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Uber is a high-tech company that was founded in 2009. It brilliantly connects the transportation industry with technology via its ride-sharing app. In 2014, it was stated as the highest valued venture-supported company. Uber offered its service in over 200 cities in 53 countries by 2014.
Uber is valued at over US $40 billion. This means, its value is more than the full U.S. taxi and limousine industry. It is expected that the startup will have yearly revenue of $10 billion by 2015.
There are many reasons why the users love Uber. It allows a more convenient, easier and less costly way to reach a location. However, the firm evokes some contrasting emotions too. The local government, traditional taxi drivers, and a small group of Uber drivers are against the practices that the startup engages in.
Because of these differing views, Uber should make some changes. Many are raising questions about the company’s ability to rule the transport industry in 2015. A SWOT analysis seems like the best option, in this case. It will help you explore the opportunities and threats the company might face. It will also contribute to finding out what the strengths and weaknesses of Uber are.
Strengths and weaknesses are internal factors. Uber has control over these elements. Opportunities and weaknesses are the external factors in SWOT. Uber does not have any control over these. However, it must take measures to exploit opportunities and avoid the threats. Below, I have added the SWOT analysis of Uber.
- It is a well-recognized brand
- It has a high standard of service, verified drivers and cars. Uber Black users enjoy very high standard of service.
- Has an unlimited fleet of vehicles. Regular Taxi service regulations are not applicable for Uber.
- Uber has no full-time drivers. As it does not hire drivers, there are no responsibilities toward employees.
- Operational cost is quite low. As it relies on customer-to-driver interaction, a dispatcher is not needed.
- Very little competition. A major competitor is Lyft.
- As cashless payment system is used, Uber can track and choose highly rated drivers. It has many other features like getting a car easily and having record of the spending.
- Dual rating system boosts trust and safety.
- The system is convenient for the drivers. They can work flexible hours and even choose to be a part-time employee. Drivers can also reject unwanted clients.
- The prices are lower compared to traditional taxi operators.
- High valuation of Uber. Many people are ready to invest on it.
- The idea can be easily imitated. Nothing will prevent competition from presenting the same product.
- The relationship between Uber and the drivers is ethically questionable. It lacks the real connection. So, it is expected that loyalty between Uber and its drivers is quite low.
- Also, company and its customers have no bonding. Incentive to remain with Uber is low.
- Costs of operating vehicles are very high. But, the drivers do not earn so much.
- Very Unpredictable business model.
- There are privacy concerns. Uber records where customer gets the taxi from. It also notes where he goes with it.
- Customers are often dissatisfied with traditional cab companies because of high prices and long waiting time.
- It can exploit new and big markets in countries like India where taxi services are inconvenient and expensive.
- Can tap growing markets in suburban areas where taxi services are not available.
- Rise in number of Uber drivers will reduce the Estimated Time of Arrival. This will make Uber more liked. The startup will get more revenue and drivers will be profited as well.
- Uber can increase the valuation. This might appeal more investors. As a result, Uber will have more money to operate.
- Cheaper electric cars can be used. It will reduce the cost and increase the driver’s profit margin.
- Additional services like transporting older patients to hospital, transporting children to school and transporting pets to the vet can be offered.
- Drivers aren’t happy with the low-profit margins. This might lead to bad publicity. This can in turn discourage the new drivers from joining Uber.
- Some new legal regulations in countries like Germany will ban Uber from operating.
- Problems with local authorities can lead to fines. It will also earn a bad PR.
- Increasing competition will ultimately decrease prices. This will discourage drivers from joining the startup in new markets. This will result in loss of customers. Uber’s revenues will decline.
- As new markets and drivers are joining, fraud and scandals are also increasing. It is damaging for the brand.
- Self-driving cars, e.g. Google Cars, will eliminate the need for Uber.
- Overvaluation can lead to Overinvestment in locations where there is no room for businesses of a similar type.
There is no doubt that the customers love Uber. They enjoy benefits of the service. Apart from the fact that it is convenient, they like how Uber helps save time and money. But, governments and drivers often hate Uber. To main its customer-centric approach, the company charges a very low price. This is why the drivers do not have a high-profit margin.
Uber does not have to follow the regulations that traditional drivers must abide by. It has been fined for skirting regulations many times. Germany, France, India, Thailand, Netherlands and United Kingdom are some of the countries that fined Uber. Negative press is something the startup must work on overcoming.
It is not known what Uber’s future is. Google Cars are a big threat to its success. Uber should maintain its strengths. It should address the weaknesses found in the SWOT. The aim should be to turn weaknesses into strength. The team must work and exploit the opportunities and avoid the weaknesses.