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CommeASSIGNMENT 2Uber: Driving Global DisruptionCommentsPresentationDIMENSION COMMENTS POINTS Technique/ Mechanics5Clarity 5 Support Make use of visual aids, a SWOT and an appendix. 2 Appearance 4Executive Summary 16DIMENSION COMMENTS POINTS Content Note more of the conclusions from all sections of ...

Description

ASSIGNMENT 2 Uber: Driving Global Disruption

Comments

Presentation DIMENSION Technique/ Mechanics

COMMENTS

5

Clarity Support

5 Make use of visual aids, a SWOT and an appendix.

Appearance

16

Content

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

Succinctness

Clearly note each section in the proper order.

Independence Impact/ Authority

Limitations/ Foreshadowing

POINTS 2 2 2

Use more paragraphs.

2

Introduction DIMENSION Description/ History Rationale/ Context

2 4

Executive Summary DIMENSION

POINTS

8 COMMENTS

POINTS 5

Why does Uber need to consider a new strategy? Note other research and resources.

0 0

Organization

2

Mandate

7

DIMENSION

COMMENTS

Description Analysis

POINTS 5

Stakeholders?

4

Use of Concepts

4

Conclusions

4

External Analysis DIMENSION

17 COMMENTS

POINTS

Description

Expand on the macro issues.

3

Analysis

Do not discuss Uber in the Macro Environment.

3

Use of Concepts

SWOT?

3

Conclusions

Note some of the substitutes.

3

Internal Analysis DIMENSION

12 POINTS

Description

COMMENTS Provide more of the Current Strengths and Weaknesses.

Analysis

Expand on the Building Blocks.

4

Use of Concepts

SWOT?

3

Conclusions

Do not discuss competitors or external issues.

4

Strategic Options DIMENSION

4

15 COMMENTS

POINTS

Description

Provide three distinct and new Corporate or Business level strategies.

1

Analysis

Expand on the pros and cons.

1

Use of Concepts

Include a Hambrick table for each option.

1

Conclusions

1

4

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

Overall Mark

POINTS / 10 8.00 4.00 3.50 8.50 6.00 7.50 2.00

WEIGHT

MARK

10%

8.00%

5%

2.00%

5%

1.75%

10%

8.50%

20%

12.00%

20%

15.00%

30%

6.00%

53.25%

Executive Summary Uber is one of the most significant company of this decade. The company business model has massively changed the landscape of the transportation industry both in the United States and around the world. Through its simple business model, the company has both been incredibly successful and has managed its expansion around the world. In this report will see the mandate of the company including the mission statement, vision statement and company’s core values. We will also look at both the company’ primary stakeholders and secondary stakeholders. Next will perform an external analysis of the company to see who its main competitors are, risk of new entrants and strength of the company. We will also see threats and opportunities Uber has in its environment. Internal analysis will see the strength and weakness of the business. The last part of the report will see the strategic options Uber has and will look into functional strategy, business strategy and corporate horizontal strategy. Introduction Uber is a transportation company founded in San Francisco, California by Travis Kalanick and Garret Camp, which operate through an app on people’s smartphone. The basic premise of the business is that a customer downloads the app on their smartphone and can hail a car to drive them to their destination from anywhere to everywhere. The person pays a fee electronically and is given a total estimate of the cost before booking a trip. A contracted driver in the surrounding nearby area will be notified, he will come to pick up the customer and drive them to their location. The Uber is involved in this process by providing a link through the app to both

the driver and customer ,and collecting payments automatically through credit card. This business model has been extremely successful for Uber as it reduces both wait times and costs for customers and has allowed for the company to expand to cities across the United States and around the world. Mandate Mission Statement The mission statement of Uber is "to bring transportation to everyone, everywhere.[ CITATION Bri20 \l 1033 ]" It means that by connecting people and them to travel wherever they want without worrying about having their vehicle. Vision The company's vision statement is "Smarter transportation with fewer cars and greater access. Transportation that's safer, cheaper, and more reliable; transportation that creates more job opportunities and higher incomes for drivers.[ CITATION Bri20 \l 1033 ]" the company wishes to reduce the traffics on city roads and provide people with an option for a safer ride to their destination. Core Values Uber operates using eight values, replacing its old 14 core values. The company's CEO Cara Khorowshahi described these as[ CITATION Mad17 \l 1033 ]: 1. We build globally; we live locally. – the company uses its global reach to connect local communities 2. We are customer obsessed. – the company is always working on customer satisfaction and is willing to make a short-term loss for long term customer loyalty 3. We celebrate differences. – the company makes sure to help people from diverse backgrounds feel welcome and encourages their inputs 4. We do the right thing. – the company is unwilling to engage in unmoral or discriminating actions 5. We act like owners. – the company will seek out problems that occur and help to solve them 6. We persevere. – the company is unwilling to give up in the face of challenges. 7. We value ideas over hierarchy. – the company is willing to accept new ideas no matter where they come from, be it their employees, drivers, or customers. 8. We make big, bold bets. – the company is willing to take a risk in a new venture even if they could fail Stakeholder Analysis Primary Stakeholders The primary stakeholders of Uber are its contracted drivers and shareholders. The company's contracted drivers are a vital stakeholder as both rely on each other for their income. as Uber becomes more successful and profitable, its drivers also see an increase in their income. While the company has greater power in their relationship dynamic, its driver does have an indirect

