Importance of Business Strategy in the Contemporary Environment

This report discusses the importance of business strategy in the contemporary environment and its impact on Uber. It covers frameworks such as PESTEL analysis, VRIO analysis, and Porter's Five Forces model to analyze the macro and internal environment of Uber. It also examines the strengths and weaknesses of Uber's organizational structure and skill-set. The report concludes with the critical application of Porter's Five Forces model to evaluate the competitive forces in Uber.

Unit 32

Table of Contents
INTRODUCTION ...............................................................................................................................3
TASK 1 ................................................................................................................................................4
P1 Discuss frameworks and analyse impacts and influence of macro environment on given
enterprise .........................................................................................................................................4
M1 Examine macro environment to determine along with to inform strategic management
decisions...........................................................................................................................................6
TASK 2 ................................................................................................................................................7
P2 Critically examine internal environment & capabilities ...........................................................7
M2 Examine internal environment to evaluate strength and weaknesses of organisational
structure and skill-set.....................................................................................................................10
TASK 3...............................................................................................................................................10
P3 Critically Apply Porter's Five forces model to evaluate competitive force in Uber.................10
M3 Apply strategies to improve competitive edge and market position based on outcome.........12
TASK 4...............................................................................................................................................12
P4 Analyse theories, concept and models to execute strategic plan ............................................12
M4 Analyse strategic management plan which has strategic priorities.........................................14
D1 Interpretation of environmental and competitive data to form set of strategic directions.......14
CONCLUSION..................................................................................................................................15
REFERENCES...................................................................................................................................16
Books & Journal: ..........................................................................................................................16

INTRODUCTION
In business, it is essential to be well aware about business environment so that goals are
accomplished. Business strategy is defined as strategical actions and tactics that are used to access
competitive benefits and higher productivity (Akan, 2016). Main aim of this report is to understand
the importance of business strategy in the contemporary environment. Uber, an American
technological company headquartered in U.S. It is at located at global scale and has number of
subsidiaries such as Uber Eats, Postmates, Careem etc. It as founded by Travis Kalanick on March
2009. Uber has many competitors such as Lyft, Grab, Curb etc. This report comprises of macro
environment PESTEL Analysis, internal environment, VRIO and SWOT analysis, Porter Five Force
model and strategic planning.
TASK 1
P1 Discuss frameworks and analyse impacts and influence of macro environment on given
enterprise
Macro environment refers to how condition of micro economic influences performance of a
company. It includes external factors that impact on business performance and progress. So, in
context of UBER, they operates at global scale and are affected by macro environment at larger
level. So, PESTEL analysis has been discussed as follows-
PESTEL Analysis
It refers to framework which is used to do scanning of business environment with strategic
management. To conduct this model, wide range of information is needed and it is a time
consuming process. It comprises of several elements which are described as follows-

Political factors-
It refers to components which comprises of factors such as political stability, corruption,
government policy etc. It focuses on intensity up to which government interfere within a economy.
In relation of Uber, due to rising of their services the tax rates are becoming higher. Also, in South
Africa Uber is facing political issue like the government of country is seizing Uber car because
driver doesn't hold a taxi permit (Braun, 2019).
Advantages
 Main benefit of this factor is that Uber is taking effective decisions within every country
where they are facing political issue.
Limitations
 Drawback of this factor is that it leads to disrupting relations between government and Uber
which affects their productivity.
Economic factor
In this element it comprises factors such as inflation and deflation rate, disposable income
of consumers etc. In relation of Uber, they have been known for generation of employment within
economy. Also, company is providing taxi services at lower prices Ciasullo, 2017).
Advantages
Illustration 1: PESTEL Analysis
Source: https://blog.v-comply.com/pestel-organization-
success/

