Uber For Management And Business Context

Market Segmentation, Positioning, and Targeting

Discuss about the Uber for Management and Business Context.

As technology has attached itself with every aspect of daily life even with transportation, several companies have come forward with the innovative idea of building global cab service network with the help of Smartphone and internet. Among all of them, Uber is probably the most preferred brand of cab service and food delivery at present. With its quick and efficient service, Uber has established its identity in all the prominent cities across the world and holds maximum share of the transportation market in countries like United States and Australia (Uber, 2017).Looking at its pioneering position in the market, the report attempts analysis of its internal and external contextual factors along with domestic and international contextual factors as well as the issues related to Uber’s business and management context is to be critically analysed (Cannon & Summers, 2014).

Uber’s market segmentation, positioning and targeting is of great importance to be analysed in this context. Uber covers personal transportation market, especially for the people who travel to different places. The target consumer group for Uber is the section of people who need cabs on urgent basis and particularly who are business professionals. The people who have to travel at odd times of a day mostly prefer to use this kind of cab service. Presently, Uber holds a stable position of the market principally because it has showed signs to evolve with the rapid market changes. The service of Uber has made the journeys in the cities more convenient and accessible at any point of day (Tamberino, 2015).

The most approved way of analysing Uber’s internal contextual factors is to attempt a SWOT analysis on it. This analysis involves evaluation of an organization’s strengths, weaknesses, opportunities and threats; alongside this, it discusses about the potential competitors of the chosen company (Uber, 2017). Commencing with the strengths, Uber’s widespread global presence in more than 50 countries and over 200 cities is its greatest strength. Besides, the brand image that Uber has already developed even in the developing countries certainly serves as an advantage. High customer satisfaction rate with the application of supreme technology has been strengthening Uber’s customer base for more than seven years (Thomas, Le Masson & Weil 2017). In addition, Uber has less amount of fixed investment since it serves as a market place. Among fewer of its weaknesses, the most problematic aspect of Uber is that its image is entirely dependent on its drivers and that the smallest deviation in their professional mannerism can sabotage the brand image of the company (Uber, 2017).

SWOT Analysis

However, if this has to be considered as a weakness, it will not be wrong to say that all the cab companies around the world suffer from this. Another limitation of this company is that in contrast with the huge demand and cash burning, monetization is really complex at present. However, Uber has boundless opportunities especially in the developing countries where unorganized market has a large share in the economy. Since Smartphone and internet usage is ever rising, Uber being a digitally hired transportation medium sees numerous opportunities in this context. In addition, the disposable income rate is rising as well as the consumers are becoming more inclined towards convenience of this kind of cab service (Singh, 2013).

On the other hand, the external contextual factors are to be examined by PESTLE analysis of the global company. The political and legal factors include significant questions of government licenses, whereas in some countries this license process can take time. Besides, the laws deciding minimum wage for taxi drivers may affect the profit margin of this industry. The economic factors across the world, however, mostly go in favour of Uber as the growing level of profit in corporate sectors have been increasing demand for the convenient cab transportation. In contrast, the inflation and growing maintenance cost is likely to reduce profit margin of Uber (Dua, 2013). Being a technology-based company it is highly in favour of Uber that mobile apps’ usage is rapidly rising and that the market is always open for innovation and technological up gradation. The social factors include increasing population in the cities and their demand of cab transportation facility. Environmental factors propose the trend of electrical and hybrid cabs towards forming a more promising, eco-friendly and sustainable environment. The cabs used by Uber are in line with this view of sustaining a green environment (Shontell, 2017).

The contextual factors aim to analyse the key organizational factors that define the internal environmental forces like the strategy and goals of the organization as well as its business environment, size, organizational culture, resources and technological aspects (Uber, 2017). The internal contextual factors are preferably discussed with Mckinsey 7S model that discusses the structure, system, skills, strategy, staff, and operational style and shared values of the chosen organization. Uber, from a start-up has speedily grown rather than its competitors and currently has 9 subsidiaries and 80 executives. The CEO Travis Kalanick heads the company and under him, four directors along with the CEO form the managing board. Uber’s operational system depends on the customer rating system and digital media booking (Cannon & Summers 2014).

PESTLE Analysis

Uber’s strategy of combining modern network orchestrator model with capital-intensive framework of service providing has been providing the company with larger profit margins, consistent growth opportunities and has enabled it to respond quickly to user complaints and to evolve with market changes. Although Uber initially did not show any interest in having shared values in the organization, in 2015 the company declared its elaborate 14 corporate values that are to be strictly adhered by the organization. The company emphasizes on the hiring of the staffs, especially drivers as technically are the face of Uber that user’s experience (Wirtz & Tang, 2016).

