Uber SWOT Analysis
SWOT is an acronym for strengths, weaknesses, opportunities and threats related to organizations. The following table illustrates Uber SWOT analysis:
| Strengths
1. First mover advantage and global market leadership 2. Low operational costs 3. Effective implementation of ‘Think Global, Act Local’ strategy 4. Uber ecosystem 5. High levels of user convenience |
| Weaknesses
1. Damaged brand image due to a series of various scandals 2. Increasing losses of the business 3. Uber business model is easy to imitate 4. Only technically savvy individuals can use Uber services 5. Low earnings by Uber drivers |
| Opportunities
1. Increasing popularity of sharing economy 2. Self-driving cars 3. Improving brand image through CSR programs and initiatives 4. Increasing internet penetration in the global scale 5. Increasing service range |
| Threats
1. More legal actions in certain countries to ban Uber from operating 2. Further intensification of competition 3. The risk of new scandals and ethical issues 4. Growing protests and retaliations from traditional taxi services 5. Drivers leaving Uber due to low earnings |
Strengths in Uber SWOT Analysis
1. Uber is the largest global taxi technology company in the world and it has a first mover advantage in the ride-hailing segment in the global scale. The company has effectively utilised its fist mover advantage to build momentum and achieve global expansion in a short period of time. Moreover, thanks to first-mover advantage, the word Uber has become synonym for ride-haling internationally and the new term uberisation has emerged describing commodisation of various services.
Uber is an undisputed market leader in ride-haling the global scale. The largest mobility platform in the world has more than 93 million monthly active riders in approximately 10000 cities worldwide. As illustrated in figure below, Uber is much more popular than its closest rival Lyft in the largest metropolitan areas in the US.
Rideshare sales in US in May 2021[1]
2. The global transportation technology company is able to achieve low operational costs, considering massive scale of its global operations. Uber does not hire drivers as employees and accordingly, the company does not have responsibilities towards its drivers in terms of monthly salary payments. Uber business model is based on an aggregator Uber app. Therefore, adding more cities on Uber network does not require significant additional expenses.
Moreover, for Uber there is a negative correlation between the size of the business and business expenses. In other words, the greater the sizes of the business, the lesser business expenses per customer. Taking into account Uber’s size, cost efficiency of business operations is a considerable strength in terms of maintaining its cost leadership business strategy.
3. The global taxi technology company effectively implements ‘Think Global, Act Local’ business strategy by adjusting various aspects of its services to tastes and preferences of local customers. For example, Uber users can pay USD 30 to have a visit from an actual kitten, for up to 15 minutes of quality snuggle time in over 50 markets across the United States and Canada.[2] In India, on the other hand, Uber provides a ride in a hatchback, taking into account unique needs of local customers.
4. Advanced ecosystem is a major source of competitive advantage for Uber. Unlike its major competitor Lyft, the company started investing in ecosystem and moved beyond mere ride-haling early. The ecosystem integrates Request API (application programming interface) that assists third party developers to integrate their application into Uber, UberEAT food delivery service and Uber Feed, an application that learns from routines of customers and views their calendars for the addresses of meetings across the town.
Uber Cash is a strategic latest addition to the ecosystem and the closed-loop payment network serves as an effective customer retention tool. Moreover, Uber ecosystem has further immense potential for growth and the senior management appear to recognize the potential.
5. A high level of user convenience is another strength point associated with Uber service offerings. With Uber, there is no need for customers to call dispatch, wait in a line, or wave from a curb. Customers can tap “Request” on their phone from the comfort of indoors and wait for a push notification that their driver is “Arriving Now”. Even in dense urban locations, Uber drivers arrive usually in less than a minute. Moreover, passengers rate drivers and poorly rated drivers are deactivated by the company.
Weaknesses in Uber SWOT Analysis
1. Uber brand image has been damaged considerably during the past few years due to a series of scandals and management incompetence. Uber employees and subcontractors were responsible for sexual harassment and mobbing, the company suffered more than a few resignations of top executives and it had retreated from China, failing to compete with local Didi Chuxing. As a result of above and other scandals #DeleteUber campaign has been launched and about 500,000 users had deleted their accounts by March 2017.[3]
2. Despite increasing revenues, Uber has been making massive losses since its establishment in 2009. The global transportation technology company has spent a lot of cash during the past few years on driver bonuses and discounts for its customers as the company tries to ward off global competition.
Uber incurred operating losses of USD 3.0 billion, USD 8.6 billion and USD 4.9 billion in 2018, 2019 and 2020 respectively. Moreover, as of December 31, 2020, the company had an accumulated deficit of USD 23.1 billion.[4] Taking into account intensifying global competition, the largest mobility platform in the world may not become profitable anytime soon and this is a major weakness associated with the business.
Uber Technologies Inc. Report contains a full version of Uber SWOT Analysis. The report illustrates the application of the major analytical strategic frameworks in business studies such as PESTEL, Porter’s Five Forces, Value Chain analysis, Ansoff Matrix and McKinsey 7S Model on Uber. Moreover, the report contains analyses of Uber leadership, organizational structure, business strategy and organizational culture. The report also comprises discussions of Uber marketing strategy, ecosystem and addresses issues of corporate social responsibility.
[1] Yeo, L. (2021) “Uber vs. Lyft: Who’s tops in the battle of U.S. rideshare companies”Bloomberg Second Measure, Available at: https://secondmeasure.com/datapoints/rideshare-industry-overview/
[2] Bender, A. (2015) “Uber Delivers Kittens: Prepare for Cuteness Overload with UberKITTENS” Forbes, Available at: https://www.forbes.com/sites/andrewbender/2015/10/29/uber-delivers-kittens-prepare-for-cuteness-overload/#2589be333fa0
[3] Flynn, K. (2017) “About 500,000 people deleted their Uber account in week #DeleteUber began: NYTimes” Mashable, Available at: https://mashable.com/2017/03/22/uber-delete-account-500000/#FDn7P8OFxaqa
[4] Annual Report (2020) Uber