Analyzing Uber's Business Model: An Entrepreneurial Case Study

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Innovation and Entrepreneurship Assessment
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Table of Contents
Introduction......................................................................................................................................3
2. External Analysis.........................................................................................................................3
2.1 Macro environment analysis......................................................................................................3
2.2 Competitor Analysis: Analysis of the other businesses in the industry the organization
competes with,and how intense is the competition.........................................................................5
2.3. Customer Analysis: Analysis of the customer profile, needs and expectations, along with
an understanding of their unfulfilled needs and expectations in the market...................................6
3. Internal Analysis...................................................................................................................6
3.1. Organizational analysis:............................................................................................................6
3.2. SWOT analysis:........................................................................................................................7
4. Recommendation:.................................................................................................................9
Conclusion.....................................................................................................................................11
References......................................................................................................................................12
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Introduction
Innovations and entrepreneurship are the intrinsic key in order to build a successful commercial
business. With the desire to commence a successful business it is important to relate the two
concepts that is carrying business activities with never stopping exploring with the new and
existing products and services. Innovation is the process in which the new products and services
are launched in the market maintaining the requirement and suitability of the consumers. Thus, it
also includes the modification of the existing products and services as per request of the potential
customer in the market. The main objective of innovation is continuous renew, expand and
growth of an enterprise with new and advanced products. With the passage of time passes the
demand for the updated products arises within the customer, hence, if not fulfil the customer will
ultimately change its market and start with the fresh one. Therefore, in order to maintain the
stability of the business and its perpetual succession in the market, an enterprise is required to
adopt the advanced technologies and innovations in order to create a fresh new products and
services for their potential customers in the market. In order to pursue new and innovative
methods of production a company need to introduce many strategies and methods that will be
discussed below.
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2. External Analysis
2.1 Macro environment analysis
The Macro environment analysis consist of PESTLE analysis that is the acronym of politics,
environment, social, technology, legal and economical issues that affects the operations in an
organization (Shtal et al., 2018). Absolute disputing the highest demand in the market of
transport sector Uber Australia is one of the leading organizations. Under laid is the PESTLE
analysis depending on the operations of the country affecting Uber Australia.
PESTLE Analysis
Factors Descriptions
Political Due the free economic system applied in the Australia, Uber Australia
enjoys its business established in a much-stabilized manner.
Environmental Australia is a sensitive citizen based country related to the socio-
environmental factors. Focussing on the above factor Uber Australia
tries to reduce its carbon footmark while rolling out the green initiatives
by providing the eco friendly rides
Social In Australia, the criminal rates are relatively high especially for the
women. Due to this factor, Uber Australia is dynamically trusted as a
tracking rides and security provider. Thus the rate of travelling is
relatively low which enable the low class people to enjoy a better
transportation method while travelling
Technological Before Uber was launched in Australia, there was no such kind of public
sharing transportation system (Sridhar et al., 2016). Thus, this leads to
massive gain in footing owing to the overall economic demand of Uber
Australia. Due to this, the low income group can easily afford travelling
through this mode of transportation
Legal Uber Australia is legally generated a great beneficial to the overall local
community. Therefore, because of Uber Australia witnessed creation of
the new industries with new laws and regulations in the transportation
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sector
Economical The public transportation in the Australia is very expensive which leads
to advantages in the operation of Uber Australia in the transportation
market (Ayala, 2016). Moreover, the cost that is the cost incurred in
licensing part is relatively low which helps to achieve their objective
easily
Table 1: PESTLE Analysis
(Source: Created by Author)
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2.2 Competitor Analysis: Analysis of the other businesses in the industry the
organization competes with,and how intense is the competition.
The organization Uber is a transportation company which has spread its branches worldwide.
The headquarter of the company is situated at San Francisco, California (Berry & Berry, 2018).
