Assignment 2 Uber Strategic Report PDF

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Summary

Assignment 2: UBER: Driving Global Disruption: Strategic Report ADMN404: Strategic Management Professor: Michael Mauws Naomi Woods: Student ID 2972788 Dated: February 2, 2019 Presentation DIMENSION Technique/ Mechanics   Clarity   5 Support Make use of visual aids. 4 Appearance   4 CO...

Description

Assignment 2: UBER: Driving Global Disruption: Strategic Report

ADMN404: Strategic Management Professor: Michael Mauws

Naomi Woods: Student ID 2972788 Dated: February 2, 2019

Presentation DIMENSION

COMMENTS

Technique/ Mechanics

5

Clarity Support

POINTS

5 Make use of visual aids.

4

Appearance

4

Executive Summary

18

DIMENSION Content

COMMENTS Note more of the conclusions from all sections of the report.

Succinctness

2 Provide more of the conclusions.

2

Introduction DIMENSION Description/ History

2 2

Independence Impact/ Authority

POINTS

8 COMMENTS

POINTS 5

Rationale/ Context

Why does Uber need to consider a new strategy?

Limitations/ Foreshadowing

Note other research and resources.

0 2

Organization

4

Mandate

11

DIMENSION

POINTS

COMMENTS

Description Analysis

5 Primary stakeholders?

4

Use of Concepts

4

Conclusions

4

External Analysis DIMENSION

17 POINTS

COMMENTS

Description

Clearly note, rate and discuss the five forces.

3

Analysis

Do not discuss Uber in the Macro Environment.

3

Do not combine concepts or use concepts from other courses.

Use of Concepts Conclusions

3

Note some of the substitutes.

3

Internal Analysis DIMENSION

12 POINTS

COMMENTS

Description

5

Analysis

5

Use of Concepts Conclusions

5 Do not discuss competitors.

4

Strategic Options DIMENSION

19

Description

COMMENTS Ensure your options are either Corporate or Business level strategies.

Analysis

Expand on the pros and cons.

Use of Concepts

POINTS 2 4

Include a Hambrick table for each option.

3

Conclusions

3

12

Grade Calculation - Assignment 2 SECTION Presentation Executive Summary Introduction Mandate External Analysis Internal Analysis Strategic Options

POINTS / 10 9.00 4.00 5.50 8.50 6.00 9.50

WEIGHT

MARK

10%

9.00%

5%

2.00%

5%

2.75%

10%

8.50%

20%

12.00%

20%

19.00%

30%

18.00%

6.00

Overall Mark

71.25%

Executive Summary The purpose of this report is to discuss the strategic position of Uber; a company which has operated in the ridesharing industry since 2009. This report will outline Uber and how they have achieved global success through the introduction of a ridesharing app. Insight into the external environment including political, economic, technological and social aspects that affect Uber will be discussed. An internal analysis of Uber will be conducted focusing on Uber’s strengths. Key weaknesses such as the negative relationships with governing bodies will also be highlighted. Finally, strategic options will be addressed and discussed. Uber must choose new strategies to remain relevant with the increased competition and to help end the regulatory concerns they are facing. Such strategies include global expansion through differentiation, adhering and lobbying regulations, and introducing a fixed-price strategy.

Introduction/Company Overview The Uber application came about through a joke between the co-founders about how it would be much easier, safer and reliable to be able to call a taxi with just the tap of a button. This simple joke is where the idea of Uber began on a cold wintery night in 2008. Since being established in 2009 by Travis Klananick and Garrett Camp, Uber has dominated the ride-forhire industry and has pathed the way for other companies. Uber began operations in San Francisco as a private car service application providing premium, reliable and easy to order transportation. During 2010 Uber experienced unanticipated growth throughout the world as demand for more reliable ride-for-hire services increased. The surge pricing strategy that Uber operates under makes them attractive to consumers, thus helping Uber to expand to over 65 countries worldwide, employing over 16,000 team members to become one of the most profitable companies within the service sector.

Uber has not only revolutionized the way consumers hire transportation but has also created a flexible way for people to earn extra income. The small idea between two friends has helped to strengthen many city economies making transportation as “accessible as running water” (Uber, 2017) and creating safer modes of transportation. Uber has brought to light the many downfalls of taxi services including dirty environments, rude drivers, unreliable transportation and sexual exploitation. Through Uber’s use of a vigorous screening process each potential employee is subject to criminal record test and drug testing, Uber also ensures potential drivers are not known sexual offenders to ensure the safety of all customers. Drivers are also required to use their own vehicles and to provide Uber with a copy of their clean driver abstract. Using this approach has enabled Uber to prove to consumers that they have their best interests in mind and only want to provide the best and safest service possible. The intention of this report is to look at Uber’s mandate, external and internal environment, and to provide an analysis of how Uber has become the leading ride-for-hire company and how they can sustain competitive advantage above others. Strategically Uber should be focusing on one of differentiation to help them continue to stand out from the competitors they paved the way for within the transportation industry. Through continuous research and development into what customers and employees need they will be able to create sustainable competitive advantage and customer loyalty. Mandate Uber’s mission statement is to “Ignite opportunity by setting the world in motion” (Uber, n.d). Uber is part of the transportation sector with the main goal is getting their customers from point A to point B safely and quickly. Through their mission, Uber is dedicated to trying to solve big problems faced within the transportation industry from the safety of the riders to ensure drivers are properly compensated. Uber is known for their diversity selecting potential employees of all races, ages, and backgrounds – the