 Advantage of this factor is that it is they are able to provide better services to people and
also improving transportation line.
Limitations
 Limitation of this element is that it due to changing market situation, it is not possible for
Uber to execute business activities in proper manner.
Social factor
It is another element of PESTEL in which it consists of age distribution, cultural barriers,
growth rate and many more (Decock, 2017). In context of Uber, they have been affected by this
element as because individuals and customers are happy towards service Uber as they can easily
travel one place to another.
Benefits
 This factor is also beneficial because Uber is able to generate profit from urban areas as due
to change of prices at higher scale. Also, with rise of number of users, entity is expanding its
activities.
Limitations
 Due to flexible prices of Uber, consumers and users are switching to other alternative
options like Lyft. Ola cabs etc.
Technological factor
In this, it focuses on factors such as use of artificial intelligence, advanced software and
hardware etc. In relation of chosen firm, they have been able to updating their technology and hiring
skilled employees. For example- selected firm is focusing on innovation such as adoption of
geolocation, message pop ups etc.
Benefits
 Main benefit of this factor is that it helps in increasing productivity level and efficiency
scale of business of company (Desai, 2019).
Limitations
 Drawback is that it leads to cost expensive procedure because technology changes from time
to time.
Environmental factor
It is a element in which it comprises of elements like raw materials, climate change etc. In
relation of selected organisation, Uber has been focusing on this factor and paying attention to
sustainability.
Advantages
 Main benefit of this element is that it assist in increasing of goodwill of firm when
environment is protected.

Limitations
 Drawback is that this element require proper implementation and access of environmental
resources and practitioners.
Legal factor
In this, it focuses on component which includes rules, regulations, etc. In relation of Uber,
they have failed to follow government rules for example- drivers of Uber has been charged for
harassment, rude behaviour etc. (García, 2021).
Benefits
 Uber is being properly updating their legal policies which is beneficial for their business
activities.
Drawbacks
 Limitation is that it is difficult to adopt rules & procedures because it is time consuming
process for chosen firm to follow governmental considerations.
PESTLE analysis is a strategic framework which is used to analyse the key factors
influencing the performance of an organization. The management uses the results of this analysis to
guide strategic decision making. The above discussed advantages and disadvantages of PESTLE
analysis suggest it is an effective strategic planning tool in scanning the external environment.
M1 Examine macro environment to determine along with to inform strategic management
decisions
Macro environment has deep impact on business and it is crucial to be well aware about
these factors so that appropriate strategies are being implemented. Also, strategic management
decisions required to be taken with proper considerations of these external factors in proper manner.
This is stated that selected organisation conduct proper business environment on the basis of which
they are able to gain benefits through taking effective strategic management decisions. Furthermore,
it is too examined that it is necessary to have appropriate knowledge about market so that effective
tactics are used.
PESTEL Analysis have deep impact on strategic management decisions as because within
management of chosen firm, external factors affects the overall organisational structure at wider
level.
Advantages
 Main benefit of macro environment is that it helps in accessing to relevant information
which are needed for implementation of strategies. In relation of selected firm, they by

accessing to macro environment they are able to make decisions in appropriate manner.
Limitations
 Drawback of macro environment is that deep level of market research is required to conduct
analysis.
The strategic management of chosen firm focuses on accessing to competitive benefits
which is done by them through applying HR practices and strategies in well effective manner. It is
seen that strategic management of Uber is at developing stage and they are aiming towards growth.
(Gökdeniz, 2017).
TASK 2
P2 Critically examine internal environment & capabilities
In this contemporary environment, it is essential for entity to use internal capabilities so that
effective strategies are being used. Main aim of this model is to understand the impact of internal
capabilities within enterprise. It provides an simple overview about the resources of firm. So, VRIO
is discussed as follows-
VRIO analysis

It is a framework which is used by entity to examine and access internal capabilities so that
goals are accomplished and strategic objectives are achieved. It comprises of several elements
which are described as follows-
Valuable-
It is a element in which it focuses on resources that are most important for business and
growth. So, in context of Uber, they also have valuable resources such as innovation, customer
loyalty etc. With these valuable resources they are able to access business opportunities in
appropriate manner (Kornelius, 2020).
Rare
It is another element in which it focuses on resources that are rare and increases value to
organisation. In relevance of chosen entity, they too have resources which are rare such as
employees, financial resources, and many more.
Illustration 2: VRIO Analysis
Source: https://expertprogrammanagement.com/2019/11/vrio-framework/

