Uber Case Study Analysis: Assignment

Uber Case
Analysis Report
Tutorial teacher: ord

Unless otherwise stated, all information in this report has been taken from this case: Farronato,
C., Maccormack, A., & Metha, S. (2018). Innovation at Uber: The Launch of Express POOL.
HBS No. 9-619-003, Harvard Business School Publications, Boston. Retrieved from The
University of Western Australia Learning Management System.
External Analysis
Identifying the Industry
The industry Uber Technologies Inc. (Uber) is operating in can be classified as the ride-sharing
industry.
Analysis of the General Environment
Economic
There has been a rise in economic welfare, affecting non-essential expenses in a positive manner.
With the rise in consumer confidence which increased in tandem with rising disposable income,
individuals can now afford more expensive transportation services other than public transport,
valuing factors such as convenience and comfort over price. However, a major cost factor for the
ride-sharing industry is fuel costs which directly impacts ride prices. Ride-sharing suppliers are
extremely dependent on the oil industry and therefore volatile to oil price changes.
Demographic
Population size is increasing and this significantly increases the need for viable transportation
options to cater to the increasing commute needs. Additionally, there has been a rapid increase in
global urbanization rates, with projections that 68% of the world’s population will live in urban
areas by 2050, as compared to 54% in 2016 (UN DESA, 2018). Such demographic trends have
been proving to place pressure and result in over-crowdedness on public transport. This provides
ride-sharing companies the opportunity to react on these occurings as they are able to provide
transport alternatives with emphasis on comfort and privacy for travellers to travel at their own
convenience and pace, thus increasing the attractiveness of ride hailing services.

Socio-cultural
There has been a recognizable shift in the rise of environmental awareness where people now
value and demand products and services that are perceived as eco-friendly. Ride-sharing is a
great way to reduce the number of vehicles on the road and the algorithm that ride-sharing
companies utilise also proactively send idle cars to high demand areas, thus speeding up travel
services and reducing wastage in the form of waiting time (Connor-Simmons, 2017). With
increasing number of studies shedding light on the benefits of ride-sharing, companies in this
industry will definitely stand to benefit with the improving perception of ride-sharing services.
Furthermore, with the increasing pace of life, time has become a vital factor. Fast transportation
services are highly valued and enable people to save time and effort on travel. With increasing
importance being placed on convenience, on-demand transportation service companies such as
ride-sharing applications offer customers the convenience of booking a ride wherever and
whenever and eliminates the need to worry about parking, dealing with small interruptions like
fueling up a car with gas, taking time to call a taxi, and hassles about paying in cash.
Technological
Global smartphone penetration rate has been increasing steadily, with 40% of the world’s
population projected to own a smartphone by 2021 (Holst, 2019). Technological advances have
made internet access easily available, which resulted in growth opportunities for mobile
applications and web-based businesses that many ride-sharing companies utilise. Moreover,
development of GPS technology has provided opportunities for more efficient taxi services.
Lastly, there has been increasing research and innovation in the field of self-driving vehicles due
to manpower concerns and this creates enormous opportunities for companies in the
transportation services industry.
Political, Legal
There are many legal challenges affecting the business of ride-sharing companies. This is
especially so for companies that operate on a global scale as they are exposed to different
political environments and therefore complicate decision-making and strategy formulations.

Firstly, ride-sharing companies have faced issues with employee classification as they regard
drivers as independent contractors instead of employees. This has brought about much debate
and uproar amongst ridesharing drivers as they are deprived of employment-related benefits such
as overtime pay and raises the issue of liability in the event of negligent acts (Park,2018).
Additionally, ride-sharing have had a disruptive effect on the traditional taxi industry and have
thus faced pushback from governments in the form of new sets of rules and regulations imposed
which varies by location. Ridesharing companies are vulnerable to policy challenges and
changes and have to adapt accordingly to the political system they are running the business in.
Furthermore, with the emergence of highly autonomous vehicles in ride-sharing companies, this
will potentially result in significant policy changes and restrictions, as they pose uncertainty
regarding safety and will displace drivers.
Global
Globally, rising fuel prices, increasing traffic congestion, and changing emission standards
support the growth of the on-demand transportation services industry. These evolvings make car
ownership less attractive and ride hailing services more attractive. However, the growth of the
ridesharing industry is hampered by low rates of internet penetration in developing countries.
Nevertheless, improving infrastructure and the increasing wealth of the population, will soon
result in an increasing demand for ride hailing services.
Analysis of the Industry Environment
Within the industry, the Porter’s Five Forces model is used to evaluate factors influencing a
firm’s competitive position within the industry and determine the profit potential.
Threat of New Entrants – High
There are very low barriers of entry into the ride-sharing market, mainly due to minimal capital
requirements – the mobile application which is the basis of business can be set up for zero cost.
Furthermore, existing competitors are not able to enjoy significant economies of scale due to the
nature of the ride-sharing business which is not production based. Additionally, despite the

