BEN MBOCHA 1

ANALYSIS OF UBER AND RECOMMENDATIONS

Executive Summary

Uber an international transportation company that uses an internet enabled software to

connect riders and drivers of personal vehicles it is the focus of this paper. This paper conducts

Porters five forces analysis on the industry Uber operates in and looks at the threats that face

the company when it is coming to threats from rival companies, substitutes goods, competitors,

new entrants supplier and buyer power as well, the paper analyses the companies SWOT that is

its strengths, weaknesses and for its external environment its Opportunities and threats that face

the company. This various forms of analyses they have led to various recommendations two of

these are that the company needs to invest in having good relationships with governments of

where they set up their operations secondly, the company does need to incorporate existing taxi

providers into Uber instead of looking for just anyone who owns a car to drive for them this way

they will make these taxi drivers partners instead of competition.

Company over view.

Uber is an transportation company that depends in the online platform. The Idea of Uber

began in 2009 in San Francisco, California by Travis Kalanick and Garrett Camp. The idea came

to Kalanick when he was in Paris 2008. He was trying to find a cap but he could not find one

after he went back to San Francisco he created the service with Garrett Camp and it was

launched in June 2010.

Internationally, Uber has expanded the business over the world the first place that Uber

opened outside of the US was the inspiration place Paris in 2011, and then it began to operate the
 BEN MBOCHA 2

business to other countries all over the world from different continents. Uber now has the service

in more than 50 countries, and they plan to expand the service to more countries

The way that Uber works is that first a driver has to apply to Uber. Once he or she is

accepted to be a driver by Uber, then he or she can download the app. The driver has the option

to be online or offline, so He or she does not have specific hours to work. When the app is turned

to be online the driver will have a request from the customer to pick him or her up. The driver

has 15 seconds to accept the request otherwise it will go to another driver. In the other hand, a

rider has to download the app, sign up with Uber, and then connect the credit card with the

account. After that he or she can request a ride.

Ubers business model which is one used often by E-commerce businesses it is the

brokerage type of business model, the reason for this it is that in the brokerage type of business

model, a broker he or she acts as a go between for a consumer and a seller in Ubers case the

driver of the vehicle is the supplier while the rider is the consumer (Uber Driver n.p.).

Ubers Five Force analysis.

Each new company should have done an industrial study to see how the business would perform

in the future and how it can be secured from failure. There are five thing to give an eye in which

are the power of suppliers, the power of buyer, the substitute company, the competitor, and lastly

Industry rivalry. This threat they can be high, low or even moderate. Below it is an analysis of

Ubers five forces.

Suppliers (High)
 BEN MBOCHA 3

The supplier threat for Uber is high, in Uber is the driver of the Uber taxis, this person he is

the only supplier for Uber and this it is not such a good thing, the reason it is because the

supplier if he realizes he has more power over Uber can make things difficult for Uber, the only

hold that Uber they have over its suppliers it is that they give various incentive programs like

commissions on rides driven and on good ratings given, but the competition like zip car or side

car can also match this kinds of incentives. To be able to change this supplier strength the

company can train more drivers so as to have a ready source of replacement for the drivers that

leave their service but also this it is not a sustainable thing.

Uber works on a contractual basis with its employees to avoid various tax, and benefits

programs around the world . it needs to make it a permanent as it has being bringing conflicts

around the world("Taxi medallions” n.p.) in the US Uber drivers they have even taken the

company to court in California asking to be paid any tips and car maintenance costs(Rugbar

n.p.) this is showing the need for the company to make its employees more permanent.

Buyers power (high)

The threat from the buyers of Ubers services who are the consumers of the taxi service it

is pretty high, the reason for this it is that Uber it prides itself in providing low prices for its can

and so it attracts users who are price conscious and therefore whenever they feel that they are

being overcharged by Uber or they have another problem with the company they can move to

another provider like zip car since there are no barriers to moving from one provider to another.

Uber customers they have complained about surge pricing which is done during periods of high

demand using a certain algorithm developed by Uber and this could be one period when

customers they could move(Kedmey n.p.). Journalists around the world were said to move out
 BEN MBOCHA 4

of Uber when the senior vice president of the company Emil Michael threatened to invest a

million dollars in funding for research into the lives of journalists who were critical about

Uber, this is just one show of the power that the consumers they have over Uber and how easily

they can replace the service since many alternatives they exist(Smith n.p.)

