UNIVERSITY OF GUJRAT

Department Of Management Science

BBA 2YEAR (4th Semester)

Assgnment No:
03
Submitted By:
Umar Razzaq
Roll Number:
19016620-011
Submitted To:
Dr Syed Ali Abdullah Mehboob
Subject:
Strategic Management (Mgt-406 ‘D’)

Uber Case Study

External analysis
PESTLE method is used for conducting external analysis of company’s environment.
External analysis of Uber with the help of this method is as follows:

Political Factor: In California and San Francisco, a conflict was faced by the Uber
against regulatory authorities working for taxi drivers. This conflict simmered on for
around 3 years. Public Utilities Commission of the California and San Francisco
Metro Transit Authority issued a cease-and-desist order against the organization along
with the fine of up to $5,000 per instance of operation. In response to this, UberCab
changed its name to the Uber. The cited firm also used social media for gaining public
support and increasing demand for its services. In between the dispute for 3 years,
Uber continued to provide its services with loyalty and trust to the customers. As per
the result, strong public demand for the Uber service made Public Utilities
Commission of California to stick a deal with the firm, lift the issued order and
eliminate the fines.

Along with the above issue, Uber also faced political problems in doing registration
with the Federal Motor Carrier Safety Administration. This registration was for safety
and security of the taxi drivers along with the customers. Under this, it is prime
responsibility of the Uber taxi driver to drop their passengers safely at their given
destinations. On the other hand, once the company was not allowed to pick up
passengers at the airports.

Economical Factor: In present time, market is facing huge competition in the field of
private taxi services. Increasing competition is working as a threat for the Uber.
Along with this, changing economies of the nations like US affects the revenue of the
organization. Therefore, in context to these issues, it is important for the Uber to
select right strategy for maintaining its success and balancing its profit margin at the
time of recession. Nations like US banned or restricted the services of Uber due to
having unfair competition against the regular taxis but the fast development of the
firm lead to remove those restrictions.

Social Factor: Uber is using social networking sites like Facebook, YouTube,

Twitter, Instagram, etc for maintaining relations with the customers. Positive and
negative reviews or feedbacks help company in improving its services as per the
demand of passengers. In addition, easy to access platform of the organization makes
customers to enjoy its services. Use of application on Smartphone makes easier for
people to select their pick-up time, source and destination place.

Technological Factor: People having experiences with the Uber share their stories on
social media which increases number of customers along with the profit margin of the
company. As per the given case, the firm has provided app to the people for easy
access to its services. It is necessary to have 4G network for operating the application
properly. Along with this, GPS system is used by the company for tracking their cabs
and ensuring the safety of traveler. On the other hand, Google Map is used by the taxi
drivers for picking up and dropping their customers to their desired places. All this
information represents that Uber is using latest techniques for offering high quality
and premium services to its passengers.

Legal Factor: According to the given case, Uber faced ongoing lawsuits from
incumbent taxi and limousine companies in the cities like Seattle and Chicago. Along
with this, the company faced opposition from the public utility commission and taxi
companies for classifying it as a motor transportation firm instead of a technology
organization.

Environmental Factor: From the various studies, it has been found that people may
use Uber rather than public transportation for environmental friendly travelling.
Congestion has not increased by the cited firm.

Porter’s Five Forces:

This method is used for understanding the threats and opportunities for Uber in the
current marketing environment. Porter’s Five forces concerning Uber are as follows:

Threat of New Entrants: This threat is low for the Uber as barriers to entry are very
high. It is quiet difficult for the new entrants to handle all barriers or restrictions for
creating a successful place in such a high competitive market. Along with this, large
regulations on the amount of drivers also lower the threat of new entrants for the
Uber.

Threat of Substitutes: This threat is high for the Uber in San Francisco as there are
various substitutes exist in the market like Public Transportation, Lyft, Sidecar and
motor bikes. Another reason for high threat of substitute is quality performance and
price comparisons. People like to prefer those services which provide high quality
performance at affordable prices. Due to this, Uber is offering its services at cheap
prices at US.
Bargaining Power of Suppliers: Uber’s suppliers include oil and gas prices,
manufacturing leverage, supply of drivers, etc. The bargaining power of suppliers of
Uber is low due to the loyalty and fixed price strategy.

Bargaining Power of Buyers: In Uber, price of travelling are fixed and due to this
bargaining power of buyers is very low. Passengers have to pay the fix price which
also helps in maintaining trust and loyalty among them. This strategy helps Uber in
building strong brand image not only in US but worldwide.

Threat of Rivalry: According to the case, Uber is facing high threat of rivalry at US.
The company is facing high competition with the Lyft which is a privately held
company based in San Francisco. With respect to smaller competition, Uber has threat
of sidecar which offer passengers to select car as per their price along with the vehicle
model.

