Strategic management

Individual assignment
Purpose of Analysis:

•The key purpose of this analysis is to apply the concepts, tools and frameworks
studied in the course i.e. “Strategic Management”, which would help in
developing the strategic actions and plans to operate within a Taxi industry.

•The aim of the analysis is to assess the current strategy and recommend a future
strategy, based on a validated and insightful view.

•The main consideration is to devise a strategy along with keeping the excellence
and sustainable development of Uber, its stakeholders and the overall society, in
alignment with the company’s mission statement.
History
Industry before UBER
Uber’s Process
• Uber creates a technological
platform through its app, whereby
it connects he drivers and the
riders.
• The booking for an Uber ride
requires an access to Internet.
•The rider can easily pin its
pickup and destined location
through the app.
• Uber’s app allow the riders to
find the nearby drivers.
•The driver’s information, car
details and estimated time to
reach the rider’s destination is
available.
How money is created by
Uber?
Uber – Business Model
Defining Uber’s Customer
• No car availability.
• No interest in driving towards a party or
an event.
• Preference for being treated as a VIP
and for being stylish.
• Cost-effective cab facility at doorstep.
 Tap the app, get a ride Product

Uber provides the smartest way of making a trip. The

customer needs to tap the app and the driver will reach
directly at the customer’s doorstep. Further, thee payment
options i.e. cash or cashless riding.
 BUSINESS PROPOSITION
• Uber’s business is quite different from tradition taxi services, as Uber does not own fleet, rather it
connects licensed drivers with the customers.

• Different car owners join as Uber drivers, via the drivers’ app.

• 80% of fare goes to the driver and 20% is commission charged by Uber.

• Uber can charge premium, based on the dynamic pricing.

 Strategic Leadership

Roadmap
Blue Ocean
Strategy
 :

Attributes of Uber’s Blue Ocean Strategy

1.Uber has used modernized technology and devices in order to convert the non-customers into customers, which
ultimately lead to creation of an uncontested market space.
2. Uber has offered taxi services just through an, which has kept Uber’s position in front of the taxi system and it has
made the competition irrelevant.
3. Uber’s strategy involved the creation of customers, by offering, high quality, safe and comfortable services at a
global level.
4. Uber has provided value to its customers in terms of cashless payments, location tracking, while charging only
20% of the commission from fares. Uber provides convenient booking services by avoiding problems of tipping,
arguments and services denial etc.
5. The Uber’s activities and systems are alienated to provide services in terms of differentiation and low cost at the
same time. Uber’s services are differentiated as compared to other cab drivers. Additionally, the services are provided
at lower cost, ultimately generating sufficient revenue for the drivers and the company.
 ERRC Grid
The strategic values created by Uber can be analyzed using the ERRC
Grid.

Eliminate Raise Create Grid

Reduce

• Fares are charged • Drivers can generate

• Providing on-
revenue.
according to • Waiting Time demand cab
meter readings. service 24/7. • Creating a platform
• Problem of making
• Safety standards. to connect drivers
• Uber’s cab is fares payments.
• High quality with riders.
available • Uncertain fares.
• Convenient • Convenience in
irrespective of booking and using app.
weather payment.
circumstances.
Business Model Canvas
 Identifying general strategic choices
Strategy
Formulation
Description of advanced business model

Assessing Uber’s competitive strategy - Normative

Identifying General Strategic Choices

Summary regarding Uber’s context is presented in the

overview section.

Based on the general strategic options, assessment will be

carried on the formulated alternatives for Uber in the next
section.
 Layer 1: The Uber identity
Vision
 “We ignite opportunity by setting the world in motion.” 

Mission
“Transportation as reliable as running water, everywhere for everyone.”
 Layer 2: Uber’s Competitive Strategies

Cost Focus
• Uber’s takes a very small commission percentage i.e. 5-20%.
• Full time drivers are not hired rather a network is created to connect between drivers
and riders.

Cost Leadership
• Riders are receiving more convenience at lesser costs, while the drivers are
generating extra money.
• This strategy lead to a sustainable competitive advantage.

Differentiation
• Differentiation is based upon usage of cutting edge technology.
• Technology plays a crucial role in Uber’s services and in the business model.

