Prepared For :

Strategic Management
 INTRODUCTION
• Transportation network company operating Uber Car transportation and
food delivery mobile apps
• Headquarters in San Francisco, USA
• Founded in 2009 by Garrett Camp and Travis Kalanick (CEO)
• Operating in 570 cities worldwide
• Revenue : 20 billion USD (2016)
• Number of employees: 6700
• Follows dynamic pricing
• Provides services as UberX, UberPOOL, UberLUX, UberGO, UberEATS,
UberRUSH, self driving cars and helicopter service
• International expansion in 2011. Launched their services in India in the
year 2013
 BUSINESS PROPOSITION

• UBER has no fleet of its own. Different from other taxi services as it
connects the licensed drivers and the customers
• Drivers (Car Owners) join UBER and get access to driver’s app
• UBER charges 20% Commission on fare and driver gets rest of 80%
• Dynamic pricing helps UBER to charge premiums
 FUNDING MECHANISM
• Started in 2009, Travis Kalanick sold their startup “Red Swoosh” for USD 19
Million which helped in the initial capital
• The rest of the money was raised via a series of private equity fundings totaling
USD 8.2 Billion as of 2016

Additional
$37M by $258M by
$1.2B by $1B from
$11M led by Goldman Google $1B by
Black Rock, Times
Benchmark Sachs, Ventures Microsoft,
capital
Google Internet,
Menlo and TPG Bennett
ventures Foundation
Ventures Growth
Capital
TAXI SERVICE INDUSTRY BEFORE UBER
 Threat of New Entrants

PORTER’S FIVE FORCES MODEL

Supplier’s Power Intensity of Rivalry Buyer’s Power

Threat of Substitutes
 Threat of New Entrants
Barriers to Entry : LOW
• Low protection from new firms
• New entrants can start with less
capital initially
• Virtually zero switching cost

Supplier’s Power Intensity of Rivalry Buyer’s Power

Supplier Power : MODERATE Buyer Power : HIGH
Rivalry Determinants : HIGH
• Depends entirely on drivers • Many substitutes available
• Large number of firms (Lyft,
• Have power to negotiate higher • Switching cost is very low
Ola etc.)
price • Sensitive to price changes
• Fast market growth
• Uber has the power to set
• Similar cost structure
terms and rates

Substitutes Threat : HIGH

• High buyer inclination to substitute
• Traditional taxis and public transport

Threat of Substitutes
 High
BCG MATRIX

• Growing at a very fast rate

• Market share is still low on
Market Growth Rate

rides as a whole (market

leader only in taxi-apps)
• Needs a lot of cash
• Raised $8.2 Billion in funding
rounds as of 2016
• Can become a Star
Low

High Relative Market Share Low

 STRENGTHS WEAKNESSES
•Global player in over 50 countries and 200
cities •Dependent on Manpower and Internet
•Brand Equity •Misbehaviour of drivers directly affects the
•Enhanced user experience & higher brand image
customer satisfaction •Low Customer loyalty
•Unlimited fleet of vehicles and no full time •Unpredictable Business Model and Pricing
drivers
•Low operational Cost

OPPORTUNITIES THREATS
•Self driving and flying taxis
may yield unending possibilities •Low Entry Barriers
•Uber’s Garage services can generate large •Rising Competition
sums of revenues •Customer retention and brand
•More drivers will reduce the estimated time of switching
arrival. •Future is unclear due to lack of
•Increasing demand for Used cars regulations
•Poor public transport •Conflicts with local authorities
 •Government require •Population density is
•High disposable Income growing
commercial licenses
•Growing corporate sector •People follow fast paced
•Political discussion about
minimum wage laws for •Price sensitivity decreases lifestyle
taxi industry •Increasing demand for
•Tax issue transportation in Urban
areas

•Competition with other •Growing demand for •Regulations and

ride share companies electrical and hybrid car Standards
•Improved Navigation •Uber Pool •Ban on ride sharing
•Schedule rides in advance •Health issues due to •Social Media Impacts
pollution
 LEVELS OF SERVICE
UberPOOL- Economy service promoting Ride UberBOAT available in Istanbul is a water
Sharing taxi service

UberEATS Allows food delivery by Uber UberGO available in India for a ride in
Drivers in 71 cities hatchback

UberRUSH- Courier package delivery in NYC, UberTAXI allows booking of licensed taxi
SF and Chicago through UBER with additional booking fee

• On Sep 2016, Uber launched its first self-driving car service in Pittsburgh and San
Francisco in Dec. 2016
• In July 2014, Uber launched Helicopter service in NYC
• In 2016, same urban transportation with flying vehicles in Sao Paulo
• On Apr 2017, Uber announced to launch a new patent purchase program named UP3 to
facilitate patent purchase
 CUSTOMER SEGMENT
1. Early Adopters
• Tech-Savvy users
• Smartphone users
• Customer who values time
• User with limited spending powers

