Uber: Leading the Sharing Economy SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Leadership & Managing People
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Uber: Leading the Sharing Economy
Uber was a technology company that relied on its mobile app and word-of-mouth advertising to reach customers interested in its transportation services. It prided itself on being an on-time, stylish, unique, and modern transportation option. However, in 2014, Uber faced many challenges and questions as an industry incumbent. Could its business model succeed despite being heavily reliant on buyers' willingness to pay a substantial premium in some situations? Could the model be sustained and expanded into cities worldwide? How could the regulations protecting the taxi industry be overcome in so many diverse markets? Finally, how could Uber position its business model in a way that would create entry barriers to keep rivals out of the market? Sayan Chatterjee is affiliated with Case Western Reserve University.
Swot Analysis of "Uber: Leading the Sharing Economy" written by Sayan Chatterjee, Kayleigh Fitch includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Uber Transportation facing as an external strategic factors. Some of the topics covered in Uber: Leading the Sharing Economy case study are - Strategic Management Strategies, Competition, Entrepreneurship, Growth strategy, International business, Pricing, Technology and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the Uber: Leading the Sharing Economy casestudy better are - – technology disruption, increasing inequality as vast percentage of new income is going to the top 1%, cloud computing is disrupting traditional business models, increasing transportation and logistics costs, increasing government debt because of Covid-19 spendings, geopolitical disruptions, increasing household debt because of falling income levels,
challanges to central banks by blockchain based private currencies, there is increasing trade war between United States & China, etc
Introduction to SWOT Analysis of Uber: Leading the Sharing Economy
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Uber: Leading the Sharing Economy case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Uber Transportation, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Uber Transportation operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Uber: Leading the Sharing Economy can be done for the following purposes –
1. Strategic planning using facts provided in Uber: Leading the Sharing Economy case study
2. Improving business portfolio management of Uber Transportation
3. Assessing feasibility of the new initiative in Leadership & Managing People field.
4. Making a Leadership & Managing People topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Uber Transportation
Strengths Uber: Leading the Sharing Economy | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Uber Transportation in Uber: Leading the Sharing Economy Harvard Business Review case study are -
High brand equity
– Uber Transportation has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Uber Transportation to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Innovation driven organization
– Uber Transportation is one of the most innovative firm in sector. Manager in Uber: Leading the Sharing Economy Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Effective Research and Development (R&D)
– Uber Transportation has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Uber: Leading the Sharing Economy - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Low bargaining power of suppliers
– Suppliers of Uber Transportation in the sector have low bargaining power. Uber: Leading the Sharing Economy has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Uber Transportation to manage not only supply disruptions but also source products at highly competitive prices.
Sustainable margins compare to other players in Leadership & Managing People industry
– Uber: Leading the Sharing Economy firm has clearly differentiated products in the market place. This has enabled Uber Transportation to fetch slight price premium compare to the competitors in the Leadership & Managing People industry. The sustainable margins have also helped Uber Transportation to invest into research and development (R&D) and innovation.
High switching costs
– The high switching costs that Uber Transportation has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Successful track record of launching new products
– Uber Transportation has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Uber Transportation has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Strong track record of project management
– Uber Transportation is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Learning organization
- Uber Transportation is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Uber Transportation is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Uber: Leading the Sharing Economy Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Training and development
– Uber Transportation has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Uber: Leading the Sharing Economy Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Ability to recruit top talent
– Uber Transportation is one of the leading recruiters in the industry. Managers in the Uber: Leading the Sharing Economy are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Diverse revenue streams
– Uber Transportation is present in almost all the verticals within the industry. This has provided firm in Uber: Leading the Sharing Economy case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Weaknesses Uber: Leading the Sharing Economy | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Uber: Leading the Sharing Economy are -
Aligning sales with marketing
– It come across in the case study Uber: Leading the Sharing Economy that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Uber: Leading the Sharing Economy can leverage the sales team experience to cultivate customer relationships as Uber Transportation is planning to shift buying processes online.
High operating costs
– Compare to the competitors, firm in the HBR case study Uber: Leading the Sharing Economy has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Uber Transportation 's lucrative customers.
