Business Strategy Analysis: Uber's Macro and Internal Environment

This report provides a comprehensive business strategy analysis of Uber Technologies, covering its macro environment, internal capabilities, and strategic planning. It begins with an introduction to Uber's business model and objectives, followed by an examination of the impact and influence of macro-environmental factors using PESTLE and stakeholder analyses. The report then delves into Uber's internal environment and capabilities, applying the VRIO framework and McKinsey's 7-S model to assess its strengths and weaknesses. Furthermore, the report applies Porter's Five Forces model to analyze the competitive landscape of Uber and concludes with a strategic plan, outlining recommendations for Uber's future growth and sustainability, referencing relevant theories and models throughout the analysis.

BUSINESS STRATEGY

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
LO1..................................................................................................................................................3
P1-Impact and influence of Macro environment ........................................................................3
M1 – Critical analysis of external factors ...................................................................................5
P2- Internal evironment and capabilities ....................................................................................5
M2- Critical analysis of internal capabilities ..............................................................................6
LO3..................................................................................................................................................7
P3. Porter's 5 forces model of Uber ...........................................................................................7
LO4..................................................................................................................................................8
P4. Devising strategic panning for Uber .....................................................................................8
Strategic plan of Uber ...............................................................................................................10
CONCLUSION .............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Business strategy refers to the long term action plan adopted by the company in meeting
common desired goals of the company. It includes companies objectives and goals where it lays
down type of product and services that is being planned by the company to reach and sell it to
the end customers and the market which company need to target which will lead to company
achieving its target in terms of its profitability and boosting the sales and revenues of the
company . Uber technologies Inc which is commonly known as Uber offers wide variety of
services such as hire vehicles, food delivery that forms part of Uber eats, couriers, packaging,
freight transportation and various others with partnership with various biggies all across the
globe. Present report will brief on impact and influence of various macro factors, its internal
environment and capabilities, will apply theory of Porter five force analysis and will apply
various theories and models to assess strategic direction of the company.
MAIN BODY
LO1
P1-Impact and influence of Macro environment
It is a condition that exist in the economy as whole rather than a section or a particular
region. These are the external factors that affect the business functioning and for which company
needs to closely monitor and account to the same to survive in various business dynamics and to
face the challenges more effectively and prominently. This could be better understand using
PESTLE analysis – It includes factors as
Political- This factor has affected business operations of Uber as it has faced lots of
controversies as in initial development it did not accounted to clear regulations as it was diffiicult
to pinpoint to whom insurance lies in when there is accident happens that accounts to fault of
company or its driver where they have faced additional scruitny where government of france
filed complain against uber drivers not having taxi licences , which imposed various penalties,
cease its operations.
Economical – This factor influence as its drivers respond to customers quickly and drive them
to there location where its services are often cheaper than other taxi providers and which is easier
on part of customers to schedule the same and which ar affordable according to there income
level.

Social- Company accounts to this factors as customers of company enjoys as its easy to access its
platforms whereby company operations are designed in a way that facilitates choosing an
appointment and pick time easy for its customers by the use of its app on smartphones which
ensures building trust, loyalty by customers towards its services (Pan, Chen, Zhan, 2019).
Technological- Company accounts to various continuous technological improvements which
accounts to fostering growth of the company where it also get valuable insight about and from
its customers regarding experience of there journey where they give it according to them star
rating and also with its drivers which helps in assessing business operations of the company.
Customer make appointment through the app where by its technological innovation it helps
customers to know about its relevant cost, traffic congestion, weather forecast and various others.
Environmental- Company accounts to this factors where many believes that vehicles result in
pollution and give rise to traffic congestions where studies have shown that uber has ot increased
traffic congestions whereby general public prefer to use Uber vehicles over public transportation
as its vehicles are so well designed which prospers to efficient utilisation of fuel that dose not
encounter environment pollution and has an positive impact on environment protection,.
Legal- Company abide and accounts to follow all rule and regulations being laid down in various
region all across the globe in which its business operates as it does not serves as discontinuation
of business operation and ensures general audience and public that its operation are on fair
grounds and not meant with the purpose to fraud or cheat potential customers which helps
company not to account to various restrication in its business operations (Pupo Kairuz, 2020).
It could also be understood with the helps of
Stakeholder Analysis -It is the process of asseing the system and changes that are highly
potential as they relate to intersted and relevant parties to business operatiion that are being
termed as staeholders, it is referred as key stakeholder who are related with a project. This are
subdivided into
High power and high interested people stakeholders that manages closely- this are the people
in uber who have high power and high interest in business and are the makers of decision and
contribute and leads to have high impact on undertaking success and managed closely to
manage with there pass judgment This helps in formulation of Uber strategy and its operations
as it leads to decision making in the company which is highly effective and which helps the

