SWOT analysis of Uber

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SWOT analysis of Uber

This detailed SWOT analysis of Uber aims to examine the strengths and the weaknesses of Uber. It also aims to examine the opportunities the company should explore and the threats it should keep an eye on. Uber Technologies Inc. is a transportation network company (TNC) headquartered in San Francisco, California (USA).

Strengths of Uber

As of April 2019, Uber operates in 65 countries and over 600 cities worldwide. Its major US offices are in New York City, Chicago, Washington D.C, Seattle, and Los Angeles. The major international offices are in London, São Paulo, Mexico City, and Amsterdam (Uber Technologies Inc., 2019). Approximately 15 million Uber trips are completed each day with 3 million Uber drivers worldwide. Out of the 3 million drivers, 0.75 million is based in the US, while the rest of the 2.25 million is based in the rest of the world (Iqbal, 2019).

It is worth mentioning that as Uber offers flexible working, perhaps most of the drivers do not solely rely on Uber for the livelihood. Uber drivers work as contractors (self-employed). This helps the company keep the operating costs low. Likewise, as most of the Uber drivers use their own cars, this also helps the company in saving costs.

Uber is one of the most popular ridesharing apps in the world as evidenced by its net revenue of $11.3 billion generated in 2018 worldwide (Statista, 2019). Uber’s global recognition is further evidenced from the use of its app by approximately 95 million people on a monthly basis. Uber has received a number of awards over the years. For instance, USA Today named it its tech company of the year in 2013. Uber has also won the Association for Financial Professionals 2018 Pinnacle Grand Prize for excellence in treasury and finance (Association for Financial professionals, 2018).

Uber has a number of services in its portfolio e.g. peer-to-peer ridesharing, ride service hailing, food delivery, and a bicycle-sharing system. It has adopted a dynamic pricing strategy – a pricing strategy that is based on current market demands. The price is determined by the demands in the market which is very useful and financially beneficial for the company and the drivers.

Weaknesses of Uber

Uber’s image received a huge blow when it was revealed that the company had concealed a hack that affected 57 million customers and drivers in 2016 (Lee, 2017). It was also revealed that it paid hackers $100,000 (£75,000) to delete the data. The data breach affected the names, email addresses and mobile phone numbers of 57 million customers and the names and licence details of 600,000 drivers.

Uber’s image is highly dependent on the behaviour of its drivers as they are the face of the company. However, a number of drivers have been accused of sexually assaulting or raping customers in many countries including the United States, and the United Kingdom (Samuels, 2016). Likewise, a number of Uber employees were also accused of similar misconduct. This is absolutely deplorable and utterly disastrous for Uber.

As Uber focuses on tech savvy customers only, it leaves a huge market untouched, particularly in countries where the technological infrastructures are still under development. Likewise, many senior citizens in developed nations are not much into technologies either.

Opportunities for Uber

Uber can certainly grow further into its home market and the United Kingdom. Likewise, there are also uncapped growth opportunities in many countries e.g. India, China, Pakistan, Germany, Saudi Arabia, Egypt, Morocco, Jordan and the United States of Arab Emirates to name but a few.  In fact, the acquisition of Careem by Uber with $3.1 billion has opened the door to an incredible business opportunity for the company in the Middle East.

Uber has the potential to benefit greatly from its efforts to introduce driverless cars. This would help the company cut costs further by eliminating the need for drivers, perhaps the company’s biggest expense. Uber has already tested its self-driving cars on roads in Arizona, Pittsburgh, San Francisco and Toronto (Wakabayashi & Conger, 2018).

There are many other innovative opportunities Uber can explore. For instance, it may benefit from services e.g. ambulances or other forms of emergency vehicles and aerial ridesharing. In fact, Uber is working with its Elevate Network partners to introduce shared air transportation with fleets of small, electric VTOL (vertical takeoff and landing) aircraft by 2023.

Threats to Uber

Threat is the last element to address in the SWOT analysis of Uber. Uber faces a fierce competition from a number of giants in different markets. For instance, Lyft, Ola, Careem, Didi, Taxify and Yandex.Taxi are the major competitors of Uber in ride-hailing business. Likewise, GrubHub, DoorDash, Deliveroo, Swiggy, Postmates, Zomato, Delivery Hero, Just Eat, Takeaway.com and Amazon are its major competitors in food delivery business. When it comes to driverless technology business, Uber considers Alphabet’s Waymo, GM’s Cruise Automation, Tesla, Apple, Zoox, Aptiv, May Mobility, Pronto.ai, Aurora and Nuro as its major competitors (Kolodny, 2019).

Government regulations and legal challenges may also affect Uber dearly. There is still debate on whether Uber should be considered a conventional taxi company or an IT company. In 2017, Transport for London (TfL) announced that Uber would not be issued a new private hire licence as the latter was considered unfit to hold a London private hire operator licence. However, it is worth mentioning that a court in the UK has decided that Uber should be awarded a new 15-month probationary licence to continue its operations in London.

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Last update: 07 May 2019

References:

Association for Financial professionals (2018), Uber Wins 2018 AFP Pinnacle Award Grand Prize for Excellence in Treasury and Finance, available at: https://www.prnewswire.com/news-releases/uber-wins-2018-afp-pinnacle-award-grand-prize-for-excellence-in-treasury-and-finance-300741159.html (accessed 05 May 2019)

Iqbal, M. (2019) Uber Revenue and Usage Statistics (2018), available at: http://www.businessofapps.com/data/uber-statistics/ (accessed 04 May 2019)

Kolodny, L. (2019) Uber lists competitors such as Alphabet and Amazon and addresses past scandals in its filing to go public, available at: https://www.cnbc.com/2019/04/11/uber-s-1-risk-factors-competitors-deleteuber-campaign-reputation.html (accessed 06 May 2019)

Lee, D. (2017) Uber concealed huge data breach, available at: https://www.bbc.co.uk/news/technology-42075306 (accessed 05 May 2019)

Samuels, G. (2016) Uber drivers accused of 32 rapes and sex attacks on London passengers over the past year, available at: https://www.independent.co.uk/news/uk/uber-drivers-accused-of-32-rapes-and-sex-attacks-on-london-passengers-a7037926.html (accessed 25 April 2019)

Statista (2019) Global net revenue of Uber from 2013 to 2018 (in billion U.S. dollars), available at: https://www.statista.com/statistics/550635/uber-global-net-revenue/ (accessed 05 May 2019)

Uber Technologies Inc. (2019) About, available at: https://www.uber.com/gb/en/about/  (accessed 04 May 2019)

Wakabayashi, D. & Conger, K. (2018) Uber’s Self-Driving Cars Are Set to Return in a Downsized Test, available at: https://www.nytimes.com/2018/12/05/technology/uber-self-driving-cars.html (accessed 06 May 2019)

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Author: Jo David

Jo David has years of experience both in the UK and abroad. He writes regularly online on a variety of topics. He has a keen interest in business, hospitality and tourism management.