saturation in the market for ride-share, customers are price sensitive and rarely stay loyal to a
single company, switching to whomever that offers the lowest price.
Bargaining power of buyers – High
Buyers are mainly individual customers seeking for transportation options and they are presented
with a myriad of modes to choose from other than booking a ride-share such as public
transportation, flagging a traditional taxi, driving, cycling and even walking if deemed possible.
Thus, the bargaining power of buyers are high as there is a plethora of product offerings that
fulfil the same purpose of transporting customers to their desired destination.
Bargaining power of suppliers – High
Suppliers are the drivers that ride-share companies contract with, to provide the actual
chauffeuring service. There is low switching cost for providers (drivers) as they are able to
utilize multiple platforms with ease and the amount of “supply” they provide in the form of rides
are flexible, with no specific quota (Uber Blog, 2016).
Threat of substitute products – High
There are a fair number of substitutes in the ride-share industry that fulfils the same needs of
customers, which is essentially to get to their desired locations. Depending on the customer’s
preference such as comfort and price points, the services that ride-share companies provide are
easily substitutable. Furthermore, the existence of a credible substitute product such as traditional
taxis, creates price limits for the services that ride-share companies provide.
Intensity of Rivalry – High
There is a high level of rivalry in the market due to the high concentration of competitors.
Additionally, the ride-sharing market is anticipated to grow continuously at a growth rate of
more than 20% over the period of 2018 to 2025 (Costello, 2019). With such a high and steady
growth in the ride-sharing market, this will attract even more competitors to enter in the future.
The large number of existing and potential competitors, coupled with low switching cost for
customers due to minimal differentiation in the services provided across different ride-sharing
service providers, intensity of rivalry is very high.

As a whole, the ride-sharing industry is not an attractive industry as despite its high and steady
growth rate, there are low barriers to entry and high intensity of rivalry amongst current
competitors. Furthermore, the bargaining power of both buyers and suppliers are high, leaving a
low profit margin to any potential market enters and the need for them to differentiate and
constantly meet the demands of both customers and suppliers alike.
Internal Analysis
Analysis of Resources
Uber possess a mix of both tangible and intangible resources which are vital in ensuring the
sustainability of Uber’s business. Detailed below is a non-exhaustive list of Uber’s key
resources.
T
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Financial
resource
- $6,406 million worth of cash and cash equivalents as at December 31,
2018 (Uber Investor, 2019)
Organisational
resources
- Employee headcount of about 22,000 (Uber Newsroom,
2019) with large percentage of data scientist at 2.4% of total
headcount
- 3.9 million drivers and 91 million registered riders
globally (Uber Newsroom, 2019)
- Partnerships with companies like automaker

Daimler AG for self-driving vehicles and NASA for
Space Act Agreement
- Diversified product portfolio (offers eight ride-hailing
products: Express, UberPOOL, UberX, UberXL, and
UberSELECT, and UberBlack,UberSUV, and UBERLUX.
Additional offerings include food delivery service Uber EATS,
Uber Freight for freight awaiting transport, Uber Health offering
patient transport to doctors’ appointments)
Physical
resources
- Uber headquarters in San Francisco, California
- Uber has 46 physical offices globally
Technological
resources
- Uber mobile application (Uber and
UberEATS)Algorithm developed and refined by Uber’s
engineers and data scientists

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Human
resources
- Company culture of being experimentally driven
Innovation
resources
- Innovation expertise (R&D) which allows Uber to continuously
experiment with new product offerings and stay ahead of the market
Reputational
resources
- Strong brand reputation amongst customers (first-mover in the
ride-sharing industry) where customers associate the name “Uber” with
reliable ride-share at an affordable price
Uber being a reputable firm possess several tangible and intangible responses.
TANGIBLE

