Uber Case analysis
MMM306 - Global Strategy and International Management
Founded by Kalanick and Garrett in 2009, the mobile application Uber hopes to be the global provider of the ride-sharing service. Uber drivers use their own cars when providing taxi service and Uber gets certain percentage of the fare. Uber uses an advanced demand algorithm to balance of supply and demand by calculating the cost of transportation based on the availability of drivers. Uber service is available in over 83 countries and over 674 cities worldwide, completing over 2billion rides by 2016 (Uber statistics report, 2017). Uber is a worldwide phenomenon due to the simple and easy to use app, as it connects passengers with drivers almost instantaneously while providing transportation at significantly lower cost than Taxi services.
Dynamic Capabilities and industry- based considerations are vital part Uber’s future in taking advantage of its business opportunities and developing its firm’s international expansion strategy. Dynamic capabilities are the firm’s ability to anticipate changes and make changes in strategy, to adjust to changing competitive environment (Eriksson, 2014). Dynamic capabilities can be divided into three main categories, sensing, seizing and transforming capabilities. Porter’s 5 force theory allows us to explore the competitive environment of the firm, to avoid putting the competitive edge at risk and ensure the long-term profitability of products. (Porter 1979). Both these factors must be analysed to understand Uber’s current capabilities as a business and how these characteristics can be improved to expand the business internationally.
According to Kindström et al. (2013) sensing refers to detecting opportunities through gathering relevant market intelligence. In an industry where the buyer has substantial bargaining power, it is vital that Uber can gather information and detect opportunities early, to maintain their competitive advantage. Uber’s clienteles are sensitive to price variations due to the existence of alternatives and rivals. The number of Uber users that installed Lyft has grown in 2015 from 6% to 10%. (Uber statistics Report, 2017). This highlights the bargaining power of buyers and how it could set a limit on the amount of income Uber receives. Given that customers can freely choose between services, it is crucial that Uber promotes customer loyalty and engagement to retain their customer base.
Uber is identified as having market research capability which is mainly attributed from their mobile app. Uber gathers information through their app, gaining information about their drivers and their customers. “Uber increased the amount of accountability by providing a two- way rating system for passenger and drivers” (Martherne and Jay O’Toole, 2017). From the ratings and feedback provided by their customers, Uber can actively track the likes and dislikes of its customers and can provide t...