Uber SWOT Analysis

Uber was established in 2009 as a high-tech startup. Its ride-sharing app perfectly integrates the transportation industry with technology. It was named the most valuable venture-backed company in 2014 by Forbes. By 2014, Uber had service in more than 200 cities across 53 countries.

Uber is a peer-to-peer ridesharing, taxi, food delivery, and transportation service provider based in San Francisco. The company currently operates in 785 cities around the globe. 

Uber’s platform requires you to use its app or website. This business has had a tremendous effect on the economy since its inception. A term used to describe Uber’s impact on various companies is “Uberization.”

Uber’s users adore it for a variety of reasons. It makes getting to a location more convenient, easier, and less expensive. However, there are some opposing feelings evoked by the company. An anti-Uber coalition includes members of the local administration, traditional taxi operators, and some Uber drivers.

Uber has revolutionized city life and how people get from A to B since its launch in March 2009. Individual car ownership is being replaced by more efficient and productive shared economies, causing a shift in the overall transportation mix of the city. 

After more than a decade of disruption, we examine Uber’s Strengths, Weaknesses, Opportunities, and Threats.

Today, I’ve decided to conduct a SWOT Analysis of Uber to identify its strengths, weaknesses, opportunities, and threats and how it rose to the top of the ride-hailing transportation industry as a brand.

Uber SWOT Analysis

Company	Uber Technologies Inc.
Year founded	March 2009
Industries	Transportation
CEO	Dara Khosrowshahi
Founder	Garrett Camp, Travis Kalanick
Headquarter	San Francisco, California, U.S.
Type	Public
Areas served	Worldwide
Market Cap	$88.19 Billion (October 2021)
Revenue	$11.14 billion (FY 2020)
Website	https://www.uber.com

Uber was the first company to offer a ride-sharing service. It eliminated the need for individuals to hail a cab outside of the building. Uber has become a favorite among travelers and offers several mobile apps. 

For the first time, people may order an Uber and have the driver meet them at their front door anytime during the reservation process. As a result of Uber’s innovative features, numerous ride-hailing services have followed suit.

Uber needs to make some adjustments due to the conflicting viewpoints expressed here. The company’s ability to dominate the transportation market in 2015 is being questioned by many. 

In this scenario, a SWOT analysis appears to be the ideal alternative. It will assist you in identifying potential business possibilities as well as hazards. It will also help identify Uber’s strong points and weaknesses.

Uber Strength

There are many strengths at Uber Technologies Inc. that will make it successful in the main field. A SWOT analysis will help amplify these strengths. Here are some of them:

Global Market Leader

Uber has a monopoly on ride-sharing businesses because it invented it. Their market share in the U.S. is 77%, and they complete over 40 million journeys each month. Lyft, Uber’s main competitor, holds 10% of the market.

Uber has been operating in over 65 countries and 785 cities since its founding in 2009. It holds a 69 percent share of the ride-hailing business in the United States. The company has established a strong brand identification, making expansion into new areas easier for Uber.

1. World’s Largest Ridesharing Platform

Uber has made a name for itself as the world’s leading provider of ride-sharing services. Uber was one of the only ride-sharing services available in the early days. Uber will have 103 million customers served each month by 5 million drivers in 93 countries and over 900 cities by 2020.

Uber is a transnational corporation with operations all over the world. It’s active in more than 85 nations around the world. This gives it a substantial global reach. This makes it easier for the general public to recognize, which increases its publicity. 

The result is that it can ensure local control while still implementing its global perspective. Thus, it may pursue its all-encompassing objectives and win over its customers’ hearts.

2. Pricing Strategy

Uber’s dynamic pricing model, in which the company uses a variety of factors to decide the price of a ride, is one of its strongest suits. Price increases, for instance, occur when demand increases concurrently at the exact location.

Uber has satisfied drivers by implementing a pricing mechanism that adjusts according to demand. Every trip will cost much more if the driver works Saturday night shifts.

Surge notifications are broadcast when the Uber app detects an increase in demand. Uber’s dynamic pricing method benefits customers and drivers because it helps drivers reach regions where demand is higher and get on the road more quickly.

3. Diversification

Adaptability and innovation are two of Uber’s most significant success elements. We can see this in Uber’s expansion into logistics with Uber Freight and in the addition of grocery delivery services like UberEats and Postmates.

Uber has not wasted any time expanding its offerings despite its rapid growth in the ride-sharing industry. You may be familiar with Uber Eats, Uber Rent, and Uber Bikes, all of which cater to delivery services. 

