Graduate School of Business

Strategic Management

Uber Case Study

Comprehensive Exam May 2018

Presented to
Dr. Ahmed Eltagy

Prepared by:

Ahmed AbdelTawab ID# 16124218

 1- Situation Analysis for Uber
A- SWOT Analysis
Strength
S1- Vast Improvement over Taxi rides /Faster
S2-Clean Cars / Polite & Well educated Drivers
S3-Strong Growing Financial position
S4-Wide range of services
S4-High Incentives to Drivers
S6- Popular support from drivers/customers
S7-Innovative operational cost model
S8-Strong name /Attracting Drivers
S9- High market share
S10- Asset-light (no owned cars – lower
expenses),easier to exit at any time.
S11- Strong Investment in new technologies
(Self-driving cars )
S12- Substantial Funding / High revenues
S13- Independent drivers shielding the company
from legal liabilities – No paid Tax
S14- Robust, user-friendly Mobile and web
Applications.
S15- Strong Brand with good advertisement and
continuous price promotions
S16- Eco-Friendly strategies in car-pooling
Opportunity
O1- Ride-hauling market growth/more demand
O2- Acquiring strong market share in
Autonomous vehicles, and electric cars.
O3- Gaining more partners/drivers
O4-Opening Markets in new countries
O5- Limited supply of taxi licenses /poor taxi
service in many countries
O6- Introducing new services for more market
segments and demographic groups.
Weakness
W1-Bad Public Image
W2-Poor Ethical environment
Sexual harassment / female discrimination
W3- Drivers accused of groping / kidnapping
W4- Unlicensed service violating regulations
W5- Market-based pricing resulting in high fares
and customers backlash
W6- Continuous Problems with local Authorities
W7- High drivers turn-over rate
W8- High ranking executives successive
resignations
W9- Difficulty to retain customers
W10- Poor relation with Drivers.
W11- Drivers are the most expensive part
W12- Dependence on Internet for app to work.
Threat
T1-Local Authorities and regulations Lawsuits
T2-Drivers Unionizing
T3-Properitry cases of Autonomous car
T4-Customers #DeleteUber campaign
T5-Strong competitors alliances
T6-Ease of New Entry of service providers
T7-Zipcar substitute solution of hourly car renting
T8-Social Media Drivers outcries
T9-Sexual harassment and discrimination lawsuits
T10- Uber itself, Executives competitive tactics
and comments affecting company reputation.
T11- Internet outage causes application stop.
B- Macro Environment (PESTL) Situational Analysis

Political

1- Governments requires operational licenses, making it harder for Uber operation

2- Employment laws require minimum wages for drivers, pushing Uber to employ
drivers, instead of using them independently.
3- Federal trade commission requires clear information and raising a lawsuit alleging
that Uber had misled drivers about earnings and vehicle finance.
4- Countries attitude towards Uber, banning its operation for many reasons,
Denmark banned Uber, Czech issued an injunction against its operation, Germany
allowed it only under official taxi employment.

Economical

1- Growing demand for private ,non-expensive transportation

2- Increasing Energy costs, affecting private car ownership and encouraging
carpooling and sharing rides, also affecting ride fares for Uber drivers.
3- Increase on Unemployment rates, which offer more drivers seeking for income
improvement.
4- Increase in inflation rates, making wages not enough for living, attracting more
employees to work extra hours as Uber drivers.

Social

1- Population growth requiring more transportation demand.

2- Faster life pace, demanding faster response for rides.
3- Different Age distribution segments, attracting young and well-educated drivers
and passengers.
4- Regional shift in population towards cities, increases ride demands.

Technological

1- Advances in communications and internet coverage, making it easier for Uber

mobile application usage, while internet outage is a big problem for Uber.
2- Heavy Investment in Autonomous cars technology ,seeking for a new markets
3- Advanced mobile application and GPS usage, making it easier for drivers and
passengers to match faster, any down-time for app servers is a big problem.
4- Social Media (Facebook, Twitter...etc.), which sometimes support, sometime
attack Uber, whether from passengers or drivers.

Legal

1- Local regulations that prohibits Uber operation in many countries, while Uber is
violating the regulations.
2- lawsuits against Uber, whether from authorities , passengers , Drivers all
affecting Uber reputation and image
3- Proprietary legal battle with Waymo concerning Self-driving car patent.
4- US department of justice opening inquiries about Uber usage of Greyball tool.
C- Micro Environment (Porter 5 forces) Situational Analysis

Threat of New Entry

Power of
Power of Rivalry
Customers
drivers

Threat of Substitutes

Strong Rivalry:
 High market growth, increasing demand for ride-hauling instead of owning
and driving a private car.
 Strong cost competition with local and global service providers, including
local taxi providers, Lyft, Via, Zimride, Grab and Ola.
 Low industry exit barriers , very easy to exit the market at any time
 Uber Service is not highly differentiated, easy to copy or imitate the mobile
application and the service quality.

High Bargaining Power of customers:

 Very low switching costs, customer can switch to another service provider
without additional costs.
 Increasing number of customers, with many service providers to choose.
 Customer loyalty is not high, as long as similar service provider will offer
same or lower price.

High Bargaining Power of Drivers:

 Total rely on External Independent Drivers, No owned Assets.

 Strongly Affecting the company operation, whether by unionizing, or using
social media outcries.
 Although legally independent, but drivers are making troubles to Uber
reputation by accidents and other acts of kidnapping and stealing customers.
 Drivers can switch to another company easily, getting better commissions.

