Uber Business Policy: Analysis, SWOT & Recommendations

This report provides a comprehensive analysis of Uber's business policy, starting with an overview of its founding and evolution in the ride-hailing industry. It delves into Uber's current situation, past performance, strategic posture including its mission, objectives, strategies, and policies. The analysis extends to the external environment, examining natural, societal (economic, technological, political/legal, sociocultural), and task environments (threat of new entrants, power of buyers, threat of substitution, power of suppliers, rivalry among competitors, and power of other stakeholders). The internal environment is assessed through corporate structure, culture, and resources (marketing, finance, R&D, operations, HR, and information systems). A SWOT analysis is performed, leading to strategic factor identification and recommended strategies for Uber to improve its business model and maintain its competitive edge. This document is available on Desklib, a platform offering study tools and resources for students.

Running Head: UBER 0
Seminar in Business Policy
Student Details
2/26/2019

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Contents
Introduction................................................................................................................................3
I. Current Situation................................................................................................................3
A. Past Performance.........................................................................................................3
B. Strategic Posture..........................................................................................................5
1. Mission:...................................................................................................................5
2. Objectives:...............................................................................................................5
3. Strategies:.................................................................................................................5
4. Policies:....................................................................................................................5
II. External Environment........................................................................................................5
A. Natural Environment...................................................................................................5
1. Physical Resources..................................................................................................5
2. Wildlife....................................................................................................................6
3. Climate.....................................................................................................................6
B. Societal Environment..................................................................................................6
1. Economic.................................................................................................................6
2. Technological..................................................................................................................7
3. Political/Legal.................................................................................................................7
4. Sociocultural...................................................................................................................7
C. Task Environment.......................................................................................................8
1. Threat of New Entrants............................................................................................8

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2. Power of Buyers.......................................................................................................8
3. Threat of Substitution..............................................................................................8
4. Power of Suppliers...................................................................................................8
5. Rivalry among Competitors.....................................................................................9
6. Power of Other Stakeholders...................................................................................9
III. Internal Environment....................................................................................................10
A. Corporate Structure...................................................................................................10
B. Corporate Culture......................................................................................................10
C. Corporate Resources..................................................................................................11
1. Marketing...............................................................................................................11
2. Finance...................................................................................................................11
3. R&D.......................................................................................................................11
4. Operations and Logistics.......................................................................................11
5. Human Resources..................................................................................................12
6. Information Systems..............................................................................................12
IV. Strategic Factors............................................................................................................12
A. SWOT Analysis.........................................................................................................12
B. TOWS Matrix............................................................................................................14
C. Evidence of the Hierarchy of Strategies....................................................................14
D. Recommended Strategy.............................................................................................14
References................................................................................................................................16

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Introduction
Travis Kalanick, an entrepreneur founded Uber in 2009. He got this idea from his
frustration of being got stuck into traffic jams for unbearably long hours in San Francisco.
Uber has brought revolution in the taxi services all around the world which provide
customers with on demand transportation service. Uber provides the easiest way of booking
rides or cabs to the customers just by clicking on their phones. Cabs arrive at the location of
the customer in the minimum possible time. Uber has changed the entire process of booking
cabs or taxi as it provides of ease of booking rides and customers are free from the burden of
guiding their pick up locations and routes to the driver. Various companies adopted this kind
of business or start-up before also but it was the efforts and strategies of Uber’s team that
presented a huge success of Uber’s business model. Uber is considered among one of those
tech companies whose value is around $70 billion and it is present in 633 cities all around the
globe. This report discusses the business model, mission, strategies, objectives, policies,
external environment, and internal environment of Uber. At the end of the report, there would
be some recommended strategies for Uber to make improve in its business model.
I. Current Situation
Currently its competitors are gaining ground and giving tough competition to Uber due to
its involvement in lot of controversies due to not following rules in most of the cities. Despite
of all these controversies and challenges, Uber sustain its rank to 2nd in most disruptive
companies list of CNBC in 2018. Addition to its ride business, Uber has moved its business
in various different fields such as food delivery service through Uber Eats.

