Uber's Strategic Management in China: Challenges and Recommendations

Running Head: Strategic Management
Uber
Strategic Management

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Executive Summary
Strategic Question
My Boss has entrusted me with the responsibility of understanding the dynamics of the Chinese
market and create a way for smooth execution of Uber Business Model in China. The scope of the
report here is to work on understanding the strategy Uber can use to enter into the China market.
Uber is a US MNC, which has been doing extremely well in the home country, Europe, India,
Singapore and other markets. However, China, which is the biggest market, owing to the highest
world population and absolutely different dynamics, this makes market study extremely critical for
the entry. China has strong cultural values and they prefer to boast the domestic companies in lieu
for international companies. The onus is here on Uber to understand the dynamics of China market
and come up with a formidable strategy to not hurt the sentiments of the Chinese and ensure
business sustainability of its business model. The company has to find a way to click with the Chinese
local authorities and the local taxi unions and benefit from their understanding of the China market.
Uber forayed into the China market in the early 2014 with the launch of luxury car services in
Shenzhen, Shanghai & Guangzhou. Uber’s strategy to enter the Chinese market was by creating a
separate legal entity by the name of Uber China to give maximum attention to the world’s most
populous country. Uber’s expansion strategy was to think local to expand global; however the same
was not applied in the Chinese market. According to the Fredrickson & Hambrick strategy model the
company was very much clear with its Arenas, Differentiator, Staging & Pacing, Vehicles and
economic logic, however the company failed to implement the strategy it lay down to create success
ripple in the Chinese waters. Uber faced a lot of competition from the local taxi hailing services of
China; certain companies like Didi CHuxing and Kuaidi were smart enough to tie up with the local
authorities and capturing a larger market share in comparison to Uber. Uber faced a lot of financial
and political challenges and was bearing a loss worth 1 Billion dollar to keep its business running in
China. Even though company offered many subsidies to the drivers and the consumers, it was still
not enough to penetrate the price and culture sensitive Chinese market. Another major challenge
which the company faced was its inability to partner with the local taxi service providers, which
made them angry and created further troubles for the US Company. It has been advised that in order
to succeed in a market like China, it is extremely important to partner with local authorities to
support them in their business, also one cannot compete in the China market on the basis of Price.
Understanding the market dynamics thus becomes fairly important. Another advice to Uber is to
understand the payment preference of the Chinese people and their sentiments when building trust
with the drivers.

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