company in getting and edge over the competition and winning in marketplace for Uber (Roy,
2019).
Power High- Interest low these are the people that neds to be made satisfied even though they
are not interested as if not they may use power in unfavourable way if they are not satisfi
Power low- interest high - these people need to be adequately informed and need to ensure to
them that no major issues are arising where they can be very implemental with the details of the
program (Elias, 2016).
Low power Low interest these stakeholders needs to be closley monitored, where Uber needs to
be ensured that do not get bore with excessive communication.
M1 – Critical analysis of external factors
Company need to closely monitor and account to its various external factors to support
for its business growth, if not then it may account to company loosing its competitive advantage
where it will be hard to survive in business dynamics which will affect its sales and revenues and
in turn will lead company to face loss.
P2- Internal evironment and capabilities
This refers to strength and weakness of company that can break and make business for
the company, it could be better understood with helps of
VRIO framework- It states that resources of the company needs to be
Valuable – Resources of uber shoud be valuable as they helps in increasing perceived value for
its products and services to its customers. This could be done by the company if it accounts to
decreasing prices of company services and products or can be by making and increasing
differentiation of its services and products which makes it hard for competitors to delliver the
same. The resources which cannot meet up with the same leads to competitive disadvantage at
workplace. It is required to constantly account to valuable resources because various business
dynamics may lead to resources that are less valuable and useless at all (HoLEE, 2020).
Rarity- It states that resources that are acquired by few companies are considered as rare. It
helps in getting temporary advanatge of winning with competition. The resources which are
being common and not rare in nature for Uber leads to competitor similarity as a result of
company using identical resources to apply the scheme that are similar and which does not helps
organization with its superior performances. Various resources which are rare for company are

its way of conducting business services by its talented and skilled employees who contributes in
success of the project.
Imitability- it states that resources should be costly to imitate,substitute or buy it at a reasonable
price. It can occur to Uber in ways such as directly imitating tht is reffered to as duplicating or
by the ways providing comparable services and products that is being reffered as substitution.
By having this it helps company to achieve competitive advantage which can be by reason such
as historical conditions where resources are developed due to historical events that cover long
time period and are resources of Uber that are costly to imitate (Ariyani, Daryanto, 2018).
Organised- it states that resources if not organised may not provide any advantage which can
serve as source of providing value to its customers. Uber should organise its management
processes, systems, structure, policies and its culture to be able to fully and optimum utilisation
of resources that are valuable, costly to imitate and rare for Uber.
Mckinsey’s 7's Model- It includes
Strategy- It refers to the plan developed by the company to compete successfullly in maketplace
and gain competitive advantage that is sustainable. It is long term business plan that is being
reinforced by strong mission, vision and values of Uber .
Structure- it refers to the way how business divisons and units such as its various departments
are managed and organised that includes accountability of various individual in Uber. It is the
organisational chart of the company which is most easy to change and visible element of this
framework. It states that uber has proper hierarchy of chain of command where it lays down
various top professional authority to whom various subordinates are accountable to which
ensures proper execution of the business.
Systems- it refers to the procedures and process of the company which accounts to day to day
functioning of business operations and how decision are being made in Uber. It determine how
business is being done and managed . The company implement various policies which ensure
that its functioning is on proper grounds and not accounts to any misunderstanding at the
workplace (Cox, Pinfield, Rutter, 2019).
Skills- This are the abilities that employees of Uber have to perform there task very well. It see
ability and capableness of employees. It is being needed by the companies in setting where
business mechanics is occuring which helps in assessing how company can implement its new
strategy and processes. It is being seen in variou situation& condition where conflicts at

