Uber Technologies Inc Strategic Analysis

Uber Technologies Inc Strategic Analysis

Company Overview

Uber Technologies Inc. is a ride-sharing company that offers transportation services through its platforms, such as websites and mobile applications. The company’s business model includes connecting drivers with riders or independent transport solution providers. The company’s operational model includes ride and delivery services for merchants offering grocery and food through freight, delivery, and mobility segments. The mobility segment includes delivering products that connect consumers with riders and offering transport services using auto-rickshaws, cars, minibusses, and motorbikes. The freight segment includes leveraging brand awareness, copyrighted technology, and experience in various industries to connect carriers with shipping agents on its platform, give carriers transparent, upfront pricing, and allow them to schedule deliveries. The delivery segment includes an application that allows consumers to look for local restaurants, grocery vendors, and convenience stores, order a product, and either get it delivered to their selected location or pick it up. Uber has expanded into different markets worldwide, including Europe, Asia-Pacific, Africa, America, and the Middle East.

Financial Performance Overview

Uber is among the ride-sharing companies that have experienced rapid growth over the years due to its popularity in the ride-sharing market and increased sales and revenues that enable it to expand into new markets. However, the company has been experiencing losses since 2019 due to stiff competition from other ride-sharing companies such as Lyft. According to Cuofano (2022), the company’s net revenues as of 2021 were $17.45 billion, but there was a $496 million net loss in the same year. The company also recorded a net loss of $1.69 billion by September 2022. Figure 1 below shows Uber’s financial performance between 2016 and 2021. Figure 2 shows the company’s financial performance between 2021 and 2022

Figure 1: Uber Technologies Inc. Financial Performance Between 2016 and 2021 (Source: https://fourweekmba.com/is-uber-profitable/)

Figure 2: Uber Technologies Inc. Financial Performance Between 2021 and 2022 (Source: https://fourweekmba.com/is-uber-profitable/)

Recommendations For Improvement

Uber Technologies Inc.’s losses may be attributed to the company’s reduced market share. The company is losing dominance in the taxi app market because of the rise of many small and large companies offering the same services, as shown in Figure 3 below.

Figure 3: Uber Technologies Inc. Market Share (Source: https://www.excellentwebworld.com/uber-alternatives/)

Based on the diagram above, it is evident that Uber Technologies Inc. faces a considerable risk of losing its large market share in the global market, hence the need to invest in strategies that can enable it to increase its competitive advantage. The company should focus on improving its services and market penetration strategies to increase its market share in developing markets and sustain its market share in markets with stiff competition.

Strategies For Achieving A Sustainable Competitive Advantage In The Marketplace And Increasing Financial Performance

Sustainable competitive advantage is the capabilities, characteristics, or assets that allow organizations to meet customer needs better than their competitors. It is linked with a company’s performance because it enables it to increase and sustain customers, thus increasing revenue and profit margins despite facing stiff competition. One of the strategies that Uber Technologies Inc. can use to achieve a sustainable competitive advantage and increase its financial performance is cost leadership. According to Lieberman (2018), cost leadership includes offering products and services at a lower cost than competitors. Uber Technologies Inc. can use cost leadership to gain dominance in emerging markets, thus creating a competitive advantage that can be leveraged to increase revenue and profit margins. The company can also use cost leadership to increase customer loyalty in markets with stiff competition, thus creating a competitive advantage.

The second strategy the company can use is differentiation, which includes distinguishing services and products by benefits and features from competitors. According to Littler (2015), differentiation focuses on building sustainable competitive advantage by offering products and services with unique features such as customer service, innovation, and quality. Uber Technologies Inc. can use personalization and customization to create services that customers may view as unique in the ride-sharing and transportation industry, thus enabling the company to charge a premium price and earn profits with above-average profit margins.

