Analysis of Impact and Influence of Macro Environment on Uber's Strategies

This report analyzes the impact and influence of the macro environment on Uber's strategies. It includes a framework for analysis, evaluation of internal environment and capabilities, and application of strategic models.

Business Strategy

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Frameworks for analysis of impact and influence of Marco environment on organisation
and its strategies..........................................................................................................................1
TASK 2............................................................................................................................................3
P2 Analysis of internal environment and capabilities of organisation........................................3
TASK 3............................................................................................................................................5
P3 Application of Porter's five forces model to evaluate the competitive forces.......................5
TASK 4............................................................................................................................................7
P4 Application of theories, concepts and models, interpretation of strategic plans of
organisation.................................................................................................................................7
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Business strategy can be defined as the activities and decisions which are taken by
company to reach its business goals and take competitive advantages in the industry it is
operating. The strategies define what are the activities which will help to reach goal, what can be
guidelines to take decisions of hiring process and allocation of resources (Chen, Eshleman and
Soileau, 2017). The company selected for this report is Uber Technologies, Inc., which is
commonly known as Uber, it offers vehicles for hire, food delivery that is Uber Eats, couriers,
package delivery. It has been estimated that Uber has over 110 million active users monthly that
too worldwide. The report covers analysis of impact and influence of macro environment and its
businesses strategies, analysis of internal environment and capabilities of enterprise. Apart from
this report focuses on evaluation and application of outcomes in given market sector and a range
of theories and concepts which can devise strategic plans of organisation.
TASK 1
P1 Frameworks for analysis of impact and influence of Marco environment on organisation and
its strategies.
Uber Technologies, Inc. is a company which is based in San Francisco and has operates
of transportation services in over 900 metropolitan areas worldwide. It is one of the biggest
providers in gig economy and a pioneer in development of self-driving cars. Macro environment
includes factors which are external to the working of enterprise (Cagnin, 2018). The following
are two analyses which have been used by Junior Strategy Manager of company to analyse the
macro environment of company.
The first analytical tool used by junior strategy manger is Pestle Analysis. This tool is
used by the manger to analysis and supervise macro environmental factors which impacts on the
company (Irawanto, 2017). The result of this analysis helps in identifying threats and weaknesses
of enterprise.
The factors are discussed as follows:
Political factors- In UK it has been seen that constitutional monarchy is there which is
being ruined under the influence of a parliamentary system. UK is one of the most stable
countries with plenty of resources and opportunities for the companies which have being
operating there. The junior strategy manager has seen positive impact of political factor as there
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us political stability and government is also proactive and the administrations are also split into
national and authorises. This has helped the entity to expand in different countries also. It is
influencing the strategy of Uber as the enterprise has to make changes in its strategy according to
the political policies.
Economic factors- UK has strong economic position as compared to other countries. It
has high GDP and diversified economy, but it also has few issues (Ansah and Sorooshian, 2017).
By operating in such an economy junior strategy manger has observed that despite large
population, small markets can avail profitable situation, company is running in diversified
economy were both large public and private sectors are influenced. It is affecting strategy of
Uber because the managers of the organisation are required to formulate all the strategies
according to the changes in the economic factors.
Social factors- These factors are deceptively important factors in pestle analysis. In UK
there is high social standard level which leads to better all-round circumstances for the company.
This impacts positively on the working of Uber as there is open migration which is leading to a
cosmopolitan environment which provides cheap working labour to company. The social factors
have helped the company earn high profits as the standard of living is high in UK by which the
demand of facilities by Uber have in demand by the customers. It is also leaving impacts upon
the strategies of the enterprise because the managers need to modify their strategies according to
taste, preferences and other social factors.
Technological factors- As Uber is technological company the innovative technological
up gradations has helped company to develop its functions effectively. Consumers use the
application for their appointments. For example, the consumer can excess the application and
then get an estimated ride cost before booking a ride (Pan, Lu and Lei, 2017). They can pay for
the ride through that app too. The impact of this factor is positive as the customer can be
attracted easily as their work is getting done through one click. The entity’s strategies are getting
impacted because of these elements because the managers are responsible to incorporate all the
new technologies in business to ignore lack of engagement of customers in business.