workplacer occurred and which helped for resolving the same which in turn leads company with
accounting to effectiveness of business operations and if not then may lead to a culture which is
unfavourable in nature and which hinders the growth of the business.
Staff- this element is concerned with how many and what type of employees will be needed by
the company and how they will be selected, recruited and trained in organisation.
Style- This refers to the leadership style of how the top management will manage its organisation
under variou challenging tasks and risks (Shaqrah,2018). The company adopt to democratic style
of leadership where it account to participation of employees to share there view and opinion in
decision making process which gives them valuable insights to the company and accounts to fun
loving culture at workplace
Shared values- these are the guide, standards and norms that guide behaviour of employees at
Uber and thus lays down foundation of the company.
M2- Critical analysis of internal capabilities
Company needs to account and monitor its own strength and weaknesses, if not then it
may lead to misunderstanding in various business operation leading to conflicts at workplace
which can affect its position in harsh manner where it may give rise to competitors to capture
huge market share.
LO3.
P3. Porter's 5 forces model of Uber
Uber is one of the fastest growing transportation company which have a great presence
all over the world and customer loyalty. Because of its wide operations it gives competitive edge
and therefore to identify potential growth company's Porter's five forces model should be
analysed. To know the rivalry and competitors in the same industry and other aspects.
Threat of new Entrants
The threat of new entrants in high as the business model on which the company is
operating is not very costly and includes less capital. As Uber is also making a huge profits so it
attracts a lot of people to enter into this segment. Therefore the business model of Uber can be
replicated by others too without much effort and capital (Lewis, 2017). There are various firms
that are preparing themselves to enter into this market and that too with lesser capital and also
charging less prices for the same distance. The company is not immune in rising the rates
therefore its all the more easy for others to enter into the market.

Threats of substitutes
Substitutes are the common fear which Uber faces as there are many firm that provide a
replacement services which are being provided by the company. The best example for this is taxi
drivers. Although it is a traditional concept but Uber has a close chances of losing customers if it
tries to increase the rates. And because of other transportation sources like trains, private cars
and self-driving cars is a great threat of substitutes for Uber.
Bargaining power of buyers
The bargaining power of buyers is higher as customers have various other option on
which they can shift. There are number of competitors and rivals that are providing customers
with more services and at lower cost. As the customer have lower switching cost as the efforts is
only of registration. Also the trend of maintaining the status by owning one's own car also
increases the bargaining power of buyers.
Bargaining power of suppliers
As the company does not have any vehicle of themselves therefore they are dependent on
the suppliers who have vehicles. Their business model is basically dependent on drivers who
own cars. The number of suppliers that can work for Uber is not so high due to stringent
requirement which is required by them to get the job. As oil and gas prices also affects the
bargaining power of supplier as they have a high negotiating power in running of Uber.
Rivalry among existing firm
The rivalry among the existing firm in this industry is intense as there are various
competitors. Some competitors even have similar business model to Uber. Uber no doubt is a
dominant force in transportation industry but there is a need for improvement on their innovative
strategies to gain a competitive edge.
LO4
P4. Devising strategic panning for Uber
These strategies are the framework to help Uber identify the competitive advantage and
potential niche in which they can get competitive advantage. This strategy basically identifies
where the strength of company falls into in terms of cost leadership or differentiation. There are
The following is discussed in detail below:
Cost leadership strategy

This strategy calls for being the lowest cost producer in the industry in this strategy the
firm gives the services at low cost or at average cost. There are various ways in which Uber
acquires cost advantage through process efficiency, gaining unique access to a large source of
lower cost material. The objective is to lower price and gain maximum market share. It is the
main generic strategy that is used by Uber in different consumer markets. The objective behind
using this strategy is to retain the market leadership position through efficient value chain
management (Islami, Mustafa. and Latkovikj, 2020). They focus on affordability and easy
accessibility which can enhance brand awareness and boosts sales. Uber also offers discounts
and coupons to achieve their sales target and can also manage the competitive pressure. Ubers
cost leadership elements includes reduced capital expenditures, low cost structure and also
reduced HR expenditure.
Differentiation strategy
This strategy is used to make Uber service look unique and different from others and also
attractive. It is commonly used generic strategy by Uber to gain a competitive advantage. It
allows Uber to expand its customer base and market share over unique features offered by them.
To make their service look different they concentrate on innovation. To differentiate itself from
the other brands it also uses marketing and advertising strategy by celebrity endorsement. Apart
form all these the logo of Uber is also a differentiation basis and this unique logo has build very
strongly on the minds of customers. Their experience also plays an important role in this strategy
as they are the oldest brand with strong presence (Hales. and Mclarney, 2017). The
differentiation element of Uber includes Uber application program interface, flexible
employment etc.
Focus strategy
This strategy helps Uber to focus on their resources on expanding the customer base that
are narrowly targeted segment. To adopt this strategy Uber base its competitive advantage on a
particular niche market to understand the dynamics of that particular market and to serve the
unique needs of customers. Uber adopts focus strategy in terms of low cost and offers best value
too. They focus on developing different services specifically for niche market and the services
concentrates on low cost or well-specified service for the market. After determining the focus
strategy, cost leadership or differentiation strategy is selected. This strategy ensures that Uber