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A. Past Performance
Uber is going to become highest valued private company soon due to its explosive
growth and disruptive technology. Due to its involvement in various controversies, its
value decreases from $70 billion to $48 billion in 2018. To enhance company’s value,
it announced a new offer that increased its value up to $62 billion. In the starting of
2018, a Japanese conglomerate Softbank group bid for 20% share of Uber at such a
lower evaluation. According to the reports Softbank got 15% share in the company
and the remaining 5% goes to other investors. In august 2018, New York City Council
stopped new licence issues to ride-hailing services such as Uber (Hauser, 2015). Uber
was founded by two friends in 2009. The service of Uber was started with just three
cars in San Francisco in May. The simplicity and easy process for ordering a cab gave
popularity to Uber and in October 2010, company received a large amount of $1.25
million as its first major funding. 2011 was the important year in growth of Uber.
Through rise in its funding of $11 million of series A funding, it expanded its business
in Washington, Seattle, Chicago, Boston, and in overseas also such as Paris. In
December 2011, company raised $37 million in its Series funding. Company
expanded its service offering in 2012 by launching UberX. Uber rose its funding of
$3.5 million from Wealth Fund of Saudi Arabia in 2016 (Wilhelm, 2018). Uber
suffered a loss of $3.8 million in 2016 as revealed by Uber itself in April 2017. The
company had major losses from China and sold in summer of 2016. Company earned
its maximum profit from UberPool and by the 2016 year end, revenue of Uber
increased to 75% and losses increased to 5%. Company also faced several resistances
from its oppositions and government regulators in 2014. In 2017, Uber lost its
operating licence in London where company had around 40,000 registered drivers. In

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June 2018, company was again given 15 month operation licence with various
conditions (King & Newcomer, 2018).
In 2011, Uber use algorithm method for price rise according to supply and demand in
the market. In 2013, surge pricing issue again triggered in New York during a
snowstorm. But now, Uber is more committed to limit surge pricing during various
snowstorms (Blystone, 2018).
B. Strategic Posture
1. Mission: Uber’s mission is to bring opportunities by setting the world into motion. It
is working on the mission of bringing transportation for everyone and everywhere
(Uber, About Us, 2019).
2. Objectives: Objective of Uber is to provide car services to the customers so
efficiently that provide services to them at a rate cheaper than owning a car
(Skrabanek, 2018).
3. Strategies: As suggested by Uber CEO, future strategy of Uber is to include
driverless cars where people do not want to be chauffeured (Shontell, 2015).
4. Policies: To make the rides enjoyable and safe, Uber has several policies for both
rider as well as driver. These include respecting each other, providing personal space
to bot rider and driver, riders’ safety first, and feedbacks from riders for improvement
(Uber, 2019).

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II. External Environment
A. Natural Environment
1. Physical Resources
Uber is a ride-hailing start-up which lessens the dependence of people on personal
automobiles. As people start using shared rides instead of using their personal
vehicles, it will reduce the consumption of fossil fuels such as petrol and diesel. Thus,
physical resources are saved to a great extent through services of Uber (Barnard,
2016).
2. Wildlife
Ride-hailing has bright future as it promotes less usage of personal vehicles and thus
eliminates congestions from the roads. It is not only human friendly but also
beneficial for wildlife also as carbon emission decrease to a great extent (Galbraith,
2016).
3. Climate
Uber is providing huge benefits for climate also as carbon emission has reduced to a
great extent and also reduction in traffic congestion (Motherboard, 2019). Due to
reduced use of car-pooling, emissions from vehicles has reduced and thus contributing
into a better and pollution free environment (Union of Concerned Scientists, 2018).
B. Societal Environment
1. Economic
Uber operates in a sharing economy which means economy of Uber is based on
intellectual and physical resources sharing. Although, growth of Uber has increased
exponentially, but in some countries it has been banned due to its unfair competition

