Internal and External Analysis of Uber Corporation

After analysing Uber this report will provide a detailed internal and external analysis of the company, based on the evidence provided, by reviewing the environments that will impact Uber in upcoming endeavours which may facilitate or hinder future growth. The report will contain recommendations on how Uber can strategically manage their company by identifying their strengths and striving to maintain and improve them also by identifying their weaknesses and proposing solutions to overcome these. With Uber being in 130 cities and 36 countries, “Uber has revolutionized the way people move in cities around the world”. Under management of Khosrowshahi Uber is striving to be an IPO company “as early as 2019”. To attract investors to purchase shares, the company needs to increase revenue, we are seeing improvements as in the first quarter of 2018 Uber as booked gross revenues of “$11.3 billion, a 55% increase” of the previous year but heavily relied on two deals, Yandex and Grab to provide them with profits, once the “one time gain was stripped out” Uber still made a loss in the quarter.

Uber goes from strength to strength seizing opportunities as they arise. A major strength Uber has is seeking customer frustrations and providing solutions. Supplying a service when there is undoubtedly going to be disruption. We see Uber identifying an opportunity to grow their customer loyalty by offering lifts during “special events” such as “New Year’s Eve”. To retain customer loyalty Uber should continue offering an uninterrupted service on these “special” days. (Value Chain) Customer value is majorly important to Uber one of the earliest differentiation strategies we’ve seen Uber use to improve the customer value was the development of the smart phone application which effectively enabled customers to hail cars “from the comfort of a coach”. Not only is the Uber app a major competitive advantage it enables Uber to track the demand for their taxis, it demonstrates clear value. This type of innovation is invaluable, I would recommend Uber to persist with this strategy of competing with the market not only through cost but through differentiation. On analysing value to customers, a strong and noticeable difference between Uber and regular taxis is the feature of allowing “riders to rate drivers”. Again, we see Uber using differentiation to attract customers, it is strategies like this that give Uber clear competitive advantage which in turn leads to superior profitability, I recommend staying ahead of the market by continuing this attractive model leading to clear competitive advantage.

Are organisational resources and capabilities strengths or weaknesses?

Uber uses drivers in every city which is vital for the business to succeed. They need to maintain a network of drivers in each city. The appeal of working for Uber, is working when your available choosing working hours but this is not enough to incite drivers. Uber is aware of this and in 2013 took steps to ensure “financial and safety advantages” weren’t the only incentives to attract drivers. Uber arranged “$2.5 billion” in financing with Toyota and GM which made it possible “20,000” drivers to buy their own cars. In return the drivers would be in partnership with Uber for the duration of the loan. Drivers in every city are necessary for the success of Uber and with out cars there is no drivers. Uber has taken advantage of their main resource base by sourcing the financing for their drivers and it is recommended Uber should continue with appealing incentives to attract them.

Are organizational resources and capabilities strengths or weaknesses?

Cars and drivers are Ubers main resource but there were many concerns around regulations of these driver and the vehicles. This was a major weakness for Uber. Uber was issued a “cease and desist order” in California with penalties including fines and up to ninety days in jail. At the time Uber changed their name and continued their service. The company only grew but again was deemed “illegal” in Washington. Another strike for the company’s name. The sting operation worked in Ubers favour, as cars were being hailed and impounded the customer loyalty grew. Customers were urged to send emails the legislation was withdrawn. This incident showed that all Uber had was drivers and cars and it they were declared illegal the company ceased to exist, it would not be recommend Uber ignore regulations, this was a weakness the company faced, ultimately it worked in their favour but showed how quickly the company could be dismantled if their most valuable resources were contested. Uber should learn from this incident moving on and ignoring regulations is discouraged. Competitors highlighting Ubers lack of regulations to the government in San Francisco increased tensions between rivals and Uber, the government could have imposed the regulations with serious consequences to Uber but it was Ubers rapid growth and customer loyalty of “36000” signatures on a petition that suspended the ordinance and legalised Uber “removing any caps on driver numbers”. This customer loyalty overcoming a barrier to entry for Uber into the market shows Uber is now a key player and a brand no to be ignored. It is recommended that Uber remain customer focussed as they saved Uber when needed.

