Introduction
Having clear and focused strategies is a critically important aspect of every organization. Without well-defined strategies, organizations may stall or even fail. Effective strategies provide direction and action plans that help in achieving both short and long-term goals. Strategies also help in prioritizing and aligning activities in the organization. This is because strategies help executives in making appropriate, establishing priorities, allocating resources to strategic initiatives as well as coordinating to achieve the desired results (Lechner & Gudmundsson, 2014). Additionally, sound strategies enhance communication and communication within and without the organization.
Organizations have business level and corporate level strategies. Business level strategies refer to plans or methods organizations use to conduct various functions in their business operations. Organizations often use more business strategies since they always have several departments with different business functions. The business level strategies provide guidelines for managers and employees to follow when working in the organization. On the other hand, corporate level strategies refer to the strategic decisions that organizations make that affect the entire organization. For instance, financial performance, human resource management, mergers, and acquisitions as well as the allocation of resources are some of the corporate level strategies. Uber Technologies Inc. has both business level and corporate level strategies that it pursues to achieve its business goals. Both business level and corporate level strategies are essential for business success.
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Uber Technologies Inc.
Uber is transportation network that matches available drivers with passengers in need of a ride through a lightweight, user-friendly smartphone application. The company currently operates in approximately 570 cities around the world. The drivers use their vehicles, and the company affords them high earning potential with a flexible work schedule. As such, the drivers provide the cars while the company provides passengers. The company adheres to a network orchestrator model as opposed to the more capital intensive business model of the traditional taxi business. The business model has been able to attain higher profit margins as well as the ability to quickly and effectively respond to market changes relative to its competitors.
Uber epitomizes disruption. The company has revolutionized the way people think about grabbing a ride. The company has effectively incorporated technology into transportation hence enhancing the experience of customers. Uber has managed to capture its share of the market by utilizing a great smartphone application, the aggressive courting of drivers as well as excellent social media marketing. The smartphone application has a smooth user interface that rarely reports errors. Uber charges different fares across cities. The company has been able to transform the way taxi business is run around the world. The business level strategies and corporate level strategies it has employed have enabled it to compete favorably with its business rivals such as Lyft, Sidecar, and Flywheel-America.
Business Level Strategies
Business-level strategies are crucial to Uber’s success in the competitive transport industry. There are various business level strategies that Uber pursues, and they include coordination of unit activities, utilization of human resources, and development of distinctive advantages.
Coordination of Unit Activities
Uber has successfully managed to change the way the world thinks about transportation by through the use of technology. The company has built a technology that people can use every day to get rides. Therefore, Uber has become part of the fabric of daily lives of customers (Lechner & Gudmundsson, 2014). The company’s expansion into many cities around the world has made proper coordination of such business units necessary. The various city operations represent individual business units that report to the organization’s headquarters.
The company has found an excellent product-market fit with its world-transforming service. Additionally, Uber is still inventing its business every day to effectively meet the unique needs of customers around the world. Because the company’s business is spread around the world, it places significant emphasis on coordinating the various business units in line with the goals and objectives of the organization. The company has operational managers in every city they operate in. The operation managers are responsible for identifying and developing a global network of driver partners for the company. The driver partners the company’s most important customers because they provide the means through which the organization can effectively serve its global customers. Therefore, the activities of all driver partners around the world can be coordinated by the managers in charge of the cities in which the company operates. It is clear that coordination of all unit activities is critical for the achievement of organizational goals.
Utilization of Human Resources
Utilization of human resources is a critical factor in every organization. The more people are utilized, the more the organization can make more profits. Uber encourages employees to do their best by not restraining them. This ensures that employees get the opportunity to be innovative as well as contribute positively to the growth of the organization. Uber has been able to attract great talents who have been able to drive the growth strategy of the organization.
The company has also been able to utilize the driver-partners effectively by bringing innovation to the market. Unlike in traditional taxi business, the drivers, under Uber’s model, are able to access more passengers per hour (Lechner & Gudmundsson, 2014). This means that the skills of the driver-partners are utilized more hence increasing their earnings as well as those of the organization. The company also offers incentives for drivers so that they can avail themselves when demand is high. By promising customers that they will not have to wait for long, the company’s services are considered reliable. This makes the partner drivers more popular among riders hence increasing the earning potential of the drivers. As such, Uber leverages the skills of drivers. The company sets very clear goals as to what constitutes success and follows through with metrics. This demonstrates how Uber has been able to utilize human resources to facilitate it growth.
Developing Distinctive Advantages
There are several benefits that customers associate with the use of Uber services. The two main advantages that characterize the services offered by Uber in the market are simplicity and convenience.
Simplicity
Using Uber services is easier for riders. The application’s interface is straightforward and easy to navigate. For instance, requesting a driver is not complicated at all. The rider only needs a smartphone, with the application installed to start using it. Therefore, the passengers can request for a ride wherever they are with just a click of a button. The customers are not also limited to a smartphone because requesting for a car can also be done through the Uber mobile site. Additionally, a customer can even send a message to a designated number provided by the company for a particular city. This is very useful, especially if a customer does not have internet connectivity necessary for using the app.
Convenience
Uber has been able to make it convenient for passengers to acquire a ride. This is advantageous especially when a passenger finds himself without a ride in the middle of the night in an unfamiliar area. Using the company’s platform, a passenger will be able to request for a driver to pick him up. Additionally, the driver is able to locate the customer using GPS. As such, the Uber driver simply marks the location of the passenger. Most of the vehicles utilized by cyber are private-style vehicles, indicating that they are comfortable that traditional taxi cabs. Most importantly, the passengers can choose to be immediately picked up or at a later time that the passenger specifies. This demonstrates that Uber enhances the convenience of passengers using the services.
