Impact and Influence of Macro Environment on Uber

This report discusses the impact of macro environment on Uber and its business operations. It includes a PESTLE analysis and Ansoff matrix for strategic planning. It also evaluates the internal environment and capabilities of Uber through VIRO analysis. Additionally, it uses Porter's five force model to evaluate the competitive forces of the telecom sector for Uber.

Business Strategy

Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
P1. Impact and influence of macro environment on Uber......................................................3
TASK 2............................................................................................................................................6
P2. Internal environment and capabilities of Uber through VIRO analysis..........................6
TASK 3............................................................................................................................................8
P3. Porter's five force model to evaluate the competitive forces of telecom sector for Uber 8
TASK 4..........................................................................................................................................10
P4. Several theories, concept and model, interpret and devise strategic planning...............10
CONCLUSION..............................................................................................................................12
REFERENCES................................................................................................................................1

INTRODUCTION
Business strategy refers to number of tactics which are being developed with an aim to
direction the actions performed by an organisation toward accomplishment fo its goals and
objectives. As these tactics help in directing the each and every action performed within the
organisation toward success (Brewster, 2017). Uber Technologies Inc is a organisation that
operates in providing services like offering vehicle for hiring, couriers, food delivery (Uber
Eats), freight transportation, package delivery etc. There are 110 million monthly active users
through out the world who uses Uber. The current report elaborate the information about
business strategies and its role within success of organisation. It also contain details regarding
influence of external environment attributes factor over busines tactics by implementing
PESTLE and Ansoff matrix. Other than this, presents the internal environmental analysis as well
as capability of Uber with the help of VIRO analysis. Additionally it also contains an implication
of 5 Force framework for rival analysis of industry in which Uber operates and also involve the
implementation of several concepts, models and theories for appropriate planning related with
strategies.
TASK 1
P1. Impact and influence of macro environment on Uber
Macro environment is defined as the integration of several forces which remains
available outward to the company but also it bring huge impact on the operations that are
performed within an organisation (Chen and Jermias, 2014). Therefore for performing its
business operations effectively the Uber technology Ltd must put emphases toward analysing the
external environment regularly that support in determining the changes that are happening
outside the organisation and which may affect its functioning so that better action can be
undertaken on timely manner.
PESTLE analysis:-
Environment factors present outside the company also have a huge impact on business
tactics and manner in which it is operated. Hence for performing macro environmental analysis
Uber must use PESTLE framework. As it support in determining several threat and opportunities
that are present in marketplace for Uber. The description is explained below:

Political:- It mainly consist of factors such as change within political policies, rules and
regulations within a nation. The political situation of UK is stable and also determined as the
most successful nation within context of implementing policies, regulating quality and
government effectiveness. This is a positive factor for Uber as it can operate effectively in
market without any kind of barriers related with changes in political situation or regulation in
operating the business.
Economical:- This factor consist of things like inflation-deflation, taxes etc. The UK get
a high downturn in economy due to Brexit but it start recovering and also stands at 5th position in
world wide economy. Additionally it is a greater source of FDI as well as a destination for many
of the food retailers. Hence it act as a positive factor as Uber can tie up with their to expand its
business and also get foreign investors easily for its further business growth (Davies, 2016).
Social:- It consist of factors such as customer taste and preferences which in turn directly
affect the purchasing decision of customers. Due to Brexit majority of people loose their job who
were working in other European country and also the businesses also get affected due to
economic condition. Hence, it is a positive factor for Uber as people do not prefer to spend more
over purchasing and maintain their own vehicles when they get cabs on rental basis at lower
price.
Technological:- UK is consider as technologically advanced country which may be a
benefit and challenge for Uber at the same time. As by getting technical support it become able
to better customers experience through their ride. But on the same time technological
advancement may also let other competitors to grow faster in market and needed Uber to quickly
improve its services which get more investment to be done.
Legal:- This factor contains all the laws and standards that an organisation have to follow
for executing the operations appropriately in market. There remains several legislation which
Uber is required to follow for performing well in market (Goffee and Scase, 2015). These mainly
includes copyright laws, employee safety law, labour and usage law. It is a challenge for
company as it got banned previously in several locations anf also being criticized. This can
further affect its brand image.
Environmental:- The impact of Uber over the environment is ever get shifted. As with its
population and usage increase the traffic congestion as well as fuel usage. But its new plan for