It mainly deals with services concerned with sharing of rides, delivery of food and even bicycle
sharing system. Presently over 785 metropolitan cities all over the world have been providing
Uber facilities. The various competitors of Uber vary from Lyft, DidiChuxing, Grab and many
more. Uber and Lyft comprise almost 98% of the market share of Australia and its worth is 15.1
billion US dollar. Didi is another company which has the capability to dominate Uber in terms of
resources to enable ride sharing among the public. Didi holds a comparative share in companies
of Ola, Lyft and Grab. There is a significant competition rate among these companies. As Uber
started its functions by investing large capital, the other entrants are investing lesser capital to
develop themselves. The numerous issues which came up regarding Uber’s operations, its
reputation is at stake (Carayannis, Sindakis & Walter, 2015). Also the technologies initiated by
Uber are now being copied by others. There have been more companies dealing with travelling
business. Though Uber has invested profusely and established a strong foundation for its
business development, it needs to lower the operation cost as the bargaining power of the
consumers have risen to an enormous level.
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2.3. Customer Analysis: Analysis of the customer profile, needs and expectations, along
with an understanding of their unfulfilled needs and expectations in the market.
Uber has tied up with numerous corporate companies like Qantas and Westpac and is further
looking forward to crack more deals with other Australian companies. Qantas frequent flyer
members are going to earn more points while they ensure in booking trips of passengers with
Uber as well (Jensen et al., 2016). Uber tries to create a unique ride experience for its customers.
It believes in developing a harmonious relationship between the passengers and the drivers and
maintain transparency about the company’s working protocols. The brand has mostly made the
passengers privy with the digital mode of travelling with innovative navigation facilities and
easy information access. There have been several allegations regarding the functioning of the
company from its fellow passengers, like fare has been deducted from the customer’s account
without providing service and drivers have stopped in a strange location and tried assault. Other
feedbacks provided by customers for Uber are to update with other payment options, or drivers
20 minutes away should cancel the ride (Teece, Peteraf & Leih, 2016). Other segments where the
company can expand their operations are Rockhampton, Shepparton and many more.
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3. Internal Analysis
3.1. Organizational analysis:
Analysis of the internal capabilities of the organization that gives it a competitive edge in the
current market
Uber Technologies Inc. is a rapidly growing company in the sector of transportation network The
organization is headquartered in San Francisco, California. The organization offers innovative
services such as ridesharing, food delivery, bicycle-sharing and also ride service hailing
(Uber.com, 2019). The various platforms of the organization can be accessed through mobile
apps or websites. Uberisation refers to the changes in the industries that have been resulted due
to the operations of Uber in the sharing economy and this term also signifies the prominent
impact of Uber on the economy. The organization helps its users by taking them to the places
they want while ensuring their safety and security which is the top priority of the company.
Service innovation
Uber, Australia have introduced various services for adding value to its customers as well as the
employees. Some examples of the innovations are listed below:
The clear navigation system of Uber cabs helps the customers to reach their destination easily
and earlier (Uber.com, 2019).
The user friendly and simple to use mobile application of the organization enables it customers
in searching rides nearby and also helps the drivers identifying the location of the customers
easily.
The option of cashless payments helps the customers to get into their destinations whenever and
wherever.
The mobile app also featured with a option of ride tracking during a ride that assures the
customers about their security. The riders can also reach the specially trained team of Uber
anytime during their ride.
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With Uber Eats people can order food from their favorite restaurants anytime anywhere and also
receives it faster by the nearby delivery partners who are also responsible for maintaining the
quality of the food (Uber.com, 2019).
The organization Uber, Australia is also efficient in maintaining their relationship with their
drivers and other employees, suppliers and customers. It offers reward schemes to the employees
and occasional discounts to the customers. The organization has a good knowledge of market
and the competitors. The quality of the technological equipments and systems have also
improved and being improved by a group of researchers and engineers so that better experience
can be provided to the customers. Increasing customer satisfaction of any organization is the
main drive force in the achievement of competitive advantage. These all factors provide the
organization a competitive advantage in the industry (Kumar & Pansari 2016).