The external contextual factors are explained by Porter’s five forces model that analyses the external environmental forces of bargaining power of the suppliers and the buyers, the threat faced by the entry of new ones, threat for the already existing substitute services and the competitiveness among the existing companies in the market in case of Uber (Uber, 2017).

 Uber mostly hires cars from different sources on contractual basis and in this case, the suppliers tend to bargain and try to gain the most out of their cars given on rent. However, on the other hand, there is no such scope for the consumers of Uber to bargain; rather Uber itself surges price whenever the situation demands. Since it is quite a profitable market, more companies are likely to invest in this field and the threat of new entrants always remains. Moreover, Uber faces tough competition from its rivals like Lyft, Ola Cabs, Sidecar, Didi Dache, Curb and the like (Singh 2013).  This innovative and emergent form of cab services have greater target market base that helps in developing the brand in spite of its several takers (Cannon & Summers 2014).

This analysis of Uber reveals several risks that the enterprise is dealing with at present. The foremost risks that lies before Uber is about Uber IPO; initially, there was a talk on this but it seems that poor condition of the market, poor performance and revenue generated and most importantly weak economic condition of a country can highly affect the business and can delay the proposed IPO. There is also a battle on whether Uber drivers are contractors or employees and if the drivers are to be accepted as full time employees, this can cause a huge money-suck for the company. In addition, the increasing competition between Uber and other cab service companies like Didi and Lyft creates the need for Uber to raise its expenditure (Thomas, Le Masson & Weil 2017).

McKinsey 7S Model

The study about Uber should entail the appropriate mitigation strategies for the number of risk factors that are faced by the organization.  The contextual theory of services provided by Uber can be improved by incorporating better client service experience and employing practices that will effectively regulate the operations and management of all the conveyance function.  Moreover with a purpose of making public transport more feasible, Uber operates with strategic an infrastructural amenity which makes optimum use of technology along with service operation. Since Smartphone and internet usage is ever rising, Uber being a digitally hired transportation medium sees numerous opportunities in this context.

In addition, the disposable income rate is rising as well as the consumers are becoming more inclined towards convenience of this kind of cab service (Uber, 2017). Therefore in regards to the challenges that take place in their services can be effectively solved with the help of a successful operating plan. In fact the sound design structure and innovation policies of Uber reflect the congruency within the applied model and business processing (Wirtz & Tang, 2016).

Therefore, this analysis can be concluded on a brighter note which has efficiently employed and analysed all the contextual factors and resources which are the significant constituents of Uber. The essay entails and is an account of the strengths, weakness along with the relative opportunities and threats that allows determining the business statistics of the cab service organization (Uber, 2017).

References:

Aversa, P., Haefliger, S., & Reza, D. G. (2017). How to assess the value of a business model portfolio?. Mit Sloan Management Review.

Cannon, S., & Summers, L. H. (2014). How Uber and the sharing economy can win over regulators. Harvard business review, 13, 1-4.

Dua, T. (2017). ‘Brand crises on steroids’: Why Uber is the Trump of brands – Digiday. Digiday. Retrieved 14 April 2017, from https://digiday.com/marketing/brand-crises-steroids-uber-trump-brands/

Dobbs, M. (2014). Guidelines for applying Porter’s five forces framework: a set of industry analysis templates. Competitiveness Review, 24(1), 32-45.

Shontell, A. (2017). Here’s are the biggest threats to Uber according to Morgan Stanley, the bank that’s helping the $62 billion startup raise its next round. Business Insider. Retrieved 14 April 2017, from https://www.businessinsider.in/Heres-are-the-biggest-threats-to-Uber-according-to-Morgan-Stanley-the-bank-thats-helping-the-62-billion-startup-raise-its-next-round/articleshow/50583413.cms

Singh, A. (2013). A study of role of McKinsey’s 7S framework in achieving organizational excellence. Organization Development Journal, 31(3), 39.

Tamberino, R. (2015). Uber: A Winning Strategy – Technology and Operations Management. Rctom.hbs.org. Retrieved 14 April 2017, from https://rctom.hbs.org/submission/uber-a-winning-strategy/

Thomas, M., Le Masson, P., & Weil, B. (2017). How easy it is to reproduce Uber Business Model?–analyzing the design logics behind Business Model Innovation.

Uber. (2017). Uber.com. Retrieved 14 April 2017, from https://www.uber.com/en-IN/

Wirtz, J., & Tang, C. (2016). Uber: Competing as Market Leader in the US versus Being a Distant Second in China. SERVICES MARKETING: People Technology Strategy, 626-632.