Unit 32 (Business Strategy) - Uber: Strategic Analysis Report

This report comprehensively analyzes Uber's business strategy, focusing on the impact of the macro environment and internal capabilities on its operations. It begins with an overview of Uber's mission, vision, and objectives, followed by a PESTLE analysis to assess the political, economic, social, technological, environmental, and legal factors influencing the company. The report then delves into stakeholder analysis, identifying and evaluating the interests of various internal and external stakeholders. The VRIO model is employed to assess Uber's internal environment and capabilities, examining the value, rarity, imitability, and organization of its resources. The report also utilizes a balance scorecard to monitor strategic decisions across financial, customer, internal processes, and learning & growth perspectives. Furthermore, the competitive forces within the transportation industry are evaluated using Porter's model, followed by a discussion of strategic planning models, concepts, and theories. The analysis provides insights into Uber's strategic positioning and future directions.

Unit 32 (Business Strategy)

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
LO 1.................................................................................................................................................3
P1 Impact of macro environment on the organisation and its strategies.....................................3
LO 2.................................................................................................................................................7
P2 Internal environment and the capabilities of Uber.................................................................7
LO 3.................................................................................................................................................8
P3 Evaluation of the competitive forces of transportation industry for Uber..............................8
LO 4...............................................................................................................................................11
P4 Strategic planning through models, concepts and theories..................................................11
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
Business strategy is basically considered as the outline of the actions and the decisions
which are planned by the company for reaching the goals and objectives of the business. These
focuses on the ways in which business can reach its goals and also it helps in guiding the
decision making process to hire the desired candidates and allocate the resources (Shtal and
et.al., 2018). This report will focus on business strategies of a very well-known company known
as Uber. The company deals in food delivery (Uber Eats) couriers, package delivery, freight
transportation, ride-hailing etc. Uber company is headquartered in California, US but performs
its operations in more than 70 countries across the world. The report will shed light on the
external and internal analysis of the company by analysing the influence of the internal
capabilities and the external environmental factors on the business strategies of the company.
Various models and theories will be use to analyse this impact. Porter’s model will be used to
evaluate the outcomes of the analysis. This will be followed by highlighting the strategic
planning for the organisation.
MAIN BODY
LO 1
P1 Impact of macro environment on the organisation and its strategies
Mission: The mission statement of Uber is “Transportation is as reliable as the running water,
everywhere for everyone”. This means that the company strives hard to treat the customers with
the memorable services of transportation.
Vision: The vision statement of the company is “We ignite the opportunities by setting the world
in motion”. This describes the level of the impact which the company has not only in the
transportation niche but also on the other various different life processes which directly or
indirectly depends on what the company does. This is why; the company tries to link the people
with other people as well as places by setting the world in motion. The vision statement of the
company is customer centric which means the most of the decisions of Uber are based on the
ways in which the customer receives them.
Objectives: The main objective of the company is providing a convenient, safe and inexpensive
taxi service. This helps the company in providing taxi service for everyone. The other objectives
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include providing job opportunities and dependable income for drivers which help in creating
brand loyalty and making the customers and the drivers satisfied.
The macro environment is considered as a dynamic factor which keeps changing
drastically. This affects the business and its strategies greatly as it leads to the increase in
competition, avenues and the complexity. The impact of the macro environment on the business
can be analysed by using various models such as Pestle, Porter’s 5 Force, Ansoff Matrix,
Stakeholder Analysis and many more (Tzur, 2019). Though, Uber is facing rapid success in the
transportation industry, the company is also facing various controversies related to the taxi
industry, banning in many countries, minimum wage complications etc. In order to analyse the
impact of these factors on the business and the business strategies of Uber, Pestle model can be
used.
Pestle analysis is basically a framework or a tool which is used for analysing and monitoring the
macro-environmental impacts on the company (Song, Sun and Jin, 2017).
