Editing SWOT

Make the additions that are mentioned.

Weaknesses additions:

1. Multiple Scandals & Driver Backlash: Uber’s brand has received negative coverage over numerous scandals and controversies. Cases such as sexual harassment and targeted attacks have defamed the company. It came to the point that its co-founder Travis Kalanick had to resign. Public outcry over these allegations resulted in #DeleteUber campaign where about

500K users

deleted their accounts in 2017.

2. Substantial Losses: Although it has increased its revenues, Uber has been facing significant losses since 2009. In order to beat out its growing competition, the company began providing bonuses to its drivers and discounts to its customers. This investment has only resulted in Uber’s net losses to exceed $2.75 billion in 2016.

3. Dependency on the workforce (basically unpredictabilty of untrained gig workers): Uber’s heavy dependence on its workforce and internet has not been advantageous for the company. The behavior of its drivers has been unpredictable and has damaged the image of the company. Over 103 Uber drivers in the US were

accused of sexual harassment and abuse

which paints a poor picture of the company culture.

Uber has several weaknesses that face the company. The business model and idea implemented by Uber is not protected by any form of patents because it does not contain any proprietary information. This means that it can easily be imitated by other people intending to engage in the same business as there is nothing that prevents them from imitating the same idea. Another weakness is that the business model is unpredictable, and this may affect the organizational revenues. An example is that the revenues declined with an increased number of people staying at home because of the Covid pandemic, and the revenues were boosted only by sales on the Uber Eats platform (Sonnemaker, 2021). Additionally, the relationship that exists between the company management and their drivers is ethically questionable. This is because there is no real connection between the management and drivers, and this makes the loyalty levels between the two groups very low as well as driver supply can fluctuate based on different times in the years and that can hurt revenue as they dont have a stable number of drivers. 

There are privacy concerns among the clients because Uber can locate their movements based on where they pick up their rides and their destinations. Another serious weakness is that Postmates, the food delivery service owned by Uber, charge high delivery fees for suburban areas that are far from merchants. This leads to loss of revenue because of reduced numbers of people from such areas using the service. Careem is a subsidiary company to Uber, and it offers vehicle hire services. The main threat that Uber faces from this subsidiary company is that it suffers from low vehicle volumes over the weekends. This leads to loss of potential revenue as they are not maximizing their potential business because of shortness of vehicle volumes. 

Threats additions:

1. Fierce competition means Uber will need to work hard and creatively to retain its customer base.

As competition with other rideshare companies increases, it will become more difficult for Uber to retain customers. Increasing competition from Lyft and ride services in other countries, such as India’s Ola, China’s DiDi and Bolt in Europe, forces Uber to keep prices low.

New Uber competitors are continuously being launched, for example, inDriver in South Africa. Traditional taxi services protest for governments to regulate pricing because they can’t compete with Uber’s rate. In Germany, Uber was taken to court by the local taxi industry for violating competition rules.

Uber’s U.S. market share has declined from 74% in September 2017 to 71% in October 2020, but is still far above Lyft who only had a market share of 29% in October 2020. (Statista)

2. Employee retention will increasingly be an issue due to Uber’s competition.

Drivers may switch to rival platforms due to better incentives from competitors from the ride-hailing space or from other parts of the sharing economy.

Driver satisfaction rates have declined from 2017 to 2019, where only 34.1% of drivers in 2019 said they were somewhat satisfied with Uber. (Statista)

3. It faces intense competition outside of its ridesharing industry as well, being attacked on all sides.

In the food delivery industry, UberEats faces competition from companies like GrubHub and DoorDash. Google Cars and Tesla are Uber’s major competitors in the driverless technology industry.

Uber Eats, with its acquisition of Postmates, has a combined 37% of the food delivery market share in the U.S., behind DoorDash which has 45% of the U.S. market. (npr)

4. Its low prices for riders means Uber’s profit margins are also low.

To maintain its customer-centric model, Uber keeps its rates low and only takes between 5% to 20% of payments, leading to low-profit margins.

Uber’s unprofitability has prompted it to withdraw from China, Russia, and Southeast Asia. Uber has an 80% market share in Brazil, but it is still unprofitable there. None of the other top ride sharing platforms are profitable. (Forbes)

5. Local laws vary widely across regions and are changing, making it difficult for Uber to make sure it is complying everywhere it operates.

Increasing pressures from local authorities require Uber to comply with certain laws, which the company skirted when setting up in different countries. Non-compliance with local laws incurs fines and results in bad publicity. Changes in legislation can lead to complications for Uber. For example, in California changing laws required ridesharing companies to treat drivers as employees, not independent contractors.

Uber claims that 0% of its workforce are drivers in order to limit various liability. (The Washington Post)

6. It has received some bad publicity, which may alienate some riders.

Sexual harassment scandals and stories of driver fraud reflect poorly on the company’s image. Class action lawsuits filed by drivers against Uber over its minimum wage policy have damaged the company’s public image.

Uber, in its own report, admitted to 235 reports of rape, 280 reports of attempted rape, and 1,560 reports of groping in 2018. (NBC News)

7. Frequent lawsuits have diverted time and money away from Uber’s core businesses.

Uber is plagued by controversies regarding its employment and HR practices, such as whether Uber is required to classify its drivers as employees versus independent contractors. It has gotten so bad that Uber and Lyft have threatened to stop ridesharing services in California due to a judge’s order mandating the companies classify their drivers as employees, increasing the companies’ costs and liability.

Uber faces several threats from its organizational environment. One of the main threats to Uber is increased competition. Other companies are entering the digital taxi-hailing space, and this will affect the revenue of the organization. One example of a new company offering competition to Uber is Lyft. Another threat to the company is the emergence of self-driving cars such as Google cars which have been on the rise over the years. This threatens to eliminate the need for drivers, and this may affect the business model adopted by the company (Geldmacher & Plesea, 2016).

Furthermore, the company faces the threat of increased lawsuits to compel them to classify their drivers as employees as witnessed in a California court. This means that the company will pay the driver a wage plus money for renting their car of use in business significantly reducing the revenue of the organization. Another threat to the organization is the increase in fraud cases and scandals with the expansion of the company. These cases may be damaging to the Uber brand by pushing away potential clients. Postmates which is one of the subsidiaries under Uber is facing low employee retention rates. This may affect the customer satisfaction levels if not handled leading to reduced revenues.