Strategic Analysis Report: Uber's Acquisition and Strategy

This report provides a comprehensive strategic analysis of Uber Technologies, examining both its external and internal environments. The external analysis utilizes PESTEL and Porter's Five Forces models to assess political, economic, social, technological, environmental, and legal factors, as well as competitive dynamics. The internal analysis delves into Uber's key resources, including its network, brand image, platform, pricing algorithms, and human resources. The report also evaluates Uber's value chain and explores its strategic choices, particularly in the context of the acquisition of Postmates. The conclusion synthesizes these analyses to offer insights into Uber's strategic position and future prospects in the transportation and delivery industries.

Uber to acquire rival
Postmates for 265
billion

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
External Analysis....................................................................................................................3
Internal Analysis.....................................................................................................................6
Evaluation of Strategy............................................................................................................9
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Strategic Analysis refers as process of formulating effective strategy by conducting research
on the organisation as well on the environment in which it is operating. It analysis the internal
and external factors present in the environment. The analysis is effectively done with the usage
of models such as Porter’s Five Forces, SWOT/ TOWS analysis. The strategic analysis helps the
organisation to gain advantage from these factors evolving in the environment. Further analysis
is beneficial for the organisation in devising business plans for new or existing products or
services (Do and et. al., 2017).
Uber Technologies, Inc. an American technology company famously known as Uber. It
offers the services of transportation, food and package delivery, couriers. The company aims to
provide its customer with easy transportation access. Further the company furnishes its social
responsibility by providing employment opportunities. The company effectively operates under
transportation industry. The report examines the external and internal strategic analysis of the
company.
MAIN BODY
External Analysis
PESTEL Analysis
PESTEL analysis is often used in the large organisation to identify the opportunities and
threats by considering all the possible external factors evolving in the environment. The six
determinants in the PESTEL analysis are discussed below.
POLITICAL
The factor access the stability of the political environment (Pal, 2018). The policies and
regulations formulated by the companies differs in the countries. The factors includes the tax
policies, tariffs, treaties which might create opportunities and threats for the company. One of its
example is Tax fluctuation, government might impose heavy taxes on the companies. These
factors mostly causes adverse effect on the companies and thus, are unpredictable. Uber has been
facing political discussion in relation to piece of employment legislation which is minimum
wages law. The question was raised whether the Uber is abiding these rules. Furthermore, the
government intervenes and requires Uber with proper documentation and licenses.
ECONOMIC
The factor access the economic conditions prevailing in the market in which the
organisations are operating. The company introduces employment opportunities which ultimately

led contribution in the economy. The factors includes inflation, foreign exchange rates, GDP. It
can be seen as opportunity, for example the company devises opportunities where decisions are
made in respect of interest rate. Further Uber faced hit hard because of the COVID-19 pandemic.
The company is banned because of its unfair competition with the regular commercial vehicles.
(Deshpande, 2019).
SOCIAL
The factor access the social and cultural influence on the company. It varies in the
countries and the business strategy need to update accordingly. The factors include distinct
cultural views, religions, local languages and others. Nowadays, the role of masculine and
feminine is trendy in society. Social Factors is seen as an opportunity in many companies as
they promote local norms and values with the help of Hofstede Cultural Dimensions.
Furthermore, the easy availability is one of advantage favouring social factors. It cost effective
travelling led to the company’s growth. Also accepting women as part of skilled workforce
devises opportunities for many organisations, since the company engages female drivers.
TECHNOLOGICAL
The technological factors led to threats and opportunities for the organisation. The pace
of technology provides opportunities for the company to innovate new products or services
accompanied by better quality. The customers can book taxi through app with an aim to provide
users best service. Online payment is another feature along with the credit option in case of
emergency. The company even through app makes sure the activity of its drivers. The company
grabs the opportunities of technology so as to achieve the desired goals by satisfying the trendy
needs and wants of the customers.
ENVIRONMENTAL
The factor access the environmental or ecological condition in the market (Chai, Li and
Zhao, 2020). The factor includes geographical climate, regulations in respect of environmental
law, climate change. Nowadays, environmental factor has become concern and treated as
strategic tool. The Uber service has reduced the usage of public transportation. Due to cost
effective travelling people prefer Uber and thus, leading to traffic congestion. The company is
taking environmental measures such as reducing carbon emission with an aim of zero emissions
target through EV or hybrid vehicle.
LEGAL
The factor access the laws and regulations prevailing in the countries. The factors
includes employment law, product regulations, health and safety laws and others. Legal issues