Figure 1: PESTEL ANALYSIS OF UBER
Source: PESTEL analysis, 2021
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Political: Uber was known for its involvement in the political debates since many years. The
company is facing various types of regulations and political issues. The company is also facing
lawsuits and the also was ruled by the Californian authorities to treat its drivers as employees and
not as contractors (Kara, 2018). Also, the company is facing licensing issues which the why the
government started impounding the taxi drivers because of not holding the permits.
Economic: The Company has faced a higher growth because of its low price and great customer
service. Uber also provide various jobs to the people due to its sharing economy even in the
times of economic crisis. Due to the economic factors, the customers get attracted to the
company providing low cost services which helped the company to beat the competition.
Social: Uber managers its socially respectable and acceptable image. The customers are attracted
by the price and the quality of the customer service provided by the company which provided
them the experience of rising which was not available before. The company gained popularity in
the society which strengthens its social image (Ma and et.al., 2018). This helped the company to
stand as a tough competitor against the controversies regarding the laws, background check of
drivers, competition etc.
Technological: Uber believes to innovate itself by making use of advanced technologies. This
provided the great experiences and the smooth access to the riders and the drivers. The company
strives hard to add new and innovative features to its app and everything such as push
notifications; direction, geolocation etc. are integrated in the app.
Environmental: The environmental concerns are increasing day by day which force the
companies like Uber, Lyft etc. to adhere to the sustainability concerns regarding the rise sharing
services. The company also started a project named Uber Green which can help the customers to
get the experience of green rise.
Legal: The companies like Uber needs to comply with the laws made by the government of the
country in which it operates as if the company does not comply to the laws then it has pay
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greater fines. The company is facing various legal issues regarding the taxes. The company was
fined many times for illegal driving without permits.
Stakeholder’s Analysis
The stakeholders play a major role in the decision making and the performance of the company.
These are considered as the most important for the company as they are involved in every
process and operation of the company especially the decision-making process. These can be
internal as well as external. The internal stakeholders belong to the company and works in it
whereas the external stakeholders do not belong to the company but engage from outside the
company.
The internal stakeholders of Uber are owners, managers, employees, IT support staffs, drivers,
taxi operators etc. whereas the external stakeholders include competitors, customers, government
etc.
Figure 2: Stakeholder frameowork of Uber
Source: Uber Stakeholder Analysis, 2021
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The CEO of the company Travis Kalanick started up the service application idea of cab call and
extended it by talking to the other entrepreneurs. General direction was provided for opening the
overseas market and making a decision. The co-founder Garrett played a small role by playing as
public profile. Both of them are responsible for gaining billions of dollars from the business of
Uber (Pelzer, Frenken and Boon, 2019). There are various stakeholders who have their own
importance in the company whose analysis is as follows:
Stakeholder Interests Significance
High-3
Neutral-2
Low-1
Actions
Government or
regulatory authorities
Adhering to the local
regulations, carry out
investigations for attacks
in Uber drivers, banning
the company in various
countries like India and
France.
2 Awarding licenses, bans.
Traditional taxi
operators
These threaten the partner-
drivers of the company
and also under cry the
unfair and undercutting
practices.
2 Physical threat
Company Executives
or directors
Defend the company
through the law-suits by
standing in the trial for the
company (Urbinati and
et.al., 2018).
1 Occasionally flout the
rules.
Partner-drivers Gets the benefits from
partnerships, safety and
good payments.
2 Harassing the client,
driving out the traditional
operators from business.
Passengers Considers Uber as safe 1 Take the legal actions
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and convenient to have the
ride. Complains in case of
harassment by the drivers.
against Uber, become
cautious and can avoid the
services.
LO 2
P2 Internal environment and the capabilities of Uber
The internal environment of the company and its capabilities can be analysed by making
the use of VRIO model. This model is a framework and basically the acronym for value, rarity,
imitability and organisation. The VRIO model can be applied to Uber for analysing its internal
capabilities as follows:
Figure 3: VRIO analysis
Source: VRIO analysis, 2016
Value: This states that the company offers resources which adds value to its customers and is
able to exploit the opportunities and neutralise the competition. The financial resources and the
local food products of the company are valuable as they help the company to combat the external
threats and also to make the perceived value by the customers high. The patents of the company
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are also valuable resource as it helps in selling the products without the interference of its
competitors (Al-Sulaiti, 2020). The employees of the company are valuable and are trained
which helps in increasing the productivity.