Slow decision making process
– As mentioned earlier in the report, Uber Transportation has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Uber Transportation even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Uber: Leading the Sharing Economy, in the dynamic environment Uber Transportation has struggled to respond to the nimble upstart competition. Uber Transportation has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Increasing silos among functional specialists
– The organizational structure of Uber Transportation is dominated by functional specialists. It is not different from other players in the Leadership & Managing People segment. Uber Transportation needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Uber Transportation to focus more on services rather than just following the product oriented approach.
Interest costs
– Compare to the competition, Uber Transportation has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Uber Transportation is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Uber: Leading the Sharing Economy can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Need for greater diversity
– Uber Transportation has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Uber Transportation supply chain. Even after few cautionary changes mentioned in the HBR case study - Uber: Leading the Sharing Economy, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Uber Transportation vulnerable to further global disruptions in South East Asia.
No frontier risks strategy
– After analyzing the HBR case study Uber: Leading the Sharing Economy, it seems that company is thinking about the frontier risks that can impact Leadership & Managing People strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Products dominated business model
– Even though Uber Transportation has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Uber: Leading the Sharing Economy should strive to include more intangible value offerings along with its core products and services.
Opportunities Uber: Leading the Sharing Economy | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Uber: Leading the Sharing Economy are -
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Leadership & Managing People industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Uber Transportation can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Uber Transportation can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Manufacturing automation
– Uber Transportation can use the latest technology developments to improve its manufacturing and designing process in Leadership & Managing People segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Creating value in data economy
– The success of analytics program of Uber Transportation has opened avenues for new revenue streams for the organization in the industry. This can help Uber Transportation to build a more holistic ecosystem as suggested in the Uber: Leading the Sharing Economy case study. Uber Transportation can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Uber Transportation in the consumer business. Now Uber Transportation can target international markets with far fewer capital restrictions requirements than the existing system.
Buying journey improvements
– Uber Transportation can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Uber: Leading the Sharing Economy suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Uber Transportation can use these opportunities to build new business models that can help the communities that Uber Transportation operates in. Secondly it can use opportunities from government spending in Leadership & Managing People sector.
Building a culture of innovation
– managers at Uber Transportation can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Leadership & Managing People segment.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Uber Transportation in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Leadership & Managing People segment, and it will provide faster access to the consumers.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Uber Transportation can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Uber Transportation to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Leveraging digital technologies
– Uber Transportation can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Uber Transportation can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Using analytics as competitive advantage
– Uber Transportation has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Uber: Leading the Sharing Economy - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Uber Transportation to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Threats Uber: Leading the Sharing Economy External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Uber: Leading the Sharing Economy are -
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Uber Transportation in the Leadership & Managing People industry. The Leadership & Managing People industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Regulatory challenges
– Uber Transportation needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Leadership & Managing People industry regulations.
Stagnating economy with rate increase
– Uber Transportation can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Uber: Leading the Sharing Economy, Uber Transportation may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Leadership & Managing People .
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
High dependence on third party suppliers
– Uber Transportation high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Increasing wage structure of Uber Transportation
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Uber Transportation.
Technology acceleration in Forth Industrial Revolution
– Uber Transportation has witnessed rapid integration of technology during Covid-19 in the Leadership & Managing People industry. As one of the leading players in the industry, Uber Transportation needs to keep up with the evolution of technology in the Leadership & Managing People sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Uber Transportation business can come under increasing regulations regarding data privacy, data security, etc.
Environmental challenges
– Uber Transportation needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Uber Transportation can take advantage of this fund but it will also bring new competitors in the Leadership & Managing People industry.
Easy access to finance
– Easy access to finance in Leadership & Managing People field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Uber Transportation can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Uber Transportation with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Weighted SWOT Analysis of Uber: Leading the Sharing Economy Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Uber: Leading the Sharing Economy needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Uber: Leading the Sharing Economy is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Uber: Leading the Sharing Economy is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Uber: Leading the Sharing Economy is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Uber Transportation needs to make to build a sustainable competitive advantage.
