Macro and Microenvironment Analysis of Uber

The study emphasises the importance of being aware of the numerous strategies that Uber could adopt as a framework for its strategy. The most valuable and diverse ride-hailing private company in the world is Uber. Across 78 countries, there are almost 15 million regular journeys taken every day. Because of its convenience and commitment to its consumers, Uber has greatly expanded its network over the years and has had tremendous success (Mittendorf, 2017). The strategic models, macro and microenvironment analyses of Uber, and the significance of the PESTLE framework approach are all covered in the paper.

Submission Front Sheet
Programme BTEC Higher National Diploma (HND) in Business (RQF)
Unit Title and Number: Business Strategy (Unit 32)
Assignment title Business Strategy Assignment
Unit RQF level/Code
5/
(K/508/0574) Module Tutor
Name /Email
MD Hasan
m.hasan@mrcollege.a
c.uk
Credit Value 15
Assignment Brief
Code RQFBM-BS320203-V4
Cohort Name
HND MKT APRIL 20B
Assignment Date
Set
26th Apr 2021
Student’s Name
Zsolt Bandi
Student’s
Registration
Number
25229
Submission Date Distribution Date
Is this a first
submission
yes
Is this a referral
submission
Word Count
3341
Learner’s statement of authenticity
I certify that the work submitted for this assignment is my own. Where the work of others has
been used to support my work then credit has been acknowledged. I have identified and
acknowledged all sources used in this assignment and have referenced according to the
Harvard referencing system. I have read and understood the Plagiarism and Collusion section
provided with the assignment brief and understood the consequences of plagiarising.
Student’s Signature Zsolt Bandi Date 19/06/2021
1

Table of Contents
Introduction............................................................................................................................................................3
An Overview of Uber.............................................................................................................................................4
Evaluation of the impact and influence of the macro environment on Uber and its business
strategies.................................................................................................................................................................4
Assessment of Uber’s internal environment and capabilities................................................................................8
Detailed Evaluation and analysis of Uber using Porter’s five forces model........................................................10
Interpretation of strategic directions using models, theories and concepts to assist with the
understanding.......................................................................................................................................................12
Conclusion............................................................................................................................................................14
2

Introduction
The study highlights awareness of the various strategies which could be used as a strategic
framework for Uber.Uber is the most valuable and diversified ride sharing private organization
in the world. On a daily basis, and across 78 nations, over 15 million rides taken regularly. Uber
has diversified its network to great extent over the years globally, and has been greatly successful
because of its convenience and loyalty to its customers (Mittendorf, 2017).The report covers
strategic models, macro and microenvironment analysis of Uber and the importance of PESTLE
framework strategy.
3

An Overview of Uber
Uber is an American international mobile app-based technology company which focuses on
services like transport, food deliverance, stock delivery, couriers, payment processing. The
Founders of Uber are Garrett Camp and Travis Kalanick in March 2009; it has its headquarters in
San Francisco, California, United states of America and has a diversified chain of network
serving more than 69 countries globally (Kim et al., 2017). Since its founding, Uber has
incorporated wide range of car services .For instance, Uber has added Uber XL, Uber black as
well as Hoover SUV to its basic and most affordable service UberX other car services includes
Presently, Uber is one of the leading transportation services in the world currently valued at
approximately 68 billion dollars. Uber stands as the world’s gigantic ride sharing technology
firm with booming diversifications globally and the world’s most beneficial startup (Mittendorf,
2017).
Evaluation of the impact and influence of the macro environment on Uber and its business
strategies
The impact of macro environment on Uber can be studied through PESTLE Analysis.
PESTLE Analysis of Uber
Political factor
Uber have gone through numerous controversies over a period of time due to government curbs,
political regulations and rules. In United States, local taxi organizations have been pushing local
governments to restrain Uber services. Besides this, supervisory board of San Fransico has
proposed a rise in cost of ride sharing services. New York too has restricted new licenses for on
demand four wheelers. Seattle too had permitted drivers to propose a bargain in the cost but was
denied. Thus, Uber faced lots of backlashes in issues like commercial advertising, minimum
wage issue and policies (Shapiro, 2018). Uber has counted this by paying the fine of any driver
and calling out to the public to write to members of parliament to demand that Uber be allowed
to operate. If it loses more court cases it could have significant ramifications for a range of
companies with similar business models in other industries such as accommodations with Airbnb
or general service with Air Tasca (David and West, 2017).
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Economic factors
Uber has shown an exponential growth since its launch through new service lines and
diversification globally, it has left no stones unturned to reach the milestone (Horan, 2017).
Though, the status of the economy of the nation is directly correlated to their expenditure of the
customers. In some cases, customers may avail to public transport which is much cheaper or may
also resort to driving themselves. Besides this, they may prefer to stay home if the economy of
the nation declines eventually. Uber accounts for 70% of U.S. transport services and plans to
elevate over $9 billion in its services in United States in the coming years.
Though it is expected to maintain growth in countries but in a low rate, unemployment is steady
as well as disposable income so the economic impact on the industry remains positive.
Figure1: Uber Stock Price
(Source: Xignite)
Social Factor
Social impacts play an important key to Uber’s success. Uber’s easy accessibility and
convenience have created a positive impact among the customers .Besides this, its effective fare
price have too helped the company to attract new customers on regular basis .Thus, these social
traits and consumer friendly policies have helped Uber to diversify its network globally which
have led to increase brand value, sustainability and profit margin ( Lee, 2018).
Technological factor
5

