Uber: Analysis of Business Strategy and Competitive Advantage

This report presents a comprehensive analysis of Uber's business strategy, examining both its internal and external environments. It begins with an introduction to Uber Eats and its strategic objectives. The main body includes a detailed PESTLE and SWOT analysis to assess political, economic, social, technological, environmental, and legal factors, as well as Uber's strengths, weaknesses, opportunities, and threats. The report evaluates Uber's resources and capabilities using the VRIO model, and assesses the competitive environment using Porter's Five Forces. It identifies Uber's competitive advantages and discusses strategic objectives, including the use of the Ansoff matrix and integration models. The second part of the report critically evaluates strategic directions and recommends appropriate growth platforms and strategies. Finally, it evaluates methods for monitoring the chosen strategies to ensure success, concluding with a summary of key findings and recommendations.

Business Strategy

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
PART - A.........................................................................................................................................1
Analysis will include a detailed and considered PESTLE and SWOT of the organisation...1
and an evaluation of the organisation’s resources and capabilities........................................1
Analysis and critical evaluation of the competitive environment using Porter’s five............4
Forces model..........................................................................................................................4
Porter’s 5 forces model...........................................................................................................6
Identification and justification of the organisation’s existing and/or potential competitive
advantage................................................................................................................................9
Discuss the valid strategies and tactical objectives to achieve overall strategic objectives of
the Uber................................................................................................................................11
Ansoff matrix........................................................................................................................12
Integration Model.................................................................................................................13
PART - B.......................................................................................................................................14
Critical evaluation of the different types of strategic directions available to the organisation14
Justification and recommendation of the most appropriate growth platforms and strategies14
Evaluate ways and means by which the chosen strategies can be monitored in order to ensure
success..................................................................................................................................15
CONCLUSION..............................................................................................................................16
References:.....................................................................................................................................17
Books and Journals...............................................................................................................17

INTRODUCTION
Business strategy means the decisions and the actions which have to be taken by the
company to achieve the objectives(Gao, Gu and Liu, 2019). It is the planning which has been
done by the top management of the company so that the organisation can carry all its operations
accordingly. Developing good strategy for the organisation helps the company to sustain all the
competition and to earn profits in the long run. Making the strategy helps the companies to avoid
the mistakes and make right decisions which will work according to the dynamic nature of the
environment. Uber eats is an online food delivery company which was started in 2014 in San
Francisco, California. People can make the online orders from the application of Uber eats and
the food will be delivered to them from their favourite restaurants. This report will cover the
internal and external analysis for strategic decision making of the company and the evaluation of
strategic options of the company.
MAIN BODY
PART - A
Analysis will include a detailed and considered PESTLE and SWOT of the organisation
and an evaluation of the organisation’s resources and capabilities
PESTLE ANALYSIS
Political factors: Political factors under pestle analysis relates with the extent of government
intervention into an industry or the company within a specified industry. Uber has been facing
challenges globally from their business operations as the government of different nations are
worried about the standard and practices of sharing economy. In its initial stages Uber didn’t had
clear regulations with regards to the insurance matter as if the accident arises who will be the
responsible for the fault, driver or company itself (Solhaug and et. al., 2019). On the other hand,
there has been a bad impact over the other additional taxi services in the different nations with
the rise of Uber’s business. Uber is facing a law suits in many countries and it have been
suggested that company must treat their drive as their employees not the contractors. Uber is not
facing an issue from one but country but from multiple nations as In South Africa, government
have initiate the seizing of the Uber cars while drivers were not having licence and valid permits
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to operate. It is advisable for Uber to revise its policies and regulations to minimise the political
effect.