generally creates threats for the company. Uber faces many criticism and the company is
required to adhere with laws related to technical usage. Copyright laws and employee safety
laws.
Porter’s Five Forces
The model is used to analyse the attractiveness of the industry for long term. The model
helps to determine profitability among different and industries. Further helps to examine the
competitive advantage in the marketplace (Haas, 2018). It enables the organisation to tale
decision in respect of entering in the market. The forces are discussed below:-
Competitive Rivalry
This force determines the number of competitors prevailing in the industry. It intensifies
the competitive environment. The rivalry is high when there are numerous number of
competitors accompanied by equal power in the market such as Lyft, OLA, and even other
regular taxis. They compete in different aspects such as customer service, brand reliability,
comfort and safety, price. As Uber has strong presence nationwide and thus, faces fierce
competition in the marketplace.
Bargaining Power of Suppliers
The force examines the powers and control in the hands of suppliers. Lesser the suppliers
more powerful they attain. The business perform better when there are numerous suppliers in the
market. Most of the users of Uber are price sensitive and further the shifting cost of customer is
low. Generally, the company faces competition on the basis of price. Thus, has high bargaining
power.
Bargaining Power of Buyers
The force determines the power and control in the hands of customers (Chen and Reyes,
2017). These are the important stakeholders which need to be kept satisfied. Competition is held
in the market in order to furnish best value to the customers. Uber is highly dependent on its
suppliers which are drivers who run their commercial vehicles. The company has to take care of
its suppliers, as it can ruin its brand image if anything adverse happens against suppliers. Thus,
have a high bargaining power in the marketplace.
Threats of Substitutes
The threat of substitutes encourage the switching power of the customers towards the
alternatives. It creates the situation where the demand of customers as compared to the supply
which led limited amount of profits in the industry. The company has threat from other taxi
companies which are causing fierce competition in the market. Even the public transport are also

the substitutes and thus, creates a threat on Uber’s revenue and market share. The customers can
drive away the sales of Uber by opting local services.
Threat of New Entrants
New entry led to influence competition power in the market. The company faces threat
not only from the existing competitors but also from new arrivals in the industry. Further new
entrants faces certain barriers to enter in the market. The business model on which the Uber is
initiated, it does not takes much effort or cost to bring competition. Further the company hires
those people who want to work as drivers and even they can bring own cars, get registered in
order to work for Uber. Thus, there is high threat of new entrants in the marketplace. (Pitt and
Treen, 2017).
In short the mode of force which led attractive industry along with opportunities in the market
 Competitive Rivalry (high)
 Bargaining power of buyer (high)
 Bargaining power of suppliers (high)
 Threats of substitutes (high)
 Threats of new entrants (high)
Internal Analysis
Key Resources
The resources of the company plays an important role in deriving goals effectively and
efficiently. They are considered as an important components used to accomplish goals and in the
conduct of business. Further they are required to obtain sustainability in the marketplace (Pistoni
and Songini, 2017). These resources are bifurcated as-
 Physical Resources
 Human Resources
 Intangible Resources or Intellectual Resources
 Financial Resources
The key resources behind the success of Uber Technologies accompanied by strength and
weakness are discussed below.
 Strong Network: Uber has created a strong network for its drivers and riders. The
company provided significant number of drivers and riders to build strong network. Such
strong network creates barrier to enter in the market. The drivers and riders forms strong
bond with the company. They are the ones who led customer satisfaction goals for the
company. Further they add value by satisfying the needs and wants of the customers.

