MGT501 | Business Environment of UBER

Answer:

Brief Introduction

Globalization, Technology revolution and evolution of Internet are the major drivers of the Business ecosystem in the 21^st century. The world is changing with every passing second, every new day a new company comes up in the industry with a different offering or with differentiated offering. However, the key takeaway is that business environment is changing at the blink of an eye; hence it is of significant importance to ascertain such environmental factors which pose challenge to an existing business or its aspirations (Steinberger, 2017).

Considering the above introduction as the Preamble of the assignment, the company picked for the report here is a California based peer to peer ridesharing, taxi cab, food delivery, bike sharing and a transportation company network Uber Technologies. The company which was founded in the year 2009 by Travis Kalanick and Garrett Camp has been in the news for all the wrong reasons in the near past. The ride sharing/transportation company despite being a technology company falls in the service industry (Ganguly, Das & Farr, 2017). The report here will use some of the strategic management tools to identify and ascertain the impact of the environment on the company Uber. Additionally, certain solution will be provided to stay protected from the changing environment across the industry.

External Environment-Macro Environment

As mentioned earlier External environment plays an important role in the functioning of business organization. Businesses have to consistently look towards various factors such as Political, Economic, Social, Technological and others to ascertain the forces and create proactive strategies to stay wary of the forces. PESTLE analysis is one such framework which helps in ascertaining the impact of external forces on the business environment of Uber Technologies.

PESTLE Analysis

PESTLE analysis is a macro environmental analysis framework, or a framework which speaks about the forces which are directly not under the control of business organization. Understanding these forces will help Uber in creating a business strategy for the present and the future.

(Source: Sobhami, Azam & Jamil-Un-Nabi, 2018).

Political Factor

Uber has been among the companies which ignited a lot of controversy in its starting days and even until now. Most of which can be contributed to the political forces in different countries. The biggest problem Uber faced with its Ride sharing app was the regulation of the sharing economy, political parties in order to support the domestic taxi companies protested against Uber which made its journey a little difficult. Uber has a negative impact on other taxi companies; moreover the company also faced a lot of fire for treating its drivers as contractors and not employees. Uber has been facing a lot of law suits in US, China, India and Singapore owing to its business model. Thus, at the political front the countries want to safeguard the interest of its domestic companies as well its citizens (Contreras & Paz, 2018).

Economic Factors

Every company along with it bring umpteen employment opportunities, better services and also a ray of hope for the economy as well as its citizens. Economically, all the countries are either recovering or have recovered from the great economic depression. Plus, the purchasing power parity of the people has been on an increasing spree, all these factors help Uber to secure a good footfall in its ride sharing application. Another big advantage for Uber here is the proliferation of Internet technology and Smartphone penetration which makes it easier for people to book a ride by just a click on their smartphones. Along with it, Uber with its business model brings along cheaper ways of travelling such as Uber Bike, Ride sharing and many other offerings. Thus, economically, the company has been doing well and it has not faced any significant problems economically from any country, except China (Todoli-Signes, 2017).

Socio-Cultural Factors

Socio –cultural factors have the same important role to play as other forces in the PESTLE framework. Globally, the world is moving towards a young generation, leaving apart Japan and few other countries, rest of the world is moving towards a youth population. This youth or millennials are the major drivers of growth of Uber. These people due to their understanding of the technology, internet, social media marketing and others are the target customers of Uber. The company also with its value based offering, huge discounts and reliable services is creating a dent in the universe and shifting the travel pattern of people across the globe. Thus, the socio cultural factors seem to be in full sync with the business strategy of Uber (Green, 2018).

Technology Factors

At the start of the assignment, it was mentioned that technology is one of the most important factor which is driving business ecosystem in the 21^st century. Uber, which is now called as Uber Technologies, is sitting at the helm of technology and uses and plays with its excellent technology to provide customers with what they want. Uber has done remarkably here by pitching the small and unique idea of ride sharing application on the world map, and technologically has been the biggest aide for Uber so far. Uber even in the present day keeps experimenting on technology to boast the customer experience while sharing or taking a ride at Uber. Most of the countries are becoming tech strong, which is most definitely harbinger of good times for Uber Technolgies (Srnicek, 2017)

Legal Factors

It is important for a multinational corporation to comply with the legal compliance of any given country in which the company is operating. Uber has been in the middle of plethora of frivolous law suits the government bodies, industries association, Unions and even citizens. For instance, Uber in California faced a lawsuit for minimum wages, In India the company is facing lawsuit for its surge pricing, in China the company had to shut down its business due to inability to comply with the Chinese norms and more so. Additionally, Uber while experimenting with its self-driven car technology killed a person walking down the street and many more such incidents which put Uber in bad light legally. Thus, Uber has to fasten its seat belt and review its strategic goals and objectives and come up with better compliances in the present and the future (Foss & Saebi, 2017).