electric car would be beneficial in this regard and help in reducing negative impact over the
environment.
Ansoff's growth vector matrix:-
This framework help in strategic planning by helping in creating a action plan about
future success. The Ansoff framework mainly contains 4 major tactics which help in getting
succeed within market. The implementation of model is presented underneath:
 Market penetration:- In this a company tries to enhance the quality fo current service
and offer it in existing market. This support an organisation in getting a broader market
base by enhancing the performance (Jocovic and et. al., 2014). Uber can manage the
market share by working toward enhancing the service quality or by offering it at lower
price to attract customers.
 Market Development:- Within this strategy an organisation try to enter into a new
market with existing services in order to get addition customers base. By getting enter
within a emerging market, Uber become capable to enhance it level of profit by getting
more customer base to offer services.
 Product Development:- In this strategy a company try to bring new services within
existing market to get new targeted customers along with retaining the loyal existing
customers. With the help of this strategy, uber can add some new services to their
offerings as per the demand of customers.
 Diversification:- This strategy suggest to bring new product in new market in order to
expand the growth opportunity (Lawton, 2017). Within this strategy the Uber must try to
bring a new service to customer within a new country to expand the business.
From the above mentioned different strategies, Uber can adopt the product development
strategy to achieve competitive edge as the transportation industry of UK has several growth
opportunities for the company. So, for this Uber must try to enhance the current service and
reposition it within a improved version in order to maintain its customer base and attracting
customer toward it.

TASK 2
P2. Internal environment and capabilities of Uber through VIRO analysis
It is defined as the integration of several attributes which represent in an enterprise and
influence its operations. This mainly consist of corporate culture, employee working pattern etc.
The internal analysis support in brining changes within the operations executed by company for
achieving competitive edge.
1) Strategic capability:-
This is a ability which a company have regarding implementing the competitive strategy
that further support in improving the operational value. The strategic capability involves
a strategy which a company that uses with its assets, resources and market position in
order to determine best possible way to implement it to get maximum outcome
(McCahery Sautner and Starks, 2016). This support Uber in analysing the resources that
are needed to execute a particular strategy and its possible consequences which are
required to keep in mind prior to implementation of resources. This support in reducing
the issue of miss-conduct and support in getting the positive toward organisational
success. As Uber can achieve competitive position with the help of managing its
competencies in well manner.
2) VRIO/VRIN model:-
VRIO analysis is consider as a analytic method which support a company in evaluating
its resources to determine the way of utilising them for achieving the competitive edge. It is
stands for Valuable, Rareness, Imitability and organisable. The recent enterprise tactics of Uber
is expanding its operations within geographical region by approaching new customers as well as
improving the services quality using innovative technological support (Peng, 2017). This can be
used to improve the internal capability of Uber as by offering high quality services it can get
maximum market acceptance. The VRIO framework of Uber is explained below: Valuable:- This put emphases toward identifying the resources that an organisation have
and be able to create value among customers. These valuable resources help Uber in
exploiting the opportunities available in marketplace. These can be gained by
differentiating the services from other and ta same time reducing the cost that further help
in achieving competitive edge. The network effect, Uber application as well as algorithm