Uber has grown its market share, revenue, and earnings by bundling several services. Diversification has resulted in a rise in market share and income.

Uber has increased its involvement in autonomous transportation technologies by investing in self-driving cars and partnering with Aurora Innovation.

4. Convenience

Uber is less expensive and more convenient than using a traditional taxi service. Uber’s app-based innovations now make ride-sharing easier for customers. There’s no need to waste time at taxi stands or on the street, and you don’t need to have exact change either.

Uber’s success is largely due to its ability to make ridesharing more convenient and cost-effective than hailing a cab. A low-cost ride can be booked with just a click on the phone.

Customers can communicate directly with drivers through the Uber app, which is simple to obtain and utilize. The cashless system in the app allows customers to link their credit cards to their accounts. Customers make payments through the app.

Uber’s business model lends itself perfectly to interactions between customers and drivers. Customers can review their driving experience and the driver using Uber’s new rating system. This grading system aids in selecting top drivers and keeps tabs on their progress.

Uber Weaknesses

An organization’s weaknesses fall under its internal factors. A SWOT analysis of Uber will reveal many of these weaknesses.

1. Dependency on Drivers

Uber has no direct contact with its employees (drivers), yet it still relies on them, raising questions about their relationship’s nature. Uber customers have complained that drivers were rude to them or showed up drunk at pickup locations.

There have been more than a hundred allegations of sexual harassment against Uber drivers in the last few years. An Indian driver was also accused of rape in 2015, and the company was temporarily shut down.

A woman from Washington, DC, recently sued Uber, claiming that the driver had sexually abused her. Uber’s inability to provide safe transportation for female passengers shows that the company’s image and profitability are at risk.

Uber is partially at the mercy of its drivers’ erratic behavior. However, their image has been tarnished, and rivals have eroded their market share.

2. Copycat Business Models

Uber has been accused of copying Lyft’s business model, while Lyft has copied Uber. No one can argue that the ride-sharing industry lacks proprietary and protectable characteristics.

Several governments and labor unions are calling on Uber to alter its business model. When drivers are classified as independent contractors rather than employees under Uber’s business model, they lose many valuable advantages. 

In two separate class-action suits against Uber, the plaintiff claimed that the company misclassified its drivers. New entrants to the ride-sharing market have few obstacles. OLA is a fantastic illustration of this, as it’s dominating the Indian ride-hailing business at full throttle.

3. Continuous Losses

Uber has experienced billion-dollar losses despite its recent success despite growing revenue. The company’s lack of profitability is caused by its aggressive strategy of providing bonuses to drivers and customer discounts to outperform the competition.

Uber has been losing money since 2009, even though its revenues have grown. It started rewarding its drivers with bonuses and discounts to consumers to stay ahead of its competitors. 

Uber’s net losses arose from this investment in 2016, exceeding $2.75 billion.

4. Poor Company Culture

A lot of businesses spend money on the welfare of their workers. On the other hand, the drivers of Uber work primarily on their own, which puts them at risk of attacks. The cost of insurance, maintenance, and fuel are also their responsibility.

Uber’s brand has been damaged, possibly permanently, by its misogyny and immorality. 

Uber’s culture led to the resignation of Travis Kalanick, the company’s CEO and co-founder, and the #DeleteUber campaign, which saw over 500,000 people delete their Uber accounts.

5. Brand Connection Strategy

Rapid changes are taking place in the world. As a result, Uber needs to adapt its business model to deal with this new reality. 

A revolution is required in the company’s traditional practices of branding and communication. It’s not just the messages that need to be changed, but the media. 

In this instance, social branding is quite vital to keep in mind. It will be very costly for Uber if they refuse to alter its business practices in the long run.

Opportunities For Uber

A company needs to use opportunities to its advantage and gain. The SWOT analysis will prove helpful to Uber’s leadership before they make its next significant move.

1. Expansion in New Markets

The government’s assistance with economic development is helping to create new markets. This development will allow Uber to expand its market reach even further.

Uber may expand its services when high-speed internet access becomes more widely available in underdeveloped nations. A country like China, which has a rapidly growing middle class, is a significant growth market.

2. Accountability and Performance

The popularity of unorganized taxi firms that have been out of business for too long has diminished. Uber’s services can now reach a much larger market. The service can improve by providing services focused on outcomes and responsibility.

Tracking drivers’ performance can help the organization identify its most valuable drivers. The company can also address the numerous sexual misconduct allegations against several drivers.

