Business Strategy Report: Uber's Macro and Internal Environment

This report provides a comprehensive analysis of Uber's business strategy, examining both its macro and internal environments. The report begins with an introduction to Uber and its position in the transportation industry, followed by an analysis of the macro environment using PESTLE and stakeholder analysis frameworks. It then delves into the internal environment and capabilities of Uber, utilizing the VRIO framework and McKinsey's 7S model to assess its resources, competitive advantages, and organizational structure. The report further explores Porter's five forces model to understand the competitive landscape and concludes with a discussion on strategic planning and the application of various theories and models. The analysis provides insights into Uber's strengths, weaknesses, opportunities, and threats, offering a holistic view of its strategic position and future prospects.

BUSINESS STRATEGY

TABLE OF CONTENT
INTRODUCTION...........................................................................................................................3
LO 1.................................................................................................................................................3
Impact and influence of macro environment...............................................................................3
LO 2.................................................................................................................................................6
Internal environment and capabilities..........................................................................................6
LO 3.................................................................................................................................................9
Porter’s five forces model............................................................................................................9
LO 4...............................................................................................................................................11
Theories, models, concepts and strategic planning...................................................................11
CONCLUSION..............................................................................................................................15
REFERENCES..............................................................................................................................16

INTRODUCTION
Business strategies help businesses in the market to have a vision and mission without
risks and smooth long term goals. The competition in the market is increasing therefore making
the right decisions in the market is essential for the businesses. Uber was established in 2009 and
is having its headquarters in California, US. The company is serving over 900 metropolitan areas
in 69 countries. This industry belongs from the transportation industry and is public type
organization and was formerly known as Ubercab from 2009 to 2011. There are different types
of strategies which are going to be analysed and then a plan is going to be presented in the
further report. Different analyses like internal, external factor and competitive analysis so that
there can be a strong strategic plan which can be made so that the organization has a simple and
right sense of direction to operate into.
LO 1
Impact and influence of macro environment
Uber is having a lot of competitors coming up in the market like Ola, Lyft, local taxi, etc.
therefore it is very important for the organization to analyse the market effectively so that there
are going to be less factors which are going to impact in the future (Arieftiara, Utama and
Wardhani, 2017). To reduce the risks and external impact on the organization the company will
have to analyse and the report is going to discuss with the help of two frameworks which being
PESTLE and stakeholder analysis.
PESTLE
 Political Factors
There are a lot of controversies which are present in the market for Uber which have to be
worked upon so that there are going to be effective working. There were no clean regulations in
the organization and when in case of accidents then who has to be blamed for it, the drive or
company. There are minimum wages for employees which laws for this industry were also not
well maintained and followed. In countries like South Africa the Uber cabs were seized since the
drivers did not have a permit of taxi. The traditional services of taxi are getting affected and the

government as well will have to make new commandments for these services so that this
business operates effectively in the countries (PESTLE Analysis of Uber, 2017).
 Economic Factors
There is large number of people in different countries which are getting employed which is a
great factor. The company is providing the customers with travelling facilities at low cost which
is making the functioning and local drivers lose their jobs which can be a threat as well. The
products and services of the organization are cheap which is why the company is being able to
grow in the market so effectively and efficiently. To compete with the existing the company
made sure that the products and services of the organization are going to be lower so that the
organization will be able to operate effectively in the market.
 Social Factors
Uber focuses on the satisfaction of the customers and that make the organization improve
from time to time so that there is going to be better functioning (Chen and Keung, 2019). There
are smart phones which are being used by the organization so that there is door to door drop
which is going to be present for the customers which is going to make the organization have
more customers. There are social media, ads, etc platforms which are being used by the
organization so that the customers are aware of the changes and due to it s availability as well
there is a growth which is visible.
 Technological Factors
In the 21st century there are a lot of developments which have taken place in technology and
this is one of them which Uber takes advantage of for the satisfaction of the customers.
Customers want to have better experience and innovative ideas in the market so that there are
going to be better functioning (Peris-Ortiz and Ferreira, 2017). Uber has all the latest updates on
technology so that the customers can have better experience and it is also a quick developer in
the market which is making the company have a strong base for themselves in the market.
 Legal Factors

There are huge fines which the organization which is in transportation industry will have to
pay if they are not following the laws which are meant to be abided. The employees of the
organization are complaining about the low wages which are being paid to them for the services
they are providing to the customers of the organization. There is no improvement on this factor
which makes the productivity and services of the organization fall in the market. In France the
Uber cabs were fined because there was unlawful driving without appropriate grants.
 Environmental Factors
The fuel is being consumed a lot in this industry which is not friendly to the environment
which needs to be monitored. People take public transport so that there are going to be less
traffic and due to Uber cabs and other competitors there are more congestion which can be
observed (Hsieh, Ma and Novoselov, 2019). Uber green is a new measure which the organization
has taken so that they can control the functioning of the organization which is going to make the
reputation and brand image of the organization improve in the market as well.
Stakeholder analysis
Figure 1: Stakeholder analysis
(Source: What is stakeholder analysis, 2020)
From the above diagram it can be concluded that there are four stages in stakeholder
analyses which are keep satisfied, manage closely, monitor and keep informed. Uber is having