that Uber uses are consider to be its valuable resources as it help in simplifying the
process of maintaining a interaction with the customers and uber. Rare:- This factor include those resources that remain unique and many acquired by only
few organisations. The competition within transportation industry is higher and resources
are approx. similar to one another in industry (Lee, 2014). Therefore it is crucial for Uber
to provide better training to its employees so that they offer outstanding services by
delighting customers and help in achieving competitive edge. The mobile application
which is used by Uber as platform to maintain a link between the customers and service
provider i..e driver is developed in a manner that it remain user friendly i..e easy to
access. This act as a rare factor for Uber and Competitors are unable to get such type of
access in easier manner. Imitable:- This involve type of resources that an organisation have and remain difficult to
copy. Companies that are having rare capabilities and resources become able to achieve
success and competitive edge at marketplace as with such inimitable competitors are few.
The inimitability feature of Uber is its application algorithm as well as pricing of its
services which is quite difficult for Lyft to copy as company manage its cost from
reducing the expenses over internal operations.
 Organisation: - This factor suggest that an organisation can achieve success when it
know the best possible approach to manage all its resources in efficient manner so
resources get fully utilised. As all resources which remains valuable, rare and inimitable
are remain ineffective till they do not get organised in appropriate manner (Morton,
Wilson and Cooke, 2015). Uber is effectively organising and managing all its resources
in effective manner with respect of all the above-mentioned resources which is the main
reason it is surviving within the industry.
Resource and capabilities of Uber:-
The very essential resources for the Uber platform is the network effect. This is essential
to have apppropriate data, algorithms and capability for evaluating the insights. The network
effect among participants i.e. drivers and customer must be proper and effective. Along with this,
it is also essential for Uber to manage its application effectively as any error or issue may result
into big loss to the company.
Resources and Valuab Rare Costly to Organized to Impact on Competitive

capabilities le Imitate Exploit Advantage
Network effect Yes No No No Realized Competitive Parity
Uber application Yes Yes No No Temporary competitive
advantage
Uber app algorithm
and pricing
Yes Yes Yes Yes Market sustainability and
competitive advantage
TASK 3
P3. Porter's five force model to evaluate the competitive forces of telecom sector for Uber
This framework is consider as an analysis technique which perform an evaluation about the
five industrial force which further support in determining the intensity of competition. This
support an organisation in identifying the actual position within industry and it also support in
formulating the appropriate tactic for dealing with the competition that is present in market so
that the sustainability can be achieved in marketplace. These five force includes new entrant,
bargaining power of buyer, bargaining power of supplier, substitute present and industrial rivalry
(Pasquinelli, 2014). Factors support in determining the actual structure and intensity of rivalry
present in sector with which the company has to deal.
Uber technologies Inc. which is commonly known as Uber operates with a partnership to
Lime, motorized scooter rental and electric bicycle. It offer range of services such as package
delivery, freight transportation, food delivery, package delivery and vehicles for hiring. Its
headquartered within San Francisco and also operates within around 900 metropolitan area
throughout the world. The competition is growing within the UK which require Uber to improve
its market position and for this it is essential to perform the industrial analysis on regular basis so
that it become able to determine the upcoming challenges and alter the marketing strategy
accordingly. This support in accomplshing the competitive edge. The industrial evaluation is
presented under:
Bargaining power of buyers:- The bargaining power of the users are relatively higher
toward Uber. This strength of customer may influence the performance of firm by lowering
down the price it charges over services. The Uber client remain sensitive to the price variation

which leads to analysis of other alternatives present in market. As the market is expanding the
number of competitors are also arising which are bringing new and more choice to customers
which in turn increases the chances of switching brand to get similar services ta lower price
(Rasula, Vuksic and Stemberger, 2012). This is so because the application to book this
transportation services are mainly mobile based application that are free to use which provide
customer a way to compare the price and choose among Uber, Lyft, Curb etc. without any
switching cost. This in turn presents that the bargaining power of buyer over Uber is
considerably higher that never let it to increase the price of services to bring extra profit margin
out of services.
Bargaining power of supplier:- Most important suppliers within the transportation
sector is remains the drivers to deliver services. As about Uber the company’s business model is
highly depended over the drivers which owns the car. Hence the focus of this group of suppliers
toward work with the Uber is not high because of the stringent requirement which is required to
hired by Uber. But the uber utilises a subcontracting policy about its employment and one who
meet the term can use its web application. Therefore it can be said that the bargaining power of
suppliers are low as they are getting well paid job with tehir own vehicle which also reduce the
burden of any damage to company so they can operate with low risk of job loss.
Threat of new entrant:- The position of company can get affected due to the ability of
another organisations for entering into the market. By setting up itself into the technological era,
Uber aims toward bridging a link between customer and transport provider. But this market need
a higher amount of investment at initial stage and though Uber is consider as the founders parted
along with some substantial amount of capital the upcoming rivals are required to utilise less
initial capital to begin their operations which make it easier for them to penetrate in market
(Ryan and Wilson, 2013). Another major issue present in front of Uber is that due to several kind
of legal issues and negative publicity the government of different country has charged some
fines. The controversial information is also spreading in UK which created a threat in front of
Uber that may open up door for new competitors to enter in market. Hence the threat of new
entrant to Uber is also high.
Threat of substitute: - A substitute is consider as a fear which experience within the
competitive business environment. Within transportation industry there remain a number of
member organisations which are providing the replacement services of Uber. As there are