Economic factors: The business of Uber have affected the economy and is getting affected by
these factors as Uber have generated large amount of employment opportunities for the people
through operating in sharing economy. It has generated a job employment for large number of
driver across globe. Uber, through their unique approach have made easy for searching taxi in
busy areas and have forced the others taxi services to reduce the cost to remain in the market by
offering cost effecting taxi services across the globe (Villas‐Boas and et. al., 2020). As the
people tend to buy product which are high in quality and low in price which have made Uber to
survive even in the times of recession without getting affected by the downturn of an economy
unlike other sectors.
Social factors: Social factors determine the ability of a customer to accept the products and
services offered by the company and this seems to be true in case of Uber. Social factor are
equally important as other factors because there exists a mutual beneficial relationship between
customers and company. Uber have gained the acceptance because of the two primarily reason,
one is price and other is exceptional quality of services. The price is less as compared to other
taxi services and easily available. Uber have spread awareness through advertisement, social
media application and word of mouth due to their free rides offered initially.
Technological factors: Technology is the key driver for everything big in 21st century and
everything revolve around technology. Success of Uber is also due to the integration of
technology into their business operations. Uber have captured a large share of market of share
riding which is based on excellent technology and made easy for both drivers and customers
through their exceptional quality of services (Allen and et. al., 2020). Uber is providing several
features through their application from geo location to direction and maps, payment to finding
cabs all at one platform. Due to their technology people have easily managed to book and find a
cab event at the busiest place.
Environmental factors: With the growing concern of the environment pollution due to the
business operations of multinational business, businesses are heading towards sustainability and
low carbon foot prints. Uber operates in distinct geographical location and adhering to the
environmental law has become essential for the company. Uber have started a project called
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Uber green where riders are given an option to choose green ride. Additionally Uber have started
a cab sharing facility which is a great initiative towards low carbon emission.
Legal factors: Compliance with legal and regulatory practices is essential for each business to
conduct their business in a societal acceptable manner and avoid from prosecution and penalties.
Uber is facing a serious challenges related to tax, human resource and legal practices. Allegedly
Uber have been into controversies for low wages to their employees and California state
regulators ruled that Uber must threat there staffs as employees rather a mere contractor.
SWOT analysis of UBER
Strengths Weakness
 Uber is recognised across globe as the
leading ride sharing technology based
business. Uber have more the 40
million active users in approximately
750 cities across globe (Stroiteleva and
et. al., 2019).
 Uber has placed itself as a strong brand
in the market in more than 50 countries
and have overtaken General motors,
Honda and Ford with regards to the
brand value framework.
 Uber’s business is highly dependable
over the workforce that is driver who
ride their taxis rather than a technology
and behaviour of the drivers in
unpredictable and have ruined the
image of the company.
 Uber have been a part of numerous
controversies and scandals such as
under paid wages to workers, illegally
operating in South Africa etc.
Opportunities Threats
 With the rapid digital transformation,
Uber can expand its market share
through more innovative approach such
as voice commands in taxis or
personalised services. Uber can expand
into the market such as Denmark and
china where it does not have its
operations.
 Driverless technology and collaboration
with the other emergency services such
 With the low wages and lack of
rewards and recognition is resulting
into a losing talented workforce of
Uber. Rise of competition, poor
employee satisfaction and involvement
of company into several controversies
have damaged the brand image of Uber
(Avdeeva and et. al., 2019).
 Rising competition with their rivalry
firms and threat from the east entrant
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as ambulance have helped the Uber to
capture large market share and expand
its business into other sectors too.
into the market results to be threat for
Uber. Ola, Lyft and other small
rivalries have affected the overall
performance of the company.
Analysis and critical evaluation of the competitive environment using Porter’s five
Forces model
Internal environment are those factors which cover internal issues of an organisation
like relationship of employees and management team, organisational structure, organisational
policies and many more. It is important to analyse internal environment to identify what all
obstacles are faced by employees in conducting their work. It is also helpful to analyse the value
of resources within an organisation by using VRIO model of analysing internal environment of
business.