only requirements being a sound criminal record check, reliable transportation, clean drivers abstract and vehicle insurance. The vision is much the same as their mission statement to “ignite an opportunity by setting the world in motion, taking on the big challenges to help all those affected within the transportation industry”. (Uber, n.d.) The major goal of Uber is to help to overcome the frustrations both customers and drivers face with taxi cab services. The overall experience of cab services can be unpleasant for both the driver and rider with many cabs being dirty, often both riders and drivers being rude, wait times being long especially during peak times such as Christmas and New Year, services often unreliable and fares high. The core values (see appendix 1) of Uber show that one of the top priorities is customer service and the safety of all riders and drivers. This makes Uber attractive to potential customers as well as potential employees; the team at Uber cares about people more than money. The Uber model is built around technology and how as it evolves it can help us all feel safer and happier, through the dedication of the Uber team the ride-for-hire process is made as stress-free and safe as possible for all users. Uber strives themselves on their belief for reliability, safety, and affordability. Uber is in the growth phase and is experiencing increasing competition from Lyft and Sidecar who offer similar services. The biggest challenge Uber faces is regulatory concerns in the ride-for-hire industry. Uber has faced a backlash from many governing bodies since penetrating the market in many countries and cities. The limitations of this report will include a lack of access to financial reports. Uber is a privately-owned company; therefore, financial data is no available for public use. This will stop any assessment of high well Uber is financially doing today. There are many speculations available on the internet of Uber financial situation; however, these are unreliable resources and will not be used for this analysis. The analysis of Uber will be based off factual information that can be backed up appropriately.

Stakeholder Analysis Uber is made up of two key stakeholders; the internal and external employees and their customers. Uber’s customers are a diverse group and bring some unique challenges with them. With the use of the efficient feedback system within the application Uber is able to bring their customers together with their employees. This robust feedback system is only possible due to the outstanding work from one of Uber's key internal stakeholders' the R&D team, the knowledge, and expertise these employees have has helped to grow Uber into a multimillion-dollar company that is trusted by thousands of people. The internal team is made up of the R&&D team and human resources. The human resource team is responsible for the hiring of the drivers; they are to ensure that Uber hires the right people for the work they offer. The human resource team is perhaps the most important stakeholder for Uber as they are to ensure all other stakeholders embrace the Uber mandate in order the provide the best services for potential and current customers. The key external stakeholders of Uber are the team of drivers they employ. The application devised by the Uber team makes it possible for the drivers to be paid fairly, quickly and electronically. The application also enables the drivers to rate the customers they pick up; allowing all drivers to be aware of any potential problem customers. The rates themselves are set by the Uber internal team which could potentially cause some issues if drivers feel they are undervalued and could potentially lose Uber business if the customer or driver does not agree with the set rate of pay. All of these activities are supported by the company infrastructure, the information system, and logistics. If Uber focuses on bringing all of these together with the use of their key stakeholders, then Uber could potentially position themselves to achieve sustainable competitive advantage. External Analysis

Uber has become the favorite and for many the first choice in the ride-for-hire industry. Uber is a first mover for the new era of the ride-for-hire industry, but as shown through an external analysis there are many obstacles for Uber and many others to overcome. These are shown along with their strengths and opportunities through a SWOT and PESTLE analysis in the appendices. Throughout Uber's lifecycle there continues to be endless controversies surrounding the political factors. There are still no clear regulations for companies like Uber to operate throughout the world. These leave a lot of uncertainty as to what regulations will be enacted and just how bad could these impact ride-forhire companies. The uncertainty makes it very difficult for Uber to make firm plans for their future operations. Socially and economically Uber has become acceptable as an alternative for a taxi cab or town car which can often be expensive and unreliable. Uber has created new employment opportunities as drivers do not require tax licenses; just a clean abstract, clear criminal background check and valid driver license. However, this has created some backlash with many established taxi-cab firms. Through Uber's reliability, they have now established themselves in many of the bigger cities around the world and can focus on creating more customer loyalty in smaller cities and towns to make Uber the preferred transportation choice. Uber's dedication to safety is the strongest social factor they possess. The goal of Uber is to ensure the safety of all drivers and customers for the most enjoyable experience possible. The company has dedicated themselves to conduction internal safety reviews to ensure all aspects are up to the required standards; focusing on three main aspects: operational, technical and organizational. In conjunction with external safety reviews, this has enabled Uber to keep themselves ahead of the competition and up-todate with all health and safety regulations.

