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Analysis of Aspects of Uber Company Essay

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Updated: Jun 22nd, 2022

Background

Uber is a successful company in the field of ride-hailing, having businesses on a worldwide scale. It has recently expanded to include food delivery services, which are particularly lucrative during the pandemic. However, despite the strong positions, Uber experiences a number of issues, including incidents with drivers, and faces tough competition from Lyft and the traditional taxi business. One of the potential solutions is introducing a new niche service that would further separate the company from the competitors. This paper will use a SWOT analysis to identify Uber’s internal and external factors and determine the best course of action.

SWOT Analysis

Strengths

The first focal point will be the company’s strong aspects. They include worldwide brand recognition, pricing, market domination, the safety policy, the communication approach, and service satisfaction, and each of them will be discussed in detail below:

  • Worldwide brand recognition. Uber operates in about 70 countries and covers more than 10,000 cities, with the US and Brazil being the top two clients (Uber, n.d.a). Additionally, it has managed to become synonymous with ridesharing even in such countries as the UK, where taxis are traditionally strong (Skok & Baker, 2018). Although the company had to partially abandon the Asian market at one point, its name remains recognizable, and the demand exists for Uber to reenter some regions (Anwar, 2018).
  • Pricing. Uber is renowned for its low prices for customers, which are the result of decreased regulations imposed on drivers (Gabel, 2016). On the other hand, the policy of surge pricing during periods of high demand, when certain multiplies increase the fee, benefits the latter (Jiao, 2018).
  • Market domination. As far as the US, Uber’s biggest market, is concerned, it has a 68% share in rideshare, while the rest is occupied by Lyft (Yeo, 2021, para. 1). The company also dominates in the largest metropolitan areas, with the lowest percentage being 55 in Phoenix (Yeo, 2021, para. 4).
  • The safety policy. Uber values riders’ and drivers’ safety, which is particularly evident during the COVID-19 pandemic when sanitizing protocols are being vigorously implemented (Uber, n.d.b). Furthermore, guidelines exist regarding a driver’s background, emergency help, privacy, and cleanness (Uber, n.d.b).
  • The communication approach. The digital nature makes Uber transparent through the rating system and real-time monitoring, enhancing the service and identifying inappropriately-behaving drivers (Liu et al., 2021). Difficult customers are also tracked, and more experienced operators can be assigned to them (Liu et al., 2021). Overall, the constant feedback ensures that both complaints and appreciative messages are heard, and the latter may boost a driver’s morale.
  • Service satisfaction. Customers appear to be generally satisfied with Uber, with the rating remaining above 4 (Siagian, 2020). Drivers also expressed a relatively high rate of satisfaction in 2018, compared to Lyft, although the situation could have changed (Shokoohyar, 2018).

Weaknesses

Despite Uber’s strong brand and other advantages, the company is plagued by controversies and questionable decision, some of which will be highlighted below:

  • Continuous scandals. Uber tends to be associated with alarming news concerning its drivers or passengers. The recent ones involve a murdered Uber Eats operator and a dispute with a passenger in the UK (Grimsditch, 2021; O’Kane, 2021). Such reports tarnish the business’s image and make potential customers seek alternatives.
  • Dependency on drivers. The company’s model makes it highly dependent on its employees, who do not share a common organizational culture, leading to unpredictable situations.
  • Dependency on the Internet. Uber being application-based may be inconvenient for areas with an unstable connection or during disruptions, which causes fewer orders and increases potential cancelations.
  • Questionable accessibility. Despite the pricing policy, Uber vehicles are rarely seen in low-income and women-dominated communities, and the minority client base is small (Jin et al., 2019).
  • Financial losses. In 2020, the company suffered a major decrease in sales due to the pandemic (Yeo, 2021). It may take years for Uber to recover and restore them to the previous level.

Opportunities

The desperate situation did not only lead to negative consequences but introduced several opportunities on which the company can capitalize, and some of its long-term plans are also worth mentioning.

The growth of non-passenger services. Uber Eats met an unexpected success during the pandemic period, and the same is true for Uber Freight, although to a smaller degree (De Silva, 2021). Thus, introducing new services might be beneficial for the company.

