In-Depth SWOT Analysis of Uber | Strengths Weaknesses Opportunities & Threats
About Uber:
Uber is a transportation network company based on a smartphone app that connects drivers and passengers.
In 2009, Uber was founded by Travis Kalanick and Garrett Camp in San Francisco. The idea was to create an easier way of getting a ride with their iPhone than calling a cab company or waiting for one.
The company operated in 41 countries by 2015 and had drivers in almost 50 countries when it came to an end-of-year review.
The service was so good that in 2014, Kalanick was named one of the world’s 100 most powerful people (CEO of the year: 2014) and in 2015, was named to Time’s 2014 100 most influential people.
In January 2016, Uber was valued at $62 billion.
Uber is currently available in over 900 cities across 93 countries, according to Uber Technologies. There are 103 million Uber monthly average users (ride and Uber Eats combined) among these, who are served by a total of 5 million drivers.
Since Uber is a platform that allows for casual work, it is important to remember that this does not reflect the number of drivers who depend entirely or even primarily on Uber for a living.
In 2020, Uber Technologies’ net revenue was estimated to be around US$11.1 billion. The mobile transportation network corporation has over 100 million monthly users worldwide.
Uber is currently in 93 countries around the world and has been banned in some cities due to its disruptive operation and local politics.
The company has grown so well that it has started to replace competitors and even come up with its own cars.
Uber’s Network:
The Uber app allows users to quickly locate a driver when needed and view ratings of drivers from other users.
On the app, users can add a tip to the driver, and they show up on the next trip with a small icon or label.
The app allows for users to enter commands like ‘hey Uber,’ ‘go home,’ or just ‘panic.’ The driver will then be informed of what needs to be done.
Once on-boarded, each passenger is assigned a personal ride quote within the app. This quote includes their destination, car type, and time they wish to be picked up.
Once the passenger has approved the quote, a car is dispatched. The app also allows for users to get an estimated price and add additional, extra, or optional features.
If the passenger likes the price, they can book a ride through the app. The app gives users a call back once the driver is close to their location if they did not get a response.
SWOT Analysis of Uber
Uber Strengths
#1 Pricing: One of Uber’s main strengths is its competitive pricing strategy, in which the company uses multiple variables to decide the price of a trip.
#2 Competitive Advantage of Uber. Uber has competitive advantages over its competitors because of its operating structure and efficiency. The operating structure of Uber is much like a startup because it does not have any employees, with the exception of corporate staff members.
This allows the company to invest an average of 8-10% into revenue back into operations and R&D, which is much more than what most comparable companies spend.
#3 High-Profit Margin: A large portion of Uber’s revenue comes from allowing riders to use the service without having a car. This means that Uber has a large portion of its customers also be drivers, which creates efficiency in managing operations.
#4 Efficiency in its operations. Uber has been able to create efficiency in its operations because it was able to move quickly from an idea into a business model within 6-8 months. This frees up the company to be able to focus on other strategic and operational issues.
#5 Uber Innovation: Another factor of Uber is its history of innovation by creating a novel service. This allows Uber to have innovative ideas to use in adjusting their business model and has led to the introduction of autonomous vehicles (cars that can be driven without humans).
#6 Easy Integrations. Uber also has an advantage because its platform can integrate with other companies’ platforms quickly. This means that Uber has the ability to create a network of riders that can use other services. These include insurance companies, photo-sharing websites, and taxi companies.
#7 Capital Investments: Uber also has an advantage because they are able to raise more capital by being able to receive the money within a short time a company would like to invest in Uber. As well as this, Uber is also a private company that allows it to raise funds without having to answer for the financial statements of its operations and finances.
#8 Competition strength. Competition strength comes from the fact that they are able to use their existing platform and history with drivers to expand into new markets. This is a strong advantage because people around the world can use these drivers.
#9 Economies of scale. In addition to this, competition has a diverse global reach, leading to its ability to operate in different markets. Competition can also increase their profits by leveraging economies of scale.
#10 Supply & Cost: Competition also has many drivers that can be leveraged to increase their supply and decrease their costs. In addition to this, as of now, there are no strong competitors for Uber’s services. In order to be successful in the future, they must look for competitors to try and leverage economies of scale and capital investments.
#11 Strong Brand Value: Uber has also received a lot of media coverage, thus creating a strong brand value.
#12 Favorable Demand: Another strength of Uber is that there is high demand in the taxi services market, which provides growth opportunities for the company.
#13 Low Investment: The startup costs of Uber are fairly low, and it is easy to start-up operations with little capital investment.
#14 Technology Disruption: It is also possible to run Uber through an app, which makes it highly efficient and easy to operate. The Uber app is one of the most downloaded apps.
#15 Ease of access: Uber is accessible to anyone with an internet connection and smartphone.
#16 Minimal wait times: Riders are typically picked up in less than five minutes after booking a ride, and the wait time before being picked up starts at only one minute.
#17 Increase in Popularity: With so much increased popularity, there is potential for large growth in profits.
Uber Weaknesses
#1 Diverse Lawsuits: The company has been involved in several lawsuits regarding the alleged misclassification of drivers, which has affected its reputation and viability.
#2 Poor Uber – government relations: One of the weaknesses comes in the form of their current relationships with governments. Uber has a history of not complying with governmental regulations and laws regarding the taxi industry. This has caused them to lose access to cities like New York, San Francisco, and Houston. Uber is struggling with other issues such as lawsuits because of privacy violations and harassment. The main focus for Uber now is to put into place a policy that can curtail this behavior.