managed closely stakeholders in the organization because there is a lot of improvement with time
which the organization will have to take. With experience there are a lot of changes which have
already taken place in the company which have to be well maintained so that there are higher
results. The stakeholders of Uber are having high power as well as interest in the organization.
The company is not having a lot of experience in the market which is why the stakeholders will
have to analyse the market so that there are right decisions which can be taken so that there is
going to be higher performance and more customers can get attracted in the company.
Stakeholders are always informed about any idea or problems which rise in the company so that
there are right decisions which can be taken by the organization which is going to not impact the
company on a large scale later (Ajagbe and et.al., 2016). After a lot of analyses the stakeholders
comes to a decision which is discussed with all the associates of the company so that the changes
which come in the organization are going to be worked upon and the organization will be able to
operate effectively in the market for a better functioning.
LO 2
Internal environment and capabilities
There are a lot of capabilities which Uber is having in the market and they can take an
advantage of a lot of factors as well but for the there has to be good analyses of the internal
factors as well. The further report is going to discuss the internal environment with the help of
two frameworks which are VRIO and McKinsey 7S model.
VRIO
This framework helps the businesses to understand all the competitive resources which
can make the company increase their market share. Uber uses this framework to understand the
productivity and make the further decisions effectively on this factor so that the company can
have higher growth in market.
Resources Valuable Rare Inimitable Organization
Human resource  
Technology    

Intellectual property   
Capital  
 Valuable
These resources are those resources which add value to the company so that the organization
will be able to have higher profitability. The customers are going to have higher satisfaction level
and the company is going to have loyal of them as well. Quality of the products and services are
going to be maintained and the organization will be able to get in changes as well since there is
going to be good opportunities for the organization in the market. Like all the resources are
valuable in Uber which is why the company is being able to develop and grow so fast in this
industry.
 Rare
This increases the monopoly in the market so that the organization will be able to have
unique identity for them in the market. The brand value increases in the market when there are
rare resources which are being used in the organization (Alstete and Beutell, 2016). The drivers
of Uber are well trained so that they can use the technology to be able to reach the customers on
time and make them have a better experience in the market. Technology and intellectual property
of Uber is rare in nature since the competitors in the market are not able to get in these factors
effectively in the company.
 Inimitable
The resources and products of the organization are inimitable in nature which is all the
competitors are using the same resources so that they can compete with Uber effectively. Human
resource technology and intellectual property are all inimitable in nature so that there is not
going to be good for Uber. The company will have to improve and get in unique identity which
other organizations will not be able to copy by getting patent rights and other acts together.
 Organization
It is important to understand the importance of strategies and combinations of resources so
that the goals and targets of the organization can be achieved (Liu and et.al., 2020). There are a
lot of advantages which a business can have in the market but there has to be good method to be

able to achieve them which Uber is working for them in order to be able to operate effectively in
the market.
McKinsey’s 7S
This is a consultant and strategies analyses framework which was developed by
McKinsey in 1970 and the further report is going to discuss these factors in detail.
 Strategy
It is very important for all the businesses in the market to have an effective plan for them so
that they will be able to operate efficiently in the market. This is going to make the organization
get a competitive advantage as well as a strong direction to be able to achieve the goals and
objectives which is present in Uber. The company has developed a strong plan and decided the
strategies which have to be used in order to be able to function effectively and efficiently in the
market.
 Structure
Uber has been able to have a structure according to the teams they have so that the
communication is going to be easier and the organization will be able to function smoother in the
market (Chi, Zhao and Li, 2016). The activities are divided for the employees so that they are not
working under pressure and will be able to give in their best to the customers who are going to
impact on the brand image and reputation of Uber in the market.
 Systems
There are right measures which Uber is taking in order to be able to have a system in the
organization. According to the hours the company is paying the employees and the employees
who are working more than the fixed hours are being rewarded for the extra efforts they are
putting in so that there is going to be effective working.
 Shared values
All the working businesses have a value and ethic which they follow so that there is going to
be good working and the organization will be able to operate effectively in the market. This

makes the internal environment for the workforce healthier and safe to operate and increases the
productivity of the organization overall as well.
 Style
The leadership style which is handling the employees of the organization has to be strong so
that there is going to be effective working which would be present in the organization.
Employees of Uber have to be handled well because they are being paid low wages and the
turnover is going to increase which is not a good factor for the company therefore using the right
style and measures taken have to be accordingly.
 Staff
The employees of Uber are not well satisfied which has to be improved and has to be given
the right wages as well (Cardoni, Kiseleva and Lombardi, 2020). There are rewards which are a
good motivator in the organization but the company will have to get in more improvement for
the workforce which is going to make the demands of the customers be matched effectively.
 Skills
To make the skills of the employees of Uber increase there are training and awareness for the
driver so that they can use the technology effectively. This creates a good impression on the
customers as well and their satisfaction level increases which Uber is focusing on so that there is
going to be better functioning which would be present.
LO 3
Porter’s five forces model
Porter’s five forces tool or model is currently used by most businesses for deeply
analyzing the existing market competition. This tool was developed in year 1979 by Michael
Porter (Hennart, 2019). The main purpose of Mr. Porter behind formulating this tool is to know
different competitive forces of market place. This framework says that, there are five competitive
forces exist in the market place which can highly affect to Uber’s business environment. These
all five forces of Porter model have been mentioned below;

