Analysis of Uber's Business Model and Competitive Advantage

This report provides a comprehensive analysis of Uber, a pioneering company in the ride-sharing industry. It begins with an introduction to business organizations and their internal and external environments, setting the stage for an examination of Uber's operations. The report delves into Uber's history, highlighting its innovative approach to the taxi industry through the use of technology and its expansion across numerous countries. It explores Uber's resources and long-term capabilities using the VRIO framework, categorizing resources as tangible and intangible and assessing their impact on competitive advantage. The analysis further investigates Uber's competitive advantage using Porter's Five Forces framework, evaluating the threats of new entrants, the intensity of competition, threats of substitutes, and the bargaining power of customers and suppliers. Additionally, the report discusses Uber's blue ocean strategy, emphasizing its creation of a new market space and its core competency in the form of its mobile application. Finally, the report examines the advantages and disadvantages of Uber's business model, including its reputation, innovation, and technology-based limitations, concluding with a summary of its success based on disruptive innovation, strategic relations, and technological advancements.

Running head: BUSINESS ENTREPRENEUR
Business Entrepreneur: Uber
Name of the Student
Name of the University
Author’s note

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Table of Contents
Introduction......................................................................................................................................2
About the company......................................................................................................................2
Resource and long term capability of UBER..................................................................................3
Understanding the competitive advantage of UBER.......................................................................4
Advantages and disadvantages........................................................................................................6
Conclusion.......................................................................................................................................7
Reference list...................................................................................................................................8

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Introduction
When an organisation is set up with a profitability motive it can be called as a business
organisation. The owner of the business sets up a business organisation based on the values,
principles and ethics which drives the foundation of the operations. A business organisation
functions in two types of environment internal and external (Fisher 2012). It is important for the
management of the company to ensure that the terms and conditions of both these environments
are aligned in order to get the desired results. The elements in the internal environment are under
the control of the management as these factors are the resource and capabilities of the
organisation (Brandenburger and Nalebuff 2009). On the other hand elements like the political
condition of the country where the company operates, the economic development opportunities
of the country, the social acceptance of the service or product etc are some of the external factors
that impact the business from outside. In this assignment the sustainability of UBER is being
discussed. The competition of the company as well as the sustainability of the competitive
advantage of UBER will be analyzed and discussed.
About the company
UBER has changed the face of the taxi industry with the innovative approach that the
company has developed. The use of technology aligned with the business operations have
enebaled the organisation to reach out to the market. Travis Kalanick and Garrett Camp
established the company on 2009; they developed the mobile application which would enable the
user to book a cab by using the application (Cramer and Krueger 2016). The organisation
operates in a number of countries and has become one of the most successful startups. Over the
years of operation and innovation the company has been through ups and downs in 2017, the
company has faced a loss of $4.5 billion USD yet has managed to grow the revenue numbers

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form the last financial year. The revenue of the organisation is $37 billion, a jump of 85%
compared with 2016 (latimes.com 2018). The company has operations in over 350 cities in 68
countries (Cramer and Kruege 2016).
Resource and long term capability of UBER
With the help of the VRIO analysis the resources can be categorized in the form of their
role in the competitive advantage that these resources help the company gain. Resources can be
divided in two sections tangible and intangible (Barney 1991).
Resources Valuable Rare Imitable Organized Impact on
competitive
advantage
Tangible
 Revenues and profits Yes No No Yes TCA
 Notes and accounts
receivable
Yes No No Yes TCA
 Securities Yes No No No CE
 Inventories Yes Yes No Yes UCA
 Employees and the
drivers who are listed
with the company
Yes Yes Yes Yes SCA
 The suppliers of the
taxi
Yes Yes No Yes UCA

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 Buildings and
infrastructure
Yes No No No CE
 Tools furniture and
fixtures
Yes No No No CE
 Land Yes No No No CE
 Construction in process Yes No No No CE
Intangible
 Strategic relation Yes Yes Yes Yes SCA
 UBER application Yes Yes Yes Yes SCA
The company is driven by innovation and the idea of developing a taxi booking
application was ground breaking when the company had launched. The business model of UBER
can be said to be based on this mobile application and thus the company has the capability to
produce a strong return on equity in the long run (Barney 1991).
UBER has the resource and capability to maintain the competitive advantage over the
others platforms in the market which offer similar service. The taxis that are listed with UBER
have to maintain their regulations and ensure safety of the passengers. The above framework
showcases the capability of the company and as the company has the resource to innovate and to
maintain the security of the customers the company will have a long term return on equity
(Barney 1991).