VRIO MODEL
VRIO model- VRIO analysis is a model which helps the company to identify the value
of their resources (Miethlich and Oldenburg, 2019). In other words it helps to identify which
resource of a company is how much valuated for that company. VRIO analysis of Uber is
explained below-
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Resources Valuable Rare Inimitable Organised
Brand Image YES NO NO NO
Distribution
Channel
YES YES NO NO
Supply chain
Management
YES YES YES NO
Manpower YES YES YES YES
Valuable-
1. Brand Image- Most of their customers knows Uber only by their brand image which they
have created with their hard work. Hence, it is valuable for them.
2. Distribution channel- Uber app in mobile phones are known as distribution channel of
Uber because customers get their benefit by using their service through their apps and
hence their Uber app is valuable for them because their most of the business is depend on
this app.
3. Supply chain management- Uber is a company which provide taxi services by booking
through online by its app. They have real time digital matching of demand and supply
which helps to fulfil the demand. Hence, their supply chain is also valuable.
4. Manpower- One of the most important asset is manpower. Employees are the reason of
company’s success and failure. Uber is a successful company; hence, their employees
work harder for their success. Therefore, manpower of Uber is valuable.
Rare-
1. Distribution channel- Their mobile is rare from others. Their other competitors uses same
way of their distribution like they also have mobile apps but the difference is in features
and coupons. Uber allow different coupons and facilities to their customers. Hence, their
distribution channel is rare.
2. Supply chain management- Their supply chain management is rare because they have
different way of whole process of analysing demand in market and then match the
demand with supply as soon as possible.
3. Manpower- The skills and talents of Uber’s employees which help them to reach at
global level are rare for them.
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Inimitable-
1. Supply chain management- Every company has different way of working, different
process to conduct, different techniques to analyse their market and many others (Vargas-
Hernández and Garcia, 2019). Uber also have different way of working. Their unique
supply chain management is inimitable which means this will not copied by any other
company.
2. Manpower- Skills and talents of employees are not copied by any other company. Hence,
their manpower is inimitable.
Organised-
1. Manpower- Uber employees have fixed time to work, have fixed place to sit, have fixed
duties and responsibilities to conduct. Hence, they are organised well.
Porter’s 5 forces model
Porter’s 5 forces model is used to analyse competitive factors and their impacts upon business
(Isabelle and et. al., 2020). Porter’s 5 forces analysis of Uber is explained below-
Figure 1 Porter’s Five Forces, 2016
Source: (Porter’s Five Forces, 2016)
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1- Threat of new entrants- It describe that how Uber affected when new companies enter
the market or industry. In context of Uber, their competitors like Ola and many others
affected their business by entering the industry with some powerful strategies like
allowing customers to book a taxi in lower prices than Uber which causes loosing of
customers for Uber. Hence, it is suggested for Uber to keep their price low and to provide
some new features or services which attracts more customers and customer will show
brand loyalty even when some new companies enter the market. Strength of this factor is
that it help the Uber to analyse how they can defend them self from new entered
companies in their industry. Here, they gain some good knowledge of adoption of
powerful strategies. Weakness of this factor is that it is costly. It include more investment
from company side to analyse about the new entered company and lowering prices of
products and services to defend them self from this new entered company.
2- Threats of Substitutes- Substitutes are those goods and services which are used in place
of each other due to their exact same features and characteristics (Juliana and Nyoman,
2019). In context of Uber, their brand image is well reputed and their logo is well defined
that their customers easily get to know the real services of Uber. Hence, this threat will
not impact much on Uber business. But it is important to advertise on timely basis and
aware customers about real services of Uber. Strength of this factor is that is helps the
company to know about substitute available so that they can aware their customers for
true services of their company. Weakness is that it is tough to find and analyse exact
substitutes of business in market. Hence, it consumes lot of time to analyse about
substitutes and their impact upon business.