Technology drives Uber. It has diversified globally through social media. Positive reviews and
experiences of people have encouraged users for frequent rides (Geissinger et al., 2019).
Uber uses computer algorithms combined with GPS tracking. This method of algorithm in both
the diver and customer phones has been used to ensure that people can get rides within a 5
minutes time guarantee from their booking improved accuracy with location tracking. In the
coming years this too may improve even further but the main technological impact has already
occurred now (Kim et al., 2017).
Legal Factor
Legal factors are negative. Legal factor play an important role in transportation industry as they
must abide and follow all rules and regulations and must have proper maintenance of vehicle and
license updated on time. In November 2019, court in New York had rejected Uber’s lawsuit
which had proposed to limit the ride service licenses.
Environmental Factor
Environmental factor doesn’t have much impact on the taxi industry .Customers usually prefer
Uber rides in comparison to public transport as they are less expensive as well they are
environmental friendly and causes least traffic congestion. Uber too have been looking forward
with partnership with Tesla .Thus, resorting to sustainable resources and fuel free engines they
are contributing to an ecofriendly environment (Kim et al., 2017).
Thus, PESTLE analysis helps to monitor the strategies that can be incorporated for building a
better business plan. From, political to environmental, this analysis cover every aspect that the
firm must look upon to counter all challenge and risks that it may face and stay equipped with
the latest technology and trends which are more convenient and accessible to the customers.
Stakeholders Analysis of Uber
6

Asse
ssme
nt of
Uber’s internal environment and capabilities
The internal environment and capabilities of Uber can be studied through SWOT Analysis.
Strengths
1) Uber is a reputed global icon in ride sharing
industry.
2) Uber has reputed and good service standards
with efficient and well trained drivers.
3) Uber provides a wide range of taxi
service(Alemi et al., 2018)
4) Uber holds no responsibilities to its
employees as they have no full time employee.
5) Uber service completely resorts on
consumer driver interaction so the service cost
is quite low.
5) Uber has no strict competition in the market
domain. A major competitor of Uber is Lyft.
6) Since the payment is mostly cashless so
Uber can track well rated and efficient drivers.
7) Uber drivers have flexible hours, not a full
time service and may even decline unwanted
customers.
8) Taxi fare of Uber is economical and
convenient to the public.
Weaknesses
1. Uber has been a hugely successful company.
Thus, many of its competitors will try to
imitate its strategies for better profits and sales.
(Collier et al., 2018).
2) Drivers have no relation with Uber and Uber
holds no responsibilities to its employee so this
may have negative impact on loyalty of the
drivers to the company.
3) Drivers may have no sincere loyalty and
dedication to the company.
4) Since there are lots of ride services ,
customers can avail to any ride service
according to their convenience.
5) Privacy related issues: Uber have all records
of its customers so it may feel the customer
uncomfortable having their destination and
location known by the company or the driver
itself.
7) Through the app, Uber have complete
accessibility to its employee’s bank account
7
High power and Low Interest
Local Government
Police
Cab Enforcement units
Transport for London
High Power and High interest
Taxi agencies
Traffic regulators
Car inspectors
Private hire organizations
Low power and Low Interest
Insurance companies
Transport Committee
Infrastructure maintenance officials
HM Revenue and Customs
Low power and High interest
Passengers
Taxi drivers
Private hire drivers

9) It is a highly evaluated company and may
find lots of investors.
details.
8) The driver’s earning is low and keeps
fluctuating which may have impact on the
sustainability.
9) Since the drivers represent the company so
it it may lead to bad public relation if their
behavior with the customer is inappropriate
(Hall et al., 2018).
Opportunities
1) Uber have great opportunity to new market
launches and new services in accordance to the
customer needs. 2) Uber services may also help
its customers with pharmacy, parcel drop,
doorstep service which cvan be of great
convenience to its customers (Angrist et al.,
2017).
3) Reward programs to employee and
customers can be initiated by uber which may
help to sustain loyalty , improve brand value of
the company and will also bring in new
customers.
4) Incentives can be provided to drivers with
electric cars as they contribute to reduce air
pollution and improve recognition of the brand.
Threats
1) Goggle Self driving cars.
2) Negative relations between driver and
company and company and clients.
3) It can be easily replaced by their
competitors
(Chen et al., 2019).
4) Fraudulent apps are too created in the
market which promises to provide same
service but later ends up stealing bank
account information. This leads to decline of
the brand value of the company.
5) Uber drivers are not very satisfied with the
company services and wage which may lead
to bad PR and more turnover of the
employee.
Table 1: SWOT analysis
(Source: Hall et al., 2018)
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Detailed Evaluation and analysis of Uber using Porter’s five forces model
Figure 2: Porter’s five forces model
(Source: Stanton et al., 2019)
9
Threat of New Entry:
Medium
1) Entry Barrier: Medium
2) Exit Barrier: Low
3) Economies of Scale:
Med
1) Driver Power: Low
2) Bargaining Power of Driver:
low
3) Switching cost: Low
1) Rider Power: High
2) Bargaining Power of Customer:
High
3) Switching Barrier: Low
Threat of New
Substitutes:Low
1) Ride Sharing:
Medium
2) New Cars: Medium
3) Public Transport: Low
Competitive
Rivalry