number of tradition method of transportation such as metro, taxi services are also available in
market that can curb the profit as well as market share of Uber (Wilkins and Huisman, 2012). As
the rise in Uber rate the price sensitive customers can also become more attracted toward the
alternative or traditional method of transportation which is a risk factor for Uber.
Rivalry within market: - The competition from current rivals within market are
relatively high to Uber as the trend of industry appears to be higher and existing organisations
are competing in term of both the drivers and customers. There are number of players such as
Didi Chuxing, Curb, Lyft etc. are some of the competitors to which Uber has to deal. Among
them the Lyft is consider as the principle competitors of Uber as it offer similar of the services as
uber do.
TASK 4
P4. Several theories, concept and model, interpret and devise strategic planning
It is defined as the framework that support a company in evaluating its actual position
within industry as compare with the competitors. By using this model Uber would be able to get
a better idea regarding its market position in term of competition and take better action to further
improve it (Wright, 2014). Some positions of Bowman's Strategy Clock are explained
underneath:-

(Source: Bowman's Strategy Clock, 2019)
Position 1. Low price and low added value:- In this position the organisation remain less
competitive and the product or services offered by them are also remain differentiated which
generate a little value. Hence, within this situation the Uber must try to present its services at
lowest possible cost without reducing the profitability level as a only medium to deal with
situation.
Position 2. Low price:- This position defines the type of operation, in this an organisation
produce the product or services at higher price but offer at low price which in turn bring low
margin profit (Aubry and et. al., 2012). Because of high competition, Uber offer its services at
less price which in turn sometime act as barrier in earning the good profit for business. Hence to
earn profit in such position Uber must try to enhance the service offering speed so that higher
profit can be earn.
Position 3. Hybrid:- This position talks about a company which involve product
differentiation strategy with that the low pricing to confront the competition and create value
within marketplace. This position within Bowman is consider to be effective and for achieving
Illustration 1: Bowman's Strategy Clock

this position Uber must try to reduce its service cost to keep customers attracted and achieve
competitive advantage.
Position 4. Differentiation:- This strategy is used by an organisation to perfrom best
and offer the highest possible quality services at average price (Burgess and Radnor, 2013).
There are several alternatives present in front of customers in transportation, which make it
crucial for Uber to differentiate its offerings to create higher customer value.
Position 5. Focused differentiation: - Under this an organisation offers high quality
services at higher price. At this position Uber can be able to bring the differential service within
market and with which the customer also be able to avail services at premium price.
Position 6. Risky high margins: - In this strategy a company increases the cost of
production without increasing the value side. This kind of strategy will bring loss to Uber as
under this customer will prefer to switch alternative.
Position 7. Monopoly pricing: - This position is present for organisations which is
offering the only product within a particular segment and set up monopoly. With implementation
of this strategy Uber become able to earn more revenue but as in UK monopolist need to deal
with high regulations imposed by government to restrict companies in enhancing their price.
Position 8. Loss of market share:- Under this condition an organisation get fails in
offering the product or services which create value among customers (Cacciolatti and Lee,
2016). Within this situation Uber must try to offer its services at standard price so that it can
survive in competition.
As per above analysis Uber can operate toward diversifying its services within new
market and another practice can be done to new product development for existing market. The
main reason behind this is it help in attracting new customers and diversification will allow Uber
in offering services within new market will increase profit share.
CONCLUSION
From the above provided information it can be summarised that business strategy play a
significant role in accomplishing the organisational goals and achieving the sustainability. For
making effective strategy an organisation is required to determine its position in industry using
porter's five force model that support in planning actions perform for dealing with threats. Other
than this by using PESTLE analysis, organisation can determine the threats and opportunities
present within external environment. With this information organisation can determine

opportunities to grow and can also formulate strategies to adopt competitive edge by using
Ansoff growth matrix and Bowman's clock model.

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