Cars Uber possess assets such as Express(Match
rider going in same direction and involves
marginal waiting time) , Pool(Match riders
going in same direction offering door
pickup eliminating pickup time), Uber
X(Offering private rides for maximum four
people), Uber XL(Offering private rides
for maximum six people), Uber
Select(Offer ride to 1-4 people along with
highly rated drivers), Uber Black(Offer
private rides in black cars along with
professional drivers for one to four
people), Uber SUV(Offer private luxury
SUV rides for up to sex people), Uber
LUX(Offer luxury private rides in high end
cars for people ranging from one to four),
Uber Assist(serving senior citizens and
physically disabled people. Chachap(Low
cost transport services,Flash(combination
of private cars and taxi), Green(providing
electric and hybrid cars), Health(arranging
rides for people need to

INTANGIBLE

Application Uber ride booking application is the best
asset company possess that help in future
growth and development providing
important detail to drivers including ride
details, segment, driver information, waiting
time and drivers location along with
estimated . The application also enable
function of book now ride later to it's
employees and emergency number helpline
for it's customers if they feel any pitfall in
the process or are violated in any manner
and on the other hand the application is as
useful for the drivers as it show provides
overview of their working hours in a week
along with the generated revenue from their
business. They further share revenue in
predefined ratio set at time of policy
making.
Analysis of Capabilities
Uber for its business operation provide free cancellation policy for its users and in states provide
special vehicles like boats, helicopters for the convenience of its customers. They also started
motorcycle pickup in Paris, delivery service in San Francisco and 7 other cities has ice-cream
trucks. They are involved in such activities having access scope as they are few in number.
- Rapid product iteration satistically significant fidings about effects of a product tweak
within a short amount of time, able to change product immeditately
- ‘Tap and ride’ technology → fast, safe, reliable, and convenient transportation

- Ability to tweak servics to meet the specific demands in different locations. When entering, offer
standard package then let riders get used to core products, iterate and alter offerings depending
on market reactions
Uber for business operations must analyze capabilities of brand to target success for further
operations.
Market Expansion– Uber launched motorcycle pickup in Paris, delivery service in San Francisco and 7
other cities have ice cream trucks that are limited in place. In the context of market expansion it is
identified that in the mid of 2012, Uber introduced its new service and products to customers, Uber X.
The main characteristic of this new product was it was approximately 35% less expensive than its luxury
car offerings. Throughout, 2010, it grew rapidly as it expands its business in international market. For
more supporting this view it is also reported that Uber drivers completed about 15 million trips in around
600 cities across 65 countries. By offering almost 8 ride hailing products it made a rapid growth and
market expansion. Uber keeps 25% of a trip's gross fare.
In addition, and in the context of market expansion, in the year of 2016 Uber launched Uber eats
which provides food delivery services. By launching new products and services like Uber freight,
advancing autonomous technology, it provided attractive facilities and made a growth.
Investment capabilities– Uber being a reputed firm has the capability to raise funds from market for
future expansion and development by offering it's shares to public. For making growth, it can be said that
its innovation strategy was its substantial investment in data science. Investors in the ride sharing
companies appeared bullish. There are some investors who spread their investments across the entire
industry. The main aim of Uber is it wants to become more than users' first choice for a ride sharing
service. By generating revenue growth, it reinvests it into a variety of other variety of expansive ventures.
It investment capability in several ventures from scooter and bikes to flying taxis is a sign which shows
its growth and ambition.
It is reported that, Uber invested more in electric scooter company which names is Lime. In the
year of 2017, April it acquired bike sharing service jump. So, with all these resources and data of
investment, it can be said that this company is making growth and has a good investment capabilities.

Diversification– Uber is rare company having several diversifies products in its range dealing in vast
range such as Express, Pool, X, XL, Select, Black, SUV, LUX serving each and every call of users in the
society ranging from various prices based on trip length and distance. Initially it offered only taxi services
but now it has switched its focus from taxis to electric bikes and scooters with the main aim of expanding
its business. It offers several services like food delivery services, ride sharing services, new products
expansion like UberX, XL, E-bikes etc. Uber wants to be like Amazon which provides several products
and services to customers. By expanding its business in diversified products and services, it can take
competitive advantages.
Supply Chain Management– Uber has strong network of suppliers help in building quality as well as
company can attain better chance of growth opportunities. The company through this practice aims to
maximize consumer value to gain competitive advantage among competitors. It has the capability to make
its supply chain more digital. By focusing on all main 6 principles of digital supply chain it increased its
capability. Some design principles include: connecting supply chain data, balance between supply and
demand at the point of need, effectively utilize all relevant assets by elevating visibility, removing non-
value added information and sources, able to make instant collaboration and able transparent supply
chain.
Uber also deals in several other products and services such as Uber eats offering meal delivery
from nearby restaurant charging a nominal fee of 4$ along with their involvement in bank Barclay
offering Visa, Credit card,, cashback reward points and other incentives. They also deal in matching Uber
freight shippers with truckers similarly they match riders with drivers.
Core Competency Analysis
Rare? Valuable? Costly to imitate? Non-
substitutable?
Innovative ideas Yes Yes Yes Yes
Service Quality No Yes Yes Yes
Financial position Yes Yes No No
Every organization have various resources which show their capabilities and abilities as well as it will also
help them in gaining competitive advancement at the marketplace. It will also provide support the organization to