Value proposition is respect of drivers are their earning opportunity, easy start whereas
for riders it is safety and security, convenient transactions. Feedback and rating system
helps in adding value (Alice, 2017) (Blakeman, 2018). The strong network that connects
the company to drivers and passengers is considered as one of the strength. Because this
factor helps the company to achieve its desired goals by updating the trendy needs of the
customers.
 Brand Image: Another key resource is the global image of the company in the market.
Uber is ranked at 87 with the efficient brand value. The brand build its reputation which
led easy attraction of drivers and passengers. The brand built first choice in the minds of
customers. The brand covered large market. It is considered as one of the strength which
causes the company to maintain its quality. Further this resource led the company to
attain competitive advantage in the market.
 Platform: The Company after building strong network provide platform for its users and
drivers. The platform effectively connects both the passengers and riders. The pace of
technology led the brand build its online platform. The developers of the company
devised the app which further uses the Google Maps or MapKit to track route and
location. The company cleverly adapted the technology and achieved growth and success.
It defines as strength for the company which led the drivers and passengers easy access
to new location.
 Pricing & routing algorithm and Data Analysis: The pricing algorithm is used by the
company to maintain the graph of demand and supply in the market. The data analysis
represents that there is enough resources available to meet the demands of the customers.
Along with the data analysis the company fulfils the value proposition (Bhupendra and
Sangle, 2017). The routing algorithm focuses on the shortening the waiting time of its
customers. Thus, it seems beneficial and is considered as strength for the company. As
the algorithm and data analysis led the company to formulate strategy favouring
customers by satisfying their trendy needs.
 Drivers and Riders: As these are the vital human resources of the company which
contribute their best to attain organisational goals effectively and efficiently. The
question arises on the relationship between the Uber Company and drivers. This causes
lack of connection and ultimately lack of loyalty between the company and driver.
Further the drivers in some of case misbehaves with their customers by doing unethical
practices which causes negative impact on the brand image of the company. This

resources is responsible for weakness in the company. Thus, the unprofessional drivers
lowers the rate and performance of the company.
Value Chain
The value chain helps to create a reality platform in respect of ideas related to products or
services (Udofia, Obong and Rui, 2017). Value Chain increases the efficiency of business by
delivering best value. The goal of value chain helps the organisation to attain competitive
advantage in the market by ensuring with most value for least cost. Uber Company with the help
of this tool identifies the sources of values by acquiring competitive advantage in the
transportation industry. The company’s primary activities are as follows:-
 Inbound Logistics- The Company serves its customers effectively with the vehicles
which the company does not owns. The drivers are the contractors who either owns the
vehicle or rent to offer its services. The smart phones need to be possessed by both
drivers and customers in order to use the uber app. Also the driver can have normal
phone which can be easy tracked and monitored. Further the vehicle has CCTV camera
and tracker to easily monitor the activities of drivers.
 Outbound Logistics- The company’s internet based structure adds value in the
transportation industry (Safii, 2020) (Kapanowski, 2017). Further the company creates
unique relations with their customers by determining their choices.
 Company Operations- The company operates in more than 760 cities across the world.
The customers can make use of the company’s app and can track the location of the
driver. Further after confirming ride the customers gets the complete details of driver
along with one time password which ensures customers effective ride. The company’s
Pay and Go strategy made the payment option simpler by providing the facility of credit.
 Marketing and Sales- The company makes use of advertising. Social media, promotions
and public relations as its marketing strategy. The company through its routing algorithm
devised effective measures for shortening waiting time. Further convenient payment
option via Pay and Go strategy also led to value addition.
 Company Service- Its service led the company competitive advantage in the market. The
aim of Business model is to provide good customer service. Rating system and feedback
after journey causes drivers to maintain service.
VRIO
The company’s main competence is its innovation in its operation (Wojszczyk, 2017).

