Uber Business Plan

Instructions

I need to do a business plan about Uber as a Failing company.
The assignment outline is on the Word file, and there is more information on the Powerpoint file.
Ps: I just need to do this parts:
– Company Description/Company Strengths and Weaknesses.
– Industry Overview/External Environment/Market Analysis.
– Organization and Management/Structure of Business.

Solutions

Uber Business Plan

Uber Inc. is a multinational company that offers ride-hailing services globally. Since its establishment, Uber has strived to maintain a strong market position in the transport industry through its aggressive growth strategies. Despite being the fastest growing start-up companies since 2010, and attracting a wide, loyal customer base over the past few years, Uber has in recent times experienced the largest revenue loss and slow growth, necessitating development of a new business plan to help the firm reposition itself in its initial financial position.

Company Description

History

Uber’s entry into the ride-hailing industry can be traced back to 2008 when Kalanick and Garret Camp conceptualized the idea of a fast and mobile transport service. According to Barot and Chhaniwal (2018), the idea to establish a ride-hailing firm was created after the two co-founders attended a conference in Paris and encountered transportation woes, which led them to realize how difficult it was for commuters, loaded with luggage and encountering bad weather, to get quick transportation services. Few months after the conference, Kalanick and his colleague developed a prototype for a mobile transportation network. The system, which mainly worked using an iPhone app, connected drivers to passengers, and it allowed commuters to use credit cards as a method of payment (Barot & Chhaniwal, 2018). Years later, Uber launched major changes in its products and services by introducing an Android application to accommodate a larger market of smartphone users (Barot & Chhaniwal, 2018). In addition, the firm introduced different categories of cars as a strategy to segment its product offerings. Apart from product and service changes, Uber also expanded its operations to several nations, a growth strategy that the firm utilizes to date.

Strengths

One of Uber’s key strength is convenience, ease of use and low pricing model. According to Kumari and Sharma (2019), the firm’s app is simple and easy to use, making it the most preferred ride-hailing service among commuters. For passengers to use Uber’s superior services, all they ought to do is download the Uber application and create a profile. With a click of a button, commuters can connect with drivers that are within their location and track the car’s progress through their smartphones, creating convenience that lacks in the taxi industry. Furthermore, Matherne and O’Toole (2017) aver that Uber utilizes a demand algorithm that makes its pricing less expensive compared to taxicab. As such, Uber’s key strength is pillared against its simple smartphone-based technology and flexible, cost effective pricing strategy.

Uber’s dominance in the ride-hailing market is also a source of the firm’s strength. As observed by Kumari and Sharma (2019), Uber has a fast mover advantage that gives the company the opportunity to capture the biggest market share of the ride-hailing industry. For instance, since launching its first operation in San Francisco, Uber has expanded its activities in more than 83 countries globally. Recently, the firm also launched its operations in Vancouver, a city that has been pessimistic about ride hailing firms due to their disruptive nature in the transport industry (Larsen, 2020). The fast-moving advantage enables Uber to have a wider geographical scope and high market share in the industry, thus increasing its capacity of utilization compared to ride-hailing firms that are slow in penetrating new markets.

Weaknesses

In recent years, Uber has been facing multiple lawsuits that appear to taint the company’s image among its customers. For instance, in 2018, a former engineer at Uber sued the company over allegations of sexual harassment (Wakabayashi, 2018). The company has also been receiving numerous complaints from commuters over sexual assault by Uber drivers. These lawsuits not only taint Uber’s image and reduce its capacity of utilization, but also lead to significant financial losses as the firm tries to compensate the affected parties.

Uber’s heavy reliance on internet and manpower is also a major source of weakness. As observed by Kumari and Sharma (2019), the firm’s corporate image depends highly on its driver’s behaviour. Nonetheless, Uber lacks full-time drivers which makes it difficult for the company to control the behaviour of its workforce. In addition, Kumari and Sharma (2019) note that Uber’s heavy reliance on internet makes it difficult for the firm to expand to areas that have poor or limited internet connectivity. Uber’s overreliance on internet and contractual manpower may be associated with its current loss of revenue and slow growth in new markets.