expand and run their business in effective manner at their competitive marketplace. In respect of UBER there are
various resources which help them in gaining competitive advancement at marketplace such as innovative ideas,
service quality and financial positive. These all resources are valuable for respective company because it will help
them in gaining competitive advancement and developing new ideas which leads to earning of high profitability
ratio as well as market shares.
From this there are several resources which are rare and some are not such as UBER innovative idea is
rare because they also come up with new ideas for example UBER POOL, EXPRESS UBER POOL, UBER
MOTO and many more. Along with this, their financial position is also rare because not other competitive
company have same capital position at market but there are some resource which is not rare like service quality
because there some other companies which offer same quality services to customers. There are resources of
UBER which are Costly to imitate such as innovative idea and service quality because it can be easily copied by
other competitive companies but their financial position can't be imitate by others. In case of UBER there are
some factors which are substitute are available at market through competitive companies such as innovative ideas
and quality of services. But financial position of respective company didn't have any substitute.
1. SWOT Analysis
Strengths
- Innovation
- First-mover
- Global presence
- Brand reputation
- Low operational cost
- Offering multiple options for
different demands
Weaknesses
- Ambitious in growth
- Large scope of services, hard to
regulate standards and quality
- Dependent on unofficial
employees and the internet
- Low customer loyalty
Opportunities
- Emerging countries
- Increase use of rideshare over taxis
- New technology
Threats
- More competitors
- Low barriers to entry
- Regulatory challenges from taxi
industry and government
- Policy challenges of
- Customer brand switching
- Changing demands of users
2. Analysis of Uber’s Current Strategies

Uber has several current strategies that address the external threats and opportunities identified in
SWOT, as well as take advantage of the internal strengths and weaknesses. Uber is a constant
innovator, and they use this strength of innovation in developing new branches, such as Uber
Express POOL, which reduces the price for riders willing to carpool. This strategy utilises their
innovation and low operational cost, whilst also addressing their potential threats of more
competitors, by offering lower prices, and the changing demands of users, by providing a variety
of options to suit any needs. Another part of Uber’s current strategy is offering multiple options
for different demands. These options include; Uber X, Uber Freight, Uber Health, and Uber Eats.

By providing multiple services to suit any need Uber increases its customer loyalty which
reduces the threat of brand switching, it also takes the opportunity of new technology in
developing more options for users as the years have gone on. One of Uber’s greatest strengths is
being a first-mover, which they consistently are, and as a result constantly innovate, mainly by
doing research seen by the product operations specialists who communicate with the technical
teams and city operations teams to ensure product-market fit. This research ensures that their
ambitious growth will function, and keeps consistent with the changing demands of users. Uber’s
software and algorithms help them to stay ahead of their competition and analyse user trends,
which is at the core of their current strategies.
Articulation of Key Issues/Problems
From our internal and external analysis, we can discover some key issues Uber is facing. Uber
distincts itself by the convenience and high standard its services provides to the customers.
However, Uber is facing extreme competition within the ride-sharing industry on a global scale.
In different parts of the world there are different competitors, which require different strategies.
Secondly, Uber is struggling with the launch of their ExpressPool. This is a product that has
some contradicting outcomes to their core competency. It allows them to offer their customers
lower prices, however it also raises inconvenience due to longer wait times and customers having
to perform more effort in walking to specific pick-up points, decreasing their service standards.
This raises the question of what the optimal level of wait time and walking distance should be for
a given price. Due to the low switching costs of customers, any wait times, prices, and walking
distances not being optimal, causes customers to switch. Another problem for Uber is their
dependence on unofficial employees, which creates uncertainty for the company in terms of
customer safety and employee loyalty and performance. Lastly, the company faces uncertainty
regarding policies and regulations from the government. They are dependent on government
policies and face criticism from the taxi-industry due to not obtaining the appropriate licenses to
operate as a ride-sharing service. Additionally, the upcoming highly autonomous vehicles,
government might introduce unfavourable policies for Uber to protect customer safety.

