Uber Technologies Inc.’s Three-Year Strategic Plan Essay

Executive Summary

Company History

Uber Technologies Inc. company is an American firm that provides mobility services to its customers. It is a multinational organization operating in over 70 countries across the globe, with its headquarters located in San Francisco. It was founded in 2009 by a computer programmer known as Garret Camp as an Uber cab. Over the years, Camp and his colleagues estimated an overall expenditure of $800 for driver services; Camp thought of the possibility of reducing the direct transportation cost. After a series of brainstorming, Camp realized that it would be easier to afford the charges associated with hiring a private driver by sharing the cost with other people. The noble idea gained support from some of the Camps colleagues. In 2010, Ryan Graves became the first Uber employee and manager who later became the chief executive officer after launching the business organization.
The company launched its services and mobile application in 2011, where the public could access its services. Through the Uber mobile app, users can request rides. The firm upgraded its operations, and by 2012, it commenced using UberX, a platform that enabled contracted drivers to use personal cars subjected to insurance and constant background check. The company currently offers several services in the regions it operates, including Uber eats, couriers, ride-hailing, delivery of packages, motorized scooters, freight transportation, and electric bicycles. The number of people using the firm’s services has reached around 120 million per month.
Uber’s marketing strategy and marketing mix entail the products, price, place and promotion (4Ps). The business organization uses a number of marketing approaches, including promotion planning, product innovation, pricing strategies, and market segmentation. From the perspective of the product, the firm provides web and app-based applications that customers use to book cabs, depending on their locations. It has UberGO, UberX, UberAUTO, UberPOOL and UberEATS. The pricing approach entails using different prices and promotional codes. They apply the upfront pricing plan whereby riders check charges before payment. Uber place; the business is available in over 70 countries and more than 500 cities. The firm’s promotion is based on word of mouth and referral.

Mission Statement

The company statement plays a vital role in communicating the focus of the business to the customers. Uber’s mission statement is “Transportation as reliable as running water, everywhere for everyone.” Based on the mission clearly indicates what the business organization entails. It shows the firm’s commitment to serving clients effectively in a memorable manner. In other words, the statement is directly linked to the goal of meeting customers’ needs in the industry.

Analysis

Uber Company offers transport services that are covered in the mission. By mentioning the product which the organization provides, the statement indicates an aspect of reliability, implying that customers can depend on the services without failures. Furthermore, denoting everywhere suggests the level of market coverage. The products can be accessed anywhere by anybody willing to secure the firm’s services. The business organization has formulated different approaches that have enabled it to remain vibrant and meet all elements of its mission statement. Since transportation entails different modes, Uber diversified its services to include road, air and water transport to satisfy the needs of various customers. Furthermore, the entity has included other services to supplement the core business, which is transportation. Through its app, people can order food at relative rates that suit consumers. Therefore, the mission statement has a positive impact by exhibiting the company’s goals precisely.

Situational Analysis

Current Situation

Uber Technologies firm provides arrays of technology that connect riders with respective drivers. The company, through UberEATS, matches hungry individuals with restaurants. In addition, it links shippers with carriers and offers food delivery services. Its overall operation has grown massively worldwide since most of its products are used in many cities to aid people in meeting their travel programs. In general, the number of people ordering food or riding through the Uber app has increased over the past years. However, despite its rapid growth, the organization faces various challenges, with its employees and government authorities following its ways of operation.
The industry in which the company operates is currently growing and gaining momentum. The idea of sharing economy used to be less common since people did not embrace the socio-economic aspect. In the recent past, the company has faced fierce rivalry from its major competitors, resulting in a loss of billions. The stiff competition in the industry prompted the business organization to exit its activities in countries such as South Asia, Russia and China.
Uber company has the largest market share following the spread of its business operations in different countries. Uber rides attract a significant number of customers, and its reliability makes it suitable for many users. However, over the past few years, from 2017 to 2021, the company’s market share has faced a decline of 5%. The decrease has given its key competitor in the industry, Lyft, the advantage of gaining more ground.

Uber’s General Environment Analysis

There are several issues surrounding the company’s operations in different countries. The firm, during its formation, did not have well-stipulated regulations such as insurance, especially in cases of accidents. For instance, the Netherlands stopped its operations in the country due to a lack of Taxi licenses for its drivers. Furthermore, political issues and discussion about wage laws has been emerging, and the authority is concerned about whether the business organization follows the rules. In the economic environment, the sharing economy has made the organization realize massive growth as a result of sharing both intellectual and physical resources. Socially, the company provides easy access since customers can choose when to be picked using the website or the mobile application. Through technology, users can find cheap ways of transport. Moreover, consumers share the nature of the experience they receive from the corporation’s services, making the firm more popular on social media platform. Lastly, the company faces increased bans in different markets following its unfair competition to the traditional taxi sector. Labor laws, the safety of employees, and copyright are major concerns affecting the development of Uber.

