Business Strategy Report: Macro Environment and Uber's Analysis

This report provides a comprehensive business strategy analysis of Uber. It begins with an introduction to business strategy and an overview of Uber. The main body of the report examines the influence of the macro environment on Uber, utilizing PESTLE analysis and stakeholder analysis. It then delves into Uber's internal environment and capabilities using VRIO and value chain analyses. Furthermore, the report applies Porter's Five Forces model to assess the competitive landscape and concludes by exploring the strategic directions available to Uber, drawing on various theories and frameworks. The report aims to understand Uber's position in the market, its competitive advantages, and potential future strategies.

BUSINESS
STRATEGY

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY - ...............................................................................................................................3
P1.Influence of Macro environment on UBER and its strategies - .............................................3
P2. Internal Environment and capabilities of UBER -.................................................................5
P3. Porter's Five Forces Model -..................................................................................................8
P4. Strategic Directions available to Uber...................................................................................9
CONCLUSION .............................................................................................................................12
REFERENCES................................................................................................................................1

INTRODUCTION
Business Strategy refers to the union of decisions taken and course of actions executed by the
organization to accomplish its goals and secure a competing position in the market. In other
words, business strategy is blueprint that management of the organization implements to have
competitive position, carry its operations, please customers and achieve desired outcomes of the
business.
Uber Technologies, Inc. was founded by Garrett Camp and Travis Kalanick in 2009, is
headquartered in San Francisco, California, US. It provides various services such as vehicles on
hire, package delivery, couriers, food delivery, transportation, freight by doing partnership with
Lime, motorized scooter and electric bicycle rental. Uber have its operations globally and is the
one of the largest provider in the gig economy.
This report evaluates the impacts that macro environment has on Uber and its Business Strategy,
determine Uber's internal environment and capabilities and analyse the UK market sector and
apply different models. Last but not the least, this report applies various theories, concepts
framework to understand and interpret the strategic directions available to Uber.
MAIN BODY -
P1.Influence of Macro environment on UBER and its strategies -
Pestle Analysis -
Political Factor – Uber faced many political controversy because it did not clearly define in its
rules and regulations initial stage. Different governments regulates different laws in different
countries cause the problems like as there were political discussions regarding minimum wage
laws and whether Uber abide by these rules or not.
Economical Factor – Every business gets affected by the economic factors too, sharing
economy has produced employment at large scale (Perera, 2017). Uber has provided large no. of
jobs to various individuals which contributes in the UK economy. Due to, minimal taxi price
drives provided by Uber has also impacted the other traditional Taxi drivers.
Social Factor – Social aspect of company is essential as both company and society have mutual
beneficial relationship. Uber has gained popularity and acceptance in UK because it offers low
price and quality customer services. These both are the points which differentiates and set it out
from its rivals. Despite facing tough challenges, Uber is able to maintain its strong social image.

Technological Factors – Technology is the backbone of Uber. Company uses excellent
technologies to provide its customers with the extraordinary features for the ease and quality
experience while using its app (Shtal and et.al., 2018). Few differentiating features are like
geolocation, message pop-up, free call to driver etc. it keeps on adding innovative features to
differentiate it from other rivals.
Legal Factors – Legal compliance is a essential challenge for the Uber, as company is not just
facing the problems related to taxes but is also facing issues regarding human resource. It should
follow the law of minimum wage pay to its drivers and abide by the proper guidelines regarding
driving otherwise it has to bear high fines and other repercussions.
Environmental Factors – Environmental elements also affects the business growth to avoid that
Uber gives importance to Sustainability. By considering Sustainability, Uber launched its pilot
project Uber Green, in which riders can request green ride with just tapping one option on its app
(Yuan and et.al., 2020). Uber pool service is also one of its Eco-friendly initiative taken by
company to save people money.
Stakeholder Analysis -
Stakeholder analysis helps in recognizing and prioritizing stakeholders before the project starts.
It basically organizes stakeholders according to their level of participation in the projects.1. Determining the Stakeholders – The first step in stakeholders analysis is to identify
various stakeholders interested in the company. Generally, it includes the owner,
investors & stockholders, buyers, customers &prospects, Competitors, Banks and
Creditors, Partners & Suppliers, Government regulators, Professional & Industry
associations, media, NGOs, communities and other interested group.
2. Categorize and prioritize these Stakeholders – After the Uber stakeholders are
determined the second step is to commence grouping with respect to their interest,
influence and level of particpation in the project (Sapapthai and et.al., 2020). For this
power/interest grid can be used -

