The present paper aims at analyzing the aspects of strategic management of Uber as a major transportation shared economy enterprise on a global scale. The paper will address such aspects as globalization, technology, vision, mission, and stakeholders of the company as contributors to its functional success or failure. The paper will also consider the notions of industrial organization and resource-based models and their application to Uber to produce above-average profits.
Globalization has currently become a key instrument in terms of Uber’s functioning, expansion, and competitive advantage. According to Hitt & Hoskisson (2020), one of the major risks associated with globalization and reaching new markets is the so-called “liability of foreignness” that stands for the company’s lack of knowledge concerning the operative performance within the target market.
However, as far as Uber is concerned, its primary advantage relates to the fact that the company itself operates as a transportation sharing economy (Fan et al., 2019). Such an economic model allows the consumers to share their underused physical assets with other consumers (Frenken, 2017). For this reason, when embracing globalization, Uber stakeholders conduct a preliminary search concerning the legal and economic implications of entering a market.
The cultural aspect of globalization, for its part, depends greatly on local stakeholders who promote the social embedding of the company into the local consumer context (Fan et al., 2019). Moreover, the overall thrive of globalization serves as an undeniable benefit for companies such as Uber due to the fact that consumers from across the world are now capable of using a single delivery service regardless of their physical location instead of searching for local options.
The development of technology as such has become a catalyst for Uber’s emergence in the first place, as the company itself is driven by mobile applications that account for rapid order and delivery. According to Hitt & Hoskisson (2020), the two relevant technological phenomena in today’s strategic context are the diffusion of technology, which stands for the process of accelerated dissemination of technology among consumers, and disruptive technology, which manifests the emergence of technology that modifies the patterns of business operation.
To deal with technology diffusion, Uber adopts a proactive approach based on the diffusion of innovation theory (DIT). According to Min et al. (2018), Uber specialists assess their consumers’ behavior to anticipate their needs earlier that the demand for such a product is manifested. In such a way, the pioneer such services as Uber Eats that have been previously tested on consumers to assess their response to a separate app for food delivery.
As far as disruptive technologies are concerned, the emergence of artificial intelligence (AI) has now become a central issue of interest for companies throughout the world. Uber has successfully adopted the technology to improve customer experience in terms of estimated delivery time, assessing customer’s preferences to generate personalized recommendations, and enhancing safety measures (Uber, 2021b). Hence, it may be concluded that technology adoption is a key objective of the company’s competitive advantage and organizational growth as an industry trendsetter.
Industrial Organization Model
The industrial organization (I/O) model has become a primary model for revenue increase for Uber. A prime example of such an approach utilization was the introduction of grocery delivery in the US in July 2020, in the midst of the pandemic (Uber, 2020). Thus, the first step of the I/O model accounts for the analysis of the external environment (Hitt & Hoskisson, 2020). Uber’s marketing team analyzed the demand for safe grocery delivery at times of social distancing and isolation and developed a product relevant to the external trends.
The next step, known as the attractive industry, was adopted by Uber as they defined delivery as their key industry during the lockdown, as taxi services introduced by the company were less relevant due to the vast majority of people’s choice to stay at home. The third step, strategy formulation, stands for the choice of an appropriate strategy to adopt in the scenario (Hitt & Hoskisson, 2020). Uber opted for a market-niche strategy that allocated many resources to that particular delivery option. The assets and skills addressed by the company included a big network of drivers and customers and practical algorithms for delivery apps. Finally, the strategy implementation concerned the successful service promotion and expansion of grocery suppliers within the network to increase customer satisfaction rates.
The resource-based model revolves around the identification of the company’s uniqueness in terms of presenting a service (Hitt & Hoskisson, 2020). The first step in the context of this model is the identification of the company’s resources.
Currently, Uber has an extensive network of drivers and customers who use such services as Uber Drive, Uber Eats, Uber Business, Uber Transit, and others. Thus, when it comes to the firm’s capability, it becomes evident that such a variety of services presents an unprecedented competitive advantage in the market of transportation shared economy enterprises. Moreover, the company is considered a pioneer in the field and, hence, has a significant reputation and customer trust advantage compared to Uber’s counterparts. For this reason, Uber felt confident about embracing such an attractive industry as grocery delivery in large cities in the US. T
he strategic actions, as described in terms of the I/O model, focused primarily on the introduction of an efficient and customer-friendly delivery algorithm. Moreover, the company introduced a referral program and system of promo codes to promote service use among Uber customers (Uber, 2020). As a result, in combination with Uber Eats promotion, the company managed to partly cover for the losses caused by the pandemic. In terms of both strategies, it is difficult to speak of the possibility of earning above-average returns due to the detrimental effect COVID-19 had on the transportation shared economy enterprises.
Uber’s vision statement claims: “We ignite opportunity by setting the world in motion” (Uber, 2021a, para. 1). According to Hitt & Hoskisson (2020), an organization needs to develop a vision that challenges the organization rather than simply describes its actions. Hence, Uber’s vision statement indeed uses the phrase “ignite opportunity,” which implicitly means that the company sets an objective to pioneer the new perception of delivery services.
The phrase “setting the world in motion” encourages the company to set no limits in terms of customer reach. Moreover, it also implies that the world “is set in motion” due to the fact that every person may become an employee and share their assets with fellow customers. Hence, it may be concluded that the vision statement of the company contributes significantly to its success, as it serves as an encouragement for the team to embrace new strategically beneficial markets and service options.
Hitt & Hoskisson (2020) indicate that the mission outlined by the company, although inspiring, should be more specific, as it serves as a foundation for laying out the company’s objectives. For several years, Uber is driven by the following vision: “Transportation as reliable as running water, everywhere for everyone” (Uber, 2021a). The metaphor employed in the mission statement makes Uber sound self-confident in terms of its intentions.
The mission statement implies that Uber is willing to become a globally appraised transportation service with exceptional quality. As a result, it may surely serve as a lighthouse for both the management team and drivers working for the company. Hence, it may be concluded that Uber’s mission statement is of high quality in terms of directing the company and, hence, contributes significantly to the product’s quality.
The stakeholders of a company are divided into three major groups: capital market stakeholders, product market stakeholders, and organizational stakeholders (Hitt & Hoskisson, 2020). Undeniably, such a company as Uber has an extensive network of stakeholders, but there are some major types of stakeholders within each category that directly affect the company’s success:
- Customers, drivers, IT suppliers;
- Management and employees.
Shareholders affect the company’s ability to invest in the development of new services such as Uber Business or Uber Restaurants, and such an ability directly impacts market and customer reach. Drives and IT suppliers are major stakeholders in terms of customer satisfaction rates, as they are responsible for the primary impressions of the service, whether it is a ride or an app interface. Management and staff directly contribute to Uber’s organizational flow, economic, marketing, and legal implications.
Finally, customers serve as a primary source of profit and response to the product. It is the customer feedback and satisfaction rate that plays a major role in the company’s success, as it secures the company’s reputation in the market and options for investment. For this reason, it may be concluded that customers should be considered as primary stakeholders and success markers for such companies as Uber.
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