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Understanding the competitive advantage of UBER
With the help of the five forces framework developed by Michel Porter the intensity of
competition can be described.
Threat of new entrants: in case of the business idea and the model that is used by the company,
it is fairly easy to develop an application to support the process. The challenging part of the
business is the logistics and the goodwill that the company has developed over the years. Hence
the threat can be said to be low.
Intensity of competition: Because the company works in the international level there are a
number of competitors who have come up with the model of app based taxi service. The direct
competitors are: Didi Chuxing, China; Ola, India; Lyft, U.S; Grab, Singapore and GoJek,
Indonesia. However, these organisations are popular in their own countries of operation where as
UBER has operations world-wide (Cramer and Krueger 2016).
Threat of substitute: there are a number of substitute to the services of UBER, public transport,
personal transport, local taxi service etc are major threat to the organisation not only in terms of
the facility but also in terms of the price they have to pay for the service. On the other hand this
substitute also does not have the complexity of using the application as well. Therefore it can be
said that the threat is high in this case (Porter 2008).
Bargaining power of the customers: depending on the area of operation the bargaining power
of the customers depends, as the intensity of competition in terms of substitute is also high it can
be said that the bargaining power of the customers are high. The switching cost for the customers
to gain the service form another option is low.

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Bargaining power of the suppliers: The suppliers of the company are the people who are
providing their taxis and are being associated with the company to provide the service. The
bargaining power of the suppliers are low as UBER is the pioneer of this kind of an exposure for
the suppliers which has provided a significant trust and goodwill in the industry as well as among
the customers (Porter 2008).
Blue ocean strategy of UBER
With the launch of the application and the taxi service UBER has made a new market
place for the company where there was no direct competition during the time of inception. This
is the major reason for the company to achieve acceptance in the industry as well as the
customers. The company targeted the issues of the people in hiring taxi services, with the
application. The platform allowed the people to book a cab and then ensures that there is no third
party involved in between (Chan and Mauborgne 2005).
The UBER application is the core competency of the company. A Smartphone user with
the help of internet connectivity can download the application. Here the strategic relation the
company has developed with Google Maps helps in providing the services. The mobile
application (integrated with Google maps) that enables the passenger to connect with the nearest
Uber-registered driver. This is at that time an innovation that was disruptive in nature, disruptive
innovation is the kind of innovation that allows a company to make a new market place within
the industry making it exclusive of any other players in the market (Chan and Mauborgne 2005).
Advantages and disadvantages
The advantages of the business are that as a pioneer in the business, the company has
gathered a reputation and trust among the customers (Cramer and Krueger 2016).

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The company has addressed some of the major issues in the industry like price, rejection,
unavailability of convenience etc.
The innovation culture in the company is another major advantage as the company has a
number of innovative features that they come up with each upgrade. The feature of outstation
booking, cancellation, being able to talk to the driver and track the vehicle live etc are some of
the innovative features that UBER has pioneered (Cramer and Krueger 2016).
The promotion of the company focuses on safety and care that the drivers ensure while
carrying the passengers. This has also worked as an advantage for the company (Cramer and
Krueger 2016).
The disadvantage of the system is that the company loses out on a large target market
that is unable to use technology. As a technology based company which has a number of non-
technical substitutes makes is a major disadvantage.
The company has been through a number of controversies and this has taken a hit on the
goodwill.
Conclusion
From the above discussion it can be concluded that UBER has achieved success on the
basis of the disruptive innovation that the entrepreneurs had brought about in the taxi industry.
The blue ocean strategy is achieved by the company on the basis of this disruptive innovation.
By challenging the basic issues that the passengers face with heir services UBER has set up
returns on long term. The sustainable growth of the company is attributed towards the strategic

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relations of the company, the employees and the drivers who are listed with the company and
most importantly the technology and innovation that are developed.