High Threat of New Entry

 Entry Barriers are low, Asset-light model is no need for a big capital or high
technological capabilities.
 Uber is working without licenses and is violating the regulations, which make
it easy for others to do the same.
 No patents or proprietary elements for entering the market

High Threat of Substitute

 Car sharing, and private car ownership.
 Lower price of using public transportation, private taxi, Scoters, bicycles.
 Zipcar introduction of Hourly Car Rental model.
2- As CEO of Uber

I will not continue to deal with drivers as independent contractors; instead I will go for
hiring them as employees for the following reasons:

1- Enhancing the company public image and reputation, hiring the drivers make a
better image about the company power and better customer attitude and trust,
especially after the bad image of drivers accused of groping and assaulting.
2- Complying with regulations in many countries concerning hiring the drivers,
providing minimum wages, and paying local taxes to governments.
3- Adding more Strength to the company and better relationships with drivers,
increasing their loyalty and support to the company instead of unionizing against the
company and raising lawsuits.
4- Offering more benefits to the drivers, like health insurance, legal protection, which
will attract more drivers to work for Uber seeking for stability, Uber operational
network gaining more customers, thus increasing revenues and market share.
5- Better and centralized control of riding service, offering continuous, un-disrupted
and supervised service that is not only available according to driver choice of where
and when to work, but according to Uber Scheduling.

3- The Top Values that Kalanick has inserted in Uber’s Culture:

 Toe-Stepping
 Hustling
 Innovation
 Customer Satisfaction
 Empowering Employees
 Risk make money

4- Kalanick Resignation has the following consequences:

Positive Consequences Negative Consequences

Enhancement in Uber corporate culture
concerning Ethical challenges and leadership.
Better relationship with drivers and smoothing
down all their lawsuits against Uber
Better public image, better stakeholders and
investor’s attitude may attract more funds.
Competitors getting stronger, making strong
alliances, affecting Uber market share.
Less innovative environment, lower rate of
introducing new services .
Customer’s instability attitude, moving to
other companies, which will affect revenues.

From the case study information, it is clear that Uber board forced Kalanick to resign
rather than accepting his resignation, and that was a right decision for the
following reasons:
 He was responsible for the company broken culture and ethical challenges
 Sexual harassment and female discrimination that turns to #DeleteUber
hashtag making customers deleting Uber app due to his non-responsible
management.
 His argument with Uber driver, which gave a bad indication about his
leadership and raise drivers’ outcry on social media against Uber.
 The legal battle with Waymo concerning the self-driving car patent stealing is
his responsibility and reflects his non-Ethical management.
 Uber usage of Greyball tool to deceive local authorities reflects his poor
management practice.
 High ranking executives quitting Uber, due to conflicts with his leadership
style.
5- Uber was not using Disruptive Innovation, for the following reasons:
 Uber operational cost model make ride prices variable at different occasions,
sometime fare is much higher than local taxi or other competitors.
 Uber is providing service for customer who has many cheaper alternatives,
whether public transportation, other competitors, even car sharing or renting.
 Customer requires a cheap ride, clean car, polite and well educated driver, which
is offered by Uber and many other companies, and the customer, can choose the
better to him, there is no price monopoly.
 All parties are sharing benefits, Drivers are gaining more income, customers are
enjoying comfortable and cheap rides, company is gaining revenues, competitors
are competing for offering similar service and gaining more market share,
governments and local authorities sooner or later will provide license for fees.
 Local taxi providers are enhancing their poor service in order to compete, thus
providing more benefits to drivers and customers, enhancing the overall
transportation industry.

6- As Uber Consultant, in order to recommend future strategies I will use the

Internal External (IE) Matrix

Selected items from SWOT Analysis according to importance.

Internal Factors
Strength Weight Rank Score
S1- Vast Improvement over Taxi rides /Faster 10% 4 0.4
S3-Strong Growing Financial position 10% 4 0.4
S4-Wide range of services 5% 3 0.15
S6- Popular support from drivers/customers 5% 3 0.15
S7-Innovative operational cost model 5% 3 0.15
S13- Independent drivers 10% 4 0.4
S15- Strong Brand/good advertisement 5% 4 0.2
Weakness
W1-Bad Public Image 10% 1 0.1
W2-Poor Ethical environment 10% 1 0.1
W4- Unlicensed service violating regulations 10% 2 0.2
W11- Poor relation with Drivers. 5% 1 0.05
W9- Difficulty to retain customers 5% 2 0.1
W10- Mainly depending on Internet stability 10% 1 0.1
Total Weighted Score 100% 2.5

External Factors
Opportunity
O1- Ride-hauling market growth/more demand 20% 3 0.6
O2- Autonomous vehicles investment 20% 3 0.6
O6- New services for more market segments 10% 2 0.2
Threat
T1-Local Authorities and regulations Lawsuits 15% 4 0.6
T2-Drivers Unionizing 15% 4 0.6
T4-Customers #DeleteUber campaign 10% 3 0.3
T3-Properitry cases of Autonomous car 5% 2 0.1
T7-Zipcar substitute solution of hourly car rental 5% 1 0.05
Total Weighted Score 100% 3.05

Scores on x-y axis of IE matrix are (2.5, 3.05)

The following plot indicates the score and the recommended strategies.

As per the IE Matrix, the recommended strategies for Uber is “Growth Strategies”
This includes the following:
1- Backward Vertical Integration: Hiring the Drivers as employees.
2- Vertical Integration: Acquiring competitor (Ola / Grab / Zimride).
3- Market Penetration: Promotions / Campaigns / Advertisements.
4- Market Development : Opening in new locations ,addressing new market segments
5- Product Development: Introducing Self-Driving Cars / Electric Cars.

With the new CEO, Uber strategy must be directed to make a good public image and
growing more through drivers and customers to take back its position as the market
leader in ride-hauling industry.