Running Head: Strategic Alliances by Uber Eats 1

Strategic Alliances by Uber Eats

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Executive Summary
Multinationals all over the world are always in a continuous quest for expansion. In this quest for

growth, companies form arrangements with partner companies with shared interests and

ultimately allow the two to work toward a common goal that will benefit them both.

Multinationals are however faced with a myriad of issues that may affect their international

operations. Uber Eats is a perfect example of a multinational that continuously ventures into new

territories by forming strategic alliances in search of expansion. The company is however

susceptible to issues, both positive and negative that have a direct influence on operations.
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Company Overview and Context of Analysis

There are many different strategies that companies use for growth and development purposes.

These may include Joint ventures, Acquisitions, Strategic Alliances, and Mergers. If applied,

these strategies can help corporations gain market share, unite common products, expand to new

regions, lower their operational costs, increase profits and grow their revenues. Uber Eats is an

example of a corporation that has greatly benefitted from one such strategy. Uber Eats, a

subsidiary of Uber is an online food ordering and delivery platform that allows its users to read

menus, order, and pay for food, and get it delivered from participating restaurants using an

Android or iOS application on their phones or through a web browser.

The service was first introduced in 2014 in an attempt by Uber to break into other sectors of the

transportation industry. Uber made its entry into food ordering and delivery in August 2014 with

the launch of the Uber FRESH service in Santa Monica, California (Kalimuthu & Sabari, 2020).

It was later 2015 renamed UberEATS, and the ordering system was separated from the Uber app

into a standalone application, separate from the app for Uber rides (Kalimuthu & Sabari, 2020).

Uber Eats sought to form partnerships with big restaurant chains and international restaurant

companies for mutual gain. Uber Eats could bring in food customers and offer delivery services

for but couldn’t make the food. Therefore, for this model to work, Uber Eats forms mutually

beneficial alliances with partner restaurants and fast food chains through strategic alliances

across the world including the Middle East. The company turns profits by having restaurants pay

commissions for orders made through Uber Eats and customers paying delivery charges for

having their meals delivered. This paper analyzes the various issues that Uber Eats has faced in

its international operations and proposes workable solutions and recommendations.

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Critical Issues Facing Uber Eats’ International Operations.

During expansion into new markets, companies come across different critical issues that may

affect their international operations. Some of these critical issues may include global trends,

cultural and ethical problems, political or legal, issues with firm capabilities and resources, or be

related to international human resource management. These issues can cause a lot of disruptions

in their operations. In their international expansion, Uber eats has faced some of these challenges

which in a few instances, has been severe to the extent of causing shutdowns. In 2020 for

instance, Uber eats ceased operations in eight markets, including Saudi Arabia and Egypt. Before

that, Uber Eats UAE had announced that it would no longer operate in the UAE and instead, said

it will join forces with Careem's food delivery service after it acquired the company in a $3.1

billion (Dh11.3 billion) deal in 2019 (NAGRAJ, 2019). Some of the challenges that might have

influenced these actions are analyzed in the discussions that follow.

Cultural and Ethical Issues

Uber eats, being a fully online platform raises various ethical concerns among its users. One such

issue is user privacy which is an ethical concern whose severity is elevated by culture. As per

their privacy policy, Uber eats does not sell user data. That they are not data brokers, and they do

not put users’ data on the open market (Uber, n.d.). The policy adds that however, they do share

personal information necessary to provide you with personalized ads. Users can opt-out of such

sharing in which case Uber eats ceases sharing user information with some of its advertising

partners, and users will no longer receive personalized offers from Uber on some sites or services

(Uber, n.d.). This in itself is an ethical violation of user privacy and can potentially deter Uber

Eats’ expansion into new territories given that privacy is a critical issue that has affected

operations in multinationals across the world.

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Related to Market Selection and Entry Mode Choice

These are problems related to market characteristics and modes of entry. These issues can range

from stronger rivals or competitors in the market, late or delayed entry, or working with

minimum funding. In the Middle East, for instance, Uber eats has had fierce competition from

online food delivery services such as Careem, Talabat, Zomato, and Deliveroo. Talabat for

instance is arguably a leader of online food delivery in Bahrain and runs a similar business model

as Uber Eats. The company enjoys the advantage of being an early entrant having been founded

back in 2004 in Kuwait. Uber Eats has in the past shut down operations in several countries.

Case in point, one of the reasons behind Uber Eats India discontinuing its operations in 2020 is

stiff competition from Zomato; one of India’s largest Food Delivery, Dining, and Restaurant

Discovery services (Sharma, 2020). Zomato went ahead and acquired Uber Eats India. To this

end, competition in Bahrain is an issue that could potentially affect Uber Eats’ operations in the

country.