Major Issues Impacting Uber

The major issues affecting Uber today are loss in revenue and stagnating growth. As observed by Isaac (2019), in August 2019, Uber posted its largest-ever quarterly loss of approximately $5.2 billion, with its revenue growth hitting a record low. This loss may be attributed to the numerous lawsuits filed against the firm and decrease in capacity of utilization as commuters opt for alternative ride-hailing services. Uber has also been experiencing a stagnating growth in some of its star segments such as its food delivery business. According to Isaac (2019), Uber eats is in danger of becoming a cash-stuck business as most of Uber’s competitors are targeting on subsidizing customer’s meals in a bid for market share and profitability being a secondary concern. The current issues may greatly affect Uber’s operations in the long-term, therefore, the company needs a new business plan to help it recover from its current financial losses, enhance its profitability and market share, and increase its chances of success in the ride-hailing industry.

Customers

Uber mainly serves tech savvy customers. Kumari and Sharma (2019) opinionates that Uber only caters for people who are technologically updated. Unrefutably, for a commuter to access Uber services, they must have an internet-enabled smartphone. As such, Uber’s ride-hailing services are limited to customers that are technologically oriented.

Uber also targets customers that have varying buying personas. For instance, the firm has wide offerings for customers that want luxurious rides, quick rides, car-pooling services and cost-effective transportation. In addition, the corporation also targets people of different age and gender who exhibit the aforementioned personas. Generally, Uber customers range from young to older adult commuters with different buying personas.

Sales

Uber relies heavily on advertisement and direct marketing for sales and marketing. Some of the channels of advertisement used by the company include television ads. Uber also uses direct marketing such as consumer discounts, promotions and referrals to boost its sales (Kumari & Sharma, 2019). So far, the firm has been investing heavily on the two methods of sales and marketing to optimize its performance in the global market.

Growth Strategy

Uber utilizes various growth strategies to expand its operations, gain a significant market share and increase its profitability globally. One of Uber’s key elements of its growth strategy is product development. Under this growth strategy, Uber introduces new service offerings in the existing markets (“Uber Technologies Inc”, n.d.). For instance, the organization continues to invest greatly on ridesharing options, which is an alternative low-cost ride-hailing service. The second element of Uber’s growth strategy is market penetration. Over the past few years, Uber has been working on expanding its products to markets where it has limited presence, while conforming to local regulations (“Uber Technologies Inc”, n.d.). Furthermore, Uber uses diversification as a growth strategy. For example, apart from offering transport services, the firm also runs a food-delivery app (“Uber Technologies Inc”, n.d.). Market penetration, product development and diversification are some of the major growth strategies utilized by Uber.

Industry Overview

Uber operates in the transportation industry. The firm offers a wide range of transport services depending on consumer preference. Unlike other industrial participants such as the taxis, the firm offers a simple, convenient and easy way of mobility.

Environmental Factors Impacting Uber (CREST)

Competition is one of the major factors that affect Uber’s operations. As observed by Kumari and Sharma (2019), Uber operates in an industry where the barriers to entry are very low. Therefore, the firm faces stiff competition in each of its product offerings from corporations such as Lyft and Taxify. Although competition pushes Uber to develop more effective ways of serving its customers, this external factor poses a risk to the firm’s profitability in the long run, as the management is forced to retain lower prices to remain competitive in the industry.

Stiff regulation of the transportation industry and economic factors also impact Uber’s operations. As indicated in its annual report, Uber operates in a complex legal and regulatory environment, whereby its business is subject to U.S. and foreign laws (“Uber Technologies Inc”, n.d.). These laws mainly relate to transportation, labour rights, health safety among others. The numerous regulations governing Uber’s activities poses a threat to its future operational and financial outlook as the firm is forced to comply with policies that greatly affect its profitability and everyday activities. Economic factors such as changes in tax rates also impact Uber’s operations. For instance, the recent reduction in corporate tax rates in United States is expected to have a positive impact on the firm’s financial outlook. As such, industrial regulation and economic factors have a significant effect on the firm’s operations and profitability.

