Uber SWOT Analysis: Damaged Brand Image as a Considerable Weakness

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.      Brand value of USD 69 billion[1]

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

Uber SWOT analysis

Strengths

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. By 2016 the ride-hailing giant had more than 40 million monthly active riders in more than 760 cities worldwide[2]. As it is illustrated in Figure 1 below, the  largest competitor Lyft generates only a fraction of net revenue (USD700 million) compared to Uber (USD6.5 billion).

Uber SWOT Analysis

Figure 1Daly trips in New York City: Yellow Taxi, Uber and Lyf[3]

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. The company’s business model is based on an aggregator Uber app. Therefore, adding more cities on Uber network does not require significant additional expenses. Cost efficiency of business operations is a considerable strength for Uber 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 USD30 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.[4] In India, on the other hand, the ride-hailing giant provides a ride in a hatchback, taking into account unique needs of local customers.

4. Uber brand value has been valued at USD 69 billion[5]. As it is illustrated in Figure 2 below, the brand value of the company is considerably greater than the brand value of all other notable unicorn startups in the global scale. High brand value is a considerable strength for the business in various levels. Specifically, high brand value allows the business to secure more financing needed for further expansion. Brand value is also associated with high level of customer loyalty.

Uber SWOT Analysis

Figure 2 Valuation History for Selected Unicorn Startups[6]

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, drivers arrive usually in less than a minute. Moreover, passengers rate drivers and poorly rated drivers are deactivated by the company.

 

Weaknesses

1. Uber brand image has been damaged considerably during the past few years due to a series of scandals and management incompetence. The ride-hailing giant employees 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.[7]

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. As it is illustrated in Figure 3 below, net losses made by the ride-hailing giant have been consistently increasing to exceed USD 2,75 billion in financial year 2016…

Uber SWOT Analysis

Figure 3 Ubers’s net losses[8]

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 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 and addresses issues of corporate social responsibility.

[1] Abboud, L. (2017) “Uber’s USD69 Billion Dilemma” Bloomberg, Available at: https://www.bloomberg.com/gadfly/articles/2017-03-16/uber-needs-to-get-real-about-that-69-billion-price-tag

[2] Kokalitcheva, K. (2016) “Uber Now Has 40 Million Monthly Riders Worldwide” Fortune, Available at: http://fortune.com/2016/10/20/uber-app-riders/

[3] Source: Schneider T. (2016) “Taxi, Uber, and Lyft Usage in New York City: Open TLC data reveals the taxi industry’s contraction, Uber’s growth, and the scramble for market share” Available at: http://toddwschneider.com/posts/taxi-uber-lyft-usage-new-york-city/

[4] 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

[5] Abboud, L. (2017) “Uber’s USD69 Billion Dilemma” Bloomberg, Available at: https://www.bloomberg.com/gadfly/articles/2017-03-16/uber-needs-to-get-real-about-that-69-billion-price-tag

[6] Source CBIInsights (2017) Available at: https://www.cbinsights.com/research/snapchat-valuation-ipo/

[7] 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

[8] Source: Business Insider

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