Uber’s success
Q1 (a) What are the frameworks that can be used to analyze a company’s macro and competitive environment? Assess which of the key strategic drivers are likely to be most significant in influencing Uber’s success? Using relevant frameworks, analyze changes in the external environment of Uber, and highlight implications of this analysis. Please explain and give actual examples to illustrate your points
Uber is a multinational transport industry operating in more than 60 countries and 340 cities with a market value of $50 billion. According to the above, UBER ‘s popularity can be reflected. In this competitive time, UBER has built its success on these key drivers. The idea behind the business was to connect passengers with drivers through their mobile application. In this application, people can search, book, and rate the taxi service, which is easy to operate and save time. Also, UBER is relying on the sharing of the economy between UBER company and drivers to provide more employment opportunities. Also, UBER needs to build a brand and reputation to attract passengers.
Based on the PESTEL analysis, it explores UBER’s external environmental factors which stand for political, economic, social, technological, environmental, legal. For economic factors, UBER relies on sharing economy between company and drivers creating more employment opportunities. UBER could be a platform for some drivers to earn extra revenue with flexible working hours. Also, passengers can choose different services according to their own needs, such as regular or luxurious rides. UBER ‘s application is easy and quick for passengers to operate due to social factors. Today, UBER has gained credibility and acceptance through low prices. The key driver for the success of the application is intelligence; people are more likely to operate on a smartphone than to take a taxi. As far as technology is concerned, the platform can price, pay, track and review phone systems without long waiting time. Also, the cost of a ride can be estimated whether people can accept it or not. For environmental factors, UBER can fill more seats in one car, which means that people can ride on a shared car. As a result, there are fewer cars on the road to travel green.
Moreover, for political and legal factors, the popularity of UBER in this society has influenced the traditional taxi industry. Moreover, compliance with the law is a major challenge for businesses that has a bearing on their reputation. For instance, UBER’s license was revoked in London in 2019 with the safety problems.
The five forces can also analyze the competitive environment of UBER. First of all, there is competition, there are competitors in the world, such as Lyft and DidiKuaidi, whose business model is the same as UBER. Second, there is a high risk of new entrants to this industry because drivers can use their cars and are registered on UBER. Consequently, the costs and barriers to entry for the new company are low. Third, there may be other alternatives to UBER, such as taxi, train, which may pose a major threat to UBER ‘s operations. UBER has a high bargaining power of buyers, as most customers are price-sensitive, which means that Uber should compete with competitors.
Based on both the five forces and the PESTEL analysis, UBER ‘s success in this market can be estimated, and the key strategic drivers can be the lower price compared to the taxi, easy to operate for passengers and customized service, which means that passengers can choose different cars.
Section 2/ Q2: Explain how strategic capabilities are usually developed over a period and sometimes years. What sort of linkages exists between competences and resources? To what extent might these resources and capabilities become the basis of sustained competitive advantage? Using relevant tools and frameworks, please explain and give actual examples to illustrate your points.
Strategic capabilities are the capacities, resources and skills of an organization that create a long-term competitive advantage. There is no single method for measuring the strategy for an organization that needs to combine resources and competences. The competitive advantage is created by the use of resources and organizational capabilities. Also, strategic capability can be divided into two categories, threshold resources and competitive advantage, and unique resources and core competencies.
Today, the business environment is highly competitive and needs to focus on strategic capabilities. For an organization, resources and competencies should be sought to contribute to a long-term competitive advantage that should be sustainable. There are three types of resources, namely tangible resources, intangible resources and human resources. For tangible resources, they are physical and financial, which includes cash, inventory, buildings and investments. Intangible assets include technology, reputation and culture, such as patents, brands and goodwill, which are of long-term value rather than tangible assets. Also, human resources influence employee motivation, intercultural skills and organizational leadership. Based on these three resources, corresponding competencies are also needed for what kind of organization is doing well in the same respects—first, the method of plant utilization, efficiency, physical capacity productivity. Second, depending on the financial capacity, the resources could be the balance sheet, the cash flow combined with the ability to manage them. Thirdly, in terms of human resources, managers, employees, and suppliers could be resources and how people could use their experience to innovate.
As a result of the VRIO framework, a strategic analysis tool could have a long-term competitive advantage in terms of protecting resources and capabilities. They are valuable, rare, inimitable and organizational support for this framework. First, the company should offer a resource that adds value to consumers. For example, Zara has a strong vertical integration that manages all of its design, warehousing, distribution and logistics functions. They also have highly trained employees, better compensation and a work environment to ensure that they do not leave Zara. Second, the firm has unique capabilities. For example, Zara has strong customer research capabilities, offering products with unique customer needs to be based on natural, climatic or cultural differences. Also, Aldi offers a high volume of a few products. Third, it is hard to find alternatives to compete with your company. There are, for example, internal and external links for Zara. It focuses on customer co-creation, train employees and managers to be responsive to customer needs and location that captures customer’s subtle needs and fashion trends. Finally, the company has organized management systems to capture the value of its capabilities. Since Zara ‘s consumer management control focused on styling management and teamwork, communication has been opened up.
Also, the threshold resources and competences are the basis for a company to meet the expectations and needs of its customers. About unique resources and core competencies, the firm could distinguish itself from other competitors that are of value to customers and have achieved a sustainable competitive advantage for customers.
As a result, the company ‘s resources and competences constitute its strategic capabilities, which can provide the firm with long-term survival, such as threshold resources, and can also be a source of competitive advantage, such as unique and core competencies. According to the VRIO framework, the competitive advantage will be sustainable.