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against traditional taxis. It is still a topic of debate for people that whether Uber is
providing new career opportunities or taking already existing ones or is it bringing
lower pay opportunities (Frue, 2017). But one thing is clear from success of Uber is
that this market has economic potential.
2. Technological
Uber has gained huge attention over social media. People were using online platforms
to share their ride experiences. New users also took inspiration from these and want to
do the same. Customers are now searching for better and cheaper transportation
availability and Uber is fulfilling their need. Consumers book a cab with the help of
an app and app also estimates the price for the customer depending on various factors
(Frue, 2017). App of Uber is extremely important for its business and thus provides its
drivers with 4G network accessibility to provide services without disruption.
3. Political/Legal
During its initial operation, Uber faced several controversies. Uber faced charges
against advertising in France, Netherland made allegation of not having taxi licences
by its drivers, and ban in many Asian countries. Also, in taxi industry for minimum
wage laws, political discussions were happened. It required Uber to provide
documents regarding commercial licences to the government (Swot and Pestle, 2018).
4. Sociocultural
Uber provides an easy access to their customer which is most liked by them. Without
the need of any communication, customer gets his service in just few clicks at cheaper
rates. This led to huge growth in success of Uber in North America. Good ride
experiences led customers to share their view about Uber on social media and thus
increase in popularity of Uber. Increase in popularity resulted in increase in its fares

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which good for Uber but not for riders. Despite of this, customers still use Uber due to
its ease of use (Frue, 2017).
C. Task Environment
1. Threat of New Entrants
Threats of new entrants are significant for Uber as business model of Uber is
revealing and competitors can easily copy its business model without making any
huge investments. Also, there is no cost of switching for customers from Uber to
another taxi services, increase threats of new entrants further (Dudovskiy, 2018).
2. Power of Buyers
Customers of Uber are not loyal because they are very price sensitive. They easily
move from one service to another where they are getting same services at cheaper
rates. Also, there is very low or no shifting cost in this industry. Thus, bargaining
power of buyers is high for Uber (Wixsite, 2019).
3. Threat of Substitution
Uber has high threat of substitution not only from companies that are in direct
competition based on same business model but also from organizations which are in
indirect competition. Additionally, public transports are substitutes of Uber
(Dudovskiy, 2018).
4. Power of Suppliers
Entire services of Uber are dependent on suppliers as Uber does not own any vehicle.
Uber outsource both the cars and the drivers and thus suppliers overpower Uber. Uber
is also responsible for outsourced services because it affects the image of Uber brand
(Adamkasi, 2017).

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5. Rivalry among Competitors
Rivalry extent is high in ride-hailing industry. After establishment of Uber in 2009,
many ride-hailing competitors emerged such as Juno and Lyft to compete with Uber.
But still Uber has maintained its image of leader in this industry.
Source: (Frue, 2017)
6. Power of Other Stakeholders
Other stakeholders such as government and regulatory bodies, executives of company,
clients, partner drivers, and traditional taxi operators are some other stakeholders
which affect the performance of Uber to a great extent (Binhammer, 2017).
EFAS Analysis of Uber
External Factors Rating
Physical Resource Low
Wildlife Low
Climate Low
Economic High
Technological High
Political/Legal High
Sociocultural Moderate
Threat of New Entrants Moderate
Power of Buyers High
Power of Suppliers Low
Threat of Substitution Moderate
Power of Other Stakeholders Moderate
Rivalry Among Competitors Moderate

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III. Internal Environment
A. Corporate Structure
Corporate structure of Uber is highly hierarchical. Co-founder and former CEO of
Uber, Travis Kalanick is micromanaging the entire organization. Due to his lack of
leadership skills, there various issues in organization such as workplace
discrimination, bullying, sexual harassment, and many more (Dudovskiy, Uber
Organizational Structure, 2018). These scandals led to resigning of Kalanick from the
CEO post and new CEO appointed for Uber in 2017, Dara Khosrowshahi. Below
figure shows the corporate structure of Uber:
Source: (Dudovskiy, Uber Organizational Structure, 2018)
B. Corporate Culture
A large number of scandals at Uber resulted in resignation of Kalanick from the post
of CEO and revealed the poor culture of the organization. One of its former engineers
revealed her experience in the company which states lacking of advancement

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opportunities, dissatisfaction from senior leadership, and hostile work environment
(Impraise, 2019).
C. Corporate Resources
1. Marketing
Marketing strategy of Uber divides its market into segments according to the
geographic and demographic variables which helped the company in deciding prices
for the services accordingly (Bhasin, 2019). This strategy suggested urban areas as the
target market for Uber. Marketing strategy of Uber involves referrals, early adopter
advocacy, reviews, and partnership.
2. Finance
Each consecutive year, Uber is growing at the rate of 40%. Financial report of 2015
reflected the gross profit of $3.63 billion in the first half of the year. Also, some of the
reports show loss to the company (Iqbal, 2018).
3. R&D
Uber has been conducting much research and development in past years to provide
self-driving cars to its customers with the help of experiments carried out by its
Advanced Technologies Group (Budds, 2017).
4. Operations and Logistics
Services of Uber involve three steps: requesting the ride, ride, and pay and go. Its
operations are customer-centric and highly sophisticated due to advanced capabilities
and functions of its app. Inbound logistics of Uber is internet-based and limited to
hardware and office equipment (Dudovskiy, Uber Value Chain Analysis, 2018).