The third strategy is the focus strategy, concentrating on a small part of the market. According to Sharma (2017), a focus strategy focuses on creating a sustainable competitive advantage by offering products and services that serve a small group of customers in the market. Companies can develop and promote products and services that attract higher market share than competitors by focusing on a specific target market’s needs and preferences. Uber Technologies Inc. can use the focus strategy to offer its ride-sharing services to a particular group of customers in different markets, such as students, professionals, and students.

The Plan for Implementing The Selected Strategies

Cost leadership will be used in developing markets with few ride-sharing markets. The company will research different developing markets in Africa and the Middle East to determine areas with a high demand for taxi services. The company will then expand its operations into these markets by offering low prices to attract customers and discounts to increase customer loyalty and dominance over competitors. Cost leadership will also include setting low prices in existing markets to maintain customer loyalty and attract more customers to maintain a large market share. The prices will be updated regularly based on competition levels and the prevailing economic conditions in the market.

Differentiation will include personalizing and customizing ride-sharing services to attract customers. The company will create ride-sharing offers for the elderly, students, people with disabilities, and professionals. The ride-sharing services for the elderly and people with disability will include assistance services where the driver can help the client board the vehicle and alight and extra waiting time to give the client enough time to get to the pick-up points. The vehicles will also be customized to accommodate the needs of people with disabilities by adding safety straps and bars, ramps, seat belt adjustments, and swivel seats. The company will also create a package for students to enable them to carpool and share costs. The company will also partner with schools and comply by offering discounted daily rides to students and professionals.

The focus strategy will include designing services based on specific target markets’ needs and preferences, such as students, professionals, the elderly, and people with disabilities. The main niche market that the company will invest in is the transportation market for the elderly and people with disabilities. The company will distinguish itself from competitors by creating a specific package for the elderly and people with disabilities. The package will include additional features such as increased waiting time, the option to select the type of car a rider wants to be based on their needs and preferences, and the choice to choose the gender of the rider. The focus strategy will also include lowering prices for professionals and students who use Uber services to create customer loyalty. The company will also partner with schools and companies to transport students and employees. The partnership may include payment agreements such as weekly and monthly payments to create a competitive advantage by building customer loyalty.

References

Cuofano, G. (2022). Is Uber profitable? Uber profitability 2016-2022. FourWeekMBA. Retrieved January 16, 2023, from https://fourweekmba.com/is-uber-profitable/.

Lieberman, M. (2018). Cost leadership. The Palgrave Encyclopedia of Strategic Management, 364–365. https://doi.org/10.1057/978-1-137-00772-8_472.

Littler, D. (2015). Differentiation strategy. Wiley Encyclopedia of Management, 1–1. https://doi.org/10.1002/9781118785317.weom090417.

Sharma, S. (2017). Sustainable strategy and competitive advantage. Competing for a Sustainable World, 41–82. https://doi.org/10.4324/9781351285803-3.

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In Wk 2, you completed a SWOT analysis on a successful company demonstrating a sustainable competitive advantage in the marketplace. Now, you will shift your focus to look at a company that is failing or experiencing challenges in the area of financial performance.

Uber Technologies Inc Strategic Analysis

Select and research a company with financial difficulties or is on the brink of bankruptcy.

Review “Where Can I Find a Company’s Annual Report and Its SEC Filings?” from Investopedia.

You can also access specific information about a variety of businesses in the University Library by searching the following databases:

University Library > Databases > B > Business Source Complete
University Library > Databases > E > EDGAR
University Library > Databases > P > Plunkett Research Online

Conduct a strategic analysis of the company’s current financial operations. Determine strategies for achieving a sustainable competitive advantage in the marketplace and increasing financial performance.

Write a 1,050- to 1,400-word analysis. When writing your analysis, complete the following:

Evaluate the company’s current financial plan, including charts and/or graphs showing financial data from the struggling company, and make recommendations for improvement.
Determine strategies for achieving a sustainable competitive advantage in the marketplace and increasing financial performance.
Create a plan to implement the strategies you selected.

Include APA-formatted, in-text citations and a reference page with at least 3 sources.