Environmental Forces

Environment is one of the biggest concerns when it comes to discussion about sustainability, Uber is no different. Uber and Lyft have started Ride sharing in certain countries where rides can order for a green ride by ordering for Uber Green at the tap of a button. Besides this Uber is also experiment with its self- driven cars and electric cars which will significantly reduce the CO2 emission in the environment. However, as of now Uber is doing the best it can by curtailing the number of vehicles on the road by its ride sharing offering, thus helping the environment (Teece, 2018).

Hence, holistically speaking the company has a lot to do before it becomes one of the most successful taxi sharing company the world has seen, and some of the recommendation for that can certainly be identified from the PESTLE analysis of Uber.

Recommendation

GLOCAL Strategy

Uber faced a lot of difficulty making its ground in the South East Asian market, primarily due to its inability to understand the domestic market and enter without having any prior knowledge and experience of these markets. The company faced the same situation in Australia as well, and there was a huge backlash for Uber in Australia. Thus, GLOCAL strategy which states “Go Global and Think Local” will help Uber to understand the domestic market, the economic and the poetical condition and even the purchasing power parity of the population.  Thus, Uber by understanding the country and its domestic marketing, and creating ties or after collaboration with the domestic bodies can most definitely solve some of its biggest problems. The company just have to collaborate with these domestic companies and make them grow along with them; this win-win collaboration strategy will work in the favour of Uber (Ritter & Lettl, 2018).

Employees and not contractors

Starbuck a multinational coffee chain is not just known for its coffee, sandwiches, environment or any other tangible factors, the company is also known for the way it treats its employees. At Starbucks, Howard Schultz started the practice of calling its employees as partners, and this worked majorly in favour of the company. Uber too has to think on the same lines and start giving its drivers or other stakeholders a chance to be a part of the revolution or a change. This change has to be driven at the bottom, where the office executives have to start engaging with its drivers and treat them as one of the most important component in the success wheel of Uber, it is only then the company can march towards sustainability (Hwang et. al., 2018).

Conclusion

Every business in the 21^st century is at the mercy of changing times, raised specifically from the changing landscape in technology, globalisation and Internet. Uber technologies are a transportation company/ride sharing company has been in trouble in the recent past owing to its inability to ascertain the external environment. It has been mentioned that a lot of strategic frameworks such as PESTLE, Porter 5 forces, SWOR and many more can be ascertain to understand the external environment for the industry in which the company is operating. It has been recommended that Uber should and must follow a GLOCAL strategy and start treating its employees as employees and not contractors to save it from being written down as just any other company.

References

Contreras, S. D., & Paz, A. (2018). The effects of ride-hailing companies on the taxicab industry in Las Vegas, Nevada. Transportation Research Part A: Policy and Practice, 115, 63-70.

Foss, N. J., & Saebi, T. (2017). Fifteen years of research on business model innovation: How far have we come, and where should we go?. Journal of Management, 43(1), 200-227.

Ganguly, A., Das, N., & Farr, J. V. (2017). The Role of Marketing Strategies in Successful Disruptive Technologies. International Journal of Innovation and Technology Management, 14(03), 175

Green, D. D. (2018). Fueling the Gig Economy: A Case Study Evaluation of Upwork. com. Management and Economics Research Journal, 4(2018), 3399.

Hwang, T. K., Jin, B. H., Li, Y. M., & Lee, S. J. (2018, March). Mobile Sharing Platform Operation Model and System Dynamic Analysis: Uber and Taiwan Taxi as Examples. In World Conference on Information Systems and Technologies(pp. 978-988). Springer, Cham.

Ritter, T., & Lettl, C. (2018). The wider implications of business-model research. Long Range Planning, 51(1), 1-8.

Sobhani, M. G., Azam, M. S., & Jamil-Un-Nabi, M. H. (2018). A Framework for Analyzing the Competitiveness of Unconventional Modes of Transportation in Developing Cities. development, 3, 4.

Srnicek, N. (2017). The challenges of platform capitalism: Understanding the logic of a new business model. Juncture, 23(4), 254-257.

Steinberger, B. Z. (2017). Redefining Employee in the Gig Economy: Shielding Workers from the Uber Model. Fordham J. Corp. & Fin. L., 23, 577.

Teece, D. J. (2018). Business models and dynamic capabilities. Long Range Planning, 51(1), 40-49.

Todolí-Signes, A. (2017). The ‘gig economy’: employee, self-employed or the need for a special employment regulation?. Transfer: European Review of Labour and Research, 23(2), 193-205.