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5. Human Resources
Overlooking the importance of HR is the biggest mistake made by Uber. This resulted
in various allegations of sexual harassment on Uber at San Francisco. Its main issue
was that the role of HR here is to just recruit talent but now Uber has realised this and
started considering the essential functions of HR (Lawrence, 2017).
6. Information Systems
Information Systems at Uber allows the user to book a cab from his location using the
geological technology and shares his location with the driver. It is integrating with the
method of payment according to the users’ convenience (Abrosimova, 2014).
IFAS Analysis for Uber
Internal Factor Rating
Corporate Structure Poor
Corporate Culture Poor
Marketing Finance High
R&D High
Operations & Logistics Moderate
Human Resources Poor
Information Systems Moderate
IV. Strategic Factors
A. SWOT Analysis
SWOT analysis provides the strengths, weakness, opportunities, and threats to Uber.
Strength:
 A big and reputed brand
 Control over major market share
 Customer-centric

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 Has huge number of vehicles without owning a single one
 No obligation towards drivers
 Competitors are very few
Weakness:
 Drivers are not the employees of Uber
 Management control is low
 Public misunderstood drivers as company employees
 Affect the brand image of Uber
 Services of Uber are based on trust
Opportunities:
 Self-driving Vehicles
 Air conveyance
 Enhancement in brand image through efficient vehicle incentives and selection
of drivers.
 Expansion of services to medium sized cities
Threats:
 Legal issues with employees such as legal case of 2015 and compensation for
vehicle expenses
 More regulations in new technologies
 Increase in fuel expenses

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B. TOWS Matrix
Strength-Opportunity Strength-Threats
 Uber can utilise its strength to
maximise opportunities for it.
 Uber is a big brand which results
in helping it to expand its business
in smaller cities and in air
transportation too.
 Uber can utilise its strengths to
minimise the threats to it.
 Uber’s customer centric approach
will not affect increase in fuel
price hike much.
Weakness-Opportunity Weakness-Threats
 Uber can minimise its weaknesses
by taking advantages from
opportunities.
 Self- driving vehicles will reduce
the problem of contractors or
drivers.
 Uber can develop strategies that
minimise weaknesses and avoid
threats.
 Uber should restructure its
management process that works
more effectively and co-ordinately
with contractors or drivers. This
will avoid help in avoiding legal
issues with employees.
C. Evidence of the Hierarchy of Strategies
Source: (Baron, 2018)
D. Recommended Strategy
From the above discussion, below are some strategic recommendations for Uber

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 Increase its investment in establishing good working relationships with local
and overseas governments because it had several issues related to the laws and
faced huge fines.
 Uber should increase its investment in local taxi service providers to inspire
them to join platform provided by Uber through various incentives.
Conclusion
Therefore, it can be concluded that, Uber is the biggest and an international brand in ride-
hailing industry. But, due to lack of proper and effective leadership, organization is facing
several issues and a huge losses and fines in so many years. Hence, to sustain in this market
and to remain progressive, there is need of improvements in strategies, leadership, and
management of the organization.

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Abrosimova, K. (2014). Building an App Like Uber: What Is the Uber App Made From?
Retrieved from https://medium.com/yalantis-mobile/uber-underlying-technologies-
and-how-it-actually-works-526f55b37c6f
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https://www.porteranalysis.com/porters-five-forces-model-of-uber/
Barnard, M. (2016). Uber Not So Climate Friendly? Retrieved from
https://cleantechnica.com/2016/01/14/uber-not-climate-friendly/
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Blystone, D. (2018). The Story of Uber. Retrieved from
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Budds, D. (2017). Inside The R&D Lab Where Uber Is Building “The City Of The Future”.
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methodology.net/uber-porters-five-forces-analysis-3/

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one

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