The multinational’s entry mode of choice also has some downsides that could cause issues.

Strategic Alliances may have benefits such as reduced complexity and less binding as compared

to other modes of entry but they can be susceptible to poor resource allocation, inefficiency in

communication, difficulties in keeping objectives on target over time, and fear of market

insulation due to the local partner's presence (Delaney, 2019).

Related Firm Resources and Capabilities.

Most modes of entry for multinationals tend to be tied to a local company. If for instance a

multinational acquired a local company for expansion reasons, how well the expansion fairs

depend on how capable the company is; whether they have the potential to execute the
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multinational’s expansion goals and objectives. For instance, Uber eats operates by forming

mutual partnerships with local restaurant chains from whom customers can then order. It then

follows that the capacity and firm resources of these partner companies directly affect the

success of the alliance.

On the flip side, Uber already has the key resources such as cars, drivers, and an excellent system

to manage it. They also have a global presence, a reputation, and a proven track record. The

company, therefore, is to exploit these resources as leverage to work to their advantage and give

them an edge over the competition.

Related Human Resource Management

Human resource management issues are often inevitable whenever a company expands to new

territories. Some of these issues may range from language barriers, cultural diversity, and labour

rights. Uber eats for instance being an American Company may face language barriers or cultural

diversity issues when operating in an Arab country. International expansion also presents

companies with opportunities and challenges for staffing. They may for instance have staffing

issues and dilemmas on whether hiring senior management locally is a better choice since local

staff knows the market better as opposed to internally hiring from their branches in other

territories.

The Choice of the Strategic Pillar

Uber Eats uses strategic alliance in its development strategy. This is an arrangement between two

companies to undertake a mutually beneficial project while each retains its independence

(Kenton, 2021). Kenton adds that strategic alliances are less complex and less binding than a

joint venture, in which two businesses pool resources to create a separate business entity. In

strategic alliances, each party remains independent, while pooling resources together to
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strengthen both of their brands, reach new markets, increase market share, and achieve results

they otherwise might not realize on their own (Huhn, 2021). This strategy helped Uber Eats gain

market share in the Gulf fast food and restaurant market, expand into new territory, and

ultimately grow their revenues while satisfying the interests of their partners. The advantages and

disadvantages of this strategy include;

Advantages of Strategic Alliances

a) Strategic alliances are less complex and less binding than other forms of entry.

b) Both companies get to pool resources which allows them to share capital

c) Companies getting into the alliance also share liability.

d) Competitive advantage over earlier entrants.

Disadvantages of Strategic Alliances

a) Poor resource allocation

b) Inefficiency in communication

c) Difficulties in keeping objectives on target over time

d) Fear of market insulation due to the local partner's presence

Solutions and Recommendations

This analysis covers the various critical issues facing Uber eats’ international operations. These

Issues are seen as; cultural and ethical issues, firm resources and capabilities, market selection

and entry mode choice, and human resource management issues. There is the ethical issue of

users’ data privacy. Every user has a right to control how their personal information is collected

and used. While Uber eats insists on not being data brokers, and that they do not put users’ data

on the open market, they still have a policy that allows them to share personal information

necessary for providing you with personalized ads. A solution to this issue would be for the

company to revise its privacy policies.

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It is also my recommendation that Uber Eats solves the issue of increased competition from local

companies by fully utilizing their strengths. The company has many strengths ranging from

access to key resources such as cars/drivers and liquidity to a global reputation. These strengths

could act as leverage which coupled with the option to pool resources with partner firms, can

ensure Uber eats attains new markets, increase its market share, strengthen its brand and

ultimately increase revenues.

Conclusion
This paper analyzes the several critical issues facing Uber eats as a multinational entering into

new territories as well as their entry mode of choice. The paper identifies these issues and

proposes several solutions and recommendations. Some of the issues impact Uber Eats

negatively but the company has an equal share of positive issues. Strategic Alliance as a

company development strategy is also seen as an excellent choice and especially a perfect choice

for Uber eats.

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References
Kalimuthu, M., & Sabari, A. (2020). A Study on Customers Satisfaction Towards Uber Eats
Online Food Delivery Services With Special Reference To Coimbatore City. EPRA
International Journal of Environmental Economics, Commerce and Educational
Management, 7(4), 37-47.
NAGRAJ, A. (2019, 04 03). Uber, Careem deal to be completed in 7-8 months, CEOs tell Dubai
Deputy Ruler. Retrieved from Gulf Business: https://gulfbusiness.com/uber-careem-deal-
to-be-completed-in-7-8-months-ceos-tell-dubai-royal/
Uber. (n.d.). Uber Eats. Retrieved from Uber: https://privacy.uber.com/privacy/california/