understand Uber’s potentials, including the issues that it is likely to face in
the future, it is worth evaluating the company’s strategy.
Question 1
Uber’s International Business Strategy
Increasing the number of services to meet the needs of its customers: Based on the
customers’ budget, occasion as well as the reasons for requesting a ride, clients can choose
among Uber Access, Rush, Pool, X, Go, Premium, XI, Auto, or Access (Newsroom.uber.com,
2019).
Increased consumer convenience: Uber manages to provide unprecedented user
convenience at different levels. Customers do not have to wait in line, call dispatch or wave for a
curb. Rather, customer request for a ride by tapping “request” on their phone and the driver

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arrives within minutes (Cannon and Summers, 2014, pp.27). In addition, with Uber, disputes
resolution is easy.
Saving cost through innovation: Uber is capable of saving costs through innovation
whereby it has an app that integrates innovates features as well as characteristics. Hence, at the
core of the organization’s business strategy is to use innovation to operate at low costs (Smith,
2016, pp.386). Being the first mover in the Internet-based ride-hailing industry provides Uber
with increased competitive advantage.
Expanding to other Markets
Ansoff Matrix
Market penetration: Uber penetrates markets by applying several promotions techniques.
They comprise of distributing promos codes that allow the customers to obtain discounts for their
next ride, including “Uber VIP” loyalty program (Bashir and Verma, 2017, pp.7). Nonetheless,
by inviting friends to sign up and ride with Uber, users earn free rides.
Product development: Uber, an international transportation organization continuously
increases the number of its services. At the moment, its services include Uber X, Go, AUTO,
MOTO, Rush, XI, and Premium among others.
Market development: This is a strategy that involves finding new markets for an existing
product. Uber is operating in over 760 states globally and this global transportation company
intends to engage many more markets (Forbes.com, 2019).
Diversification: It entails developing new products for new markets. Diversification is a
risky strategy (TechCrunch, 2019). Initially, Uber was launched as a taxi organization but has
diversified its operations by entering the food takeaway delivery segment.

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BCG Matrix
Stars: Uber’s financial services strategic business unit (SBU) is a star. The company
operates in a market that has lots of potentials. From this SBU, Uber obtains a significant amount
of income. In this category, the company has a 20% market share and the market leader with the
market expected to grow by at least 5% in 5 years (Bloomberg.com, 2019).
Cash Cows: Supplier management service SBU fall in this category. Being in operation
for several decades, this SBU has earned the company high revenue. Despite that Uber’s market
share is high, there is a decline in the market as organizations manage their suppliers by
themselves instead of outsourcing.
Question Marks: In Uber’s BCG matrix, local foods SBU is a question mark. Consumers
have an increased focus on local foods. Hence, this market portrays an increased market growth
rate (Forbes.com, 2019). Nonetheless, in this segment, Uber has a low market share. Hence, the
company should carry out R&D to innovate new features.
Dogs: An example of a dog in Uber’s BCG is the plastic bags SBU. For the last 5 years,
this SBU has experienced losses. Also, Uber operates in a declining market as a result of
increased environmental concerns. The company should divest this SBU to reduce losses.
Porter’s Five Forces
Buyer Bargaining Power: Customers only use Uber services during specific
circumstances such as when they are late for work or during scheduled events. As such,
customers can freely decide either to use Lyft, Uber or other ride-sharing firms. The switching
costs are also low and clients are sensitive to price changes. Hence, customers have high
bargaining power.

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Threat of Substitutes: There are several member organizations that are capable of
substituting Uber. The closest rival is Taxi service that is traditional to cities such as New York.
Taxi service’s abundance is able to restrict Uber from increasing the service rates. Also, Uber’s
operations are threatened by public means of transportation that provide the same services at
reduced costs.
Supplier Bargaining Power: Uber has got no vehicles or fleets of its own but Uber's
business model is dependent on partner and drivers that own their own cars. Uber makes use of
the outsourcing strategy to acquire labor and assets to individuals who qualify to meet their terms
and conditions of using their web application. Hence, the suppliers have an upper hand in
influencing the company’s performance.
The threat of New Entrants: Uber does not have any protection from new-ride sharing
organizations that are capable of charging less for the same distance (Platformed.info, 2019). As
there needs to offset costs, the company is not immune to increasing its rates, thus making it easy
for new companies to enter the industry.
Rivalry with Competitors: A major competitor of Uber is Lyft which has got an almost
business model and operations as that is used by Uber. The two firms are competing for market
share and suppliers. To cut on operational costs, the two firms target customers within a specific
geographical location.
Generic Strategies
Uber uses cost leadership and technology-based differentiation. The company takes
approximately 5-20% of total earnings per trip. Also, it does not have full-time rides but rather
makes use of the network effect to increase its number of suppliers. The strategy is effective in
cutting infrastructure and maintenance costs. In Uber’s case, the cost leadership strategy works