2. Special Category
• Uber for Kids- A special service dedicated to parents who wants their kids
to reach home from schools
• Uber for senior citizens- Special service for senior citizens with huge
concessions. It make for up to 30% to 40% of total rides in many cities
 VALUE PROPOSITION

CUSTOMERS
• Minimum waiting time
• Price less than normal fares
• Cashless rides and can track
location using GPS and ETA
DRIVERS
• Additional source of income
• Part time work option and
flexi timings
• Drivers get paid to be online
even without cab request

Key differentiators are Price, Time, User experience, Convenience options

• Cost Structure- Salaries to employees, technological infrastructure & marketing
expenditure
• Revenue Streams- car rides on per Km/Mile basis, Surge pricing, Uber X, Uber cargo,
Uber SUV etc.
REVENUE GENERATION MODEL- WHAT MAKES UBER DIFFERENT

• Different cab models to cater to all

• Surge Pricing technology
• Variation in Service
• Rating Scores
• Legislation and Requirements
• A mechanism called "Real-Time ID Check" requires some drivers to
occasionally take selfies before accepting ride requests, to verify identity
and prevent drivers accounts from being compromised
UBER’s DISRUPTIVE INNOVATION
STRATEGIES
• Elimination of various transaction costs
• Encouraging increase in productivity of assets and employment rates
• Use of cutting edge technology
• Variable or flexible (and often more affordable) pricing model
• Convenient and frictionless payment
• Implementation of quality control through a rating system
 UBER’s GLOBAL EXPANSION
• Fastest growing start-ups in Silicon Valley in 2009, with a reported $1.5
billion revenue to an estimated worth of USD $62.5 billion by late 2015
• First billion rides in 6 years ; second billion took only 6 months
• Strategize which countries when as a first step
• Prepare their code for internationalization
• Build tools to efficiently communicate system-wide changes
• Adapt to local needs
UBER’s MARKETING STRATEGIES

• Early Adopter Advocacy

• Referrals
• Reviews
• Stunts
• Partnerships
BLUE OCEAN STRATEGY
• Added ease of use of cabs with technology for the traveler
• Reduced the hassle of waiting and searching for the cab on the
street
• Increased the availability of rides
• Eliminated the stinky smell which people hate in the cabs
 CONTROVERSIES AND CHALLENGES
• The class-action suit claiming Uber drivers as employees has been
settled at 100 million USD which makes them remain as independent
contractors. By doing this it could gain some confidence from the
drivers as it agreed to change its business practices, including policy for
deactivation of drivers

• Austin’s stricter regulations that include mandatory fingerprinting of

drivers reflect a shift in the composition of Austin’s city council. Uber
did not agree to the rules and decided to exit from the city. It could
have negotiated and brought changes as Austin is a major
entrepreneurial hub including the famous SXSW annual conglomerate
of film, interactive media and music festivals
CONTROVERSIES AND CHALLENGES
• Hungary government labelled Uber as illegal dispatcher services,
any driver found working for Uber would loose the license to
drive for the next three years. Hence Uber exited from Hungary
not to cause further trouble to its drivers and to safeguard itself

• In countries such as Brazil, Canada, China, France, Germany, India,

South Korea, Japan, Spain Uber is faced with severe opposition
from taxi drivers, government regulation, and competition form
similar ride sharing apps
 CONTROVERSIES AND CHALLENGES
• In China both Uber and its local rival Didi kuaidi have faced severe
protests from taxi drivers, in some cities Uber offices raided by police
• In France ‘Thevenoud law’ was passed which forbids UberPOP, a low
cost service that employs drivers who don’t have commercial
licences. Violent anti-Uber protest were held
• Like in France, in Germany too UberPOP was suspended as it violated
law
• In Japan the taxis were very prevelant and Uber faced tough
competition. The largest taxi company Nihon Kotsu gave a new
service called Line Taxi by partnering with local messaging company
called Line
 UBER IN INDIA
COMPETITVE ADVANTAGES
• Traditional operators were
unorganized and unreliable-
failed to arrive on time
• Uber services made it possible to
book cabs at short notice and for
short distances
• Cheaper than any other service
CHALLENGES
• Faced a legal lawsuit and was on
the verge of being shut down
• Rules that Uber should get the
license by fulfilling by owning its
own cabs, providing designated
parking slots, etc.
• Heavy competition from home
grown taxi sharing services
WHAT DOES FUTURE HOLDS FOR UBER
• Enormous challenge from Google, GM driverless cars
• IPO route expansion
• China- a big threat
• More acquisitions ( Till now 3 acquisitions- Geometric
Intelligence, Otto, deCarta)
REFERENCES
• https://www.cleverism.com/strategies-uber-is-using-to-disrupt-the-taxi-
industry/
• http://www.oneskyapp.com/blog/uber-global-expansion
• https://www.slideshare.net/MichaelReed11/uber-analysis-mgmt-180
• http://scholarprof.blogspot.in/2016/05/porters-five-forces-analysis-on-
uber.html
• https://www.linkedin.com/pulse/20141128105936-1160896-using-uber-to-
explain-business-terms
THANK YOU