Porters five forces analysis is composed of the competitive rivalry, threat of new entry and the
bargaining power of drivers and bargaining power of rise of riders.
High Competitive rivalries
In reference to competitive rivalries, there are notable companies such as Lyft which is Uber’s
main competitor, Go kid is another ride servicing app and with regular modes of transportation
such as cars, buses, taxis service, planes. Since Uber services works on latest technology and the
with an good customer service and loyalty the company still stands among its competitors.
Besides this, Uber offers a wide service range and a standard pricing strategy which are
favorable among the masses (Hall et al., 2018).
Threats of new entrants
The threats of new entrants are around medium. New entrants are not likely to scare and would
not have investments to directly compete with Uber. The barriers of entry is medium and the exit
barriers are low but more importantly the economies of scale are medium because the more input
of drivers does not necessarily yield higher output so since there are no main threats of new
entrants thus, establishing dominance for a new company at a local level would be a best way to
go to win market share in a specific market segment. It is probably the best way as Uber is now
the biggest company in the ride sharing services industry so since there are no threats of new
entrants Uber will be able to keep its profit and market share (Collier et al., 2018).
Threat of Substitutes
The threats of substitutes are pretty low and the ridesharing industry is medium as Lyft is their
main substitute. Launch of New cars rate are too medium and self driving cars are become too
convenient and that may yield more profit and market share (Berger et al., 2019).
Public transport is low as people are not going to switch to public transportations from Uber
anytime soon in bikes as well because of the convenience and reasonable price which Uber
offers and also lots of coupon and promo codes attracts their attention and retains their loyalty.
Bargaining power of Suppliers
Bargaining private power of drivers are pretty low because even though drivers can control they
drive they have little decision making abilities and they definitely have no control over cost and
basically just have to live with it so the bargaining power of drivers is low, switching costs is
10

also low .Barrier if entry is low, it’s easy to become a Uber driver which works to Uber’s
benefits (Anderson and Huffman, 2017).
Bargaining power of the consumers
The bargaining power of the consumers is high. Uber customers have control over the
competitive market and they can easily switch to an alternative so the bargaining power of
consumers is high .The switching barrier is very low and it is easy to switch to competitors and
often times it easy to switch in accordance to whichever is cheaper. Buyer information is high
before switching from Uber to Lyft just to compare prices so that is very easy with riders having
so much power that have the ability to drive price down and limit Uber’s profit.
Interpretation of strategic directions using models, theories and concepts to assist with the
understanding.
Figure 3: Ansoff Matrix
(Source: Loredana, 2017)
Ansoff Matrix is a marketing model which helps the brand determines its products and market
strategies. Ansoff matrix highlights four strategies essential in the business of the company
(Loredana, 2017)
These include market penetration, product development, market development and diversification.
1. Market Penetration
Market penetration is process of trading ongoing stocks to the market domain.
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With reference to Market penetration, Uber resorts to numerous sales promotion methods
throughout the year which includes
a) Disperse promo codes to users on their first ride or ongoing ride which the users can avail in
their upcoming ride.
b) Uber’s VIP loyalty programmes which felicitates customers with access to best rated drivers.
c) User may avail to free rides by sending invitation links to friends and family to sign up and on
their first ride.
2. Market development
Market developments are strategies closely related with new markets for the existing products.
With its initiation in San Francisco in 2009, Uber has operations in more than 760 locations
globally. Lately, the gigantic company has been in expectation to be executed under the new
CEO Dara (Anderson and Huffman, 2017).
3. Diversification
Diversification refers to launching new products on the existing markets. Though it is considered
to be risky, but it has been of great progress. In the initiative phase, it started as a taxi service
firm and now with Uber EATS which delivers food service, it has diversified its network
globally (Young, 2019). Uber food services, Uber Freight and expanding ride options are few of
the services which Uber plans to expand and diversify globally (Loredana, 2017).
4. Product development
Products development refers to launching new products to sell on the existing markets. The
global company has developed numerous services which include Uber X, Uber XI, UberPool,
UberGO, Uber Auto, Uber Premium, etc.
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Figure 4: Uber’s Business Model
(Source: FourWeekMBA)
Conclusion
The study highlights those innovative strategic ideas and models, attractive features for the
customers such as the lower prices influence the sustainability and growth of a company.
PESTLE framework model, SWOT analysis, Ansoff matrix model and stakeholder’s analysis
helps us to understand the strategic overview of the company. As Uber’s internal processes are
different than the traditional taxi industry, it has been of great convenience to its customers.
Uber’s disruptive global success accounts for its huge investors and ruthless execution.
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