Management and business aspects of Uber
Executive Summary
This report explains in detail the management and business aspects of Uber. Here we analyze the details about its organizational structure and how each department reports to the other. It also gives the detailed analysis of the SWOT, PESTLE which describes the risks associated with every aspect of the business and how they can be minimized. Though these risks are subject to management styles and strategical implementations, there is still risk factor persisting.
This report helps in analyzing the importance of having good management and employee’s so that the customers do not move to a different supplier. Brand building is an important factor here.
Table of Contents
Introduction 4
Organizational Structure 4
SWOT Analysis 5
Environmental factors associated with Uber 6
Risk for Passengers
Risk for Drivers
PESTLE Analysis 7
Business Context 8
Conclusion 9
References 10
Introduction
Uber Technologies Inc. is mainly into car services where they aim to deploy cars of higher end and affordable mix to customers who are looking to hire a taxi. They are expanding its presence all over India by maximizing the usability of their customers. The company also has food delivery mobile apps.
In this report, we will analyze the critical issues associated Uber, analyze their SWOT, and gain an understanding of their internal and external factors affecting the organization. We will also be able to give a justifiable conclusion to see the prospects of the company since there are already many competitors. Along with this, we will analyze the organization as a whole and see how they can compete in future since there is a possibility of new entrants into the market.
Organizational Structure
The organizational structure of Uber starts with the Board of Directors. The Board handles the CEO and a group of Directors under them. The CEO handles the Product, Security, CTO, Legal, Operations, Growth, Policy & Community under them.
After this, there is a vast bifurcation where the Product Maps, Advanced Technology Executive and GM’s are deployed under Product. The policy and the legal structures are classified under the legal category, and the operations team handles the Asia operations, International growth and the growth market (David Allen 2002).
SWOT Analysis
Strengths
Weakness
Uber is a well-recognized brand
The company has a wide range of cars according to the comfort level and the affordability of its customers
The provide exceptionally high service
The company restricts from hiring full-time drivers hence there is no burden.
The payment can be made through the app which leads to a cashless environment.
Since there are no full-time drivers, they might not get drivers when required.
The idea can be limited only to cars.
Their business model is not standard.
There are major privacy issues with the location.
Opportunities
Threats
More online options available during expansion.
Can expand in rural areas to match their cost affordability.
The company can re-work on its cost which will drive more customers towards them.
They can also include a transportation line which will serve patients, old people, and pets.
Since the profits are low, the drivers may not be available on time.
Since the company is planning to expand in the global markets, restrictions can be on the higher side.
If they do not rectify the privacy issues, customers will lose hope on them and might not come back.
They brand as such will be damaged if not given proper care.
Environmental Factors associated with Uber
There are various environmental factors that are associated with Uber for drivers and passengers are listed below:
Risks for Passengers:
Lack of professional drivers: Uber drivers are not professionals who can drive perfectly like any other driver. They use their vehicles to drive and fill petrol. This is one of the major concerns for any customer since safety becomes an issue.
No Background Checks: Uber does not do any background check of these drivers. They simply hire a taxi when there is a requirement. Due to this, the customer cannot trust the driver, and even if they miss a small wallet in the car, there is a doubt of finding it.
No Liability: Uber does not take any liability for its cost if something goes faulty. As said, the drivers are freelancers who are chosen randomly. If anything goes wrong, they do not hold the responsibility of tracking them.
Risks for Drivers:
Safety Issues: It has been reported twice that there is a lack of safety for Uber drivers. Two drivers were earlier assaulted and hammered on their head. Hence any driver would choose other contractors over Uber.
Finance: There is no profit margin for the drivers. Hence they are not patient and will not drop the customer with care (Harvey B.Mackay, 2005).
PESTLE Analysis
PESTLE Analysis helps in bringing out the importance of the various aspects of an environment surrounding Uber:
Political & Legal:
Government commercial licenses
Taxi driver wages are publicly discussed
Lesser profit margin due to higher costs
Economic:
Since contractual drivers come here, there is an issue with the affordability.
Price margins are not the same as before.
Organizations have a different affordability in comparison to individuals.
Social:
Since Uber has a reasonable number of customers, the requirement of drivers will be high.
Safety of the customers comes into the picture.
Safety of the drivers is also a major cause of concern.
Technological:
The company has to install maps and tracking devices on the cabs to track the passenger location for safety purposes.
They cannot do this until they have their cabs and full-time drivers.
Environmental:
Uber drivers pollute the atmosphere with latest cars which prove to exploit the atmosphere.
The company is growing its services into other industries as well.
Business Context
After having analyzed the SWOT and the factors affecting Uber’s environment, we get to analyze the Five Forces Analysis which deals about the company and its objectives in detail.
Micheal Porter’s Five Forces Analysis deals with the five major forces a company must deal with. The five forces are listed as follows:
Potential new entrants: Though Uber has positioned itself in the technology field the bridge between finding customer and driver are high. There is a constant demand in this business, and hence the new entrants might have to think much before entering this.
The threat of substitutes: There is fairly a good chance of threat of substitutes. There are very few existing private players who can be their substitute. This is due to the rigid rules and regulations that the company has set. Also, there are legal issues which companies face where there is a potential threat.
The threat of Suppliers: Suppliers here means the individual drivers who are available in the market. The availability is not high but depending on the bargaining power of the drivers. If they provide at an affordable cost, then there is the great threat to Uber.
The threat of buyers: As discussed above, if the suppliers provide cab services at an affordable cost then there is the very high threat. Alternatively, if the price range does not suit, the buyers might look out for public transportation services such as bus, taxi or auto to reach their destination at a much lesser rate.
The degree of rivalry: The degree of rivalry regarding cab services is high. Here the cab drivers might sometimes get into rivalry which is one of the greatest issues (Micheal Porter, 1993).
Conclusion
To sum up, Uber’s taxi services are not profitable to drivers and the businessmen. Drivers have to use their cars to drive since they are not employed full time and hence do not have the commitment to follow company rules. They cannot work to build the mission of the company. This results in a great loss to Uber and hence the management has to work on re-structuring the business model in a way which will enhance the growth opportunities for them.
The company must deploy full-time employees to enhance the stability of the availability of their drivers. This will be the initial phase that will attract more customers to travel. Also, they have to update their app from time to time which will enable them to see the availability of cars and destinations along with a fair price. The rates should be acceptable to the customer and be able to determine the available cabs nearby. These are the ways in which the company can find improvement with relations to management and business context.
References
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Harvey B.Mackay (2005). Harper Business, “Swim with the sharks without being eaten alive,” pp, 108-215
Roger Lowenstein (2001). Random House Trade, “When Genius Failed: The Rise of Long and Short Term Capital Management,” pp, 250-317
Paul Hawken (1988). Simon and Shuster, “Growing a Business,” pp, 85-97
David Allen (2002). Penguin Books, “Getting Things Done: The Art of Stress-Free Productivity,” pp, 379-451
Frederick Winslow Taylor (1911). Cosimo Classics, “The Principles of Scientific Management,” pp, 452-573
- Chan Kim and Renee Mauborgne (2005). Harvard Business Press, “Blue Ocean Strategy,” pp, 347-425
Brian Tracy (2004). American Management Association, “Focal Point,” pp, 275-324
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Alexander Osterwalder and Yves Pigneur (2009), “Business Model Generation,” pp, 153-217
Bruce Greenwald and Judd Kahn (2007). Penguin Publishing Group, “Competition Demystified”, pp, 300-320
Edward De Bono (1999). Back Bay Books, “Six Thinking Hats,” pp, 77-89