A popular taxi and ride-share app-based platform, Uber was established during the year 2009. This app-based platform matches the riders with the drivers of own cars through an app or Uber’s website. The company is headquartered in San Francisco and the company provides various services like taxicab hailing, car sharing, food delivery, bike-sharing, rental cars, and transit tickets.
Over the years, Uber’s strategic focus has helped the company to drive efficiencies and has invested a huge amount in the latest technology. It has put its effort to lower the price of the taxi through its demand prediction algorithm that matches the supply and demand.
Currently, Uber is being operated in about 785 metropolitan areas across the world. Uber platform is easily accessible through its app and website. Uber has introduced the ride-sharing phenomenon. It substituted the idea where people step out to rent a cab when they require it.
Ever since its formation, Uber has become a favorite model for many users. Users can book an Uber ride and let the driver pick up from the user’s preferred location. However, the company has seen a huge growth regardless of getting a few negative reviews and criticism.
The SWOT analysis of Uber differentiates all the main strengths, weaknesses, opportunities, and threats that give a direction to the company to scale up more. Readout this article, to get an understanding of where Uber stands.
The SWOT analysis of Uber highlights the strengths that the company has and its weaknesses where it should focus more. It also throws light on its potential threat that the business can encounter and the various opportunities that Uber sees to expand its business more.
To make sure that Uber meets the long-term competitive advantage it must address the various concerns highlighted in the SWOT analysis of Uber.
Let us discuss on the SWOT analysis of Uber.
- Largest Ride-Sharing Technology – Uber is considered the largest ride-sharing platform across the world. Uber is the first app for ridesharing in the world. During the year 2016, this esteemed transportation company has about 40 million active users in about 760 cities globally. People use this app for their daily ride that has helped Uber to grow to a great level.
- Strong Brand Value – In almost 50 countries, Uber has seen strong brand recognition. The company has already outdone Honda, Ford, and GM with regards to the brand value. Having incorporated the new technology features, it is yet to enhance its services in the coming years.
- Low Fixed Investment – Uber has its business operations being executed on low fixed investment, that is, at low operational cost, due to which it has increased its network in many cities. As there is not a fixed investment in infrastructure, the company has continued to expand at a fast pace.
- Dynamic Pricing Strategy – Uber’s dynamic pricing strategy has remained constant. Its policy, ‘Higher demand, higher price’ has proved to benefit its drivers and the industry. Uber’s drivers earn a considerable amount during the nighttime and during any bad weather and on holidays.
- Adaptive Nature – Uber’s adaptive nature is being recognized worldwide. Having international exposure, Uber has its way to blend and integrate with various cultures and nationalities. This has helped Uber to gain trust and reliability among users. Also, it has received praise for its smart marketing. For example, Uber makes use of its social media accounts to maintain connection with the customers. Through the various social media platform like Twitter, Instagram, and Facebook, Uber conveys its customers about the company’s promotions, deals, and updates. Also, customer’s queries and concerns are immediately addressed through the various social media channels. By using the social media platforms to connect with customers, Uber sees a high rate in customer engagement.
- Low Price – Uber provides low prices when compared to the taxis available in that area. The main difference between the taxi and the Uber service is that Taxis charge per mile while on travel and per minute while not on travel, where as Uber charges per minute and mile while both idle and moving. This pricing strategy has proved to be useful for customers. Also, Uber is cheaper than other transportation companies in most of the places. But other factors affect the ride’s final price. Few factors are the distance travelled, geographical location, rush pricing, cancellation charges if any, and other additions regarding the trip.
- Customer and Driver Communication – Uber’s business model is a perfect model for a customer to driver communication. Uber has developed a rating system for the customers to rate the drivers and their travelling experience. Using the rating system, Uber can track the best drivers and helps to monitor the driver’s performance.
- Rides and Beyond – Apart from the providing ride from the source to the destination, Uber tries to get closer with self-driven technology and urban air transport. Uber also helps people to order food fast and at an affordable rate, create new freight-booking solutions, and help companies to provide a good and all-in-one travel experience for their employees.
- Safety Measures – Uber focuses on safety as the most priority. Uber commits itself on its part while technology is the heart of Uber’s approach. The company has partnered with various safety supporters and incorporating new technologies and systems to improvise on the safety measures and to develop new technologies and systems to improve safety and to help people to get around.
- Global Market Leader – Over the past years, Uber has grown tremendously into the global market and is seen as a leader in the transportation company having its services extended over 65 countries and in almost 785 cities. In the United States, Uber sees having about 69% market share. The company has created a strong brand identity and has provided opportunities to enter a new geography area.