Imitable
In this element of VRIO it focuses on the level up to which resources can be copied. In
relation of chosen firm, customer loyalty is imitable at moderate because of availability of
alternative options (Lopes, 2020).
Organised
It is last element of framework in which it states about how well the organisation is
organised. In relevance of Uber, they have a well organised a staff and resources on basis of which
they are able to access positive outcomes.
Resources Valuable Rare Imitable Organised Impact
Employees Yes No Yes Yes Higher
Financial
resources Yes Yes No Yes Higher
Customer
loyalty Yes No Somewhat No Higher
McKinsey 7s model
It is another model which is used by entities to determine internal capabilities and situation.
Main purpose of this framework is to examine the internal structure of organisation in appropriate
way. This model consists of seven components which are discussed as follows-

 Strategy- It is a first element in which it focuses on tactics which is used by organisation
within workplace. In relation of selected entity, they also implement strategy of market
development.
 Structure- It refers to the way decisions and work is being carried out within entity. In
relation of Uber, they have a long structure and follows divisional structure (May, 2017).
 System- A system refers to collection of different systems which reflects their working way.
In context of chosen entity, they too have many system such as employee recruitment
system, customer relationship management system.
 Skills- These refers to capabilities that help in achieving of achieving of competitive
benefits. Uber has claimed that they have skilled employees that are able to increase
productivity.
 Style- This component refers to the way entity is being managed by supervisors. So, in
reference of selected entity, they have large members in firm and accordingly decisions are
undertaken.
 Shared Values- This refers to element in which it focuses on guidelines, principles, etc. In
viewpoint of chosen firm, they too are focused towards their ethics and values (Narayanan,
2016).
Illustration 3: McKinsey 7s Model
Source: https://www.mbaboost.com/mckinseys-7-s-and-pascales-adaption-thereof/

 Staff- It refers to people who has ability to deliver better productivity at workplace. Uber
operates at global scale and large employee size which generates revenue to business.
Therefore, it is analysed that it is essential to have proper knowledge about use of models
that can be applied within firm. In viewpoint of Uber, by analysing of internal capabilities it is
crucial for firm to use such models which increases the effectiveness of brand.
M2 Examine internal environment to evaluate strength and weaknesses of organisational structure
and skill-set
Internal environment impacts on Uber operations and functions at wider scale. In relation
of Uber, they too uses skill set and organisation structure on the basis of which they are able to
achieve competitive benefits. It is also seen that organisational structure of Uber is very strong and
well organised. In case of selected entity, internal environment includes internal components such as
raw materials, employees, management, organisation structure etc. The skill of employee is wide
and broader which is used by them to increase productivity of firm at higher scale (Powers, 2019).
Internal strength of organisational structure
 Main strength of Uber organisational structure is that they have good communication and
proper level of understanding .
Weakness
 Drawback is that the structure is not rigid and that can leads to conflicts in Uber.
TASK 3
P3 Critically Apply Porter's Five forces model to evaluate competitive force in Uber
Market is wider as well as broader and it is important to focus on development of business
goals. To do so, it is essential to be well aware about competitors within market. In context of Uber,
it is necessary to have appropriate knowledge of competitive forces so that decisions are taken in
most efficient way. So, Porter Five Forces has been explained below-
Porter Five Force Model
This is model which is used with aim of accessing competitive environment. It is necessary
to be aware about such competitive forces so that appropriate decisions are undertaken. It is
analysed that it is necessary to states about components of Porter Five Forces which are described
as follows-