Uber SWOT Analysis

SWOT analysis is a framework that provides an insight into internal and external factors that influence the performance of the business organization. The Examination will focus on the strengths, weaknesses, opportunities and threats of Uber company. Furthermore, it will address possible strategies to overcome issues that hinder the firm’s growth. Strengths and weaknesses are internal elements, while opportunities and threats are external aspects.

Strengths

1. Global presence.
2. Premium brand image in developing countries.
3. Increased customer experience due to the use of technology.
4. Advantage of fast mover in app-based transport services.
5. Strong financial background.
6. Innovative pricing approaches.
7. Improved diversification such as UberEATS.

Weaknesses

1. Limited use by individuals without smartphones.
2. Drivers’ conduct affects the brand image.
3. Customers’ dissatisfaction due to increase in prices.
4. Increased cash-burning.

Opportunities

1. Expansion into developing markets.
2. Shifting of customers towards convenience.
3. Increasing the middle class in the society.
4. Customers’ dissatisfaction with traditional taxicabs.
5. Adopting the use of electric cars.

Threats

1. Presence of traditional taxi.
2. Rising level of competition from similar players in the market.
3. Government regulations.
4. Limited customers’ loyalty.
5. Drivers not motivated by low-profit margins.
6. Upcoming self-driving taxis might eliminate Uber.

Opportunities for Change

In order for the Uber company to remain competitive in the ever-changing share economy, it should take advantage of developing economies to expand its services. In addition, to be able to cut the surging costs associated with operations, the management should consider adopting the use of electric cars to reduce fuel consumption and protect the environment. The business organization should explore and invest in regions such as India, where taxi services are expensive and unreliable.
Following the increasing level of competition from other well-established competitors, Uber should improve its services to help the company build a reputable brand image. The threat of limited customer loyalty requires the management to formulate fair pricing mechanisms to keep clients (Liu et al., 2019). In addition, Uber should raise the profit margin given to drivers to make them feel motivated. When these challenges are addressed effectively, the business organization will be in a position to retain its customers as well as employees, which is essential for its overall growth in the competitive industry.

Contingency Measures

For Uber to avoid strict regulations and continuous bans from other countries, the business organization should consider forming a joint venture with domestic players in foreign markets. The approach will allow Uber to operate accordingly since the local firm will adhere to the basic requirements of the government authorities. Furthermore, the firm should consider charging lower prices to attract more customers to its services. The strategy will enable the organization to increase its market share, making it to be the most preferred taxicab and food distributor in the industry.

Environmental Scan and Porter’s 5 Forces

Based on Uber’s business organization environment scan, the key challenges include governments regulations, customers’ loyalty, the introduction of self-driving cars, a high level of competition from similar players and traditional taxis and dissatisfied drivers. These factors contribute significantly to the underperformance of the company in the market. For instance, Lyft, Uber’s competitor, poses a massive threat to the market share of the organization. However, aspects of brand image, reliable technology and growing economies are essential to the enterprise as they facilitate its growth and development.
Uber’s business organization has developed a unique market that makes customers remain loyal to its services. The image enables it to lower the bargaining power of consumers in the market. The loyalty of users makes them purchase the services despite the prices at which they are being offered. On the other hand, Uber’s suppliers are limited; however, their power is significant. The company has the ability to reduce it by relying on several vendors.
Being an emerging industry, Uber faces an increasing threat of new entries (Bruijl, 2018). The incoming business organizations have the potential to affect the overall market prices. Through its brand loyalty, Uber contributes to entrants’ threats following its market experience and dominance, adequate capital, and reasonable fare charges. Similarly, the services offered by Uber can be easily substituted in the market. Nonetheless, Uber has a reputable image that attracts riders to use its services.
Lastly, Uber’s environmental scan indicated the existence of a high level of competition in the market. The rivalry enables buyers to have an array of choices to make therefore prompting companies to lower their prices. This aspect is causing firms to invest more in advertisement and technology to increase customer satisfaction. The incurred expenses in the industry reduce the overall profit margin the corporations enjoy in the industry.

International Performance

Uber Technologies Inc. The company is an international corporation that operates in North, South and Central America, Africa, Europe, Asia and the Middle East. The global presence has made the firm experience different degrees of engagement that influenced its overall performance in the respective market. Uber offers rides and food delivery services to its customers in all markets. On the basis of cultural impacts, the company’s approach to using the mobile app has reduced the possible barriers that it might face in the industry (Cook et al., 2018). Through the system, it operates able to connect local drivers to nearby riders, therefore, lowering the issue of norms and beliefs variations.
Currently, the company is experiencing high rates associated with variations in foreign exchange rates. All its operations in foreign markets are made on local currencies, which require the firm to convert the profit into the base denomination. Since most countries have inflation problems, the value of money derived from business operations tends to decline in value. Lastly, on the issue of political instability, Uber’s performance is significantly affected by continuous domestic wars that tamper with service providers in the affected nation.

