Business Strategy Analysis: Uber's External and Internal Factors

This report provides a comprehensive analysis of Uber's business strategy. It begins with an introduction to business strategy and its importance, followed by an examination of Uber's external environment using a PESTLE analysis, highlighting political, economic, social, technological, legal, and environmental factors impacting the company. The report then delves into Uber's internal capabilities, utilizing the McKinsey 7-S model and VRIO analysis to assess its strengths and weaknesses. Furthermore, it applies Porter's Five Forces framework to evaluate the competitive landscape in which Uber operates. The report concludes by discussing strategic planning theories and models relevant to Uber's business. The document analyzes Uber's strategies, strengths, weaknesses, and competitive position within the market.

Business Strategy
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Table of Contents
INTRODUCTION...........................................................................................................................3
LO 1.................................................................................................................................................3
P1 Impact and influence of external environment on Uber.........................................................3
LO 2.................................................................................................................................................5
P2 Internal capabilities of Uber...................................................................................................5
LO 3.................................................................................................................................................6
P3 Porter five forces to Uber.......................................................................................................6
LO 4.................................................................................................................................................7
P4 Theories and models for strategic planning............................................................................7
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................11
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INTRODUCTION
Business Strategy is defined as set of action or plan which are formed to strengthen
organizational performance for achievement of organizational goals and objectives. Business
strategy is formed for purpose of Achieving effectiveness and efficiency in work processes, Grab
resources and opportunities, Securing position beneficial for organization., Facing threats and
challenges, Planning and directing behaviour at workplace, Controlling situations by taking
corrective measures (Acuña-Carvajal, and et.al., 2019). Business strategy helps in attainment of
desired ends which are being set for specific procedure to be accomplished. Particular framework
is required for setting business strategy which assists in planning and effectively direct towards
the end. Business Strategy Formulation for creating effective business strategy, it is important
that that proper formulation of all factors and aspects are measured which helps organization
grow on larger scale. For business to be efficient, strategy is formulated which is described as
Defining the organization and its environment which consists of target market, offerings
customers, changes and challenges, adapting according to it, describing the strategic mission and
vision constituting of long run perspective, core values of the entity, position of organization in
market, Set strategic objectives, the competitive strategy being framed and its implementation
and Evaluate progress and effectiveness, Uber is known as a big shot within shared economy as
it is well known for its cheapness, ease of use and also for controversies.
LO 1
P1 Impact and influence of external environment on Uber
Uber is a firm headquartered in United States as well as operates all over the world. Firm
can deals with marketing , developing as well as operating car transportation services, also they
have their own food home delivery apps.
Pestle analysis of Uber
It is an analysis of Framework that can be more imperative for firms such as Uber that aids to
understand market dynamics as well as improves its business more continuously.
Pestle analysis- Uber has always faced endless debates all over the world. Most of the
government are worried regarding guidelines of economy sharing. Also, rising uber has also
troubling impact on the traditional taxi services that ultimately leads to the disapproval against
them within various stages (Chen,, Eshleman, and Soileau, 2017). They also faced scrutiny all
over the world as France filed charges relied on advertisings, also. Netherlands also ruled against
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the Uber for their drivers as they not having Taxi licenses and also in Asian nations ban
considerations. Also there were political discussions regarding minimum wage laws within such
industry. The government also needs commercial license needs, Uber in order to givers
documentation.
Economic factors- The industry where the Uber operates is considered as the sharing economy
that means economy relied on the intellectual and physical resources. Within the case of Uber
hires the drivers in order to respond to the consumer as well as drive them at particular location.
Uber is even cheaper than traditional taxis as well as easier to schedule an appointment (Kong
and et.al., 2020).. Nations have banned its services as against taxis Uber have unfair competition.
As per the study people are studying such type of the economy brings several new opportunities
regarding career for lower pay. Here one thing is sure, Uber has grown at rapid rate
Social factor- One of the vital thing that consumer enjoy is that Uber is easy to access platform.
Choosing an appointment as well as pick up time is considered as very easy by using the app by
the help of the smartphone. It needs no communication instead a few presses of a button and also
at the same time cheaper prizes is always attractive to many that led to the explosion of the
Uber's growth all over the world. As costumers enjoys ride and gives feedback regarding their
experience on social media, but also with enhance prices within the major cities also rose too.
Thus, due to ease of use consumes also picks Uber Frequently.