3.2. SWOT analysis:
Internal environment of any organization can be analyzed by SWOT analysis (Gürel & Tat,
2017). The SWOT analysis of Uber, Australia is done in the table below for identification of area
of innovations of the organization.
Strengths
 Well recognition of brand name
assures its riders.
 Verified cars and drivers.
 High standard of service.
 Lesser responsibility toward the
drivers as there is no full time
drivers.
 Less operational cost.
 Less presence of competitors.
 Cashless payment option for the
riders (Uber.com, 2019).
Weaknesses
 The idea of online cab and food order
is getting easily imitated and chance
of competition is rising.
 The relationship between the drivers
and the organization is not very
strong hence loyalty is low.
 As per the operational cost of the
vehicles, the drivers are not paid
adequately.
 The privacy concern of the customers
is hampered as the locations are
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tracked.
Opportunities
 High prices of the existing cab
companies and long waiting time.
 New market opportunity with
greater demand of online cab
services.
 Enhancement in the number of
Uber drivers and increased rate of
investment.
 Usage of electric cars can decrease
the operational cost and elevate the
profit level.
Threats
 Declining happiness level of the
drivers with the low profit margin can
hamper reputation.
 Reduction of prices can be resulted
from price wars between competitors.
 Enhancement in self driving cars can
hamper the business of Uber.
 The overvaluation can result in
enhancement of investment in
markets having less demand of
services.
Table 2: SWOT Analysis
(Source: Created by Author)
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4. Recommendation:
Improvement to increase the loyalty among drivers: As identified in the SWOT analysis of
Uber, the organization has failed in maintaining a good relationship with its drivers. The
organization does not have adequate responsibility toward the drivers. This directly impact on
the reputation of the company with a declining loyalty of the drivers toward the organization. So,
it is recommended that the organization must attract the drivers by implementing some attractive
reward systems or benefits like bonuses, timely compensation and incentive schemes. It will also
prevent the drivers to divert to the competitors. By making use of new electric cabs the
operational cost can be reduced to a certain level that can also attract the drivers to engage with
the company as the profit margin also increases with this. The organization can expand its
business to suburban regions of Australia that will reinforce the organization to recruit more
drivers and make use of the available drivers efficiently. This will help the organization in
increasing the happiness level of the drivers as well as to penetrate those areas or locations that
are lack of any competitors.
Providing a good riding experience to the customers:
By making the riding experience of the customers more enjoyable, the organization can achieve
competitive advantage (Krajňáková, Navikaitė & Navickas, 2015). This can be done by
providing free wifi in the Uber cabs. This can encourage the riders for spending more time in the
cabs. This feature will mainly attract the young riders. The environment inside the cab can be
made more enjoyable by developing music systems in the cab that can selectively play musics of
customers’ choice. Providing better training and development program to the drivers can
decrease the waiting time of the customers for cabs. This approach will help the drivers by
eliminating their confusions as well as improve the riding experience of the customers.
Nowadays people are more attracted toward chat systems. By availing a chat option with the
riders in the mobile app of the Uber will help the customers to have enough evidence regarding
any issue during their ride. It will also facilitate in decreasing the waiting time as sometimes
listening over phone in some locations is impaired.
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Improvements in Customer support team: Improvements in Customer relationship management
can help any organization to enhance the level of customer satisfaction (Hassan, Nawaz, Lashari
& Zafar, 2015). Uber, Australia can make improvements in their customer service operation by
giving adequate and proper training to the customer service executives on clearing the doubts of
the customers, answering the questions in lesser time and accurately. There must be a tracking
option of the last ride that have any customer taken in a particular day so that any customer can
get back those things that they have mistakenly left in the car. The Customer support executives
can also help the customers by providing information about the same so that the left belongings
can be returned to the rider as soon as possible.
Improving the security and safety concern of riders:
To increase the security concern inside the Uber cabs, another recommendation that can be made
is the installation of CCTV cameras. This would help the customers in arguing over any event
that have taken place during the ride and also help the organization in taking steps against the
disruptive drivers.
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