Legal factors- Legal compliances has been challenging for every business and even for
Uber. Junior strategy manger has seen that company has also been bounded with the laws as the
application of traditional services can be applied or not. It has faced problems to only related to
the taxes but with human resources also. There have been cases were legislations were that
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company is not providing minimum wages, enterprise has to treat drivers as employees not as
contractors, and proper permits has to been given to employees. This factor has been negatively
affected the company. These factors are affecting strategy of the organisation as the managers
are required to comply with all the governmental policies whether they get changed with time or
not.
Environmental factors- These factors state the responsibilities of company towards the
environment of the country. It has been believed that company has increases traffic congestion
and fuel usage (Zhu and Guo, 2017). But junior strategy manger has observed that people have
use Uber instead of public transportation. It has also seen that as compared to public transit the
fuel usage not impacted much to the environment. These factors can influence Uber strategy
because continuous change in environmental factors and other elements affects its pricing
strategy, organisational and operational policies as a big and global company it is not possible for
it to change its policies in frequent manner.
The second analytical tool used by junior strategy manger is Stakeholder analysis. It is a
process which identifies those people who are known as stakeholders before the beginning of
project, it groups them according to their level of participation in company, interest and influence
in project and determines how they are getting involved in enterprise. There are two factors on
which the analysis is done: interest and power. The following are the groups of for the analysis:
High interest, Low power- In this group the employees are the stakeholders of company.
In Uber, the employees have high interest over the workings of company because they have to
work according to the decisions of mangers so they need to know everything about company
(Elias, 2016). But the employees have low power because they have no rights to make any
decisions on the behave of managers.
High interest, High power- The stakeholders of this group the owners and the managers
of company. The owners and managers or the people at top authorities have high interest in the
activities of Uber because they are the one how have to make profitability out of the employees.
These stakeholders have high power because they are the ones who have to make all the
decisions.
Low interest, low power- The customers of company are the stakeholders who have low
interest and power in company. They have low interest because they get the services as and when
they need, and the other fact is that customers do not consume each and every service provided
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by company (Schmidt, Drews and Schirmer, 2017). The reason of having power is that
consumers do not have right of decision making and thinking of customers are not same so Uber
cannot focus on decisions of each and every costumer.
Low interest, High power- The stakeholders of this group is government and its
regulations. Government has low interest in the activities of Uber because the interest of
government is limited to the profitability and taxes paid by company. The power of government
is high because the polities formulated by government directly effects the decisions of
organisation.
TASK 2
P2 Analysis of internal environment and capabilities of organisation.
To analysis the internal environment which has ability to influence decisions of Uber,
VRIO analysis and McKinsey's 7S model are discussed as follows:
VRIO Analysis- This tool is used to abstract thought on the internal resources of the
company on the bases of four attributes. These resources are necessary for organisation because
it helps in sustaining in the competitive market (Vargas-Hernández and Garcia, 2019). The
analysis of the resources of Uber is done below as these attributes have more emphasis on the
growth of company.
VRIO Analysis
Resources and
Capabilities
Valuable Rare Inimitable Organized
Employees ✓ ✗ ✗ ✗
Patent ✓ ✓ ✗ ✗
Financial
Resources
✓ ✓ ✓ ✗
Distribution
Network
✓ ✓ ✓ ✓
Valuable- The above stated resources are valuable for the company because these
resources adds value and enables Uber to exploit opportunities and defend the threats (Perkins,
Mathur and Jugdev, 2019). In context to UBER, continually reviewing the value of resources is
4

necessary for the company because the internal conditions also change and can make them less
valuable or useless sometimes.
Rare- Apart from employees and all other resources are rare for Uber because for all the
entities it is not possible to use them in systematic manner. In context to UBER, Employees are
not rare because the other companies can train their employees and get the desired work done by
them.
