Uber SWOT Analysis

Introduction

Uber is one of the most popular US-based ride hailing service providers. The company has already earned a huge brand name by working in the transport sector and providing accessible rides to the customers. Uber has been able to disrupt conventional taxis and cabs as people are more inclined towards on-demand vehicles at their nearest locations. However, the company has faced many challenges in the current scenario, such as numerous scandals, consecutive losses and workforce turnover. Despite of the challenges, the company has managed to create a strong brand image and achieve increased revenue generation over the years. In order to get a close look at the company, we have presented the Uber SWOT analysis which highlights the strength, weakness, opportunities and threats of the company.

Uber SWOT Analysis

Strengths of Uber

According to Financial Times, Uber ranks among the fastest-growing companies in the world. It was among the top 47 companies out of a total of 500 companies. The ranking has been done according to the revenue and compounded annual growth rate. According to the published report, the absolute growth rates, CAGR, and revenue figures of Uber have been revealed. The absolute figures have been 267.9%, 54.4% and 14,147 million as of 2019. This is one of the biggest strengths in Uber SWOT analysis. As reported by Economist, Uber is picking up strength after it faced difficulties with its operating license in London. The service is considered “fit and proper” for the customers.

Another strength of Uber has been its huge brand name. The company has expanded its services in more than 40 countries all across the globe. Currently, the company holds the largest ride-sharing market, with 80 million active users, thereby aligning with Uber’s mission statement. Uber SWOT analysis has revealed, that due to its low prices, Uber has been the topmost choice of the customers. In a traditional taxi, the customers had to pay double or triple according to the destination. They have to wait for hours to avail a taxi. These issues have been solved by Uber as the passengers can book on-demand cars through Uber applications. Based on the Uber SWOT analysis, it has been found that the company follows a dynamic pricing strategy, where it charges fares according to customer demands. During peak hours, the charges are comparatively high. The drivers are also happy as the price of a route is determined through the level of demand. Uber riders can rate the trips and drivers and get instant notifications on the past services of the driver. Uber SWOT analysis.

Weaknesses of Uber

The weaknesses found in the Uber SWOT analysis, prevents the company to achieve its full potential. According to Fortune, Uber has faced multiple challenges due to proprietary algorithms. The algorithms are used while determining the prices of a trip. This can be treated as a key resource of the company. In the UK, the British Taxi drivers have launched a data protection complaint against Uber, stating that the company has violated Europe’s rules. The company has been alleged of misusing the driver’s information while allocating trips to them. The company is charged with not maintaining the privacy of the proprietary algorithms, which is against the law. This shows that the company partially dictates the driver’s incomes.

Other weaknesses can be multiple scandals and controversies from the customer’s sides. The main reasons for these cases include sexual harassments and targeted attacks. Such allegations portrayed a negative image in the minds of the customers and can be considered as a significant weakness in the Uber SWOT analysis. After the #DeleteUber campaign, about 500,000 users deleted the Uber application. Another weakness has been consecutive losses over the years due to tough competition from other players. In order pacify the competitive pressure, Uber is providing bonuses and incentives to the drivers. Simultaneously, it is offering attractive discounts to the customers. Sometimes, the drivers complain when the operating costs are closer to revenue figures and the overall profit is minimal. Uber is highly dependent on the internet. Due to unpredictable variables, the longevity of the business model is still uncertain. The failure of Uber IPO can be attributed to the uncertainty of investors, as they are unwilling to invest in Uber. Uber SWOT analysis.

Opportunities of Uber

Uber SWOT analysis also suggests that one of the lucrative opportunities for the company can be the high rise of Gig work in the US. Statista has put forwarded the results of a survey conducted in the US. A majority of US adults are interested to work in contractual jobs. This is opportunistic for Uber as it hires drivers under contractual agreements. It will be able to employ competent and skilled drivers from the future generation. Uber SWOT analysis also reveals another potential opportunity which lies in Germany, where millennials are aware of the car-sharing technique. The results show that about 68% of Germans have sound knowledge of car sharing.

Modern customers are attracted to companies that provide organized, superior quality services. Uber can use this opportunity to offer services based on accountability and performance. It can monitor the individual performances of drivers to identify the top employees. Based on the Uber SWOT analysis, the constant supervision is also required for addressing the cases of sexual misconduct, which have been charged against these drivers. Technology and digitalization can be utilized to the fullest extent so that a large number of users can be drawn to the services. Due to the proliferation of technology, more people are getting interconnected and the network expands across large areas. Uber can penetrate large markets like China and Denmark to increase its user bases. The company is planning to invest in an autonomous, self-driving car, which is the future of the transport sector. Driverless technology can help in increasing the availability of ambulances and other emergency vehicles. The company can use its resources to launch its logistic system. Uber SWOT Analysis.

Threats of Uber

Uber SWOT analysis has also revealed various threats faced by the company, which can be detrimental to the firm’s business operations. Forbes says that Uber is likely to face threats in London due to continuous revolts by the London taxis and black cabs. The black cabs of London are forced to accept card payments after the issuance of the proposal by Transport for London (TfL). Before this proposal, about half of the taxis in London accepted card payments, while the other half accepted only cash. Uber SWOT analysis has also revealed that after the rise of Uber, a cashless payment system emerged in the transport sector. London taxi drivers have been under pressure and therefore, they have filed complaints against Uber for not paying UK taxes. This can be a future threat.

Other threats could be customer and employee retention. The competitive pressure from Uber competitor in the market can be threatening to the company’s operations as it might lose valuable employees and customers. Due to Uber business model, if the drivers find other companies attractive, they are likely to switch and this can be detrimental to the growth of Uber’s business. Even if the company plans to provide incentives to the drivers, they always have a hold due to the large number of options available in the market. Another threat can be lawsuits filed by the drivers. To date, more than 3 lakh Uber drivers have filed lawsuits against the minimum wage policy of the company. Such conditions can have adverse effects on the brand image of the company. Rising local competitors with a reputed brand image can be threatening for Uber. Changing transport laws and regulations can create several issues for the company while operating in foreign markets.

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