say in the business's ongoing by 'voting with their feet' and choosing to work with other ridesharing apps instead of Uber. Uber's other primary stakeholders are its investors and shareholders. The company's shareholders are primarily looking for a return in investment from Uber. Uber can provide this by paying them dividends and increasing its profits and market share, thereby increasing its stock price. The company depends on satisfying its shareholder due to both obligations and as a means for future capital.

Secondary Stakeholders The secondary stakeholder for Uber includes their customer and the local communities. As Uber and other ride-sharing services become more common practice in society, their customers begin to use it more often in their everyday lives. As most people have mostly stopped using taxi services, Uber and other ride-sharing apps like Lyft and public transportation are the commonly options in practice. Instead of calling for a taxi that may take extra time to come, people now click on Uber app when they need to travel. As Uber only advertises through wordof-mouth advertisement from its users, the company is highly dependent on its reputation among customers. The company's reputation and quality service have allowed the company to expand quickly and dominate the market in most cities it enters. Examples include when European taxi drivers protested Uber's rise by shutting down service, all their clients immediately adopted and stayed with Uber[ CITATION Hil16 \l 1033 ]. The company being able to ignore legal actions from different cities due to its popularity among its citizens. However, if the service's quality drops and/or prices become too high, people will start to leave Uber for its rivals’ ride-sharing apps in a heartbeat. External Analysis Michael Porter's five forces model can be used to evaluate the different opportunities and threats that exist for Uber. Using the five forces model, we will only look at the risk of new entrants, internal rivalry, buyers' bargaining power and suppliers’ bargaining power. Risk of New Entrants The primary threat of new entrants for Uber comes from new companies with similar Uber models entering the market. Examples include Lyft, Curb, Careem, etc. as Uber begins to operate in different countries, each region, and cities, people in these places will begin developing their version of a ride-sharing app following Uber's success. This gives drivers an option between multiple apps available to them. Uber has to ensure that its drivers are kept happy with their compensation and that its fee is not too low as the drivers will migrate to the other apps. If the company's fees are too high, then the customer will leave Uber for other services. Uber has to keep a balancing act with its fees to keeps both its customers and drivers happy. Internal Rivalry Uber's primary rivals, in the beginning, used to be public transportation, taxi services, and limousines services. As it has become more popular other ride-sharing services such as Lyft, have become its primary business rivals. Public transportation, like buses, subway trains, or

streetcars, while widely available, is inflexible in both timings and locations available. These services cannot be hailed at any time or location but follow a strict, rigid schedule and specific paths. Taxi and limousine services can be hailed anywhere but are highly regulated and, in both numbers, and how much they can charge. These services have also developed a reputation for being low quality for a higher price. While they do still continue to exist as they can be hailed by a bartender, restaurant, or hospital, it is in a much more reduced capacity. Uber, on the other hand, is highly deregulated and has high brand awareness among consumers when compared to its rivals. It is easy to use the app that has allowed Uber to dominate in the market; it enters and puts most taxi companies out of business. The only real competition the company faces is from other ride-sharing apps such as Lyft. This competition is set to increase as more of these companies pop up around the world following Uber's example and expand their operations to other cities. As all of these businesses have very similar business models, only the quality of service offered, and the cost of trips can differentiate them. Uber has to ensure that it offers quality service or risk losing customers. Bargaining Power of Buyers The bargaining power of suppliers is high. Due to the ease of using the Uber app and other share riding companies' apps, people can easily change the app whenever they want to. This means that Uber must provide both cheap service and quality service for its customers. The company and many systems in place to help increase the quality of its service. People are able to rate the quality of their drivers and give them tips if they think they deserve them. The app shows the length of time until the arrival of the ride and where it is coming from and gives an estimate of the cost for the trip. Due to buyers' high bargaining power, Uber must continuously monitor its services and ensure quality service for low costs.

Bargaining Power of Suppliers While the drivers the company contracts cannot directly negotiate the cost of their service with the company, they do have some leverage by moving to another ride-sharing service. Because of Uber's algorism, if most drivers leverage their app for others, the cost of a trip will rise, potentially resulting in customers' loss. This power driver has changed from city to city as different cities will have different rides sharing apps being offered. Nevertheless, mistreating drivers where Uber is the only option is dangerous as it will affect eh company's reputation. The Macro Environment Of the six forces that can affect an organization regarding the microenvironment's influence, the political and demographic forces can affect Uber and its operations. Political Uber, whenever it expands into a new city or country, always faces a political problem. The local taxi services always argue that Uber is a taxi company and is violating the law. Legal action taken against Uber includes cease and desist and fines against the company. The company's standard procedure is to ignore all legal actions and gain the support of the city's residents. Only through the reputation the company can garner with its consumer can it avoid most legal repercussions.