3- Bargaining power of Buyers- This is the factor which states that total number of
customers and their behaviour toward the company (Kumburu, Kessy and Mbwambo,
2019). In context of Uber, they have large number of customers and their customers love
to use only their services due to coupons and discounts which they provide. But still
customers need to use best services as much as low cost which is possible. In case their
competitors provide same services in low cost then they will opt for another company’s
service rather than Uber’s service. Hence, this factor impact upon Uber. Therefore, it is
recommended that Uber must analyse market on timely basis and get to know the prices
of their competitors and offer lower prices than competitors will help them to gain
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customer loyalty. In this case their customers will not switch to another brand. Strength
of this factor is that Uber will get to know that how they can attract more customers, they
can analyse new techniques of attaining more customers. Weakness of this factor is that
focusing more segment of customers may impact upon older customers because most of
the companies ignore need and wants of older customers in attaining new customer’s
segment
4- Bargaining power of suppliers- This factor states that who are the suppliers and their
loyalty toward the company (Cuevas-Vargas and et. al., 2019). Uber drivers and their
technology handlers are their suppliers. The technology of GPS system for tracking the
taxi and time is best technology used by Uber. Hence, their technological developers and
handlers are loyal for them because Uber pay good amount to provide good technology to
their company. Hence, they are safe from this threat. Strength of this factor of porter 5
forces is that Uber get to know about another suppliers for their business and in case of
emergency supply the can contact to these suppliers. Weakness of this factor is that in
finding about suppliers sometimes company switch to another supplier who provide raw
material in fewer amounts and due to this the relationship between company and
suppliers get impacted.
5- Competitors Rivalry- This factor of Porter’s five forces states that how many and what
kind of competitors a company have in their industry (Khan, Çera and Nétek, 2019). In
context of Uber, they have tough competition with Ola, Lyft, Curb and many others
because they have some strong strategies to conduct their business like low prices,
additional discount to loyal customers, small TV screens for Backside sitters and many
others. Due to their facilities they attract most of the customers and customers like to use
their facilities in low cost. Hence, this factor impact negative upon Uber. Hence, is
suggested for Uber to keep modifying their technology to eliminate the threat of
competitor’s rivalry. Strength of competitive rivalry is that Uber get to know about the
strategies of their competitors to defend back as soon as possible. Weakness of this factor
of porter 5 forces is that is consuming lot of time to analyse competitive strategy and
when Uber analyse its competitor’s strategy then their competitors adopt another strategy.
Critically Evaluation
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From the above mentioned competitive analysis it has been observed that Uber has got
several advantages and disadvantages with regards to the above factors. As there is low threat
from the entry of the new competitors into the industry but in order to mitigate the risk from
other existing rivalries which can emerge out as a new entity with the merger and acquisition can
impact the profitability of Uber for which it has to opt for a several strategies and plans. To
mitigate the impact of the threat of new entrant, Uber can come with an innovative approach or
can lower down their prices. Apart from that porter’s five forces also makes company aware
about the availability of substitute products and services which can increase and decrease the
bargaining power of the buyer and decline the profitability and performance level of company.
Furthermore, by analysing the competition between the existing rivalry , Uber can develop a
attractive strategies and leverage their strengths to outperform the other competitors into the
industry and capture a large market share.
Identification and justification of the organisation’s existing and/or potential competitive
advantage
BOWMAN’S STRATEGY CLOCK MODEL
The Bowman's strategy clock model was structured by two famous economists Cliff
Bowman and David Faulkner (Kumburu, Kessy and Mbwambo, 2019). The purpose of the
model is to analyse the company’s position within the market compared to their competitors. It is
one of the famous marketing models that help the company like Uber to analyse its competitive
position within the industry and the market when compared with its rival companies like Ola,
Rapido etc. The model has 2 dimensions one price and another perception value to the customer.
Using the eight strategy of the model tends to highlight the aspects by which Uber can create its
position of services in the market on the basis of two dimensions. All the eight strategies are
showcased in the format of a clock.
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