 Threat of new entrants- It is element in which it focuses on entries of new firm in market.
It is necessary to for organisation to be aware about the new entries in firm so that strategies
are implemented accordingly. In context of Uber, they also have high threat of new entrants
such as Lyft, Ola cabs etc. (Riwanto, 2019).
 Threat of substitutes- In this force, it reflects about replacement of a existing product. In
relevance of Uber, they also have high threat of substitutes such as Lyft is being mostly used
by many users due to affordable services.
 Bargaining power of suppliers- In this, it focuses on suppliers as they are one who assist
in reaching to customers and resources. In reference of chosen entity, suppliers are important
without which is to not possible to access customers in easy way. It is seen that they Uber
do not use their own cars instead drivers have their own cars and then policy is made. So,
power of supplier is relatively high (Wu, 2020).
 Bargaining power of buyers- It is another element in which it focuses on power of buyer. I
this, it is crucial to be well aware about buyers attention and needs. In relation of selected
entity, bargaining power of buyer is relatively high, due to strong competition in market. So,
Illustration 4: Porter Five Force Model
Source: https://strategicmanagementinsight.com/tools/porters-five-
forces.html

due to this it is not easy for entity to execute their operating activities in well defined
manner.
 Threat of industry rivalry- It is element in which it focuses on rivalry of a organisation
within a market. It is necessary to do business scanning so that industry rivalry is being
examined properly. Furthermore, in relation of chosen firm the threat of industry rivalry is
high for example it has many competitor rs in market such as Ola cabs, Lyft etc.
From above discussed matter, it states that it is essential to focus on market situations so
that it is easy for entity to be well aware of competitive forces on basis of which it is easy to make
decisions. Furthermore, it has been analysed that it is critically crucial to focus on environment
which helps in using of resources efficiently.
M3 Apply strategies to improve competitive edge and market position based on outcome
In business, it is necessary to use strategies and tactics so that organisational goals are
accomplished at appropriate level. To achieve competitive edge, effective tactics and strategies are
being used so that benefits are achieved at appropriate level. The market position of Uber is
premium and it is critically essential to use competitive strategies (Zambrano, 2020).
TASK 4
P4 Analyse theories, concept and models to execute strategic plan
Strategic planning is crucial for development of goals and achieving of competitive benefits.
Strategic planning is important without which it is not possible to access objectives. In relation of
Uber, manager of firm use different types of strategies which assist them in completion of their set
objectives within period of time. With use of strategic plan, it is easy to access effective decisions
and achieve organisational objectives in proper manner. Executing of strategic plan is not easier and
which require proper knowledge, expertise and information in systematic manner. So, Porter
Generic strategy has been discussed below-
Porter Generic Strategy
It is a framework which is used by entity in order to access and implement strategies to
achieve business goals. Main aim of this framework is to achieve competitive benefits within
market. In relation of Uber, as they operates at wide scale it is crucial for them to use this model so
that goals are easily accomplished. It includes different form of strategies which are given below-
 Cost leadership- It is type of strategy in which low cost is used by firm with aim of
increasing revenue and profit. In this competitive market, it is crucial to focus on source
profit at any cost. In relevance of chosen entity, they do not have to use this strategy as they

have high brand value in market.
 Differentiation strategy- It is type of strategy in which it focuses on introducing new
products and service in new market. In context of Uber, they uses this strategy which assist
firm in development of business goals. Main benefit of this strategy is it reduces the
competition in market. For example- In Dubai, Uber has launched Uber Helicopter as ride
services to people.
 Focus strategy- It is another type of strategy in which firm targets few niche market. In this,
main aim is on narrow markets. In relevance of Uber, they do not use this strategy as
because using it can affects their way of operating business.
In context of Uber, they follow differentiation strategy on basis of which it is easy for them
to achieve competitive benefits as well as customer attention is also gained. Main reason for using
of this strategy is that it help in accessing of competitive edge easily and new opportunities in
market.
SWOT- differentiation strategy
Strength
 Main strength of this strategy is
that Uber is able to access
competitive benefits and that
increases their brand value.
Weakness
 Uber cannot use other low based strategy that
can negatively affects their business operations.
Furthermore, it is examined that it is necessary
to state about market environment situations.
Opportunity
 Through using of this strategy they
have opportunity of accessing to
many other countries easily which
is beneficial for growth and
development.
Threat
 Risk associated with strategy is high because
market, product and customers are new to firm.
So, proper knowledge is needed by
management of Uber to use this strategy and
deal with problems.
This has been analysed it is important to to use framework which helps organisation in
achieving of goals at appropriate level. Furthermore, it is analysed that it is crucial for firm to use
differentiation strategy (Akan, 2016). With use of differentiation strategy, entity is able to access
business opportunities in appropriate way. Furthermore, it has been also analysed that it is crucial
to use effective strategies so that positive outcomes are achieved in easier way.
Bowman Strategy Clock

