Challenges and Opportunities for Uber in the United States

This report discusses the challenges and opportunities faced by Uber in doing business in the United States. It analyzes the situational factors and recommends strategies based on the Ansoff matrix. It also identifies Uber's internationalization strategy and market entry strategies in India and China.

Running head: INTERNATIONAL BUSINESS
International business
Name of the student
Name of the university
Author note

1INTERNATIONAL BUSINESS
Executive summary
The aim of this report is to discuss about the challenges and opportunities being faced by Uber in
doing business in the United States. This report initiated a few models for situational analysis
and the relevant factors for Uber are being identified. In addition, a few strategies are being
recommended for Uber based on the factors identified in the situational analysis. These strategies
are being recommended on the basis of Ansoff matrix. Furthermore, the internationalization
strategy being followed by Uber is also being identified. This report concludes that Uber is
following licensing entry mode strategy in doing business in India and China.

2INTERNATIONAL BUSINESS
Table of Contents
Introduction......................................................................................................................................3
PESTLE analysis.............................................................................................................................4
Political factors............................................................................................................................4
Economical factors......................................................................................................................4
Social factors...............................................................................................................................4
Technological factors...................................................................................................................5
Legal factors................................................................................................................................5
Environmental factors..................................................................................................................6
Porter five forces analysis................................................................................................................6
Bargaining power of the customers.............................................................................................6
Bargaining power of the suppliers...............................................................................................6
Threat of new entrants.................................................................................................................6
Threat of substitutes.....................................................................................................................7
Value chain analysis........................................................................................................................7
SWOT analysis................................................................................................................................8
TOWS matrix.................................................................................................................................10
Ansoff matrix.................................................................................................................................11
Discussion of integration responsiveness framework....................................................................11
Pressures for business integration..............................................................................................12

3INTERNATIONAL BUSINESS
Pressures for local responsiveness.............................................................................................12
Types of internalization strategy...............................................................................................13
Market entry strategies by Uber in India and China......................................................................13
Conclusion.....................................................................................................................................14
Reference.......................................................................................................................................16

4INTERNATIONAL BUSINESS
Introduction
Effectiveness of the business strategies determines the extent to which the business
organizations will be able to have favorable opportunities. In addition, in the recent time, it is
also important for the contemporary business firms to determine the market environment only to
implement the business strategies accordingly (Mithas, Tafti & Mitchell, 2013). Moreover, in the
current era of the international business, marketing environment is also much diverse and
challenging and effective determination can only help in operating in different countries
seamlessly. Business strategies include the marketing strategy, pricing strategy, market entry
strategy and operational strategy. Relevancy of these strategies can be identified in the case of a
large scale firm.
Uber is one of the leading companies in the current time with having their operations in
different countries across the world. In addition, they are also being credited for changing the
entire scenario of cab market. It is reported that Uber is having their presence in more than 750
metropolitan cities and 65 countries across the world and this denotes their huge scale of
operation (uber.com, 2019). It is also reported that in the current time, more than 15 million trips
are completed by Uber per day. In the market of the United States alone, Uber is holding the
market share of more than 70 percent. However, with the increase in competition and rise of the
competitors such as Grab and Lyft, Uber is having the need to review their strategic intent.
This report will discuss about the external and internal challenges and opportunities for
Uber with the use of strategic models such as PESTLE, Porter’s five forces and value chain. In
addition, SWOT analysis will also be discussed to identify the major internal factors. TOWS
matrix will also be done to identify three potential actions for the company. Ansoff matrix will

5INTERNATIONAL BUSINESS
be used to identify the strategies for the stated actions and Integration Responsive framework
will be used to identify the market responsiveness of Uber outside of the United States. Lastly,
market entry strategies followed by Uber in entering in India and China will be identified.
PESTLE analysis
Political factors
Uber is facing diverse political factors due to the fact that they are having their presence
in different countries across the world. One of the major political challenges for Uber is the
negative approach of the governments of different US states towards their business model. In
addition, emergence of the unethical business practices is further causing challenge for Uber in
dealing with the political factors (Hall & Krueger, 2018). However, on the other hand, the
increasing trend of capitalization and pro business approach in the market, political challenges
for Uber are getting lowered.
Economical factors
Emergence of the new competition is the major economical threat for Uber and it is
evident in their current financial performance. This coupled with the discounts and being offered
is affecting the financial performance of Uber. In addition, the major market for Uber such as the
United States is showing less growth and is more getting saturated now. Thus, the potentiality for
Uber is also getting reduced (Wirtz & Tang, 2016). On the other hand, markets in the emerging
economies are showing good growth and presence of Uber in these markets will also be
beneficial for long term sustainability.
Social factors