Recommendations
As per the analysis of organizational services of UBER it has been identified that organization needs to
implement appropriate changes in their business practices through which they can gain maximum competitive
advantages easily. In this respect, firm needs to conduct proper market analysis that aid to determine their
position in market. New ideas that has been implemented by firm as Express Pool and ride sharing are in the
struggling phase for which firm requires to analyses new strategy that help them in creating profitable situation
easily. Major recommendation for firm are:
 UBER requires to implement new ideas and strategies through which they can make proper improvements
in their existing services. These practices assist them in enhancing worth of their current services in order
to be competitive easily for further rivalries.
 In context of governmental regulation, firm needs to implement some major policies that are related to
licensing of drivers and vehicles that are used for customers in order to providing secure services to
services users.
 Skilled employees are major issue in front of organization thus firm needs to implement proper
monitoring practices through which they can analyses internal capabilities. After this, firm needs to
provide training their existing and new employees as per their own requirements.
 Another recommendation for UBER is related to business expansion as firm can introduce their services
in several countries in which they analyses potential requirement of their services.
All these strategies of firm can help them in enhancing business capabilities through which UBER can attain
maximum competitive advantages easily.
3. Implications of Recommended Strategies
From the above recommendation it has been identified that UBER requires to adopt differentiation
strategy through which they can implement appropriate changes in their existing and new business practices. In
this strategy a company need to develop innovate and attractive idea which help them in gaining competitive
advancement as well as it will also help in attracting more and more customers towards themselves.
Differentiation strategy help company to gain competitive advantage by creating distinctive image in the market.
Moreover, this allows them to compete in areas other than price as well as develop brand loyalty among
consumers. Also, this focuses upon product quality as well as minimize the competition over market.
In respect of UBER, for adopting this strategy they can adopt various strategies like they can introduce
new vehicles having more space so that driver can pick more riders as well as it will also help in reducing
numbers of unhappy customers. Along with this, respective company can also limit pickups and drop ups of
driver such as if a drivers get ride of location A then he will get next POOL pickup within 5 Km. Through this

riders able to reach their location easily and early because driver didn't need to drive long distance for picking up
other riders which safe huge time.

4. Appendix
1. UN Department of Economic and Social Affairs (UN DESA). (2018). 2018 Revision of
World Urbanization Prospects. Retrieved on 24 Sep 2019. Retrieved from
https://www.un.org/development/desa/en/news/population/2018-revision-of-world-urbani
zation-prospects.html
2. Connor-Simmons, A. (2017). How ride-sharing can improve traffic, save money, and
help the environment. MIT News. Retrieved on 24 Sep 2019. Retreived from
http://news.mit.edu/2016/how-ride-sharing-can-improve-traffic-save-money-and-help-env
ironment-0104
3. Holst, A. (2019). Share of global population that uses a smartphone 2014-2021. Statista.
Retrieved on 24 Sep 2019. Retrieved from
https://www.statista.com/statistics/203734/global-smartphone-penetration-per-capita-sinc
e-2005/
4. Park, E. (2018) “Uber v. Drivers”: The Battle for Employee Classification. Washington
University School of Law, Law Review. Retrieved on 24 Sep 2019. Retreived from
https://wustllawreview.org/essays/uber-v-drivers-the-battle-for-employee-classification/
5. Uber Blog. (2016). Think You Have What it Takes to Drive With Uber?Retrieved on
22 Sep 2019. Retrieved from
https://www.uber.com/blog/think-you-have-what-it-takes-to-drive-with-uber/
6. Costello, H. (2019). Global Ride Sharing Market 2019, By Type, Expanse, Ownership,
Business Model, Demographic and Growth Opportunities to 2025. Retrieved on 22
Sep 2019. Retrieved from
https://www.reuters.com/brandfeatures/venture-capital/article?id=83120
7. Uber Investor. (2019). Uber Reports First Quarter 2019 Results. Uber Investor
Condensed Consolidated Balance Sheets. Retrieved on 25 Sep 2019. Retrieved from
https://investor.uber.com/news-events/news/press-release-details/2019/Uber-Q1-2019-E
arnings/
8. Uber Newsroom. (2019). Company Info. Uber Newsroom website. Retrieved on 25
Sep 2019. Retrieved from https://www.uber.com/en-PK/newsroom/company-info/