Technological Factors- Through social media Uber spread wildfire as people are sharing their
rides experiences online shares stories. It also boosted new users in order to do within a similar
way. Buyers are also searching for transportation which is cheaper as well as Uber fulfilled this
requirement. Consumers are also makes appointment by the app. This app is vital to Uber as it is
unable to function if the app suffers difficulties or goes down (Lim, Chalmers and Hanlon,
2018). The firm must assures everything is working. Here several drivers use 4G network in
order to connect to the application.
Legal Factors- These are the factors that were touched as Uber faces much bans, criticism as
well as attempted bans within location all over the world. The firm also must follow copyright
laws, usage laws, labour and employee safety laws. So, these factors has highly impacted on
company brand image and value in the market.
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Environmental factors
The efforts of Uber on the environment is shifting as several people believe that it enhances
traffic congestion as well as fuel usage. But as per the studies Uber do-not enhanced congestion.
Individuals can uses the Uber instead of traditional or local transportation. As per the analysts
have to compare the Uber fuel versus local or public transportation analysis of the impact on the
environment. As various factors can contributes regarding its final number.
Stakeholder analysis
It is essential to do analysis so that stakeholder are identified from it. Thus, for Uber as
well there are various stakeholder which is as below:
Government – it is crucial stakeholder as company have to follow all norms and laws of
government.
Employees- they are crucial stakeholder as they perform tasks and attain goals. Also, their
interest and power is high in uber.
Top management- They are stakeholder which take all decision regarding strategy and plans.
Their power and interest is high as well on Uber (Moktadir, and et.al., 2020).
It is a process of analysing of systematically gathering as well as also evaluates qualitative
information in order to determine whose interest must be taken into the account so that develop
as well as implementing a program and policy. Or in simple words it is considered as a process
regarding identifying such individuals before project starts and after that grouping them
accordingly to their levels regarding participation, impacts and interest within the project as well
as determines how one can best communicate and involve with each other.
Although Uber must has taken place, it’s all stakeholders into specific considerations. it is
mainly focused on the most of attention on the different stakeholders such as drivers, mobile
operating systems, riders, service providers etc. these are consider an important aspects for
handling or performing various business activities.
Uber must consider as own riders, give as top priority and one of stakeholder number. It
influencing with uber in which provide the better ride service for potential consumers.
Investor can influence with Uber, without the capital if it can infuse into enterprise. Uber is
becoming successful company because of taking a lot of funds from different investors.
Sometimes, a growth of business is always inspire or motivate investor to invest money and gain
more profitability in marketplace.
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LO 2
P2 Internal capabilities of Uber
Along with external environment there are several internal factors as well which impact on
company growth. It is important to find out those factors so that relevant strategy is developed.
For that there are some models which is applied by Uber. It is defined as :
Mckinsey’s 7 s model
Strategy- It is cost leadership business strategy. The company gains cost advantage to internet
based nature of its business model that disrupted traditional taxi industry in the global scale. The
international transportation technology enable in increases its service ranges regularly to cater for
the needs of greater numbers of customers.
Structure- Here, structure is classified as hierarchical. Thus, Uber is disadvantaged by the
shortcomings of hierarchical structure such as ineffective communication across various
departments, rivalry between departments that may compromise long term growth prospects and
high level of bureaucracy (Yuan, Lu, and Yu, 2020).
System –it is convenient for drivers as they can work flexible hours as well as work for the
flexible hours. Even drivers can be chosen to be part-time employees, also drivers can also reject
the unwanted clients.
Skills- The employees of company are highly trained as effective training is provided to them.
With that they are able to create and develop a positive culture in it. Besides, possessing of
advance skills has resulted in attaining goals and gain competitive advantage.
Style- The staff follows a proper code of conduct and procedure in communicating with senior
management. The leader are also engaged in decision making. This reflect their leadership style
and strong relation between management and employees. The leader respect dignity and ethics of
staff and interact with them in effective way.
Staff- In Uber there are various talent management practices which is followed. This involve
recruitment and selection, reward system, T&D, etc. thus, HR hire right staff at right job role.
Besides that, in decision making management involve employee. Also, staff performance is
measured which results in increasing their efficiency.
Shared value- The mission and objectives of Uber is aligned with its values. Thus, on basis of
values overall organisation design is developed. Thus, key elements are based on Uber values. It
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has enabled in working together in team and attaining goals (LESTARI, , LEON, and Putra,
2020).
VRIO analysis
Valuable
It has been found that Uber financial resources are also considered as valuable as it aids the firm
in order to enhance the perceived consumer value. It can be done through enhancing
differentiation or decreasing the product prize but if does not give benefits that it is not useful.
Then it will become one of the weakness.
Also, Uber employees are valuable resource as they are highly trained and experienced. The staff
is loyal and retention level is high.