adds some extra value to serve the niche market. Uber revises its branding strategies and also
make efforts to bring changes in their services to satisfy customers expectations and needs.
Diversification strategy
This strategy is defined as entering new market with new product. It is the most risky
strategy as the company decides to launch new products in completely new market. Uber uses
this strategy in support with cost leadership generic growth strategy. Minimizing cost and exiting
infrastructure makes possible for Uber to enter into new market. Uber go for related
diversification strategy to avoid risk and for this they take use of brand awareness. Some
examples of Uber diversification is entering into food delivery segment, fridges, shirts etc.
Hybrid strategy
Hybrid strategy of Uber takes two factors into account which is cost leadership and
differentiation as company believes it is better to make a combination strategy than a single one.
Uber relies on hybrid IT infrastructure setup or it is called Tripod strategy. It combines public
cloud services with standardised on-premium server racks in colocation facilities.
Vertical and horizontal integration
Both horizontal and vertical is a competitive strategy which the company adopts. In
vertical integration Uber strengthens its supply chain and reduces the cost. It is a technique to
capture the upstream and downstream profits (Pellinen, Teittinen. and Järvenpää,2016).
Horizontal integration is when Uber deciders to grow by acquiring similar type of companies in
their own industry at the same point of supply chain. Uber focuses on horizontal integration more
as they are leveraging cheap credits and an infusion of private money to expand as quickly as
possible. It is focusing on gaining market share within cities and also company is compiling a
massive database of driver and rider behaviour.
Bowman's Strategy
This strategy examines how Uber can position its services based on two dimensions
which are prices and the perceived value of the services. There are basically eight positions of
Bowman's strategy clock which are low price and low value added value, low price, hybrid,
differentiation, focused differentiation, risky high margins, monopoly pricing and loss of market
share. The main aim is to analyse and understand the positioning of Uber services to gain
competitive advantage (Echchakoui, 2018). Their main success factor for gaining market share is
perceiving value from the consumer. Uber has successfully established itself as a cost leader and

have also differentiated their value proposition in the eyes of potential customers. Which
suggests that Uber is not ‘stuck in the middle’ and the failure to choose a single strategy has not
resulted in inferior performance. The result of Uber high performance is because of its hybrid
strategy.
Strategic plan of Uber
Objective of Uber – The objective of Uber is to provide dependable and readily
available transportation service. Their goal is to continually expand globally and bring its
services to different cities to allow riders and drivers to connect. To take over the cab industry by
being the most cheap, easy ride all over the world.
Strategies used by Uber – The following strategies are being adopted by Uber
eliminating transaction costs: which helps them increasing their profits, using the technology of
cutting edge : which helps them getting a competitive edge, convenient and frictionless payment
system: this will enhance customer satisfaction.
Key performance indicators – Customer satisfaction, employee satisfaction, teamwork,
employee turnover rates, average revenue per user, number of rides per month, length of rides
etc. are the key performance indicator of Uber.
Marketing mix of Uber – Uber should try to go for cashless transaction more, should
keep their prices and rates reasonable, should concentrate more on hygiene, investment in
training and also they should try to expand their market share.
CONCLUSION
It can be concluded that macro environment do impact and influence the working of Uber
factors such as political, economical, social, technological, legal and environmental. Also the
internal factors impacts therefore analysis of internal environment using VRIO and McKinsey’s
7S is effective. Also to get a competitive advantage application of Porter's five forces model
must be analysed of Uber. To identify strategic direction Porter's generic strategies must be used.
In the report strategic plan of Uber is also determined and other strategies used by Uber.

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