The company also uses a convenient payment method for customers. The customers pay for the charges through credit or debit cards hence enhancing security and convenience. Not every customer carries cash around to pay for fares. The passengers, therefore, do not have to worry about encountering drivers who may rip them off or even jack up their prices. This is because the smartphone application takes care of processing the payment for customers.
Corporate Level Strategies
The company has corporate level strategies that ensure that it effectively achieves its long-term goals. The concept of the sharing economy has revolutionized the way most of the world works. Through a sharing economy, Uber has been able to place immense pressure on the traditional suppliers and services providers. The corporate level strategies pursued by the company include product development and diversification and expansion. The corporate strategies are essential for the sustenance of the business.
Product Development
The company has endeavored to edge out its competitors by continuously employing innovative ideas to gain more market share. This is done through continuous product development. The product development strategy seeks to add real and perceived value to the services offered by the company. Uber eliminated the various transaction costs that used to increase the amount of fare paid to traditional taxi operators. For instance, Uber customers do not need to pay any fee when reserving a car through the mobile application. On the other hand, Uber’s partner-drivers do not have to comply with local regulations involving licensing, insurance and other municipal costs (Cannon & Summers, 2014). The product developed by Uber attracted both passengers and drivers because of the desirable features.
The use of cutting edge technology served to increase the perceived value of its services due to the convenience provided. The development of the mobile application is considered one of the best strategies used by the company to gain a huge market share. People like to use their smartphones for many things. Therefore, developing a mobile phone application helps to increase the number of customers using Uber’s services. The company was able to take advantage of the concept of collaborative consumption by developing a mobile application that is packed with features designed for the convenience of users. The use of GPS to match drivers and passengers is probably the most desirable feature about Uber’s services.
Diversification and Expansion
Diversification and expansion is one of the corporate level strategies pursued by Uber. The company has diversified to food and package delivery business to leverage its technology platform. The company has come up with UberEats and UberRush. UberEats is involved in the delivery of food from restaurants on demand. UberRush offers on-demand parcel delivery services to customers. The diversification ventures aim at increasing the organization’s revenue base. Because of the company’s popularity, the brand extensions will be able to attract more customers for the company. The move to deliver food and parcels to customers has caused ripples in the transport industry. Such aggressive initiatives by the company help to cement its superior position in the market.
The company has also expanded rapidly within a few years. The company is currently operating in 570 cities around the world. The company has allocated resources to the marketing of the company’s services around the world to gain the global market. The company has carried out extensive online campaigns aimed at popularizing its services as well as the company. With the company operating worldwide, growth is inevitable. An expansion strategy enables the organization to identify new markets where it can generate profits necessary for growth.
Competition
The industry in which Uber operates is very competitive. Therefore the company is subject to competition both from established transport network companies as well as start-ups (Wallsten, 2015). Some of Uber’s competitors include Lyft, Curb, Flywheel-America, and Sidecar. On a global scale, Uber’s competitors include Didi Chuxing, Ola, and Grab. However, one of the Uber’s key competitors is Lyft. It is a transportation network company that is based in San Francisco just like Uber.
Lyft’s Corporate Level Strategies
Lyft has two main corporate level strategies. The strategies include strategic alliances and expansion.
Strategic Alliances
Lyft has focused on getting into strategic alliances with other firms with an objective of edging out competitors in the competitive environment. In an attempt to outsmart its biggest competitor Uber, the company has managed to score key partnerships that may contribute to its steady growth and establishment in the industry. In order to increase its customer base in the international markets, the company has joined already successful ridesharing companies around the world such as China’s Didi Chuxing, India’s Ola, and South East Asia’s Grab. The company has also entered into an alliance with General Motors to develop on-demand network of autonomous vehicles that will help to improve the experience of its customers.
Expansion
The company has consistently pursued an expansion strategy to increase its revenue potential. The company has expanded its operations in the United States and has also ventured into Asian markets. The company is determined to battle out its competitor, Uber, both locally and globally. The company considers the expansion strategy as an answer to its growth objective.
Analysis
Based on an analysis of the two companies, Uber and Lyft, some observations can be made. The analysis indicates that Uber’s corporate level strategies are most important to its long-term success. Unlike Lyft, Uber focuses on building its capacity to meet the needs of its consumer segment around the world (Wallsten, 2015). On the other hand, Lyft focuses on relying on other industry players. This may not be sustainable in the long run because the partners may revise their objectives hence leading to more problems for the company. With the dynamic market environment, partnerships may not last especially when goals conflict.
The opinion above would not differ in the slow cycle and fast cycle markets. The capabilities of Uber would put it ahead of the park in the two scenarios. In the slow cycle market where high impact changes in the market are not anticipated, Uber would perform better than Lyft. Likewise, in fast cycle markets where drastic changes in the market are anticipated, the product development and diversification competencies of Uber would enable it to edge out the competition.
Conclusion
In conclusion, an organization’s business level and corporate level strategies play a crucial role in its short term and long term success. Uber has both business level and corporate level strategies that help in driving its objectives and goals as a company. The various business level strategies that Uber pursues include coordination of unit activities, utilization of human resources, and development of distinctive advantages. They enable the company to deliver effective services to its customers. The corporate level strategies pursued by Uber include product development and diversification and expansion. The corporate level strategies have helped to facilitate the achievement of the company’s financial and growth objectives.
References
Cannon, S., & Summers, L. H. (2014). How Uber and the sharing economy can win over regulators. Harvard business review , 13 , 1-4.
Lechner, C., & Gudmundsson, S. V. (2014). Entrepreneurial orientation, firm strategy and small firm performance. International Small Business Journal , 32 (1), 36-60.
Wallsten, S. (2015). The competitive effects of the sharing economy: how is Uber changing taxis. Technology Policy Institute, 22.