It is type of model in which states and explore the options for strategic planning. According
to this model, it helps in repositioning of a product with aim to achieve competitive benefits. It is
necessary to use this model so that appropriate objectives are achieved. The main aim of this model
is that it assist in repositioning of a brand product easily. With consideration of this model, it is easy
to make decisions about entity's position. In market, it is often seen that positioning is important
which is to be carried out in appropriate way so that customers are easily targetted. Moreover, it is
further analysed that it is important to use the position as because customers frequently purchase the
product of firm which has a higher position in market.
Advantages
 Main benefit of this strategy is that it helps in development of business value in market and
accesses customers in easy way.
 Further, benefit is that it helps in delivering of positive outcomes at wider scale.
Limitations
 Using this model require proper knowledge of market and analysis. Any wrong decisions
can negatively affects the image of brand. In relation of Uber, it is essential for them to hire
skilled employees which is a cost expensive step.
Thus, explained paragraph shows that it is necessary to use different models with aim of
gaining benefits so that it is easy to achieve positive results within workplace.
M4 Analyse strategic management plan which has strategic priorities
Strategic management plan is wider concept and which require appropriate knowledge and
skills to achieve goals appropriately. It is duty of manager to make assure that strategy with
priorities are required to be used which is helpful for accessing of competitive benefits. Various
stages are essential which are discussed below-
 Mission- Main mission of Uber is to provide transportation services as smooth as running
water.
 Vision- Uber vision is to set the world in motion.
 Objectives- Main aim of entity is to deliver better services to users and individuals.
 Strategy- The strategy which is adopted by Uber is differentiation strategy.
 Tangible strategic priorities- In context chosen firm, their strategic priority is operational
excellence and platform and market positioning.
 Intangible strategic priorities- Focusing towards EV and natural resources.
Adopting of strategic management plan is time consuming and need to be carried out with
proper considerations. Also, it is critically important to have appropriate knowledge about elements
of strategic management plan on basis of which output is achieved easily.

D1 Interpretation of environmental and competitive data to form set of strategic directions
Strategic direction is essential which is to be known in proper manner so that effective
decisions are taken appropriately. Competitive data and environmental data helps in gaining better
results within business sector. Also, it is seen that resources are required to be used in correct way
so that it is easy to access business opportunities (Braun, 2019). With use of environmental and
competitive data, it is essential to states about what type of strategic directions are beneficial for
development of business goals and objectives. Moreover, it has been too analysed it is crucial to
access data with reliable sources so that appropriate decisions are being undertaken in proper
manner. Strategic directions of Uber are focused towards achieving of goals as well as objectives.
For example- they aims at introducing of new products and services such as Uber Air in Dubai has
been launched. With comparison of Lyft and Grabs strategy directions to Uber, it has been
examined that firm is using effective strategies to achieve competitive advantage.
CONCLUSION
After a brief analysis of above report, it has been concluded that it is essential to be well
aware of business strategies so that competitive benefits are achieved. So, discussions have been
made about frameworks like PESTEL, Mc Kinsey Model, VRIO and further Porter Five Forces and
Porter Generic Strategy is being explained briefly. This is too evaluated that it is important to use
effective strategies so that better and positive output is gained. Moreover, it have been too analysed
that it is duty of manager to make assure that results are achieved in proper manner. In this
contemporary business environment, it is essential to have appropriate knowledge about market on
the basis of which it is easy to implement effective strategies and tactics.

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