- Customer-Centric Approach – Uber’s business model focuses on customer feedback and satisfaction. Uber gives chances for the drivers and customers to rate on its scale basis the trip experience. This can be used for customer satisfaction measurement.
- Adaptability and Change – Uber’s unique business model is to provide rides. The company serves many customers per day in various countries. The main factor of Uber’s success is adaptability and change. This is seen in Uber initiating various businesses like Uber Freight, Uber Eats, Uber Bike, and Uber Health.
- Multiple Dishonors – Uber has received much negative attention over various controversies and many scandals. There were various cases reported about sexual harassment and attacks that have insulted the company. Due to this, its co-founder had to resign.
- Large Losses – Even though, Uber has increased its revenue it has been facing huge losses ever since the year 2009. To beat its competitors, the company has started to provide incentives to its drivers and discounts to their customers. Due to this, Uber has seen a huge loss during the year 2016.
- Workforce Dependency – Uber’s business model is in such a way that it is so much dependent on its workforce. Driver’s behavior dependency is more in this model and it is unpredictable and has damaged the brand’s image. In the United States, more than 100 drivers were accused of abuse that has created a bad image in Uber’s culture.
- Public Attack – During Hurricane Sandy, Uber has raised its pricing and due to this, the company has faced a severe public attack for the same. This is a huge weak point and has led to damaging the image.
- Copied Business Model – There are various claims that Uber has copied its business model from the model of Lyft, while few have claimed that Lyft has copied from Uber. This is, indeed, arguable but the main fact is that the ride-sharing industry is neither protectable nor branded. The new entrant is less here.
- Internet Dependency – Yet another weakness for Uber’s business model is being dependent on the internet and smartphone devices. In most of the developing and upcoming countries where the internet is not available easily, it becomes tough for the company to operate in those areas. The potential customers of Uber would be those who have a smartphone and internet available.
- Performance and Accountability – Customers prefer an organized cab service, and this provides an opportunity for Uber to serve better. The company can provide various services basis accountability and performance. On tracking driver’s performance, Uber can track the top performers.
- Use Digitalization – The world is going digital. Many people want an easy inter-connected network that is available on their smartphone. Uber should always continue to invest in its other services to increase its customer base. In a few countries where Uber does not operate like Denmark and China, it should expand its services there as well. On expanding its business operations to such places, it can increase its customer base.
- Enter Driverless Technology – Uber always uses the latest technology and it does see the potential to undertake driverless technology and other kinds of transportation services like ambulances and emergency vehicles. This would help the brand to differentiate among its competitors and gain more status in public.
- Logistics – Uber can venture into launching its movers and packers for public convenience. This would provide a huge opportunity for the company and be able to get more revenue.
- Partner with the Hospitality Industry – Uber can enter into a partnership with the tourism and hospitality industry that would help the company to serve many tourists. Various tourists from many parts of the country require regular taxi service while they stay at the hotel. This would benefit Uber, the partnering company, and the tourist as well.
- Retention of Employee and Customers – When the competition is increasing, retaining the customers and employees is a challenge for the brand. When there is a financial incentive for the customers or the employees, there sees a threat for Uber when its customer base reduces.
- Lawsuits – The company has faced a lawsuit from its employee. Almost 300,000 drivers have filed complaints against the company’s less wage policy. Later, these were settled off the court. But due to this, the brand’s image was damaged.
- Huge Competitors – The brand sees a huge competition from various transportation services, and this is a threat to the business. When there are more companies providing these services, it affects the customers of Uber.
- Covid-19 – Many global issues are a threat to the business. The spread of the coronavirus worldwide has led to lockdown in many countries. This has led to the non-functioning of the taxi service that impacted the business to a great extent.
- Data Breach – The Uber platform records the customer’s personal information including their pickup and drop point location. It is indeed a legal duty of the company to provide data protection of the customers’ data from theft and misuse. This is a big threat to the brand and there was a data breach that happened during the year 2016 and has impacted about three million users.
The SWOT analysis of Uber mentioned in this article has highlighted the main strengths of the brand that comes up from its brand value, being the top ride-sharing platform, low-fixed investment, dynamic pricing strategy, its adaptive nature, its low price, the communication of the driver and customer through the app, the various features apart form ride, the various safety measure that the brand has, being a global market leader, having a customer-centric approach, and its adaptability nature of the business model.
Uber sees its weaknesses in the form of owning many dishonors, large loss in revenue, dependency on the internet and its workforce, facing public attack, and having a copied business model. The brand sees opportunity from various aspects of increasing its performance, digitizing fully, incorporating driverless technology, entering into logistics, and having a partnership with the tourism and hospitality industry.
The threat is in the form of retaining the employees and customers, facing lawsuits, having large competitors, global issues, and a data breach.