High Power, High Interest – These are most essential stakeholders of Uber, and company keep
them happy with letting them know progress of project regularly.
High Power, Low Interest – Uber keeps these stakeholders satisfied because of their influence in
the company. But limited conversation is done with these stakeholders because their less interest
shown.
Low Power, High Interest – Uber keep these stakeholders informed and regularly checks for
them so that they are facing any difficulty with the project.
Low Interest, Low Interest – Uber give information about the progress of project to them
periodically.
3. Evaluate ways to communicate and win buy-in with every level of stakeholder – Once the
detail list regarding which stakeholder will fall into which category, ways are thought of, for
earning the ongoing support from different types of stakeholders (Soltanizadeh and et.al., 2016).
Uber considers following points such as – how to motivate particular category of stakeholders,
how can their priority can be aligned with company's project and how can stakeholders develop
positive view for the company's project.
P2. Internal Environment and capabilities of UBER -
To analyse the internal environment and capabilities of Uber various frameworks are discussed –
VRIO Analysis –
Illustration 1: Power/Interest Grid
Source: Yaman Bdaiwi, 2017

This Framework is the tool to evaluate company's internal resources and capabilities to
determine if they can provide sustained competitive advantage. It has four attributes – Valuable,
Rare, Imitable and Organization, Uber's resources possess for the purpose of gaining competitive
advantage.
Resources – The most crucial resources that UBER platform have is its network effect. It is
essential to have proper data, algorithms and capability to examine the insights. Uber takes care
that the network effect between the participants i.e. customer or passenger and the driver is
proper and effective. Besides this, Uber app should be effectively managed as any error can lead
to big loss for the company (Adelakun, 2019). Human resource of the Uber are skilled and
talented in area of technical, management and analytical skills. Marketing department helps
company in increasing its reach to customers by regularly updating its strategies. The
constructive routing and effective pricing algorithms are invaluable resources that are developed
by the efficient talented employees of the Uber, with all its resources Uber is able to perform
more adeptly.
Resources Valuable Rare Imitable Organization
Network Effect yes no no yes
Uber app yes yes yes yes
Pricing Algorithm yes no yes yes
Human Resource yes no no yes
It can be analysed that network effect, Uber app and pricing algorithms and human resources are
the valuable resources for the company. Company's user-friendly access to app is rare and
competitors are ineffectual to get this type of access. It is very difficult for the rivals like Taxify,
Lyft to copy such amazing pricing and app algorithm. Uber growth is making company more
organized day by day with reference to mentioned resources.
Capabilities - The Uber app came out to be very user-friendly which also helped company in
gaining the competitive advantage. Besides this, company uses various marketing techniques but
the most common is its work of mouth technique.
Competitive Advantage – Therefore, it can be clearly analysed that with the help of efficacious
algorithm related to app, routing and price company attain competitive advantage (Berisha

Qehaja, Kutllovci and Shiroka Pula, 2017). It also provides on-boarding process which helps in
assessing the suitability of the drivers.
Value Chain Analysis – Value Chain Analysis is the bit by bit business model for transforming
company's service from idea to reality. It focuses to create competitive advantage for company
by keeping its cost rational and increasing its productivity. VCA consists of Primary and support
activities.
Primary Activities -
Inbound Logistics – Normally, it involves receiving and stockpiling raw material. Uber, the most
substantial company does not own any of its vehicles uses to serve its customers. The vehicles
are either rented or owned by its Uber drivers who are not employees but the contractors for the
company. Drivers need to have smartphones to use the company's Uber app, passenger must also
possess smartphones to use its services. Thus, in Uber value addition relates to internet based
business operations (Goloshchapova and et.al., 2017). It does not have large size business, is just
have hardware and office equipments to carry its business.
Operations – Uber operations involve services like requesting the ride, ride and pay & go. Uber
operates in various countries across the world and managing its operation is difficult task but the
company does this efficiently. Its operations are highly sophisticated and customer focused and
its app provide advanced functions or features. It can be concluded that its app is one of the main
source of its operations.
Outbound Logistics – Outbound logistics is generally related to warehousing and distribution of
products. It does not apply to service sectors due to inseparability. Uber operations are internet
based and the in this company outbound logistics can be considered when the customers receive
the notification when the cab arrives.
Marketing & Sales – The car pooling giant mostly depend on word of mouth and social media
marketing to communicate its marketing message to the target customer segment. Company uses
print and media advertising, sales promotion and events as its part of marketing strategy. By
offering convenient payment method adds a source of value addition for the company.
Service – Providing high level of services to its customers is one of the core competitive
advantage that Uber have riders rate the drivers on various factors and the company provides
them scale and column of feedback on their app (Datsyk and et.al., 2016).
Support Activities -

