Uber's Rise to World Domination: Issues and Challenges Ahead - Essay Sample

Introduction

Since its inception, Uber has gained massive popularity across the world. With operations in several cities across different nations, the cab-hailing company has significantly impacted the taxi transport sector. While Uber is projected to become a very successful venture in the future, some issues could derail its success. The first problem arises out of the company culture that continually relies on aggressive growth and intense competition to dominate a new market. The approach taken by Uber has created the impression that the entity does not prioritize compliance with national, state, and local laws in new markets(Wong, 2019). Hence, the strategy could alienate the community and government against Uber, which may lead to stringent market regulations.

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Managers and Board

The decisions and actions of Uber's executive teams have led to some of the problems facing the company. While making a market entry, the board was aware that the entity was introducing disruptive technology to the taxi business. There were no relevant regulation policies for such a business model. Instead of handling legal issues amicably, the management opted to embrace an aggressive entry strategy. For instance, they could launch operations in a city without approval. Thus, the company continues to face opposition in some regions due to the existing strategic management process that encourages aggressive competitiveness.

Opportunities and Threats

Uber has a chance to positively impact organizational performance and success by embracing the use of driverless cars as well as cheaper electric vehicles. Widespread use of autonomous vehicles in its company operations will significantly reduce the potential for human error. It will help address issues such as accidents caused by errors that occur due to distracted driving. By encouraging the use of electric cars, Uber can reduce expenses that drivers incur since it is relatively cheaper to run and maintain an electric vehicle("Uber SWOT Analysis," 2019). With lower costs, there is a probability that the drivers' profit margins will increase, making Uber more appealing to more contractors.

While exploiting these opportunities offers the company a chance to expand its operations, it could face challenges in retaining its employees. In the current market conditions, drivers do not enjoy high-profit margins. Besides, competition from Uber's rivals, such as Lyft, continues to increase. With the use of electric cars, it implies that driver availability will also rise. If it translates into a decrease in prices, it will pose a challenge for Uber to retain the contractors. Such changes in the market will deter new drivers from working with the ride-sharing company, especially in prospective new markets.

Industry Analysis or Task Environment

The level of competitive rivalry that Uber faces is not intense. Based on the Porter model, the number and strength of competitors impact the organizational success("Porter's Five Forces," 2019). Its rivals, such as Ola and Lyft, do not pose a significant threat since Uber has a large market share. The company's supplier power enables it to offer cheaper alternatives to consumers. Thus, its unique business model is convenient to use compared to traditional taxis. Uber has a large customer base. The firm's clientele has the power to influence prices by measures such as boycotts. However, the probability of clients securing alternative rides with ease is low. While other companies may offer reasonably priced rides, they lack Uber's diversity in products and services("How Uber Works," 2017). Besides, Uber's dominance in current markets and continued expansion into new ones limits the threat of new entry by another organization.

Some industry factors, such as low fares, limit earnings for drivers. As a brand, Uber practically relies on drivers to achieve company goals. However, industry expenses that are beyond the control of the firm remain a challenge to the company and its drivers. For instance, the costs of fueling and repairs reduce earnings, given that drivers have to use well-maintained cars. Considering the inconveniences that passengers or travelers endure in the transport sector, Uber has an opportunity to exploit. The firm can focus on efforts and resources to establish a professional workforce that will revolutionize the customer experience. Through effective and professional service delivery, it can grow its client base rapidly.

Internal Environment: Strengths and Weakness Within the Company

The company has a hierarchical corporate structure. Its strength is that it provides a definite outline of the roles that various departments and individuals play. The weakness of the current structure is that it lacks flexibility (Qorbani, Yamaguchi, &Cosenz, 2017).The management needs to consider making changes that will make it possible for the firm to respond to external market changes swiftly.

The strength of the corporate culture at Uber is that it supports innovation. The environment encourages the use of technology to improve service delivery and customer satisfaction. The weakness of the corporate culture is that it has resulted in an unconducive, toxic work environment. The company's leadership has faced accusations concerning issues such as employee harassment and discrimination.

Analysis of Strategic Factors (SWOT)

Based on the external and internal factors, one of the key strengths of the company's success is the use of technology in its operations. Many Uber drivers can operate the app using the internet and android devices. Besides, its hierarchical corporate structure provides a clear outline of the duties and responsibilities of various departments. This strategy ensures the proper allocation of roles without duplication.

Despite the problems affecting the business, the firm is still working towards achieving its mission and vision. Thus, the two elements are always appropriate and do not require any transformation. Change of the company's mission and vision might result in significant delays in meeting the set goals. The firm may also waste a lot of time and resources planning and implementing the new aspects.

Recommended Strategy

A strategy that the company can implement to enhance organizational performance is reshaping the corporate culture. There is a high likelihood that Uber will experience success when entering new markets if it nurtures a culture where staff members respect authority and existing regulations. Some of the significant problems that the firm faces arise due to the tendency of executive management to use aggressive methods. Additionally, poor internet in some areas is also a problem facing drivers. Thus, most of the issues that the company is facing are a result of poor management and leadership wrangles among managers in different countries. While it has revolutionized the taxi business and offered a more convenient solution to customers, Uber needs to increase its compliance with local laws in new markets. By modifying its corporate culture, the firm can gain favor among external stakeholders that influence long-term success.

Implementation

One of the steps that the company can implement to initiate a change in the organizational culture is holding the management accountable for violation of market rules and regulations. Since the company operates in different countries across the world, the administration ought to be excellent representatives by establishing work ethics. Such an action would help inform the rest of the teams and employees at Uber to respect laws and perform their roles as defined by company policies. Often, employees fail to adhere to regulations due to a lack of emphasis on senior levels of management. The recommendation is financially feasible since it will help the company to minimize losses that could arise due to lawsuits for violation of the law.

References

How Uber Works: Insights into the Business and Revenue Model. (2017). Retrieved 20 October 2019, from https://jungleworks.com/uber-business-model-revenue-insights/

Porter's Five Forces: Understanding Competitive Forces to Maximize Profitability. (2019). Retrieved 20 October 2019, from https://www.mindtools.com/pages/article/newTMC_08.htm

Qorbani, D., Yamaguchi, Y., &Cosenz, F. (2017).Analyzing Business Dynamics of Ride-Hailing Services.In The International Conference of the System Dynamics Society, Cambridge, Massachusetts, USA (2017).

Uber SWOT Analysis: 2019. (2019). Retrieved from https://bstrategyhub.com/swot-analysis-of-uber-2019-uber-swot-analysis/

Wong, J. (2019). Disgruntled drivers and 'cultural challenges': Uber admits to its biggest risk factors. Retrieved from https://www.theguardian.com/technology/2019/apr/11/uber-ipo-risk-factors