Inimitable- The resources which cannot be copied are inimitable resources of company.
In case of Uber, financial resources and distribution network are inimitable because it is
impossible for the businesses to spend same value of finances in operations as Uber. On the other
hand, patients are imitable. This is because other companies need huge amount of finance to
invest and great distribution network to stand as competition against Uber which is a difficult
task.
Organisation- Distribution network is the most organised and strong resource in the Uber
because it is very important for an entity to organised it systematically to meet all the business
goals. Apart from this, financial resources are not organised properly because the policies to
spend them changes with time.
Application of the model to the internal environment of the organization- The VRIO
analysis is a very important model because it is quite helpful in order to assess the internal
capabilities which are present within a particular organization. Uber has to make sure that it
treats its Valuable resources, Rare resources, Inimitable resources and Organized resources in the
right manner because this will help in contributing in the right manner towards the attainment of
success in the organization.
McKinsey's 7S Model- This model elaborates the ways in which seven elements which
stresses on the presence of strong links between the elements in such a way that a change in one
element causes change others too. The elements of this model with reference to Uber are as
below:
Strategy- Uber follows cost leadership strategy as it gains cost advantage due to internet-
based business model which is disrupted with traditional taxi industry on global scale. With the
help of it, it is able to lead the market area which is captured by it.
Structure- The organisational structure of Uber can be classified as hierarchical although
it has been disadvantage due to shortcomings of this structure as there are disputes at some level
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and departments (Hassan, 2017). It is facilitating the entity to carry out all the operational
activities systematically so that long term goals could be accomplished.
Systems- The wide range of systems which are important for Uber include employee
recruitment and selection system, transaction processing system, business intelligence system
and others. The systems that are used by Uber are beneficial for it because with the help of them
it is able to support the strength of operations.
Shared Values- Uber tirelessly works on earning consumer trust and its business by
solving their problems, maximizing their savings or lowering the costs. Managers take short-term
sacrifices for a lifetime loyalty of a customer. The shared values of Uber are advantageous for it
because with the help of them it is retaining its existing clients as well as enhancing employee
engagement.
Skills- The skills that employees or drivers of Uber works on are innovation, quality
obsession, pumpedness in performing activities, good communication with customers, fierceness
an many other. All the skills that are focused by Uber are resulting in appropriate execution of
operations as it supports the business procedures.
Style- The leaders of Uber follow Rambo-style of leadership were they solve all the
problems that employees and company has and comes up with solutions of tough problems easily
(Li, 2020). The leadership style followed within the organisation is resulting in benefits for the
organisation because it inspires the employees to perform their jobs properly.
Staff- Uber provides flexible and independent jobs to its employees were they focus at
reducing pollution, reducing mass traffic on roads and try to increase standard of living. The
employees are focused by the enterprise to make sure that they are engaged in the jobs that are
assigned to them.
Application of the model to the organization's internal environment- McKinsey'7S
model is a particular model in which the overall assessment of the various skills and capabilities
within the organization can be done. In the context of Uber, it becomes quite essential that the
different elements within the organisation are assessed which will help the company a lot in
order to take appropriate actions in a highly effective manner. Thus for applying this particular
model to the company's internal environment it becomes essential that the internal environment
is assessed well and thus the corrective actions are taken properly if deviations and variations are
found.
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Internal environment including those factors that are influencing its activities such as
employees, managers, organisation culture. UBER should determine the capabilities of the firm
in order to integrate with the firm’s activities.
TASK 3
P3 Application of Porter's five forces model to evaluate the competitive forces.
For conducting competitive analysis, Porter's five Forces Model can be applied with
reference to Uber. This model needs to be applied to understand the network of potential growth
and attractiveness in the transport industry (Moskalenko, 2018). The following is analysis of five
individual forces that helps Uber in shaping overall extent of competition:
Threat of new entrants- The potential of new entrants is low for Uber because it is
positioned in technological field which provides channel of link bridge between customers who
demand for rides and spare car providers. It has to face legal issues around several areas and
some time it also gets fined by government authorities and under controversies the new entries
would be very cautious in stepping in such market. That is why at least for short term, the threat
from new comers is low for firm. When UBER was coming into the market it faces various
challenges in its every stage to become a competitive industry. The threat of new entrant for the
organisation is very low as it needs huge funding to become a part of the industry.