Social factors such as existence of social media sites and quick spread of information among people also impact Uber’s operations. For instance, Kumari and Sharma (2019) observe that as consumers enjoy their rides, they post their experience on social media sites, thus enhancing Uber’s popularity and enticing others to utilize the firm’s app. The authors also add that word of mouth spread awareness quickly about the firm’s ride-hailing services, enticing more customers to demand Uber’s product offerings. While the highlighted social factors provide an opportunity for Uber to deepen its popularity in the transportation industry, they also threaten its public image, especially when allegations against the firm are posted in social media sites.

Furthermore, the technological environment has considerably impact on Uber’s business. As a ride-hailing firm, Uber relies heavily on the technology infrastructure to offer its services, which are its main source of revenue. The technological environment is both beneficial and detrimental to Uber’s activities. On one hand, technological innovation enables the firm to improve its platform and add new features with rapid velocity (“Uber Technologies Inc”, n.d.). On the other hand, heavy reliance on technology exposes the corporation to slow growth of revenue in areas that have limited technology efficiency. As such, the technological environment poses threats and opportunities to Uber’s operations.

Organization Structures

Since its establishment, Uber’s organizational structure has been hierarchical in nature. This implies that there exists ranks of organizational units (Ahmady, Mehrpour & Nikooravesh, 2016). The CEO ranks at the top of the hierarchy, followed by other executive officers that oversee functions in various units in the organization. The hierarchical nature of the organization creates multiple bureaucracy which seemingly slows down the decision-making processes.

For the past few years, Uber’s management has been highly criticized and termed as a traditional command-and-control leadership style. This is mainly because of the aggressive approach utilized by the firm’s CEO in governing subordinates and Uber drivers. Uber’s aggressive leadership approach can be attributed to the high employee turnover rate experienced in the firm and deteriorating image of the organization among members of the public.

Conclusion

Analysis of Uber’s industrial overview, organizational structure and internal operations reveal that some of its micro and external environmental factors are responsible for its current loss in revenue and stagnating growth in new markets. In particular, the firm’s areas of weaknesses such as overreliance on technology and manpower, and tainted corporate image appear to greatly impact its capacity of utilization and revenue generation. In addition, Uber’s leadership style is also a major issue that appears to affect the firm’s productivity and operational efficiency. While Uber’s external environmental factors are beyond the firm’s control, the organization can greatly enhance its industrial position and operational capability by adopting an improved business plan.

References

“Uber technologies, Inc.” (N.d). CloudFront. https://d18rn0p25nwr6d.cloudfront.net/CIK-0001543151/f0dcd9ae-31ea-40c2-ac8b-36d85158c8a2.pdf

Ahmady, G., Mehrpour, M., & Nikooravesh, A. (2016). Organizational structure. Procedia: Social and Behavioral Sciences, 230(2016), 455-462.

Barot, H., & Chhaniwal, P. (2018). The journey of unicorn Uber from San Francisco to international disruption. Asian Journal of Management Cases, 15(1), 82-91.

Isaac, M. (2019, August 23). How Uber got lost. The New York Times. https://www.nytimes.com/2019/08/23/business/how-uber-got-lost.html

Kumari, A., & Sharma, S. (2019). Management analysis of Uber. Research Gate: Technical Report. https://www.researchgate.net/publication/334535923_Management_Analysis_of_Uber

Larsen, K. (2020, January 24). Lyft, Uber waste little time launching in Vancouver. CBC. https://www.cbc.ca/news/canada/british-columbia/lyft-uber-vancouver-1.5439182

O’Toole, J., & Matherne, B. (2017). Uber: Aggressive management for growth. The Case Journal, 13(4), 561-586.

Wakabayashi, D. (2018, May 21). Former Uber Engineer’s lawsuit claims sexual harassment. The New York Times. https://www.nytimes.com/2018/05/21/technology/uber-sexual-harassment-lawsuit.html