Rarity
The financial resources of Uber is rare. It is because companies can easily found that in market.
Rare and valuable resources grant competitive benefit but temporarily while on the other hand
when more number of firms have same type of resource than within same way leads to the
competitive parity. It can utilize the identical resources in order to implement the various
strategies as well as no firms can achieves such performance which can be superior.
The employees is also rare as in other firms as well employees are highly trained. They also
remain loyal to firm (Park, and Mithas, 2020).
Inimitable- the financial resources of company imitable as other business who enter in this
industry will require to earn and generate huge profit. Thus, they require huge financial
resources.
Employees are also imitable as other organization can provide effective training to them.
Moreover, compensation, benefits, resources, etc. can also be provided to them. It will enable in
gaining competitive advantage.
Organization
Here, financial resources of organization is properly organized and managed. These resources are
used strategically to invest in the right places; making use of opportunities and combatting
threats. Therefore, these resources prove to be a source of sustained competitive advantage for
Uber.
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The employees are recruited at right place in right time thus it enable Uber to perform tasks in
effective way and attain goals. With that they are able to create and develop a positive culture in
it.
Thus, it is analysed that internal capability of Uber is they are having highly skilled
employees. With that employees of company are highly trained as effective training is provided
to them.
LO 3
P3 Porter five forces to Uber
The porter five forces aids managers of Uber to have the better understanding of the
competitors among several existing players within the transport industry (Ukko, and et.al., 2019).
Basically it is a framework that can be used for evaluates Uber's competitive environment as the
number as well as power of the firm's potential new market entrants, competitive rivals,
consumers, suppliers as well as substitute product that impacts the profitability of the firm.
Industry Rivalry
Uber operates within many nations as well as their rivalries might be different within different
nation. But in general one can see intense competition within most of the marketers as well as
several major marketers for Uber that involves United nations. Other rivalries such as Ola, Didi
Chuxing and many more. Thus within the marketers of Asia and Middle East Uber faces fierce
and direct competition with careem that operates within the same business model and becoming
very powerful within such regions. So with the overall competition Uber is facing within its
industry is very high so the industry rivalry is very high.
Threat of New Entrants
The business model on which Uber operates at the moment is not so expensive. It is cost
effective as it does not take lots of efforts or costs to build. It is the kind of the business operates
regarding on the concept of people who can work as their drivers can brings their own cars and
after that get it registered as well as work for Uber at the flexible hours. So if there is new firm
that wants to take entry within a same business model the barriers to entry and cost is low. Thus
also people are now looking for the ways that are convenient that makes the market more
attractive (Yuliansyah, Gurd, and Mohamed, 2017). Thus, there can be high threat regarding
new entrants into such industry.
Threat of Substitutes
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Here within such factor substitutes for Uber are not for those who are in direct competition with
it but firms are also relied on the same business model as well as gives convenience and price to
the consumers but also such firms are within indirect competition with Uber. Several other taxi
firms also gives convenient transport are also came in indirect competition alongside Uber as
well as considered as substitutes. In addition to this these firms, other types of the public
transport are also known as substitutes for Uber as well as threats to its market share as well as
sales. These types of the substitutes are considered as big threats for the operations of Uber all
over the globe while at the same time other local services can be utilized through consumers.
Bargaining power of suppliers
Uber dependent on its supplier as Uber does not have their own vehicles as they are dependent
drivers for their vehicles especially cars. Uber outsourcing their cars as well as service of the
drivers that provides suppliers an Upper hand on the Uber. Therefore within the case of Uber the
suppliers have considered as a high bargaining power (Acuña-Carvajal, and et.al., 2019). Also
Uber has to take care of the suppliers as because if anything bad happens then it directly impacts
the name of the Uber as well as brand image of the Uber.
Bargaining power of Buyers
As here the buyers of the Uber are not permanent but at the same time they are very loyal to the
firm as due to their service or various other reason. With so many several options available
within the industry to choose from consumers also have the upper hand as they are the one who
can shift from one service to the other. In addition to this shifting cost within the market is low
thus providing consumer the freedom regarding shift easily to other service because of any type
of reason. Thus most number of consumers of Uber are price sensitive. Thus leaving the Uber as
well as various other services considered at a disadvantage as they have also compete on the
price. They also have the high bargaining power.
LO 4
P4 Theories and models for strategic planning
It has been identified that for every organisation it require to develop an effective strategy.
This is because it enable them to sustain in market for long term. However, there are various
theories and models which is applied in strategic planning. The use of model and theories
depends on needs of organisation. Similarly, Uber also used different models that are defined as
below:
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Porter Generic model
It can be used in order to determine the direction of Uber. Given Below are the four strategies
that can be choose such as
Cost leadership- Uber target a broad range of market as well as offer the lowest possible price.