Rare: These deals with the scarce capabilities or resources. The financial resources and the
employees of the company are rare as they cannot be easily found in other companies. The
distribution network of this company is also a rare resource as the competitors will require a
greater investment to come up with the distribution network. These cannot be possessed by all
the firms in the industry.
Imitable: These are the things which are expensive for duplicating as customers cannot find the
substitute of these things (Feng, 2017). The employees are not difficult to imitate as the other
companies can also train their employees and come up with greater opportunities of growth. The
local food products and the financial resources are very much costly to imitate which will help in
gaining competitive advantage. The distribution network of Uber is also very difficult and costly
to imitate as this was gradually developed in many years.
Organisation: These ensure that the company has organised management systems, culture,
structure for capitalizing on the capabilities and resources. Uber’s financial resources are much
organised for capturing the value and are used strategically for investing in the right places,
making use of the opportunities and to combat the threats. The distribution network of the
company is organised as this is used by the company in reaching to the customers. This why,
these are considered as the source of the sustained competitive advantage.
Resource
Capabilities
Valuable Rare Imitable Organisation Competitive
advantage
Positive
market
reputation
Yes Yes Yes Yes Long term
competitive
advantage
Leadership
team
Yes Yes No Yes Strong
competitive
advantage
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Awareness of
brand
Yes Yes No Yes Sustainable
competitive
advantage
High
customer
rating
Yes Yes Yes Yes Realized
sustainable
competitive
advantage
Balance Scorecard
This is basically a tool which helps in monitoring the strategic decisions which are taken
by the company and are based on the indicators established. This framework covers four major
aspects which include the financial, internal processes, customer and learning & growth. This
also helps in understanding the strategies of the company which are defined by the top
management. The main aim of using this is measuring the performance and the impact which it
has on achieving the business objectives. Uber also makes use of balance scorecard in the
following manner:
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Figure 4: Balance Scorecard
Source: Balance Scorecard, 2021
Financial: The Company was facing rapid success financially but is going down since a long
time. Its gross bookings are also declined along with the revenue almost by 18% every year. The
pandemic of COVID-19 also impacted the overall financial performance of the company. This is
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why; the company is not able to achieve its financial goals. There is a requirement of going
beyond the traditional financial KPIs.
Customer and stakeholder perspective: The company is much focused on satisfying its
customers which helps the company in experiencing KPIs such as overall rating, clients
satisfaction rating, surge and non surge rating, fare reviews per trip, Uber pool users, retention
measurements and many more. But the model of the company is customer centric which make
clients fall in love with the experience provided by the company from the first ride itself.
Internal Processes: Uber Company not only focuses on the metrics of conventional
performance such as improvements in quality, costs and schedules but also derive the internal
processes according to the expectations and demands of the stakeholders and the customers. This
is why, the company is bringing innovation in its internal processes by extending its services to
the micro mobility systems in scooters and bikes, introduced the ATG which is the Advanced
Technologies group which develops self-driving cars and also the food delivery facilities.
Learning and Growth perspective: The Company uses driver-based measures for tracking the
performance of the drivers. The company deactivates a driver if the performance is less than the
minimum level. Also, the company introduced the VIP status which is given to the drivers only
when they get excellent rating over a time period.
This is how, the four perspectives of the balance scorecard can be used to measure the overall
performance of the company.
LO 3
P3 Evaluation of the competitive forces of transportation industry for Uber
Uber Company, headquartered in US performs its operations in more than 600 cities in
various countries across the world and has almost 1200 employees working for the same. The
main domain of the company is car transportation service whose operation is performed through
the app which is designed for locating the location of the person and then connecting them to the
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