Sustainability and unmanned cars. Uber eventually plans to make its vehicles exclusively electric, which will improve the environmental situation and draw the audience who shares the sentiment (Uber, n.d.c). The initiative is likely to be accompanied by automated controls, preventing issues and scandals associated with a driver’s personality.

Further investments. Some countries, seeing Uber’s success and convenience, may choose to invest in the company, which was the case with Japan (Anwar, 2018). It allows for a smoother establishment of local operations and makes the service feel welcome.

Threats

The competition with Lyft and local organizations endangers Uber’s positions, and certain opportunities may be marred by challenges.

Local competitors. The company already had a failed venture in China, and other areas where Uber is barely present or non-existent may also choose to support national services (Anwar, 2018). Countries where taxis have been historically prominent may also be dissatisfied with its increasing share and install certain barriers to protect the established public transit (Skok & Baker, 2018).

The danger of unmanned vehicles. While automated vehicles can remove at least two of the underlined weaknesses, they present questionable accountability in case of accidents. However, by the time of their implementation, the legal ambiguity will probably have been clarified.

Lawsuits. Controversies continue leading to disputes to be settled at court, and they require financial investments, for which the company should be prepared, not to mention reputational losses.

The Suggested New Service

Considering the analysis’s results, it would be prudent for the company to expand its services. One of the potential routes is delivering small and middle-sized non-edibles, which will be a natural evolution and an intermediate stage between Eats and Freights. It can also be used to gain traction in countries with Uber’s minimal presence or intense competition, and the marketing efforts should be focused on the product’s safety. Some people might want to order both food and goods such as utensils, so combining the services seems a reasonable development. While not entirely safe from complaints, the driver-consumer mechanics are different, and external factors will be more prominent. Another aspect worth considering is accessibility, which should be more achievable with deliveries if the pricing policy is altered. Altogether, the company can thrive after introducing non-edible delivery and avoiding the existing pitfalls.

References

Anwar, S. T. (2018). Growing global in the sharing economy: Lessons from Uber and Airbnb. Global Business and Organizational Excellence, 37(6), 59–68. Web.

De Silva, D. (2021). Why Uber was named a top pick for 2021 by Morgan Stanley. GuruFocus. Web.

Gabel, D. (2016). Uber and the persistence of market power. Journal of Economic Issues, 50(2), 527–534. Web.

Grimsditch, L. (2021). Uber driver leaves woman locked out of house at 6am ‘after refusing to return keys.’ Liverpool Echo. Web.

Jiao, J. (2018). Investigating Uber price surges during a special event in Austin, TX. Research in Transportation Business & Management, 29, 101-107. Web.

Jin, S. T., Kong, H., & Sui, D. Z. (2019). Uber, public transit, and urban transportation equity: A case study in New York City. The Professional Geographer, 71(2), 315-330. Web.

Liu, M., Brynjolfsson, E., & Dowlatabadi, J. (2021). Do digital platforms reduce moral hazard? The case of Uber and taxis. Management Science. Advance online publication. Web.

O’Kane, C. (2021). Teen girls charged with carjacking and murder in death of UberEats driver in Washington, D.C. CBS News. Web.

Shokoohyar, S. (2018). Ride-sharing platforms from drivers’ perspective: Evidence from Uber and Lyft drivers. International Journal of Data and Network Science, 2(4), 89-98. Web.

Siagian, V. (2020). Customer expectation and customer satisfaction: Reviewing service quality of Uber. JKBM (JURNAL KONSEP BISNIS DAN MANAJEMEN), 6(2), 209-217. Web.

Skok, W., & Baker, S. (2018). Evaluating the impact of Uber on London’s taxi service: A critical review of the literature. Knowledge and Process Management, 26(1), 3-9. Web.

Uber. (n.d.a). Cities.

Uber. (n.d.b). Safety.

Uber. (n.d.c). Sustainability.

Yeo, L. (2021). Uber vs. Lyft: Who’s tops in the battle of U.S. rideshare companies. Second Measure. Web.

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