Internal analysis
As per the given case, the mission of Uber is to provide transportation as reliable as
running water, everywhere for everyone. The company is using expansion strategy for
increasing its market position and customer base worldwide. In aspect to this, Uber
focused on local market of San Francisco as transportation is a local topic. Along with
this, word of mouth strategy is used by the company for promoting its services among
the people. According to the CEO, the firm has spent virtually zero dollars on the
marketing. According to the scenario, the internal analysis of the Uber is as follows:

VRIO FRAMEWORK

Resources: The most important resources of the Uber platform are its network effect.
It is important to have proper data, algorithms and capability to analyze the insights.
The network effect between the participants i.e. drivers and passengers should be
proper and effective. Along with this, the Uber app is also important to manage. Any
issue or error to the app can lead to big loss to the company.
Workers of the company are skilled and talented in the area of analytical, technical
and management skills. Recruitment of the city managers and large number of
marketing teams help company in reaching to the customers and improving their
strategies. The effective routing and pricing algorithms are invaluable resources of the
Uber which are developed by its technically talented employees. With the help of this,
Uber services are more efficient and effective.

VRIO Framework:

The VIRO Framework with respect to the Uber is as follows:

Value: Network effect, Uber app and algorithms are valuable resources of the
company.
Rarity: The user-friendly access to the app of Uber is rare and rivals are unable to get
such type of access.
Inimitability: It is difficult for the competitors like Lyft to copy the pricing and app
algorithm of the Uber
Organization: The Company is organized and managed with respect to all the
discussed resources.

Capabilities: The app of Uber is very user-friendly which helps in gaining

competitive advantages. Along with this, the company uses word of mouth technique
for marketing of its services.

Competitive Advantages: Thus, it is clear that with the help of effective algorithm

regarding the price, app and routing helps Uber in accomplishing its competitive
advantages. Along with this, on-boarding process of the company helps in assessing
the suitability of the drivers. With respect to this, it is important for the managers of
the firm to select effective and appropriate strategies and approaches. By using all the
resources like talented workforce, network effect, algorithms, app, etc managers of
the Uber can accomplish the below explained opportunities and handle the threats
efficiently.

SWOT Analysis:
Analysis of internal environment of the Uber with the help of SWOT is as follows:

Strengths:

Brand name: In a very short span of time, Uber has created strong brand name in San
Francisco. In present time, people are capable enough to recognize it through the logo.
The innovative and technological services of the company help in grabbing attention
of individuals which result to develop effective brand name. Along with this, existing
brand equity of the Uber represents its strong position in market of US.

Easy to access through App: Uber started using app for calling taxi services which
later improved a lot. Now the app includes several features including one click
payment and ratings. The app is convenient to use and book taxis for the customers.
Along with this, people need not to pay cash to the driver which is another important
feature of the app.

High customer loyalty: The business model of the Uber is customer focused which
helps in developing effective loyalty among them. Along with this, competitive
pricing strategy and high customer convenience of the company has resultant to high
popularity and customer loyalty in the market of San Francisco.

Rating system: Passengers travelling in taxi of Uber can rate their experience via
app. This helps in maintaining high level of trust between the company and the
customers.

Fast Growth: The case represents the fast expansion and growth of the Uber at US.
Effective strategies with innovative services make company to achieve its objectives
efficiently.

Weaknesses:
Large number of controversies: The cited firm has faced various controversies
while entering into the market of US. Both legal and political actions were taken on
the firm which somewhere affected company’s reputation along with the profitability.

Competition: Uber is facing huge competition in the respected market with Lyft,
Public transportation and sidecars. In context to this, there is a pressure on the
organization and due to this, Uber has upped the standard of its services and
decreased the prices. It is important for the firm to think different and innovative for
adding extra feature to its services which can help in grabbing attention of more
individuals (Grant, 2016).

Limited to the young generation: Uber is basically is an app which is operated with
the help of Smartphone. Elder people are unable to access this app due to the lack of
knowledge and less use of Smartphone. Thus the access of Uber app is limited to the
young generation only which is somewhere affecting its profit margin.

Opportunities:

 Uber can grow its market in suburban areas where taxi services are unavailable.
 Company can expand its business in Asia where people are technology friendly
and will love to access app.
 Uber can partner with the hotel and hospitality industry for serving large number
of tourist who generally needs taxi for staying at a hotel.

Threat:

 The payment takes by the company is at very small share which range between 5
and 20%. If the Uber keep on selling its services to the customers than there are
chances of diminishing the profit.
 The protests done by taxi companies against Uber can work as threat for its
business.
 Lyft has provided its services to more than 236 million people between 2012 and
2016. This represents that Lyft is a threat for the Uber.
 Legal and political pressure is increasing on the Uber as Californian authorities
had make company to treat its drivers as employees.

Implications from the analysis for Uber

From the above analysis, it has been found that Uber has faced various issues while
working in San Francisco. But selection of effective and appropriate strategies helped
company in building strong brand image among the people. Along with this, the firm
is growing fast in the nation by offering quality services to the customers. On the
other hand, Uber has strong completion with Lyft and sidecars which can be decrease
via innovative services (Prassl & Risak, 2015).

Recommendations for Uber

Suggestions for Uber to improve its present situation are as follows:

Expansion of business model into other areas like UberTour, UberFresh, etc.
Company should provide validation proof of safety for the customers satisfaction
Uber should maintain consistent pricing for the passengers in rural along with urban
cities.