Demographic The primary demographic for Uber is people who have a smartphone and are willing to use their credit card or debit card online. This demographic encompasses most people in the developed world and is continuously growing in the developing world. While some people may not be comfortable with inputting their banking information on an app, most people are adapting, and this model is becoming more viable. This also means that there is little to no restriction for Uber when operating in a market. Only when the company expands into a new region does it have to rely on the young and tech-savvy for early adoption. Internal Analysis In this section of the report, we will assess Uber's internal environment and identify the strengths and weaknesses of the organization. Strengths Word of Mouth Marketing As the company has no official marketing strategy except for word of mouth. This strategy has worked out well for the company as it has gained market dominance in all markets it has entered. An example can be seen in London, wherein 2014, the codes taxi services staged a citywide protest Ubers. Instead of harming Uber, the company's ridership shot up 850%. This allowed Uber to dominate that market instantly. Another example is the various cease and desist filed against Uber by different cities overturned due to Uber's popularity. Through its excellent service, the company has achieved strong brand recognition and brand loyalty. Company Costs The only cost the company has is setting up and maintaining its app. The company has no fleet of its cars and no driver to hire. Instead, the company contracts drivers who provide their vehicles. This allows the company to expand and contract their drivers with no cost to reduce waiting time and quick entry into new markets. Rapid Expansion As the company only requires an app to get started, expansion into a new market is relatively easy. Unless the company is operating in a new country or the region is too far apart from its current headquarters, Uber can quickly expand into new markets. While early days' adoption was slow due to a lack of knowledge about the service and lack of trust, when the company expands into a new market now, adoption of the service is much higher among people. This becomes easier over time as brand recognition grows, and more people want the company to come to their cities. As the company has no fleet of vehicles and no hired drivers, there are few entry barriers for entering into new markets. The company also has a strategy for attracting and maintain drivers and keeping fee low. When an area has fewer drivers compared to demand, the app notifies drivers in the surrounding region by showing a higher rate per trip in that area. This will attract more drivers into the region looking for a higher income, which increases demand in the region and stabilizes the price per trip. This algorithm also helps to provide an incentive for drivers to operate in bad

weather and other external circumstances as rates for trips increase dramatically, ensuring there are always some drivers available. Weaknesses Low Demand Cities Uber has a considerable weakness in that the company will not operate its business in small towns and cities and rural communities. The company rationale is that as rural areas are large and sparkly populated, each trip's fare will be high unless lowered by the company, and demand will be low due to the small population. For small communities, Uber sees that the revenue generated from these communities is too small for their effort. As a result, there is an opening for Uber's rivals to make an appearance. Over extension Uber currently operates in multiple cities across the world. This means that it has to maintain its service level across different countries, in different climates and political situation. As a result, customers might face problems with wait times being too long, high trip costs, glitches in the app occurring, lag times and other problems. While some of these problems might be justifiable if they are one-off, but with repetition over time, they will start to affect the company's reputation. The company's immediate success has only been possible due to its reputation. This reputation has allowed the company to thwart lobbying and legal bottleneck in its early phase. As the company does not advertise, instead of relying on word of mouth advertisements, there is little control over the message being spread. This reputation loss can result in the company losing existing customers to rival ride-sharing apps and can hamper future expansion opportunities.

Opportunities Delivery services Another option available for Uber is to offer delivery of food takeout. The company already has most of the built-in infrastructure available to them, with only the need to sign up restaurants into this service. Most restaurants will happily adopt a food takeout delivery service from Uber as they might not offer their takeout service. Other restaurants that already have delivery service might be tempted to join as a way to expand their business and reduce costs. The only thing Uber has to ensure is the quality of its service as if the food is improperly handled or not being delivered, and it will hurt the image of the brand. Functional Level strategy A functional level strategy is a strategy to improve a company's efficiency and effectiveness. For Uber, this would mean that they must improve their operation efficacy. This can be done by looking for and fixing and glitches that occur in the app, reducing lag time and improve the route and driver selection algorithm of the app. Removing any glitches and lag time in the app will help to reduce customer frustrations and improve the quality of the app, improve the algorithm so its selects a driver more quickly and decreases the length of the route by taking

into account both traffic and road work that is happening in area while more difficult will help reduce costs and travel time for customers. Under Hambrick and Frederickson's framework, there are five questions to ask. Where will we be active? How will we get there? How will we win in the marketplace? What will be our speed and sequence of moves? How will we obtain our returns? For Uber, its strategy is about improving the efficacy and effectiveness of its business. First, the company's primary area of operation is on the significant street of cities worldwide. However, the companies' development happens primarily in their own offices. Uber already provides a cost-effective service that most taxi services out of business. For the app to be more efficient, the company should c...