Substitute (Moderate)

The substitute threat it is moderate because Uber it has threats from local substitutes but in the 53

other countries it is found in only the local taxi services they pose a problem. There are many

substitutes to Uber who use the same business model as the ecommerce company this include its

most prominent rival who is Lyft, then there is side car and zip car, Ola cabs, and Haxi

This substitutes offer lower prices in the American market and even though Uber has introduced

services such as Ubergo in Nov of 2014 there is still room for improvement (Saad 1). But this are

mostly in its domestic market of America in other countries the only substitute that it is threaten

the company in the taxi service are the local taxis and worldwide in all the places the Uber

service is there has not come out a big substitute to its E- services, of course there are other

methods people they prefer for travelling like trains, planes and public transport like buses but

in the niche market of taxis Uber it has no competitors. Also Uber has better cars than its

competitors in form of Uber x which offers luxury models like BMW and Audi.

Competitors (moderate)

Ubers main competitors are the various cab service providers in America and abroad, the only

way the competitors can challenge Uber is by ganging up against Uber as international taxi
 BEN MBOCHA 5

service providers they have done in other countries and also on using price wars which

companies like zip car and side car used but Uber they neutralized with the Uber go product

which is a low cost product, also forming of partnerships with existing bodies like it did with

the Uber Taxi which it was a partnership with Newyork local taxi commission and also rolling

out of Uber X however such moves have led to complains from suppliers(drivers) who

complain their earnings have gone down because of such moves for example limousine drivers

from Newyork ("see Uber this”..).

New Entrants (High)

The threat of new entrants it is high for Uber this is because the main business model of Uber

it is based on an application platform, and in this age of technological revolution a new tech idea

comes out so often, this it has been seen with the likes of social media platforms from Facebook

to Twitter to Whatsaap and snap chat this it is the same in the networked travel industry as seen

with the emergence of Lyft in 2012 only four years after Uber was formed and later on Zip car,

Haxi, side car Ola cabs and many others that are coming up, infact presently the concept of

doing things like Uber it has been called Uberification because of all the people using the Uber

concept showing that more they will still come out and challenge Uber in the taxi and other

businesses it might use its business model in("Uberification of.. n.p.).

 BEN MBOCHA 6

Uber’s SWOT Analyses

Strength

 One of the internal strengths that Uber it has is that it has a large capital base this it

helps it to expand aggressively for example it has gotten into a new city every month

since May the year 2011(Peak).

 Also Uber since it started very early it has a very large data base of information

concerning its various users around the world and so it is knowing their trends and how

and when they need the companies services this process of data mining it is called "God

mode"("God view" n.p.).

Weaknesses

 One of the weaknesses the company it has it is in the satisfying its suppliers who they are

the drivers, the drivers even though they make $6dollars more than regular taxi drivers in

places like Newyork, they still have to pay for servicing of their cars and

fuelling(Davidson, n.p.). These drivers have even taken Uber to court so as to be given

payment for tips and for servicing and fuelling their cars (Rugbar n.p.).

 Yet another weakness it is that the Uber business model it is very easy to be copied and

therefore the company needs to add value to its own application Inorder to stay ahead of

existing and future competition.

Opportunities

 Can be operated in a small town: small towns like Albany, Oregon do not have

that much of taxi services because there is no much demand and it is costly to
 BEN MBOCHA 7

open a new business and hiring drivers where Uber does not have to be in the

town it can be online dealing with the drivers and customers (Makos n.p.).

 Again the company it still has a very large growth capacity that it should exploit

this it is especially possible because of the large capital base it has presently with

over 40 billion in venture funding (Makos n.p)

Threats

 Some of the external threats the company it faces it comes from other taxi service

providers, for example in Portland there was argument between regular and Uber taxis

because the regular ones were saying Uber was spoiling their market and taking all the

work this it also happened in other places like in France, South Africa and India where

taxi drivers there were against Uber in South Africa it has become so bad that drivers

they have to have security escort to work(“Protesting taxi drivers” n.p.).

