Table of Contents
Uber is the world’s fastest growing taxi transportation company. The American based transportation company entered the transportation industry in 2009. Since then, the company has grown to become a multinational transportation corporation with branches and offices in different countries across the world. The reliability and quality of services that Uber offers to its clients are what has helped to position it as a global player in the taxi industry. Although it faces stiff competition from other players in the industry, Uber has dominated the Taxi industry in the United States and beyond. The success of Uber is due to the management and business model that company has adopted. Quality management has guaranteed profitability that in turn has brought about market expansion both inside and out the country. The company has been able to manage various business challenges and issues common in the transport industry. This paper presents SWOT and PESTLE analysis of Uber in it business environment.
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Strengths and Opportunities
Uber is a well-recognized and established transportation company whose value is above 40 billion USD. The company enjoys a large customer base in the United States and beyond and therefore benefits from a broader customer share. Uber enjoys low operation cost because it does not have full-time drivers and relies on customer driver interaction (Endinger et al. 2016). Uber is a reputable brand because of its efficiency, class services, unlimited cabs, and improved booking system. As aforementioned, Uber is praised for having one of the best management compared to other taxi industries. Through quality management and leadership, Uber has managed to dominate the taxi industry on the global scale (Kooti et al. 2017). Further, Uber has attracted other major companies such as Gold Man Sachs, Microsoft, Google and many others that have invested over 12 billions of dollars. Uber is yet to exhaust markets. There are many opportunities that Uber can tap into the taxi industry (Endinger et al. 2016). In China, India, Middle East, and other Asian countries the market is yet to be tapped comprehensively. In addition, Uber can launch another line of services such as transporting children to school, and older people to schools.
Threats and Weaknesses
The ideas or the platform on which Uber is established can easily be copied by its competitors thereby posing serious market threats (Harding et al. 2016). Another weakness of Uber is the ethical behaviors of the drivers who have fallen under heavy criticism for mistreating the customers something that can work for the advantage of Uber strongest market rivals. The relationship between drivers and Uber management has been unethical. Drivers have been involved in protests due issue related to their pay and management. Regular protests could damage the public image and brand for Uber (Harding et al. 2016). Stiff competition from market rivals such as Lyft poses threat for future of the company. Competition is likely to cause a decline in the revenue collection and ultimately lead to driver fallout. The competition will lower the prices making the share between the drivers or the cab owners and the company so minimal and unsustainable. Uber will be forced to scale down the prices to attract customers, which in the end can be counter-productive for drivers and the company (Harding et al. 2016). The revenue will shrink, and drivers will be forced to work independently for better returns. The barriers to entry in the taxi industry are low and therefore any person can launch a similar business model and become a serious threat to future of the company.
PESTLE analysis evaluates the external factors affecting a business enterprise. This tool examines the political, economic, social, technological, legal and ecological issues that influence the performance of business.
Political and Legal Factors
Uber has to comply with the regulations of countries where it has established its services. In most countries, Uber has found itself at loggerheads with law officials for breaching the country’s rules in one way or another. For example, France filed charges Uber based on the advertising, Netherlands opposed Uber services saying that the divers do not have a taxi license (Kooti et al. 2017). In Asian countries, the conducts of drivers have caused a total ban on Uber services. In countries where the political class has invested in the taxicab business, Uber has been faulted severally for breaking the law or for failing to comply with certain regulations. In every country where Uber establishes its services, it must comply fully with laws and transportation regulations in those countries. Some countries have banned Uber services for failing to comply with the set transportation rules (Horpedahl 2015). Since its establishment, Uber faced endless controversies because it lacked clear regulations.
As aforementioned, since its inception in the market in 2009, Uber has enjoyed a successful growth. However, this success is becoming an issue of the past in countries where the local taxi drivers have stood up against Uber. Some Asian and Middle countries have banned Uber services arguing it is a threat to the growth of the local industries (Harding et al. 2016). Uber is facing stiff competition from Companies such as Lyft that have continued to improve their services every day to compete with Uber. The market is becoming competitive because most companies are copying the business model used by Uber to establish a similar business platform thereby staging strong competition for Uber to manage. In addition, there have been issues regarding the pay the drivers get (Kooti et al. 2017). Drivers in most countries have been involved in protests arguing that Uber has failed to recognize their effort by paying them low wages.
Uber operates uses a business platform that is friendly to anyone using Smartphone. Booking for the cab is easy something that has increased the popularity of Uber in most countries where it operates (Wirtz & Tang, 2016). The cases of drivers’ misconducts in countries such as Brazil, India, and the Middle East have labeled Uber negatively. The public image of drivers is very important for the success of the company.
The social media has been one of the reasons why Uber has spread with an alarming rate. People discuss their experiences on Uber services over the social media platforms thereby attracting new users. The use of technology to make bookings and appointment has contributed immensely to the success of Uber (Wirtz & Tang, 2016). Consumers just use a phone app to book a cab within a few minutes. The app facilitates upfront payment as well besides booking. Most drivers use 4G networks to improve communication and efficiency in service delivery.
Unlike other public transport means, Uber does not contribute to congestions. The usage of fuel by Uber taxicab is way low compared to the public transits. Therefore, Uber does not contribute to environmental pollution. Several studies on Uber have mot indicated that Uber has increased congestions. In addition, Uber uses cabs in good physical and mechanical shape so that it does not become an issue when it comes to environmental matters.
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Uber is a successful high-tech transportation company that has ruled and controlled the taxi industry since its inception. Its financial strength has grown every year, which has given it an impetus to carry on with investment to untapped markets outside the United States. It is famous and popular because of its reliability, efficiency, cheapness, and modernity. It has enjoyed continued growth due to favorable social and technological factors. While it has numerous strengths and opportunities for growth, it needs to overcome some weaknesses and threats posed by competitors.
- Endinger A., Louis D., McKenna Marino and Molly Stephuck (2016). Case Study: Uber In 2016: Can it Remain the Dominant Leader of the World’s Fast-Emerging Ridesharing Industry?
- Harding, S., Kandlikar, M. and Gulati, S., 2016. Taxi apps, regulation, and the market for taxi journeys. Transportation Research Part A: Policy and Practice, 88, pp.15-25.
- Horpedahl, J., 2015. Ideology Über Alles? Economics Bloggers on Uber, Lyft, and Other Transportation Network Companies. Econ Journal Watch, 12(3).
- Kooti, F., Grbovic, M., Aiello, L.M., Djuric, N., Radosavljevic, V. and Lerman, K., 2017, April. Analyzing Uber’s Ride-sharing Economy. In Proceedings of the 26th International Conference on World Wide Web Companion (pp. 574-582). International World Wide Web Conferences Steering Committee.
- Wirtz, J. and Tang, C., 2016. Uber: Competing as market leader in the us versus being a distant second in china. In SERVICES MARKETING: People Technology Strategy (pp. 626-632).