The incident of competitors highlighting Ubers lack of regulations allowed us an insight to in style of management of former CEO Kalanick. Uber was being threatened with huge fines and jail time but Kalanick “joked” he probably had “20 000 years of jail time in front of him”. We got a glimpse of Kalanick’s joking manner of a very serious issue. Another time Kalanick’s lack of taking issues seriously in 2017 when Uber was pulled from London one of their “most profitable markets”, as drivers were not properly vetted, drivers were vetted through an app “grey ball”. Drivers were not reporting assaults or other criminal offenses. Uber were eventually granted a probationary license for 15 months to allow business in London. Not only were drivers not vetted thoroughly it was revealed a senior VP had left a business the year prior to joining Uber as he had a “credible sexual harassment case”. A further investigation led to twenty more staff being fired for “unethical behaviour”. It is not recommended that Uber continue this structure of just meeting laws and regulations by the bare minimum. Although Uber has taken actions to rectify their errors of top management by hiring a new CEO Khosrowshahi, management filters from top down and if management style was to fall back to old ways it could severely damage the company.

With Khosrowshahi taking over we have seen a serious change in management style. Khosrowshahi brings new skills and greater experience. In his first weeks meeting with drivers to discuss concerns, hiring the “company’s first diversity officer”, rectifying previous issues with regulatory battles and most importantly changing the what the company stands from. Khosrowshahi re wrote the company’s 14 cultural values down into “eight cultural norms”. He did this by being inclusive of drivers, consumers and people who use Uber as he gather 1200 ideas sent in, this gives the company shared values , these shape the company’s actions and the employee’s behaviours. It is recommended that Khosrowshahi continues to make big changes and set new standards as the values are the foundation every organisation.

External

There was a strong gap in the market for a new taxi service in the US. As it stands before Uber came on the market there was three key players in the market, medallion holders, taxi drivers and taxi dispatch companies. Taxi drivers would often have to lease medallions from companies who charges high rates and drivers could often be left making no profits halfway through their shift because of this. Uber used this to their advantage to eliminate part of the main competition. By offering the taxi drivers the ability to work with out having to pay a leasing free before taking home a wage. This handled existing competitors by enticing them to join Uber and makes the potential competitors less of a risk. Uber should consider drivers preferences when expanding in the future otherwise they run the risk of potential competitors rather than allies.

Uber risked facing consumers fearing what they didn’t know and being apprehensive to use their new taxi service with three main players dominating the market for so long they might face consumer brand loyalty to certain taxis, for example the black cab in London. To combat this as Uber entered the market, they focussed on running their service in San Francisco and targeted members of the tech community, they seen the opportunity of being most appealing to the tech demographic and it served them well. Their growth strategy was word or mouth and social media which was a success as Uber discovered their rapid growth was driven by “word of mouth”. Uber spent little to no money on marketing and still had substantial growth. As quickly as Uber can grow through social media it can lose as well as seen in 2017. Uber lost an “estimated 200,000 accounts” when Uber decided to provide services during a taxi strike with was in connection to immigration policy protests. It only took one hashtag “#DeleteUber” for the company to see such severe effects. It is recommended Uber take a more cautious course of action when consciously or be it unconsciously marketing themselves.

The hashtag “#DeleteUber” had a knock on effect with not only marketing but the competition too. Uber has many competitors but their main competitor offering a similar service to them is Lyft. Within days of the hashtag Lyft’s app had moved from “number 39” to “number 4” on Apple’s app store. Uber is always trying to stay a head of competition and in particular ahead of Lyft. It is recommended Uber continue strategies to stay ahead of rivals. The idea of Uber X was Ubers way of seeing an opportunity to cancel a threat of a low cost competitor. Uber produced competitive strengths dropped their New York fare by “20%' making them the cheapest taxi in New York. It is advised to continue developing strategies to stay a market leader and cancel competitive threats. Uber offered a service that other Taxi services at the time couldn’t match. They developed an app to hail a taxi with comfort. Uber is a cheaper option for the consumer, and gives rates based on time and distance, it is a no cash experience which ultimately it is a safer experience for the customer and the driver.