 Yet another challenge the company it is having it is from the various governments from

the various countries it operates from/Uber it has faced hard times in trying to adopt to

various municipal by laws that are followed by local taxi service providers in I different

nations around the world, the company it has been accused of by passing this laws by

both operators and local governments which it has led to confrontations in courts an

example it is in Milan Uber pop was banned by a Milan court after it was said the

company was providing unfair competition as well as it was going against the local

jurisdiction that regulates the other taxis, this law suit it had come from the Italian taxi

drivers union(Esplora il significato del termine: n.p.). Other company substituted: there
 BEN MBOCHA 8

are other substitution companies like Zip Car where it costs less than Uber when the

customer needs a ride for long distance or more than one location.

Strategic recommendation

From the above analyses it is evident that Uber needs to invest in establishing good working

with various local and municipal governments as well as national ones in the countries it rolls out

its services in, this is because it has had constant problems with following by laws set up to be

followed by various governments around the world.

Moreover, the company needs to invest in local taxi service providers so as to have their good

will they can do so by encouraging them to be joining the Uber platform by providing various

incentives and showing them the advantage of Uber over their regular kind of operations this

way Uber will maintain its growth and become a leader in the taxi business the world over.
 BEN MBOCHA 9

Work Cited

BLODGET, H. (n.d.). I Just Heard Some Startling Things About Uber. Retrieved from

http://www.businessinsider.com/uber-revenue-2014-6

Davidson, J. (2015, January 22). Uber says its drivers make $6 more than traditional cab

drivers, but the devil is in the details. Retrieved from http://time.com/money/3678389/uber-

drivers-wages/

Esplora il significato del termine: Il Tribunale blocca UberPop in tutta Italia: "Vittoria dei

tassisti". May 26, 2015. Web. Aug 12. 2015.

Kedmey Dan. "This Is How Uber’s ‘Surge Pricing’ Works". Time

Magazine.Dec.15.2014.Web14.Aug.2015.

Smith, Ben. "Uber Executive Suggests Digging Up Dirt On Journalists." Buzz feed.

November 172014. Web. Nov 18, 2014.

“See, Uber — This Is What Happens When You Cannibalize Yourself". TechCrunch.

March 15, 2013. Retrieved January 24, 2014.

“Protesting Taxi Drivers Attack Uber Car Near Paris". TechCrunch. January 13, 2014.

Makos, Jim. "SWOT Analysis for UBER." Pestle Analysis. Weberience LLC,, 25 Mar.

2015. Web. <http://pestleanalysis.com/swot-analysis-for-uber/>.

"Taxi medallions have been the best investment in America for years. Now Uber may be

changing that". Washington Post. Nov.11.2014. Web 12.Aug.2015.

Kedmey Dan. "This Is How Uber’s ‘Surge Pricing’ Works". Time

Magazine.Dec.15.2014.Web14.Aug.2015.
 BEN MBOCHA 10

“See, Uber — This Is What Happens When You Cannibalize Yourself". TechCrunch.

March 15, 2013. Retrieved January 24, 2014.

Smith, Ben. "Uber Executive Suggests Digging Up Dirt On Journalists." Buzz feed.

November 172014. Web. Nov 18, 2014.

Rugabar, Christopher S. "Labor Department Tries to Clarify Hiring Rules for Gig

Economy". Inc (Inc). July. 15.2015. Web. 24 July 2015.

Saad ."Ubergo Is Officially The Cheapest Ride In Town | Uber Blog". Blog.uber.com.

Nov.19.2014. Web. 12.Aug.2015.2015.

Travis Kalanick, Uber and Loic Le Meur, Co-Founder, LeWeb, LeWeb Dec 10, 2013

https://www.youtube.com/watch?v=vnkvNQ2V6Og

Uber Driver Training Video, Michael Colman Jun 23, 2014,

https://www.youtube.com/watch?v=makYbqd7mGA

"Uberification of the US Service Economy". Schlaf. Retrieved January 5, 2014.

"Taxi medallions have been the best investment in America for years. Now Uber may be

changing that". Washington Post. Nov.11.2014. Web 12.Aug.2015.

BEN MBOCHA 11