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by transferring benefits to the riders and drivers whereby the company charges fewer costs
without incurring financial losses.
Technology-based differentiation provides a completive advantage for Uber. Technology
plays a crucial role in Uber’s business model. The Uber app links the driver with the client and
makes it possible to rate their ride as well as convenience. Uber’s technology makes it possible
for a ride to be available to a client immediately after booking.
Pros and Cons of Cost Leadership and Differentiation Strategies
The advantages associated with cost leadership is that it increases profitability.
Profitability results from selling products at reduced prices using competitive pricing. Other
advantages include increased market share, enhances sustainability, and results in capital growth
(Cohen and Kietzmann, 2014, pp.281). However, its disadvantages include: with the aim of
maintaining a low-cost position, firms might end up reducing costs in crucial are such as
customer service thus driving away clients.
On the other hand, differentiation creates value by assisting an organization charge
premium cost which is more compared to costs incurred by differentiation. Loyal clients help
stabilize a firm’s revenues and reduces the effects of market downturns. One disadvantage is that
it is costly to implement the differentiation strategy.

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Question 2
UBER Growth of the Sharing Economy, Business Model to stay Competitive
The sharing economy is big and it is growing very fast. Pricewaterhouse in 2015
estimated that by 2015, personal services, room and car sharing, video and audio streaming, as
well as crowd-funding would grow from $15 billion to $335 billion. The growth rates of
organizations such as Uber extrapolates these numbers. Uber’s scale and size even surpass most
of the international’s largest businesses in hospitality, transportation among other sectors
(Business Insider, 2019). However, as the economics of Uber continues to grow, there are
regulations and policy skirmishes that tend to hinder its growth. Uber has three key partners,
drivers, technology partners, and investors.
International Approaches
The international approach used by Uber to occupy the market includes bulldozing into a
market and aggressively recruit drivers. The key target for Uber is car drivers, whether they are
already working in the taxi/limo trade or not. By getting the drivers to come over to Uber, they
are weakening the companies with whom those drivers were affiliated. Most of these drivers are
not computer users and have to be reached in more traditional ways (Cramer and Krueger, 2016,
pp.177). This is why Uber is putting advertisements on buses and outdoor advertising boards in
close proximity to where those drivers normally work. Word of mouth then takes over since the
drivers talk to each other and thus generate more drivers for Uber.
Industry Position
Despite challenges faced by Uber, in 2018, CNBC rated the company second among the
most disruptive organizations in the world. The organizations operate in 65 states and in over
600 cities. In the US Uber has a market share for of between 65-69%. In 2018, Uber had revenue

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of $11.3 billion which was a 43% increase, while its gross bookings increased by 45% to $50
billion (TechCrunch, 2019). The company’s valuation s $72 billion with the investment levels
totaling to $24.7 billion.
PESTLE
Political: Uber is facing several controversies because during its establishment there were
no clear regulations. The US for instance, Uber is facing several lawsuits, and in California, the
government wants the company to treat its drivers, not as contractors but employees.
Economic: Uber in a sharing economy and it affects and gets affected by economic
factors. The organization has created job opportunities. However, it has also generated
extraordinary competition creating worry among traditional service providers (CNBC, 2019).
Social: Requesting a ride is made easy by the use of an app on smartphones. Customers
are concerned about easy availability and experience. The company has acquired popularity due
to its low prices and the quality of services it offers.
Technology: Uber has taken a large market share due to its excellent technology that
provides riders and drivers great experience (GrowthHackers, 2019). The organization has
included special features in its application which provides an extraordinary experience.
Legal: Uber faces legal issues that are related to human resources and taxes. The legal
authorities are also in a fix as to whether laws that apply to traditional services should apply to
Uber.
Environmental: There are questionable responses on whether Uber is increasing traffic
congestion and consuming a lot of fuel.

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Consequences Uber could face in future
In the future, in case that the Californian Courts rule that Uber drivers are Uber
employees, the company will be forced either to reduce the amount paid to the drivers, increase
rates, pay drivers minimum wage, or even stop operating in California. Due to the new legal
precedents, drivers in other states might also file lawsuits against Uber (Kavadias, Ladas and
Loch, 2016, pp.94). The other challenge relates to employee-employer relationships. If courts
dismiss the organization as being a technology firm, authorities can argue that the payments are
Uber’s revenue, and are thus subject to state taxes. Expanding internationally also increases the
company’s operational costs.
Conclusion and Recommendations
In becoming an international organization, Uber has faced several challenges along the
way. Learning from its mistakes, not meeting the local market’s objectives as well as failure to
plan are lessons that Uber can learn from expanding internationally. Uber aims at maintaining its
marketing share and being the leader in the ride-sharing industry globally. However, with
increased competition and the many challenges the company faces, there is a possibility for Uber
to lose its sustainability if it does not design a new strategic plan. If it is to retain its market share
and continue its global expansion, Uber should use the joint venture/merger strategy. Sharing
resources and expertise with existing competitors will enable it to perform better in highly
competitive markets. Also, the company can make use of celebrity figures as its marketing
strategy to improve its branding image. Nonetheless, it can also acquire existing ride-sharing
companies such as Diai Kuiadi of China.

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