As there can be two options such as one can opt to keep cost as low as possible and assures that
they have a larger market share with average prizes. In both of the case main point is to keep the
firm cost as low as possible (Chen,, Eshleman, and Soileau, 2017).
Differentiation- Here Uber can target a broad marketplace where its demand is high but also
product or services has also unique features. With such strategy Uber can makes their product as
exclusive as possible as well as makes its more comparable products that can be offered through
competition. In success within such strategy needs very good research, innovation and
development in order to deliver high quality.
Cost focus
Here Uber can target little focused market as well as provides the lowest possible price. Within
such strategy one choose to target a clear niche marketplace and by this understanding the
dynamics regarding marketplace as well as wishes of the consumer. Uber here can ensures the
cost remains low.
Differentiation focus
One can target such less focused market and also Uber has the product or prizes that has very
unique features as such strategy gives brand loyalty ( strong) among several consumers. It is very
crucial top assure that the Uber cars remains Unique and also becomes ahead for competition
within future.
Ansoff matrix
It is often called Product marketing mix as it has a tool that can be used through firms in order to
evaluate as well as plan the strategies regarding growth. The matrix also focus on four strategies
that can aids within growth of the firm. These strategies not only help in growth but also
evaluates the risk that are related to each strategy (Kong, and et.al., 2020).
Market Penetration- Here Uber can uses their product with existing marketplace and in other
words an Enterprise main aim to enhance its market share alongside with market penetration
strategy. It can be executed within several ways such as decline prices in order to attract new
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consumers. It also enhances promotion as well as distribution efforts. It also acquires a
competitor within the same marketplace.
Product development- Within the product development the Uber develops a new product in order
to cater to the existing marketplace. It includes extensive Research and development as well as
expansion of the Uber's product range. Such strategy is employed when enterprise have a strong
understanding of their current marketplace. They also able to gives innovative outcomes in order
to meet the requirements of the present marketplace. Such strategy can be implemented within
number of ways such as Investing within R&D in order to develop the new goods so that cater to
the present marketplace.
Market development- The enterprise takes entry within a new market with existing goods.
Within such context it expanding into the new marketplace that focuses on to expand within new
geographical regions, consumer segments and many more. It can be most successful as the firms
owns proprietarty technology that can leverage within new marketplace and secondly potential
consumers within new marketplace are considered to be profitable (Lim, Chalmers, and
Hanlon, 2018).
Diversification- Here the enterprise takes entry within new market with new good. As this type
of the strategy can be considered as riskiest as both product and market development are needed.
The risk might be mitigated somewhat by diversification. In addition to this strategy can offer the
greatest potential for enhanced revenues. It also opens up a whole new revenue stream for the
firm. Two types of diversification can be Related diversification where the potential synergy that
can be realized between new product and existing business and many more. Also Unrelated
diversification as there can be no potential synergies to be realized between new product and
existing business.
Strategic Management Plan-
It is based on the process of documentation development which is mainly used to
communicate within Uber in regards of goals, set priorities, focus energy and configure
resources. It must ensure that involvement of all stakeholder in Uber to achieve desirable
success. Therefore, it can easily increase profitability as well as productivity in marketplace.
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Tangible-
Uber’s tangible resources are consider such as Riders, drivers and other application. The
entire revenue of Uber is depends on the booking fees, commission on ride. At certain point,
Uber does not pay any amount for car licence and fuel, insurance etc.
Tactical strategic priorities-
 Obtained the survey data to benchmark with compensation of all kind position
 Conduct the better employee aspects to satisfy with better services
 Implement an appropriate strategies regarding innovation concept in order to increase
profitable rate of Uber in marketplace.
Objectives-
 To focus on provide the dependable as well as readily available transportation service. it
has been continuously expanding the business in marketplace. it allows them for different
drivers, riders to connect
CONCLUSION
From the above it had been concluded that there is no doubt that people love Uber as they
can easily enjoy benefits regarding service. Apart from that it can be convenient that Uber save
times as well as money. But at the same time drivers and government often hate Uber. So main
its consumer centric approach the form charges very low prices that's the reason the drivers
unable to have the high profit margin. Report also focused on Various nations banned as well as
derestrict it as they are open about whether they are supporting or not but all of these unable to
stop its popularity which is continuous grow. Even the prizes begins to rise even though it stays
competitive against taxis. Consumers also enjoys those apps which aids to book rides as well as
pick up public transportation due to its experience.
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