 Valuable: The company offers high innovative services such as its app which enables
monitoring and tracking of taxi. Further it is considered as valuable resource for the
company in attaining competitive advantage in the market.
 Rare: The innovation itself contributes advantage and benefits the company in the
transportation industry.
 Inimitable: The innovation in technology helps the company to minimise the cost and
further process of the company.
 Organisational: The technology innovations allows company in performing its
operations smoothly. Further such advancements led company long term competitive
advantage. Thus, help company to achieve its mission and vision effectively and
efficiently.
Evaluation of Strategy
The business strategy evaluated for the company is its effective strategy in respect of
technology which is further analysed by SAF model, as discussed below.
Suitability
Strength
Technology is considered as strength. The
company positioned its brand as largest ride
sharing technology with innovative services
worldwide. Services such as its tracking
system and others.
Weakness
The advantage sometimes does not prove
valuable. Server and the monitor systems can
be hacked if strategy is not updated with the
changing technological environment.
Opportunities
The company in the pace of technology must
increase its digitalisation. The company has
potential to upgrade technology by innovating
driverless technology and by providing
emergency transportation services like
ambulance etc.
Threat
The threat is generally caused from number of
competitors present in the market. Ola and
others may affect the competitive advantage of
company in the market.

Acceptability
The stakeholder analysis helps to determine whose interest should be taken into account
while developing and implementing strategy. In order to analysis effectively company uses
Power-Interest Grid to prioritise the stakeholders efficiently. The stakeholders are prioritised
according to high or low power and interest (Susilowati, Utomo and Setiawanta, 2017).
Accordingly Uber Company’s are prioritised below.
 High Power-High Interest: Employees and head of the company includes
directors/executives as they are considered as decision makers and their need to be
managed effectively and efficiently. Investors consist high power and high interest as
they are the ones who make investment decisions and invest in the company.
 High Power-Low Interest: Clients/Passengers or riders are also considered as important
and they need to be satisfied as they possess high power. Further they must be dealt
effectively. Government and Regulatory Authority plays important role by awarding
licenses and other functions.
 Low Power-High Interest: Drivers are categorised under this head as they possess less
power because they cannot go against the company. Also the company has lack of
connection with the drivers. Further interest is high because the drivers are required to
furnish their duties and need to be adequately informed.
 Low Power-Low Interest: Media as these need to be monitored but not required to be
furnished with excessive information.
Feasibility
The skills required to implement the strategies are as follows:-
 Analytical skills led the individual to effectively analysis the strategies and the factors
connected with it. The skill helps the company to formulate steps in respect of
implementation of strategy.
 Communication skills led to communicate strategy to employees and employers. The
strategy need to be explained and communicated properly in order to motivate employees
and employers to contribute their best towards common goals. This includes work
collaboration, verbal communication and others.
 Decisiveness refers to decision making which is required in order to achieve goals
effectively and efficiently. Decision must be made keeping in view the changing
environment.

 Leadership skills helps to motivate the subordinates to pursue the common goals which
benefits the organisation.
Financial resources
There are many methods for raising financial resources (Haynes, Nunnington and Eccles,
2017). Most of the common and effective method to raise fund is through bank loan at an agreed
rate of interest. An appropriate and sufficient security need to be given in exchange of bank loan.
Further the best way to acquire financial resources without interest is the capital or savings
provided by the owner. Such funding will increase the goodwill and also devise strong image in
the minds of stakeholders.
CONCLUSION
From the above report it is concluded that, strategy analysis need to done in order to develop
and implement effective strategies. The report examined the Uber Company by applying models
in order to analysis its internal and external factors. The report further evaluated the resources
and key competency features of the company. Further examined its strength, weakness,
opportunity and threat. Also the company specific strategy is evaluated by conducting SAF
analysis. The suitability, acceptability and feasibility of strategy is discussed above effectively.
Thus, such analysis is conducted to devise effective strategy and help the organization to achieve
its desired goals.

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