6INTERNATIONAL BUSINESS
Social acceptance is favorable towards availing the service of Uber and with the huge
brand identity of them across the world; social factors are less challenging for them. However,
the emergence of unethical behaviors, ineffective management of drivers, and security breach for
the customers is affecting their social environment (Castillo, Knoepfle & Weyl, 2017). With the
change in the social trend and preferences, customers are more willing to have convenience in
riding cab, which is increasing the opportunities for app based cab services like Uber.
Technological factors
Business model of Uber is heavily reliant on the technological advancements. Services
being offered by Uber through their cab are being regarded as the benchmarks for other ride
hailing services. However, on the other hand, technological sector is witnessing rapid
development and evolution, which is posing challenge for Uber due to the reason that cost is
involved with the technological development (Chen & Sheldon, 2016). Moreover, Uber is
present in number of countries and not all these countries are superior in terms of technological
infrastructure. This is restricting Uber in gaining competitive advantages by developing their
technological base.
Legal factors
Government of the United States is coming up with stricter rules and regulations in
respect to the online can services like Uber. This is in line to the recent safety issues identified in
these services. Adhering to these regulations will cost more for Uber and potentiality will get
reduced for them. It should also be noted that these regulations will be different in different
countries and Uber will face the challenge to adhere to all of them (Cannon & Summers, 2014).

7INTERNATIONAL BUSINESS
However, on the other hand, Uber is having huge access to the financial resources and they are
capable enough to deal with this situation.
Environmental factors
Environmental factors much relevant in the current business scenario and organizations
such as Uber are having much relevancy. This is due to the reason that Uber is directly impacting
the environment by their vehicular pollution. However, in the recent time, they are also testing
and initiating electric mobility for reducing emission. This is also helping Uber to create positive
image in the market.
Porter five forces analysis
Bargaining power of the customers
Bargaining power of the customers is more in the United States market. This is due to the
reason that customers in the United States are having other options also such as Lyft. Majority of
these services are offering similar services at same price points. In addition, switching cost is
also low for the customers, which is further increasing the bargaining power for them (Dobbs,
2014).
Bargaining power of the suppliers
Uber is having the upper hand in bargaining with the suppliers such as car manufacturers
and drivers as their partners. This is due to the reason that brand value of Uber is huge and car
manufacturers are having huge potentiality in tying up with Uber for their bulk sales. Thus
bargaining power of the suppliers is low for Uber.
Threat of new entrants

8INTERNATIONAL BUSINESS
Threat of new entrants is moderate for Uber due to the reason that good number of cab
services are operating in the United States. They are offering similar sets of services. On the
other hand, Uber is the global leader in this industry and thus enjoying the maximum market
penetration in the market. This cannot be matched by the new entrants in the market. In addition,
the new entrants will not have the financial capability to match the global business presence of
Uber (Porter & Heppelmann, 2014).
Threat of substitutes
Threat of substitute is high for Uber due to the reason that same services are available
from other providers also. Customers are having the options to choose any options. Moreover,
lack of differentiation is also contributing in increasing the threat of substitutes for Uber.
Value chain analysis
Primary activities
Inbound logistics Inbound logistics of Uber are entirely based on technology as
customers will book a cab from their cab to have it in their doorsteps.
Operations Operations are centralized for Uber and each of the cabs is connected
with the control room.
Outbound logistics Customers can avail their cab ride to their preferred choice of
destination and will pay accordingly. This process is also entirely
based on technology.
Marketing and sales Uber is known for extensive marketing and sales activities. However,
huge expenditure on marketing and sales is affecting their

9INTERNATIONAL BUSINESS
profitability.
Services Customers are given seasonal discounts, loyalty bonus, and helpline
numbers in case of an emergency.
Secondary activities
Firm infrastructure Uber is having minimal assets with them rather relying on independent
partners such as drivers. However, access to millions of independent
partners is enabling Uber to manage their operation across the world.
Human resources Uber is facing issues in terms of human resource management as they
are accused in past also for mismanagement of employees. This is
mainly being amplified as Uber is having less permanent employees.
Technology
development
Uber is in the front runner position in terms of technological
development. However, the rapid development and evolution of the
online cab industry is causing challenge for Uber in coping up with.
Procurement Uber is operating in cab industry and thus they are not depending on
direct procurement. They are majorly having partnerships with the car
manufacturers in supplying the inventories.
SWOT analysis
Strengths  Uber is enjoying huge brand value in the global market as well as in
the United States. This is further helping them in increasing their
revenue.
 Global reach and high market penetration is also helping Uber in

10INTERNATIONAL BUSINESS
being the true global cab service in the world.
 Offering different and diverse services in the United States is helping
them in catering to different customer segments.
 Market leadership status of Uber in the United States is helping to
mitigate the challenge and threat by the new entrants.
Weaknesses  Emergence of unethical business practices is affecting the brand
value of Uber. This will have long term impacts (Greenaway, Chen &
Crossler, 2015).
 Market of the United States is already saturated and over dependence
of Uber for United States is limiting their potentialities.
 Uber is having less control over their drivers as they are not being
considered as the fixed time employees. Thus, the service standard is
beyond control of them.
 Lack of differentiation is causing Uber to face more threat of
competition from their competitors.
Opportunities  Offering or diversifying different services will help in generating
revenue from the market of the United States.
 Offering electric mobility solutions will help Uber to create new
opportunities in the market.
 Uber is already a front runner in terms of offering latest technology
and thus they will find more opportunities in the long term.
Threats  Emergence of new regulations and standards will pose challenge for
Uber.