3. Driver-less Technology

Uber Technologies faces excellent potential and a massive challenge with the advent of driverless cars on the road. Uber will become a more profitable business and a more sophisticated technological firm if it can provide its consumers with a safe and dependable self-driving experience.

Uber can use driverless technology to branch out into other transportation services like ambulances and other emergency vehicles. By doing this, the company will stand out and earn more popularity among the general public and the media.

Investors have already shown interest in the $1 billion investment by Toyota, Denso, and SoftBank’s vision fund. Toyota has already donated $500 million to the corporation, received in August of this year.

4. Boost Delivery Services

Delivery services have become more necessary due to recent events. The company’s meal delivery service, Uber Eats, is already available through Uber and can go even further. 

Uber’s plan calls for a North American and Latin American grocery delivery service via an app starting in July.

5. Business Diversification

Uber is a company that offers a wide range of products today but can also provide a wide range of new items in the future. Its location is now known to the general public. The corporation will thus benefit from this. 

The more products and services an organization offers, the more likely it will become invested. This will allow it to become more visible and generate more revenue. 

They might also broaden their product offerings by focusing on a smaller subset of the transportation market. Transporting animals and pets is a good example.

6. Rating and Review System

There are a variety of taxi companies and individual cab drivers offering services. These businesses or drivers follow no restrictions or rules. Customers are dissatisfied due to this circumstance, which generates an unorganized cab market.

However, the Uber Rating system can assess drivers’ on-road performance. Companies could improve their responsibilities by creating separate ratings for drivers, price changes, and other factors.

Threats For Uber

A swot analysis is incomplete without a threat analysis. We will analyze Uber’s SWOT to identify the threats that hold back this organization.

1. Low-Profit Margin

Uber’s customer-centric approach necessitates cheap rates and a 5-20% cut in payments, resulting in narrow profit margins.

Uber’s poor profit margins are due to the company’s cheap cost to riders. Its low prices and 5% to 20% cut result in slim profit margins for Uber because of its customer-centric business model.

Uber’s failure to profit has led to the company’s departure from China, Russia, and the rest of Asia. Uber is still a loss-making venture in Brazil, even though it leads the market by nearly 80%. Neither Uber nor any other well-known ridesharing service makes money.

Due to its disadvantage, Uber is pulling out of China, Russia, and Southeast Asia. None of the other top ridesharing services is financially viable.

2. Multiple Lawsuits

Controversy abounds around Uber’s employment and HR procedures, including whether it is compelled to categorize its drivers as employees or independent contractors.

Uber’s minimum pay policy was the subject of about 300,000 driver lawsuits. Uber was able to settle these cases without going to trial, but the damage to its reputation is irreparable.

Because of an order from a judge requiring the firms to designate their drivers as workers, Uber and Lyft have threatened to discontinue offering ridesharing services in California. This will increase the companies’ costs and liabilities.

3. Fierce Competition

Uber’s competitors include OLA, DIDI, and Lyft. The increasing competition may lead to a decrease in industry rates in the long run.

Transportation becomes less expensive as drivers and passengers have more platforms available. Uber must work hard to stay ahead of its competitors and maintain its competitive edge.

Uber will become increasingly difficult to keep customers and employees happy as competition grows. This could negatively affect Uber’s profitability and market dominance in the taxicab business.

4. Legal Regulations and Lawsuits

The taxi industry in most countries strongly opposes Uber when it is introduced to a new city or country. The company can no longer operate under certain conditions due to legislative changes.

Uber has difficulty complying with legal requirements in the various nations and regions where it operates. For example, regarding Lyft and Uber in Texas, wheelchair users have complained since the vehicles aren’t wheelchair friendly.

Also, in Germany, Taxi Deutschland sued Uber, claiming the ride-hailing company had violated competition laws and lacked the required licenses. As a result, Uber was barred from conducting business in the United States.

Taxi companies are required by the Americans with Disabilities Act (ADA) to offer wheelchair-accessible cars. Uber is also facing a US$650 million lawsuit from London cab drivers.

5. Employee Retention

Competing platforms in the ride-hailing industry or other sectors in the sharing economy may offer drivers better incentives resulting in drivers switching platforms.

The satisfaction level among Uber drivers has fallen since 2017, with only 34.1% reporting to be at least moderately satisfied with the service in 2019.

Final Words on Uber SWOT Analysis

Uber has redefined business standards and rewrote regulations for long-established companies. 

Since the company was founded, it has faced numerous challenges. Still, its forward-looking and resilient attitude has proven to be an effective strategy to reinforce its position as a leader in the industry.