Differentiation focus
• Availability of an Uber ride within few minutes after the booking.
• Nearest available driver responds and provides the services.
Customer Intimacy and Other Value Disciplines

• Product Leadership

• Customer Intimacy

• Operational Excellence
 The Uber Golden Circle,
core competencies, and
activity map

Core Competencies of Uber

Comparison Between Uber & Taxi
Advanced business model description

The earlier section was based upon the overview of Uber’s Identity &
Aspirations.
Assessment of Uber’s business is presented in the Next section.
Value Proposition
 Value Proposition Value Capture
• Provision of services at lower costs due to its simple structure.

• The company does not need to maintain inventory levels.

• As Uber is not a taxi service operator, it does not need to pay fees.

• Providing a network for connecting the riders and the drivers.

• Drivers are not required to pay professional fees for delivering their
services.

• Part time drivers in majority, 38% are full time drivers.

• Part time drivers may accept lower fares as compared to regular taxi
drivers.

• Uber’s drivers are the Uber’s partners, not employees.

 Customer Segmentation

Customer Segmentation
(by needs)
 Targeted Customer Segmentation

Customer Classification
• UberX– Least expensive (economy customers) .
• UberXL –For larger groups (moderate customers).
• UberBlack–Black town cars only (roughly 35% higher fares); Targeted customers who could not afford a
full-time driver, but who wanted more luxurious transportation than a taxi.
• UberSUV–Worked well for large parties; priced higher than UberBlack.
• UberTaxi–Connected users with a regular taxi.
 Customer relationships

Uber’s customer relationship is comprised of four elements.

Customer – the critical component, on the basis of which, Uber can manage its
sustainability.

Drivers – the salaries and management are strictly managed by Uber.

General Public –Portrays a positive image to the public through its services,
campaigns etc.

Regulators –Maintaining accountability, transparency and compliance through its

rating systems and reviews.
 Customer Retention
• Uber is evolving its brand constantly, a sit can be observed through provision of UberEats and
UberPOOL services.

• Uber knows exactly what the customer needs and the services are provided in accordance with such
needs.

• Uber has been putting efforts in having all the rights as other taxi drivers such as picking up riders
from airports etc.

• Uber focuses on creating a good customer experience by providing convenient services, easy to use
app and the super intuitive emails.

• Uber has provided solution to all the city concerns, as result of which, Uber has the support of the city
officials.
 key resources
• Key resources include the network of riders and drivers.

• Apps is an integral platform or a resource for the drivers and the

riders.

• Uber has a vast focus over improvement of the data analysis and
algorithms.

• Efforts on sustaining the brand image.

 key partners

Drivers– the ones who provide ride to customers and delivers the right value proposition.

Lobbyists – Ensure the interests are entertained.

Investors –Spends their profits in order to grow business dramatically.

Other Partners –technology providers i.e. maps, insurance, payments, and analytics.
 Revenue streams
• Revenue involves booking fee and the commission over the ride charges.
• Employee entitlements costs 7 license fees.
• Driver’s fee, insurance, toll and fuel charges are also included in revenue.

Different Models
• Service Rating Scores
• Variation in services.
• Real Time ID Check – requiring the drivers to take selfie on an occasional
basis before accepting any request, in order to prevent the drivers from being
compromised and to verify the identity.
• Surge Pricing technology
 Cost structure of Uber
The main cost element of Uber is related to Customer Acquisition Cost (i.e. the costs related to sales, marketing and
company’s promotion)
Other costs include:
• R&D costs
• Platform Maintenance
• Insurance
• Legal & Settlement Costs
• Infrastructure Cost
• Customer support
• Maintenance Costs etc.
 Marketing Channels
• Uber’s brand and traffic are mostly channeled through social media and the word of mouth from the
customers.
• Other channeling forms include public media coverage, digital advertisements, vouchers and paid
advertisements.
• After the public backlash, huge investments have been made by Uber over the public relations.
Innovation Requirements

Payment Options
The taxi industry needs to adopt cash less services in future by
adopting the advance payment methods such as POS, credit cards, app
payments, security etc.