Technologically speaking, our world is everchanging and without a complete, technologically advanced research and development team companies will eventually become irrelevant. Uber's team is exceptional; they saw the need for an application-based system and through lots of research they made the first ride-for-hire application which has given them the competitive advantage. However, a threat does come with this, applications can be easily imitated therefore Uber needs to ensure they are continuously researching and developing ways to stay ahead of any competition. Portor’s Five Forces model extension is used to assess some of the threats that Uber faces. The threat of rivalry is considered high for Uber. Uber is a first mover in their segment for the ride-for-hire industry; this has left the market open for lots of new competition which also increase the threat of new entrants. Since operations began Lyft, Hailo and Sidecar have positioned themselves within the market using similar models to Uber. There is also the ongoing rivalry with the current taxicab services. This increases the threat of substitutes for Uber, every country that Uber operates also operates its own taxicab service for the public. Taxicab services may not be the most reliable, but consumers will look to those substitutes should pricing be slightly higher for Uber or should there be no Uber service available. The bargaining power of suppliers indirectly affects Uber as oil and gas prices fluctuating may influence their driver's decisions to operate. As prices increase the supply of drivers will decrease and as price decrease, the supply of drivers will increase; however, the demand for services will not change and therefore this could potentially have a negative impact on the operations of Uber. The bargaining power of buyers is relatively low as the switching costs are minimal. If consumers decide to switch back to tax services or carpooling there are no direct costs associated with doing this switch, just the potential to spend more money on services or perhaps save some money through carpooling. Industry Analysis - Industry Life-Cycle Model

According to the Industry Life Cycle Model (Appendix 4), Uber is currently in the growth phase. Uber is currently experiencing growth in expanding its services to over 80 countries. The growth succession attracts new entrants to the already competitive market for ride-for-hire companies. Economic growth is expanding which increases customer confidence and business activities. The exact point of the growth phase that Uber is at is undeterminable the company does not publicly share gross revenues for the year. Once Uber reaches the peak then growth will drop to zero and they will enter the next phase of the lifecycle. Internal Analysis An internal analysis of Uber will highlight the strengths and weaknesses of the company. It will also determine how their core competencies achieve and sustain competitive advantage. The Uber business model revolves around the application developed for smartphones. The entire premise of Uber is based around technology, and technology changes every year. The research and development team of Uber will continuously commit themselves to ensure Uber stays up to date with the lasts technological trends to ensure the application is always up to date and user-friendly. The executive team at Uber consists of only the best with many holding bachelor's degrees in engineering and computer sciences. The R&D team at Uber is a core strength of the company as through research and innovation Uber has enabled the name to transfer into the food delivery service, freight services, and business services. The use of licensed drivers who own and operate their own vehicles is an advantage for the Uber model. Standard licensing for ride-for-hire companies is expensive and often hard to come by. Using driver who already carries their own licenses and vehicles allows Uber to keep the start-up costs relatively low as well as the ongoing operating costs. This helps Uber to enter new markets much quicker and cheaper than the competition. With the use of the user-friendly app to locate the services in conjunction with the

low operational costs and ease of finding licensed drivers Uber is able to gain competitive advantage over the competition. The commitment to safety is a strength that has helped Uber to grow and dominate the ride-for-hire market. An unfortunate incident with the development of self-driving vehicles set the motion for thorough research into how to make the experience safer for all parties involved and how to decreases the risk for Uber. Through extensive development of the application, there is a built-in emergency assistance button for both riders and drivers to ensure all feel safe and all know if they need help there is always a way to call. Uber has also developed a way to ensure that each trip is covered by insurance for all parties by partnering with leading providers. Uber is continuously ensuring that safety reviews are performed and documented to ensure that all current and potential stakeholders feel confident with their decisions to become part of Uber. The high commitment to safety will ensure Uber achieves competitive advantage over other providers in the industry. While it is important for fair prices, safety is the driving force for decisions to get in a taxi or ride-for-hire service, if neither the rider nor driver feels safe, they will not use the service. Uber does not serve a particular market segment; they appeal to all consumers looking for a reliable and safe alternative to taxi cabs. Uber has achieved growth in many aspects of the market including the expansion of services offered to luxury consumers by Uber Black (luxury cars and SUV’s). Uber has managed to broaden their scope of operations through having no specific target market; you can find Uber services in many cities around the world as well as in some urban areas. Consumers demand has also enabled Uber to operate in other industries such as freight delivery sectors and food delivery services through special applications designed to make the process easier and more reliable for the sender and end user.

A major weakness of the Uber service is the lack of marketing tools. The company does not invest anything into marketing tools and operations which will not help mitigate any negative reviews and media releases towards Uber. The lack of marketing could be costly to Uber especially with the increased competition from Lyft and Sidecar, should these companies be investing in marketing strategies to promote and mitigate negative issues they can use Uber’s weakness to gain more control of the market segment. Currently, the media portrayal of Uber is very mixed; on one hand, Uber has been proven to be a solution to unreliable, expensive and sometimes unsafe ride-for-hire companies. On the other hand, Uber through the negative relationships with governing bodies has been presented as at times be unethical and challenging to current legislation for the ...