11INTERNATIONAL BUSINESS
 Emergence of new competition in the market will affect the
profitability of Uber.
 Changes in the preference pattern of the customers will also reduce
the market potentiality for them.
TOWS matrix
Strengths – opportunities It is recommended that the brand value and identity of Uber should
be leveraged in diversifying in different sectors such as online
payment systems. This will help Uber in targeting new customer
segments by using the branding. In addition, the high market
penetration will also help Uber to reach out to larger section with
their new offerings.
Strengths – threats The high level of market penetration will be helpful in mitigating the
threat of new entrants as they will not get matched with that of Uber.
Moreover, global reach of Uber will also help in dealing with the
changes in the preference pattern of a certain customer section.
Weaknesses –
opportunities
Diversifying in different sectors will help Uber in enhancing their
differentiated approach in the market. In addition, offering more
updated technologies will help them in maintaining a certain service
quality standard.
Weaknesses – threats Control over the drivers should be increased in order to face less
legal complications for customer safety. Differentiation should be
increased for Uber to mitigate the threat of new entrants in the

12INTERNATIONAL BUSINESS
market.
Ansoff matrix
According to the ansoff matrix, there are four approaches that can be followed by the
business organizations to enhance their business in the long term. On the basis of the factors
identified in the above situational analysis, three recommended strategies will be discussed for
Uber based on the Ansoff matrix. It is recommended that Uber should initiate diversification
strategy, which states about the use of new products or service to cater to new market segments.
As the cab market in the United States is already saturated and Uber already gained the market
leadership status, thus they are having low chance of gaining more from it. In this case, initiation
of the diversification strategy will help to further gain new customer segments in the United
States.
It is also recommended that Uber should also follow the product development strategy
due to the reason that it will help them to gain more market share in the United States. In this
case, they should increase the differentiation in their services by adding new services such as
onboard refreshment facilities to tap the existing market more effectively. Lastly, it is also
recommended that Uber should follow market penetration strategy by offering more affordable
services. In this case, they can use smaller cars with fewer facilities to tap the tier III cities. This
will help Uber in further penetrating in the existing market.
Discussion of integration responsiveness framework
Other than in the United States, Uber is actively operating in the developing countries
such as India and China. However, according to the integration responsiveness framework, it is

13INTERNATIONAL BUSINESS
identified that Uber is following transnational strategy in operating in the foreign countries. This
is due to the reason that core service approach of providing app based cab services is same and
standardized across all the countries they are operating (Meyer & Estrin, 2014). However, the
major change for their services in different countries is on the basis of fleets, pricing and service
elements. These factors are being adopted according to the local market trends. For instance, car
models used in fleet for Uber in the United States are not the same to what are being used in
India and China. In addition, high price points charged in the United States will not be applicable
in the Indian and Chinese market. Thus, with the help of the transnational strategy, Uber is
delivering their core services with changes in the delivering approach in different countries (Qu
& Zhang, 2015).
Pressures for business integration
 Trends and preference patterns of the global customers are same across the countries. In
this case, organizations offer standardized offerings around the world.
 Risk of brand image getting diluted also causes business integration. There are brands,
which refrains from adopting specific market elements for avoiding dilution of their
global image.
 Cost reduction is also an important pressure in business integration. In the case of local
responsiveness, more cost is being incurred for research and development, which is not
applicable if standardized products are being offered in the global market.
Pressures for local responsiveness

14INTERNATIONAL BUSINESS
 Differences in the customer preference patterns. If the taste and preference patterns of the
customers are radically different in different countries, then the organizations are forced
to be locally responsive in offering their products or services.
 Conflicting cultures and social factors between the customers from different countries
also forces companies in becoming locally responsive. If the global offering is conflicting
with local culture and social trends, then it will be difficult for the companies to offer
standardized offerings.
 Attaining higher set of market penetration also influences the companies in becoming
locally responsive. This is due to the fact that market adoptive offerings will only be able
to penetrate in the target market effectively compared to the standardized offerings.
Types of internalization strategy
One of the major types of internationalization strategy is multi-domestic strategy. This
refers to the approach of offering same products or services as in the global market but with
some subtle changes in line to the local preference patterns (Tulung, 2017). This helps the
businesses in continuing with the standardized offerings along with making them acceptable to
different preference patterns around the world. On the other hand, transnational strategy is
similar to the multi-domestic strategy but in this case, standardization is being maintained in
greater extent such as maintaining the same brand name and other elements across the world
(Meyer & Su, 2015). Global strategy is the last type of internationalization strategy, which states
about the offering of standardized products or services across the countries.
Market entry strategies by Uber in India and China