Discovering new economies for taxi companies

Earlier taxi business was more focused upon taking people from
one location to another but nowadays businesses are increasing
their profitability by using same drivers, vehicles an internet
connections in delivering grocery, cargo etc.
Connected solutions
Different elements including mobile security, insurance and
vehicles are connected to each other in dispatching an ecosystem,
and such design of interconnected elements helps the company in
maximizing its ROI.
Uber’s competitive strategy – Normative
Analysis
Previous section focused upon the inherent complexities within
the Uber’s business Model.
Next section is focused upon the viability of Uber’s strategy, in
delivering its values.
DISRUPTIVE INNOVATION AT UBER

• Uber has made efforts in eliminating different transaction

costs.
• Putting efforts in improving the employment rates and
increasing the assets’ productivity.
• Usage of modern technology.
• Adoption of a flexible and affordable pricing model.
• Rating systems for maintaining quality control.
 Uber - Growth Strategies
Market penetration
Uber started its operations by simply providing application by which
the riders can connect with drivers. With its low cost strategy and
convenience , Uber has grabbed a wide market and it has gained
customer loyalty. Diversification
Uber has diversified itself by expanding
business into food and cargo deliveries.

Market Development

Market development strategy is based upon the introduction of company’s

product into new markets. Uber has expanded globally and it is offering
service sin almost 83 countries of the world. The biggest markets for Uber
include United States, India , China, Brazil and Mexico.
 EXTERNAL ANALYSIS
PESTEL ANALYSIS
Political
• Different laws have put limitation or ban on the
number drivers.
• Federal Motor Carrier Safety Administration
registration.
Economical • The competition has increased.
Sociocultural • Refusal of Uber’s services in certain areas.
• Issues related to violence by drivers.
• Low wages to drivers.
• Alternatives must be economic friendly.

Tecnological • Development of automatic and electric cars.

Legal • Regulations over public transportation.
• Labor laws and regulations.
 Internal Analysis

The competencies and resources are analyzed as follows

Strategic Control
 Competition

Competitive Advantage
- Sources
 Strategy
Execution This section is focused upon looking at the steps for implementing the
Uber’s strategy and making it a reality.
 Strategy Execution
There are four perspective regarding Uber’s strategy execution
Financial
Introduction of new revenue streams like cargo and groceries delivery services would be a source
tremendous future revenue growth.
 Billing plans will be initiated for providing billing convenience to the customers i.e. a cashless stream
will be created, whereby the customers would not paying spot cash, rather they would pay a monthly
bill.
 Different elements including insurance, mobile security, vehicle tools etc. are connected in order to
dispatch an ecosystem. All the devised solution will be maximizing the Uber’s return on investment
(ROI).
Customer
 Strong relationships with customers need to be maintained via profile driven relationship strategies.
 Simplicity and convenience must be a key disrupter behind the value creation process for the
customers.
 Providing credit facility to customers.
Internal process
Uber needs to follow an aggressive in grabbing the market share from the
competitors by charging low fares and providing premium quality service to the
riders.

After grabbing the market share, Uber would be able to acquire the competitors.
Brand recognition must be built by constantly reviewing the feedback or the
customers’ responses and maintaining a strict check and balance over the drivers, so
that a loyal customer base can be maintained.

Resources
A learning business culture needs to be followed, as a key driver of innovation at
Uber.

Uber’s survival must be based upon convenience and building up the company’s
human resources and intangible resources.
 Summary
The best way of building a sustainable position lies in the Uber’s strategy of market
disruption. Uber needs to think about what would happened in future.

As market is continuously revolving around innovation, which creates challenge in

staying ahead of the industry competition. The competitors can be left behind through
low cost strategy and these can be acquired to become a lone wolf in the market.

Uber’s winning aspiration must be based upon removing competition within the industry.
Our winning aspiration must be to lead the market by eliminating every other competitor

Every market will be offered services, which consists the targeted audience.

Fares minimization along with high quality will be used as strategies in targeting the
customers to an extent that it would become difficult for the competitor to survive in the
market and afterwards acquiring the competitor and creating a monopoly.

Reliable services, brand reputation and adhering to customer feedback must be kept in
consideration for future success.