Bargaining power of Uber riders (buyers)- The riders highly influence the
competitiveness of Uber, as the market of industry is getting bigger other companies bring more
choices for customers. And the increasing numbers and ranges of scandals in which Uber got
involved in past years, riders choose to exercise their bargaining power which implies negatively
on company (Činčalová, 2017). The bargaining power of buyers is high because the level of
competition within the industry is very high and the clients have various options to switch.
Bargaining power of Uber drivers (suppliers)- The main suppliers of Uber include large
number of drivers were the concentration of this group, that is the bargaining power is medium
as they are restricted by providing their services only. Whereas Oil and gas suppliers being the
another important supplier of company. However, Uber also take cares of its suppliers through
which it is outsourcing because if anything happens to them, it would directly affect to brand
name and image of enterprise. The bargaining power of suppliers is high as they have various
options to supply the entities like Uber.
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Threat of substitutes- As the service quality which Uber applies is high, the threats from
the traditional transportation industry is low because they have low- cost and efficiency. On an
average the Uber cares have more than 94% cars arrive in less than 15 minutes whereas the
traditional taxi stands at 27%. Other than than 99.98% cars of Uber arrive in less than 30 minutes
on the same point traditional taxi stands at 63%. Although there are probabilities that customer
may switch to other companies which provide similar services because of one reason that Uber
features with higher price sensitivity. Threat of substitute for Uber is also very high as the
customers have various options to shift from rental cars of Uber to their own car or other
services.
Rivalry amongst competitors- The degree of rivalry with competitors of Uber is high
because trend of concentration of industry appears higher. The existing companies in market are
competing with each other for both suppliers and customers on high scale. Where on the other
side the initial capital requirements to enter in the industry is also high, sunk cost at early stage
also raised up the exit barriers for companies. UBER has its competitors such as Ola, Careem,
Didi, Taxify and Yandex. The threat of competitors for the organisation is high because it is
facing competition from various competitors.
TASK 4
P4 Application of theories, concepts and models, interpretation of strategic plans of organisation.
To address and identify strategic direction Porter's generic strategies and Ansoff
matrix can be applied by Uber. Apart from this, interpretation of strategic plan is also given as
follows which as tangible and tactical strategic priorities and objectives of company.
Porter's Generic strategies has two basic types of competitive advantage with the
combination of scope of activities for which company seeks and lead to three generic strategies
to achieve above average performance in industry (Whalen and Han, 2017 ). Out of strategies
stated below one or combination of strategies can be adopted by Uber to handle competitive
pressure:
Cost leadership- The involves lowering the cost to gain competitive advantage. Uber can
use this generic strategy in various consumer market and with use of Cost leadership it can
preserve market leadership position through efficient value chain management.
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Differentiation- This type of strategy makes businesses aim at differentiating with just
one or very small number of target market segments. Uber can use this strategy with combination
to cost leadership strategies so that growth objective can be achieved effectively.
Focus- It applies on the choice to narrow the competitive scope within in industry. Uber
can focus on two variants of focus; one is the cost focus were it can seek cost advantage (Wee,
2017). The other is differentiation focus which will help firm seek differentiation in firm's target
segment.
Recommendation and justification- For Uber it is recommended that it should use cost
leadership strategies as it may increase the profitability of company.
Ansoff matrix- According to Igor Ansoff, product marketing strategies jointly works on
four growth areas and this areas are displayed visually through Ansoff Growth Matrix. This tool
is used to make future growth strategies of companies in combination of products and services
(López López, 2017). Uber can use this model which has four growth strategies:
Market Penetration- It motivates company to increase sales of current services in current
market. Uber can achieve by doing aggressive marketing to penetrate deeply in market. Through
engaging in different markets through different sales promotional techniques.