15INTERNATIONAL BUSINESS
Uber is driven by the gig economy business model and it is being followed across the
countries they are operating. In the case of both China and India, Uber is following the same
model of licensing the drivers with having their own vehicles to use the brand of Uber and to
adhere to the company rules and standards (Friedman, 2014). This entry strategy followed by
Uber is similar in both the countries due to the fact that business model of Uber is centered on
this approach. This is helping them to have less responsibility in terms of investments and
employee management.
In both China and India, market adaptation strategy is being followed by Uber and the
approach of the strategy is different according to the local market trends. For example, the
purchasing power of the Chinese customers and Indian customers is different and in accordance
to that, fare charts are being designed by Uber in each country. Furthermore, the rate of
commission offered to the drivers is different in China and India. All these factors are being
decided based on the local market trends of India and China. It is should be noted that market
entry strategy of licensing followed by Uber in India and China is relatively easier to initiate.
This is due to the reason that online cab market is limited in both these countries and there are no
specific regulations in relation to the foreign investments in this sector. Thus, Uber faced fewer
difficulties in licensing the drivers for carrying out their online business in both the countries.
Conclusion
This report concludes that Uber is currently facing a good number of challenges and
opportunities in operating in the market of the United States. These challenges and opportunities
are being identified in the situation analysis done in this report. In addition, with the help of the
ansoff matrix, three strategies are being recommended for Uber, which will help in further

16INTERNATIONAL BUSINESS
enhancement of their business. Moreover, internationalization strategy followed by Uber is also
being discussed on the basis of integration responsiveness model. This report concluded that
Uber is following licensing entry mode for their gig economy business model in India and China
and also following market adaptation strategy.

17INTERNATIONAL BUSINESS
Reference
Cannon, S., & Summers, L. H. (2014). How Uber and the sharing economy can win over
regulators. Harvard business review, 13(10), 24-28.
Castillo, J. C., Knoepfle, D., & Weyl, G. (2017, June). Surge pricing solves the wild goose chase.
In Proceedings of the 2017 ACM Conference on Economics and Computation (pp. 241-
242). ACM.
Chen, M. K., & Sheldon, M. (2016, July). Dynamic Pricing in a Labor Market: Surge Pricing and
Flexible Work on the Uber Platform. In EC (p. 455).
E. Dobbs, M. (2014). Guidelines for applying Porter's five forces framework: a set of industry
analysis templates. Competitiveness Review, 24(1), 32-45.
Greenaway, K. E., Chan, Y. E., & Crossler, R. E. (2015). Company information privacy
orientation: a conceptual framework. Information Systems Journal, 25(6), 579-606.
Hall, J. V., & Krueger, A. B. (2018). An analysis of the labor market for Uber’s driver-partners
in the United States. ILR Review, 71(3), 705-732.
Meyer, K. E., & Estrin, S. (2014). Local context and global strategy: extending the integration
responsiveness framework to subsidiary strategy. Global Strategy Journal, 4(1), 1-19.
Meyer, K. E., & Su, Y. S. (2015). Integration and responsiveness in subsidiaries in emerging
economies. Journal of World Business, 50(1), 149-158.
Mithas, S., Tafti, A., & Mitchell, W. (2013). How a Firm's Competitive Environment and Digital
Strategic Posture Influence Digital Business Strategy. Mis Quarterly, 37(2).

18INTERNATIONAL BUSINESS
Porter, M. E., & Heppelmann, J. E. (2014). How smart, connected products are transforming
competition. Harvard business review, 92(11), 64-88.
Qu, R., & Zhang, Z. (2015). Market orientation and business performance in MNC foreign
subsidiaries—Moderating effects of integration and responsiveness. Journal of Business
Research, 68(5), 919-924.
Tulung, J. E. (2017). Resource Availability and Firm’s International Strategy as Key
Determinants Of Entry Mode Choice. Jurnal Aplikasi Manajemen, 15(1), 160-168.
uber.com. (2019). About Uber - Our Story - Vision for Our Future | Uber. Retrieved from
https://www.uber.com/en-SG/about/
Wirtz, J., & Tang, C. (2016). Uber: Competing as market leader in the US versus being a distant
second in China. In SERVICES MARKETING: People Technology Strategy (pp. 626-
632).