#3 Driving under the influence: Another internal weakness for Uber is that it does not have a platform that can be used to detect when they are driving under the influence and take them off the road if needed. This could cause an accident, which would hurt the company’s reputation. This is especially dangerous because Uber is trying to expand into new areas in the United States, such as New York City and Nevada.
#4 Environmental issues: Another internal weakness for Uber is that it does not have a specific way to minimize its impact on the environment. By not having a policy that limits traffic, pollution, and other negative effects of their business model, they increase these issues.
#5 Finacial Stability: One weakness for the company has to do with its financial stability. Uber is a private company which means that it can raise money at will without having to answer for its finances. If they were to lose a large investor, they could be in danger of losing capital and may need to cut back on the supply of new drivers that it is planning on hiring. This could hurt Uber’s ability to open up new markets.
#6 Oversight and accountability: As well as this, Uber is also a private company which means that they do not have to meet certain standards of oversight and accountability in their operations. This can cause them to splurge on unnecessary expenses.
#7 Lack of transparency. Another weakness for Uber is its lack of transparency concerning its finances. Uber is a private company and has not been open about its finances. It is unclear exactly how much they are willing to spend on R&D and how much they are spending to expand into new areas.
#8 Regulatory control. Another external threat to Uber is the regulatory control of their business model. Local governments are putting pressure on Uber to abide by existing taxi regulations which can slow down the growth of their business more than it needs to be slowed down.
#9 Safety concerns: In the recent past, Uber riders have been subject to robbery, assault, or abuse while using the company’s service.
#10 Lack of consistent communication: Uber’s lack of consistent communications can be seen as a weakness, with riders relying on the app for their transportation needs.
#11 Reliance on the internet. Another drawback of Uber’s business model is its reliance on the internet and smartphone devices. In the majority of developing and emerging countries, where internet access is restricted, it becomes difficult for businesses to function in those regions. Uber’s future consumers are those who own a smartphone and have access to the internet.
Uber Opportunities
#1 Expand into new markets. Uber already offers service in over 900 cities across the globe. This is a huge opportunity to expand into new markets around the world. Further international expansion will be important if the company hopes to be competitive worldwide.
#2 Raise prices. Low pricing has been one of Uber’s biggest advantages in the ridesharing market. It would benefit well for the company to raise its prices and improve its profit margins.
#3 Advertise to new consumers. Uber could try boosting brand awareness through expensive advertising campaigns to acquire new users and increase market share. This idea worked well for other tech giants like Facebook as the company was able to expand from a regional player into an international phenomenon.
#4 Pursue a profitable vehicle leasing division. Leasing and financing vehicles is another of Uber’s interests that would be a major source of revenue. This could be another product line that they can sell, such as through the leasing or financing company.
#5 New funding: Uber recently raised $1.2 billion from investors, including Chinese internet giant Alibaba, Google, General Motors, and Saudi Arabia’s sovereign wealth fund.
#6 Expansion: After expanding into some new cities last year, it is predicted that Uber will expand into many new international markets in the coming years. Uber’s opportunities are primarily centered around expansion opportunities overseas.
#7 High number of clients and drivers. Uber has been able to attract many users, which means there is a large number of potential clientele who could become regular users in the future.
Uber has been able to attract a large number of drivers. This increases the number of people who can fulfill requests and gives the company the potential opportunity to expand into other markets.
#8 Own vehicles: They have another opportunity to create their own vehicles instead of buying them from other manufacturers. This would allow them to provide transportation services and create their own vehicles and sell them on the market. However, it will be hard for them to compete with companies like Ford or any other large manufacturer.
Uber Threats
#1 Competition: One of Uber’s major threats is its high level of competition from other ride-sharing companies, such as Lyft and Gett. With increased competition by other similar companies, the company may face difficulties in growing as quickly as it wants to.
#2 Safety Concerns: One of Uber’s main threats is safety concerns. The company has been criticized for its lack of transparency about driving records, background checks, and insurance.
#3 Legal Trouble: Uber has been sued many times by the taxi industry, the main reason being its illegal practices that cause injuries to their passengers. Uber risks tainting its name from these cases.
#4 Business Model Imitation– Many reports have reported that Uber copied its business model from Lyft, although few have suggested that Lyft copied Uber. Although this is debatable, the fundamental reality is that the ride-sharing industry is neither protectable nor brandable.
Strengths and Weaknesses Analysis
By analyzing the strengths and weaknesses of Uber, various opportunities are captured, including international expansion and the necessity to improve public safety. Both weaknesses are closely related to one another.
As more Uber drivers join their growing workforce overseas, the company will be faced with public safety issues that it has yet to face on U.S. soil.
Because Uber operates as a private company, it is not forced to disclose its hiring and driving policies and procedures. Uber will need to address the public’s concerns about their drivers’ safety records and background checks in order to grow internationally.
One of Uber’s main threats is the increasing competition from other ride-sharing companies, specifically Lyft. Because of Lyft’s recent success at raising financial investment funds, the company will be able to expand its workforce and service area much faster than Uber can.
Uber’s only option to boost its growth is by improving public safety and working on its public image. By doing so, Uber will gain the trust of its drivers and riders. By improving public safety, Uber can attract more drivers and riders to the company because they will feel safer during the ride-sharing process.
Individuals who are seeking out opportunities with Uber should look at the company’s strengths and weaknesses as a whole. While Uber has much room for improvement in the areas of public safety and international expansion, the company does have much to offer those seeking employment opportunities.
Individuals who are confident in their ability to maintain a safe driving record should consider applying for a position with Uber.
By weighing advantages against disadvantages, an individual can determine if Uber is the right fit for them or not. Before making any decisions, it is important to research all available information about Uber’s long-term growth, expansion plans, and expenses.