The business model
The business model for Uber is simply a smartphone application that helps the customers
to get access to the ride services. The technology platform links passengers to taxicab drivers.
The cab drivers are independent agents meaning that Uber does not hire them as its employees
(Di Amato, 2016). As a result, the drivers charge customers and Uber acquires a certain
percentage of the income. The process is quite simple, registered Uber members request for the
divers through the Uber App, then a driver is dispatched to the customer’s location and takes the
client to his/her destination. The customer pays through a credit card.
Principles of the “sharing economy.”
There are two basic principles of sharing economy. The first principle is the sharing of
things and services. The policy involves sharing of things which are assets, for example, cars,
houses and time. Also, people use various services which facilitate the sharing of these assets
amongst themselves. The second principle involves ownership, decision-making, and
collaboration. The policy is addresses the collaboration aspect of the peer-to-peer, which
revolves around the shared decision-making process to decide on which sector in the economy
suits their operations (Di Amato, 2016). The industry adopted should possess characteristics such
as fairness and support minimal waste.
Uber’s adaptation of the sharing economy idea to its own business
Uber is one of the companies that adopt the sharing economy idea to its business. Uber
uses the policy of sharing assets. People who include the drivers and passengers exchange cars
for use. For example, a passenger can request for a driver provided the client is a registered
member in the Uber App. Also, a passenger can hire a car from the driver by using the App.
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However, Uber does not use the second principle as much as we would expect. The aspect of
peer-to-peer or collaborative partnership is absent in Uber since the organisation is owned and
centrally governed. Drivers operate independently and are only expected to compete fairly but
not to partner with each other.
key values Uber intends to deliver with its business proposition
The value proposition is an essential aspect of consideration in every organisation. Uber
is no different in the rendering value proposition. The company mainly focuses on providing
premium services to customers. Uber plans to improve quality by adding three leading services.
They include UberHealth, UberAssist, and UberRush (Di Amato, 2016). UberHealth will help
people to order or request for nurses to administer flu shot. UberAssist is an exceptional service
meant for members with disabilities and thus requiring special assistance. UberRush, on the
other hand, is simply a service that will facilitate excellent delivery.
Why Uber is attractive to customers (“socio-cultural trend”)
Over recent years, Uber has proven to be an attractive business to many customers
Worldwide. The attractiveness of the business results from the company’s capability to simplify
platform accessibility. Primarily, the most considerable number of the population has
smartphones from which they can access the UberApp. Therefore, that makes it easy for most
people to access the app. Additionally, UbberApp is easy to navigate. Communication takes
places by just pressing a few buttons. Moreso, as the customers get to enjoy the rides, they post
about their experience on social media and thus marketing the company to many other potential
clients (Di Amato, 2016). Also, the satisfied members recommend the company to their friends
and thus promote advertisement by word of mouth.
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Uber’s value chain Analysis
Uber has designed its value chain by recognising inbound logistics, operations, outbound
logistics, marketing and sales, and uber services. Uber inbound logistics includes the use of the
internet to facilitate business operations. Uber operations involve three significant steps, which
include requesting the ride, the ride, and the pay and go. The outbound logistics is similar to
inbound logistics and thus involves the internet. Uber marketing and sales entail the use of social
media, word of mouth, and other significant methods such as promotions. Uber service remains
one of the competitive advantages of the company.
Activities in the value chain (Porter)
In inbound logistics, the activities that mostly take place include registering new drivers
and members to the Uber App. The event here is internet-based, as in, they use the internet to
perform the core activities. The Uber operations comprise of three stages that occur. The
customer requests for the ride through the app, then the journey takes place, and finally, the
customer pays for the service. In most cases, outbound logistics primarily entails warehousing
and physical distribution of products. However, in Uber, service delivery and consumption are
inseparable. The outbound logistics are Internet-based (Di Amato, 2016). Uber marketing
involves advertisements such as the use of social media, word of mouth, promotions, events, and
public relations as marketing strategies. Uber service entails activities such as the rating of
drivers by the customers, and thus, the company promotes a good reputation.
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Resources used in each step of the value chain
The resources used at the inbound logistics step include internet and office equipment.
The internet helps to connect the app while the office equipment such as tables and chairs helps
the administers to work comfortably. Uber operations make use of smartphones and computers
mostly. The smartphones or computers enables the members to access the Uber app and make
requests for rides. Also, gadgets help in monitoring all the activities taking place in the company.
Uber outbound logistics makes use of internet resource as well. Uber marketing and sales make
use of social media platforms such as Facebook, Twitter, Instagram, Youtube, and Google+ (Di
Amato, 2016). Additionally, this step utilises events, public relations, and humans to spread the
news about the company- word of mouth. Lastly, the Uber service resource comprises a
customer service icon that is well integrated with the app for assessing the level of services
offered to the customers.
Important steps in the value chain
The value chain comprises several parts which entail further steps. The essential part of
the value chain is the Uber operations, which encompass the three most significant levels in the
organisation. The first step involves requesting the ride. Customers use the Uber app to assess
the time, price, and driver to get the best option and request for the trip (Di Amato, 2016). Also,
the clients can input their place for secure locations by the driver. The second step is the ride.
Customers can view the details of the car as well as the driver. Hence, they can confirm they get
the right vehicle and driver. Pay and go is the last step in the Uber operations. The action
involves the payment of fare by the customers upon reaching their destinations. The payment
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method is simple, and customers do not need to carry cash or credit cards with them. The
payments are cust automatically on the credit card on file.