Operational Planning

Financial Performance

Uber Company has been experiencing positive financial performance over the years of its operation. The business organization has reported massive growth in its quarterly and annual revenue with over $5 billion. However, in 2018 and 2020, the corporation’s financial health dropped massively. Its various segments, including mobility, delivery, freight and others, contribute to the increased revenue. In 2021, the delivery division surpassed the mobility; they produced an income of $8.3 billion and $7.5 billion, respectively (“Yahoo is part of the Yahoo family of brands”, 2022). The figure below shows the past trend of Uber’s financial performance based on the various sectors.

Operational Budget and Assessment

The financial status of an organization is indicated in its statement accounts. The financial statements provide essential insight into the performance of a business organization over a given period annually. Proper visual presentation of the statements allows the management to identify areas causing downtrends, thus enabling them to formulate viable strategies to improve them.

From the table above, the average debt to asset ratio is about 0.3. This indicates that most of the company’s assets are not financed by debt; hence it has limited risks. Uber has limited chances of suffering default because the assets value is higher than the liabilities. Similarly, the debt-to-equity ratio is below 2, indicating the good financial health of the firm. The values show the firm uses less debt to finance its operations; hence the shareholder’s earnings are not volatile. Therefore, based on the financial ratios above, Uber’s financial health is strong.

Strategic Goals: Core Strategies and Tactics

Strategic Goals

The company is extending the range of its services to cater to the needs of its customers. It is considering expanding its operations into developing markets to gain a wider market share for a competitive advantage. Furthermore, the business organization wants to advance its level of innovation to enable it to reduce operating costs (Min et al., 2019). Lastly, it is planning to grow by acquiring local players to enable it to overcome government barriers in the foreign marketplace.

Prioritized Core Strategies

• Increasing the range of services
  • Uber company is currently considering extending the number of products they offer in the market to enable them to meet customers’ needs. The approach aims to provide a competitive advantage since consumers will have a variety of services to choose from.
• Improving the level of innovation
  • The aim of innovation is to extend the experience customers derive from using the company’s services. The organization is targeting changes that will enable it to operate at a reduced cost. For instance, introducing various features in the app will make it convenient for clients to use it effectively.
• Acquiring other adjacent businesses
  • The strategy is to enable the company to gain access to other opportunities to enhance its growth. For instance, the organization has managed to acquire Mighty Al, Geospatial and Careem. The approach allows it to have a wider market hence generating more revenue.

Recommended Organizational Structure

Based on the nature of operations undertaken by Uber Company, it will be necessary for the firm to apply a hierarchical organizational structure. The system will enable the people within the system to share their relevant skills and knowledge hence making it easier for the business to achieve its objectives. Furthermore, the structure will improve the chain of command, thus making employees focus on the responsibilities assigned to them.

Recommended Marketing Positions

Uber business organizations should position both local and international markets on brand loyalty. Becoming a reputable company will enable it to create a proper image in the minds of customers who will remain loyal to its services. Brand recognition will allow the company to capture more markets, and irrespective of the price of products, the trust consumers have will prompt them to buy from the organization.

Measuring Success

To determine the progress of the company, the management has to measure the success of the strategies used. Uber company will depend on the key performance indicators to identify its progress. It will consider factors such as the surge rating, acceptance rate, fare reviews, overall rating, rate of cancellation and non-surge rating. The approach will enable the management to have deep insight into the performance of the business in relation to the strategies being used.

References

Bruijl, G. H. T. (2018). The relevance of Porter’s five forces in today’s innovative and changing business environment.

Cook, J., Patel, R., & O’Rourke, J. S. (2018). Uber Technologies, Inc.: Accountability in Corporate Culture. The Eugene D. Fanning Center for Business Communication, Mendoza College of Business, University of Notre Dame.

Liu, P., Gao, P., & Chu, P. (2021). How to evaluate the feasibility on renewables’ sharing economy in China: A case study of Uber-like mode plus wind.Renewable Energy, 169, 80-94.

Min, S., So, K. K. F., & Jeong, M. (2019). Consumer adoption of the Uber mobile application: Insights from the diffusion of innovation theory and technology acceptance model.Journal of Travel & Tourism Marketing, 36(7), 770-783.

Yahoo is part of the Yahoo family of brands. (2022).