Bargaining power of suppliers (Low)
Currently bargaining power of supplier is low for the company, because Uber has no
requirement of raw-material to produce or develop any product to customers. It just requires
vehicles to provide its different cab services. In this situation, there are lots of vehicle and
automobile companies exists in market place which can provide different types of vehicles to
Uber on favourable prices. The company has main requirement of cars, so it can simply buy cars
through Nissan, Toyota, BMW, Audi, Land Rover, Lotus, Mini etc. These all car manufacturing
companies are basically suppliers of Uber, so that currently bargaining power of suppliers of is
low.
Bargaining power of customers (High)
Bargaining power of customers is high to Uber, because currently there are lots of cab
and taxi companies exists in market place, so that they not have only option of Uber to travel one
place to another (Huimei and Yadi, 2018). So due to high competition in cab industry, Uber get
influenced to do price negotiation on the basis of customers’ terms and conditions. That’s why
currently company has used competitive-based pricing strategy to provide its different products
and services to customers on something cheap rates than its competitors. Top-level management
at Uber is completely aware about this fact that, a customer always looks for appropriate cab
services with cheap rates, so that the company have to develop its services according to
customers’ needs and demand. However, still the bargaining power of customers in very high.
Threat of substitute products (High)
Threat of substitute products is high to company, because currently there are lots of
options available to customers for travelling one place to another. For example; not all people
take cabs to travel or ride, because some of people uses air transportation, some uses sea
transportation. There is bus transportation, metro services, etc. are major substitute services of
Uber, so that people use these all services in their daily lives. This is the main reason that, threat
of substitute product is higher to this venture.
Potential of new entrants into the industry (Low)

This competitive force of model is low to company, because currently there is already has
very high and tough competition in the transportation sector (Amakobe, 2019). Currently
thousands of ventures already worked in this sector to generate huge profit margins in market
place. That’s why no one can dare to start its business at the large scale in this industry, because
the existing market competition will defiantly negatively affect to that new entrant. These all-
mentioned factors are enough to show that, the potential of new entrants into the sector or
industry is low to Uber.
Competition in the industry (High)
In this dynamic and modern world, there are thousands of businesses simply available in
mare place which provides transportation services to customers. In this situation, currently
competition in the industry is very higher. Many local cab companies and ventures, local bus
transportation, metros etc. gives very tough competition to Uber. Currently many hotels and
destinations also started to run their own vehicles to reach their customers from one place to
another. These are some major factors behind higher competition in this industry. Currently
Addison Lee, Delta Taxis, ComCab and City Taxis are major competitors of Uber in the United
Kingdom. These all ventures also provide those all services which has provided by Uber in
market place.
TOWS framework
TOWS analysis is a helpful tool to analyse a company’s key internal factors. Tool refers
four key factors that has discussed below;
Strengths (S): The company has positive
brand in market place.
Opportunities (O): The company has
opportunity to effectively promote its brand
by using digital marketing.
Threats (T): It has threat of increasing
market competition.
Weaknesses (W): Recently company was
started its new subsidiary, named; Uber eats,
but it has not gained appropriate results in
Asian countries.

SO Strategies: The company choose strategy
of social media for effectively increasing its
brand image.
ST Strategies: The company should use its
brand image for gaining huge competitive
advantage in market place.
WO Strategies: It should again start its Uber
eats food delivery services by using digital
marketing to promote new service
effectively.
WT Strategies: Uber should use product
differentiation strategy to gain excellent
outcomes in smarket place.
LO 4
Theories, models, concepts and strategic planning
A productive strategic management plan has been created below for Uber company by
using different theories, concepts and models (Harmon and Castro-Leon, 2018). Top-level
management of Uber have to adopt and implement those all business strategies within its
workplace which has mentioned in this management plan. The main purpose behind formulating
this plan is to enable this cab company for gaining excellent profit margins and huge competitive
advantage in market place. Different theories and models of strategic management plan has
systematically described below in this strategic management plan;
Aim: For gaining market share more than 12% in transportation industry.
SMART Objectives
 To attract maximum customers by providing quality services.
 For improve own supply chain to deliver own services to customers on time.
Situational Analysis
For analysing internal business situations, SWOT analytical tool is used below;
SWOT framework
Strengths: Uber has widely expanded business operations, because its business expansion
strategy is very productive.
Weaknesses: Many times, company’s cab drivers not reach customer’s location on time due to
poor navigation system.
Opportunities: Currently company has an opportunity to attract many new customers by