Procurement – Procurement is when the department of the company is reponsible for
appropriating strategies for multiple commodities. Company basically focuses on brand
merchandising, technology, intellectual services and marketing and communication.
Technology – The Uber app regulates prices, locations and routes. The Uber faced several safety
issues, drivers registered identity was stolen, cab back no. plates are stolen etc. Uber take care of
the following and came up with the features in its app which provide every necessary detail
regarding driver to the customer.
Human Resource Management – Uber have capable talents in its organisation but with its growth
it needs to hire more talents for its expanded operations, so that its existing HRM problem can be
solved. Uber must ensure that the driver they are giving contract has a sound backgound because
they faced problem regarding this issue.
Infrastructure – Uber infrastructure is based on the information, it stores the information of its
drivers and customers. Company ensures that it connect right driver to right customer.
P3. Porter's Five Forces Model -
It helps in recognizing and evaluating five different competitive forces that shape every industry
and it also helps in anticipate changing trends within the industry (Ivanova and et.al., 2017). The
following discussed below is the Porter's Five Forces -
Bargaining Power of Customer – The customers of Uber are not constant unless they develop
faith in the company for its services or any other reasons. There are so many options available in
this industry that customers can easily shift from one service to another. This means that the
shifting cost in this industry is low, which offers freedom to customers to shift to their rival.
Furthermore, Uber customers or buyers have high bargaining power as they are price sensitive
and Uber and its competitors have to compete in the market on the basis of price.
Bargaining Power of Supplier – Uber is dependent on its supplier partner Lime and own its
drivers for cars, bicycle and motorbikes, as it does not own any of its vehicles on its name.
Therefore, suppliers have high negotiating power and company takes care of its suppliers. But
the basic principle behind this outsourcing is that if anything bad happens, Uber name and brand
image is not affected.
Rivalry among existing Competitors – Uber have its operations globally and face different
competitors in different countries. It can be analysed that industry rivalry is very high, as Uber

faces tough competition for market share from various companies like Lyft, Ola, Grab, Didi etc
and much more. However, in Europe and Africa its main competitor is Taxify, which has a bit
similar business model. Uber gets competes on different factors such as customer service,
reliability, price, convenience etc.
Threat of New Entrants – The business model that Uber is follows, it will not take much effort
for new entrant. The basic concept followed by Uber is people concept, if anyone wants to work
as driver can bring their own car, get themselves registered and can work for Uber with flexible
working hours (Lewis, 2017). It can be analysed that with this business model, costs and entry
barriers is low and threat of entrant is high.
Threat of Substitutes – There is threat of substitutes not only from the companies who give Uber
direct competition or are following similar business models but also from companies who gives
indirect competition by providing convenient transport facilities. Besides these companies, other
transport facilities also bring threat to Uber sales and market. Uber should consider all the
substitutes factors and take relevant measures to avoid threat from substitutes.
Balance-Score-Card Approach - It is the Strategy Tool that helps Uber in tracking its
performance by evaluating the set of Factors. It includes four perspective for the company
strategy: Financial, Customer, Internal Process and Learning and Growth.
Financial – After facing the trigger amount of competition, Uber has managed to achieve its
estimated profits and is working more to develop strategies achieve its financial goals.
Customer – Customers are Uber's top priority, on their app they provide various feedback
features to know how many customers are satisfied (Simpson and et.al., 2020).
Process – Company must focus on developing cloud infrastructure and its process is generally
based on the information through internet. Managing properly its user data is part of its process.
Innovation – Uber provides innovative features on its app by using advance technology and
always try to come up with ideas which give company more benefits.
P4. Strategic Directions available to Uber.
Porter's Generic Strategies is the framework used by the companies to recognize a potential niche
in order to gain a competitive advantage in the industry. This framework involves Strategic
Directions available to Uber -