Market Development- The company can get motivated by expanding itself in new market
which will attract new customers for existing products. Uber can adopt these strategies to expand
itself geographically in transportation technology.
Product Development- The company can be encouraged with this strategy to introduce
new product for its current market. Uber can increase its range of services in the countries its
operating.
Diversification- It is the riskiest strategy from all above stated strategies as company has
to enter in new market with a new service or product (Kuimov, 2017). Uber can adopt this
strategy if it has risk take capacity and has new service line which can be successfully expanded.
Recommendation and justification- It is recommended that Uber can use Market
development strategies by entering in new market which will help company in expanding its
market share.
From the above discussed models, Uber should adopt Ansoff Matrix model as it states
various market growth strategies. Company should go with market development as this services
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are highly in demand in many countries so it will be easy to capture new market. The following
is strategic plan which can be implemented by enterprise for expansion in markets of Latvia.
Strategic management plan: It is focused with communication of organizational goals,
focus energy, vision, mission, strengthening operations and ensures that employees are working
towards common goals (George, 2017). The following is plan which can be formulated by Uber
technologies for the purpose of enhancing the market share in a new country:
Vision- Uber has a vision of staining in market share of Latvia for long term. The
company aims to bring in a new fleet of taxis and ensure that it provides a wide range of services
to the customers.
Mission- Uber wants to expand its services in Latvia and capture costumer base higher
than its competitors. The company wants to ensure that it assesses the customer base which it
wants to capture so that appropriate actions can be taken.
Objective- The main objective of expanding business in Latvia is to increase the market
share by 20% in upcoming 5 years. To achieve this objective, the company will aim to apply
aggressive marketing strategies effectively and efficiently.
Strategies- Some action plans which are designed to achieve long term goals and aims
are strategies. The following can be some strategies of Uber for expanding market in Latvia:
Arrangements of funds- Funds are necessary and most important elements which will
help Uber in easy expansion of market in Latvia. Some of resources through which company can
raise its funds are venture capitals, loans from NBFC's or banks, business grants from incubators
and other. These sources can be used by Uber so that it is able to get the desired amount of funds
for achieving its goals and objectives.
Research and development- Uber needs to do proper research of transportation market
in Latvia and accordingly develop its strategies which can be formulated for smooth work of
expansion. Uber needs to make sure that it increases its overall level of expenditure made on
R&D so that it can attain its different types of goals and objectives in the right manner.
Tactics- The means through which an objective of company can be gained and some
strategies which are used in overall plan are tactics. The tactics on which Uber can work for
market development are:
Technological development- Being a company based on technology, Uber needs to
develop those tactics which can be adopted by consumers of Latvia very easily. The company
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has to make sure by undertaking this tactic, it is able to facilitate the technological development
in the right way to attain goals and objectives.
Market trends- Uber needs to have full knowledge of the market trends in Latvia and
form such schemes which can attract the costumers at large number. The company has to ensure
that by keeping a full knowledge of the market trends it is able to analyse and interpret the wide
variety of needs and requirements in a better manner which will help in providing products and
services to the customers accordingly and ensuring that the overall level of profitability can be
enhanced.
Budget:
Particulars Amount
Research and development 10000
Promotions 5000
Advertising 8000
Salaries to staff 50000
Hiring experts 16000
Cost of cars 150000
Rent of office 5000
Total 244000
Total funding which is required by Uber to carry out the management plan will be around
244000.
CONCLUSION
From the above project it can be concluded that business strategy involves the actions and
decisions which has to be taken by businesses to reach its goals and have capabilities to sustain
in market. For environmental analysis and strategic growth management plans some internal and
external analytical tools can be used by company. To analysis macro environment Pestle and
stakeholder analysis can be done which defines the external factor that may affect the working of
enterprise. Porter's generic strategies and Ansoff Matrix can identify the strategic directions
which can be sensibly applied by company.
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