Ansoff’s matrix
Market penetration
Uber carries out market penetration by applying several sales promotion techniques. The
first one the promo codes which enables the loyal customers to have a discount for their next
ride. The second one is the “Uber VIP” loyalty program that gives the riders exclusive access to
the highest-rated drivers (Di Amato, 2016). Also, the riders earn free riders by referring their
friends to sign up with the company.
Product development
Product development involves creating new products and services to offer the market.
The global transportation organisation continues to advance products and services. Currently, the
company provides a wide range of services including Uber X, XI, GO, POOL, AUTO, MOTO,
Acess, Premium, and Rush.
Market development
Uber was started in San Fransisco in 2009. Further, the organisation added more markets
in major countries, and currently, it has about 760 branches in all major cities across the World.
Also, Uber is anticipated to increase the market under the new leadership.
Diversification
Uber was launched as a technological transportation company for enabling members to
gain access the transport services from registered taxi drivers. However, the company has
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recently added food delivery services to its business. The service is performing well and is
expected to increase its performance excellently.
PESTEL Factors
Political factors
Uber lacked clear regulations during the initial development stage. It was hard to
determine the insurance lie where, in case of the accident, it was not known whether the driver or
the company was the one guilty. Also, the company faced charges regarding advertisements in
France, charges regarding driving the licenses in the Netherlands, and severe rejections in several
Asian countries.
Economic factors
Uber experiences rejections in some countries due to the stiff competition it creates. Most
customers have shifted from other taxi companies to Uber due to the company’s quality services
at lower prices. As a result, it becomes challenging to operate in such countries where the
economy is not in its favor.
Legal factors
Uber experiences a lot of bans in most countries such as the Netherlands, France, and
other Asian countries about usage laws, copyright laws and employee and customer protection
laws.
BCG Matrix
Stars
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The financial service is a star in the Ubers BCG Matrix. The company works in the
industry with a potential future market.
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Cash Cows
The cash cow in uber’s BCG Matrix primarily constitutes of the supplier management
service unit. The operation has taken place over a decade, earning Uber high revenue. However,
the overall market is declining as organisations are doing away with outsourcing.
Question marks
The local foods strategic business unit fits in this sector. The market trend indicates an
increase in local foods by consumers. Therefore, the market suggests a high growth rate
potential. Uber should invest more in research and development to come up with better ways to
penetrate the market since it has low demand in the sector.
Dogs
The plastic bags strategy is a dog in Uber’s BCG Matrix. The policy operates in a
declining market due to more environmental concerns has made losses in the previous years.
Competitors Analysis
Lyft is the major competitor to Uber. Lyft operates just like Uber and has branches in
over 300 US states- a significant factor to its stronghold (Di Amato, 2016). Zipcar is another
significant competitor to Uber. The company operates indifferently from uber in that the
passengers are the drivers. It gives them the freedom to carry themselves with cars. Taxi is the
third significant competitors of Uber. Their competitive advantage lies in the perception that they
are more secure than Uber.
However, competitors still exhibit some weaknesses — Lyft experiences reliability issues
regarding drivers. Zipcar spends a lot on vehicles and materials when expanding its operations.
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As a result, the company has adverse effects on profitability. Taxi has problems regarding
drivers’ misconduct and thus becomes difficult to retain customers.
Uber competitive advantage lies in several factors. The most significant factor is its most
extensive ride-sharing technology in the World. The second factor is a strong brand recognition,
which has lasted for years in over 50 countries. Thirdly, Uber charges lower prices compared to
other companies like Taxi and Lyft. Some of the weaknesses include multiple scandals which
have tainted the reputation and overdependence on the workforce when the driver’s behaviour is
unpredictable.
Porters five forces and generic strategies
Uber utilises cost leadership and product differentiation to gain a competitive advantage
over its competitors. The company adopts cost leadership, depending on the bargaining power of
the buyers. If Uber attempts to raise its prices, the customers will shift to other companies like
Lyft and Zipcar. The concept of product differentiation is present in the company’s capability to
offer a different set of services like Uber X, XI, Access, Premium, and Rush (Di Amato, 2016).
The company differentiates its products from the new entrants who find it easy to get into the
industry. Uber proves to benefit from these two generic strategies, but there is always room to
add better ones. Compared to competitors, Uber is better than them. The technological
transportation company offers quality services at lower prices. Also, Uber covers the most
substantial part of the globe, and thus, it is recognised widely.
The activities in Uber’s value chain possess some characteristics of cost leadership and
product differentiation. Inbound logistics support cost leadership since there are less operational
costs. The company makes use of the internet and a few office requirements. Uber operations
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promote product differentiation by offering exceptional services like Uber Premium and Rush.
Outbound logistics support cost leadership strategy, just like inbound logistics. Uber sales and
marketing mostly use product differentiation by offering services such as Uber VIP to its
members.
Competitive Advantage and Improvement Recommendations(RBV)
Uber’s main competitive advantage lies in the Uber App, which facilitates secure
networks of both customers and drivers. The system is Worldwide, and it is easy to navigate the
app compared to other companies. Another competitive advantage for Uber is operational
experience. The platform is simple to develop and maintain operational expertise. However,
Uber can improve its services by taking advantage of autonomous cars which are coming up.
Adopting the autonomous vehicles will increase profit since the cars do not need drivers for hire.
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References
Di Amato, A. (2016). Uber and the sharing economy. Italian LJ, 2, 177.