Porter's Generic Strategies – Porter's Generic Strategies is the framework used by the
companies to recognize a potential niche in order to gain a competitive advantage in the industry
(Halmaghi, Iancu, and Bacila, 2017). This framework involves Strategic Directions available to
Uber -
es two strategies – Product Differentiation and Cost Leadership. By using combination of both
the strategy company can gain more competitive advantage -
Cost Leadership – Uber acts as an online third party taxi accumulator, it reduces the capital
expenditure of owning vehicles as asset. It signs cab drivers as partner drivers (contractor) and
not employees. Company uses advance technology by using GPS navigation in its mapping
service which saves the fuel and time of cab drivers.
Product Leadership – Uber have innovative process with good employment opportunities
available with flexible working hours. Company does product differentiation by providing choice
to riders on preferred vehicle for transport in terms of comfort and affordability in price. Uber
capitalize brand management to differentiate and produce brand value for Sedans, black
hatchback as Uber rides.
Ansoff Matrix – This framework provides insights into strategic planning. It explains four
strategies that can help uber to grow its business more -
Market Development – As Uber is becoming the market leader it should increase its
sustainability and take government into confidence that company is providing employment
opportunities which focuses on advance technology platform, which helps less fuel consumption
and less traffic on road. In London, it launched Uber Luxury to cater rich market, company can
launch this luxury Uber business in other cities as well.
Product Development – The backbone of Uber's Operations is Technology, company should
focus on ways to alleviate customer problems, by knowing what consumers want, offering
multiple travel options and various payment gateways to stay ahead in the competition
(Маруго2020). Uber must patent its technology to avoid imitation.
Market Penetration – Uber can increase its sales in the Uk market, by focusing on
infrastructural growth like using cloud infrastructure and striving to have skilled workforce.
Company can run exchange leasing and routine maintenance programs to attract more drivers to
join them. Uber can also offer fixed price and launch a system which offers monthly packs for
similar routes to gain more customers.

Diversification – Uber should focus on offering various cabs options with differentiating price
this will ensure that customers have various other available options. Offering different options
cab according to comfort and price, bikes for single traveller while electric bikes and bicycles for
food delivery options gives customer choices and will stop him to shift to another rivals.
Strategic Plan -
Aim – To increase the Uber sales by 20%
Objectives –
To increase the Uber app usage between 20-40 yrs of age group.
To improve its drivers rating within 1 year.
To ensure that drivers maintain proper hygiene and precautions during this pandemic.
Marketing Mix-
Product – Uber offers cab services and food delivery services on Uber app with various features
Price – Uber objective is to provide its quality services in affordable price in order to gain more
competition.
Place – Uber have its operations globally but is focusing on expanding its business more in
European countries.
Promotion – By satisfying its customers, it uses word of mouth technique for its brand
promotion. To attract the age group of 20-40 yrs it uses social media marketing as customers are
more alert through them. It also advertises and do publicity events to make people aware of its
brand and gain more customers.
Strategies -
Branding - To increase the sales Uber can focus more on building its brand awareness and giving
best customer service so that people can build trust in the company and company can gain loyal
customers.
Cost Awareness – Company can attract people with its cost awareness perks, previously telling
them the prices and discounts available to them for particular destination. As the people of Uk
are price conscious this strategy may come out as success.
Implementation -
Uber will implement its objectives by recruiting skilled workforce, because graduates and young
generation come up with the fresh ideas which may help Uber to increase its sales. By

motivating its current workforce and giving them incentives and rewards to come up with
strategies.
Control & Evaluation -
By measuring the regular performance of company sales and revenue, monitoring the
performance of their drivers that what rating they are given by customers (Indartono and
Wibowo, 2017). Company should also monitor the performance of their internal management.
By setting performance standards, comparing the actual performance and analysing where the
variances are occurring to fulfil the objectives and taking corrective actions to attain its aim.
Time Frame – Achieve the aim in 1 year.
CONCLUSION
The report above analyse the impact and influence that macro environment has on Uber and its
business strategy by using Pestle and Stakeholder Analysis. It critically evaluates Uber's internal
environment with the help of VRIO and Value chain analysis. By doing the above analysis,
report apply the results of analysis using Porter's Five forces. Lastly, this report determines the
appropriate strategies by using models such as Porter's generic strategies and Ansoff Matrix and
then develop strategic plan that has strategic priorities and objectives.