Uber Consulting Report

An in-depth report about Uber that discusses their business strategy, structure and provides recommendation strategies for global expansion.

Uber is a high-growth company in the rideshare/taxi service industry with the mission of global operations that impact the world. They strive towards this by providing ubiquitous transportation services, building relationships, and delivering a personalized experience to all. Uber’s objectives revolve around their rideshare/taxi business, increasing bookings per month, enhancing customer experience, as well as employee satisfaction and improving internal engineering processes.

The rideshare/taxi service industry is not a lucrative one as it has reached the mature stage of its lifecycle. From dealing with high asset costs to government regulations on a number of licenses and increasing cost of entry, the industry has very few companies that are maintaining market share. Companies in the industry have low bargaining power as they are highly dependent on their drivers and must remain competitive for their market share which may be threatened by new entrants with the same business models. Politics and geopolitics have a heavy influence on the industry as the location and government play a large role in how the industry operates. Companies in this industry most commonly pursue related diversification in the form of low capital costs and high demand for drivers. When faced with global expansion strategies, companies in this industry face government and low local responsiveness, generally implying the international strategy as a slightly difficult approach. In terms of costs, the main source of costs is asset costs which many companies have been able to reduce significantly. The factors within a company in this industry that appear to be pivotal are quality customer experience and feedback, expenditures, a strong brand and global presence, employee flexibility and human capital.

Uber specifically competes in the rideshare industry with cost leadership and broad differentiation strategies. They access a large volume of customers by offering a series of prices and rideshare types backed with a strong brand and presence globally. This strategy has been executed well, enabling them to achieve many business objectives and obtain the title of a disruptive company within the first 5 years of operations. They have also maintained a strong statement of financial position with short-term and long-term assets covering short-term and long-term liabilities, respectively. The current diversification strategy is to upgrade their customer experience and enter the grocery delivery service. Uber has been attempting to establish a strong presence outside of North America, however, has been struggling due to low local responsiveness. Their expansion into the food delivery business has allowed for a better response from the local public and further increased their brand recognition.

Uber possesses notable strengths in its strong investor backing, strong brand image, low asset costs, and being a cost leader in the industry. This allows them to effectively deal with its weaknesses, opportunities, and potential threats. Strong brand image along with low asset costs creates their main competitive advantage. Uber’s biggest weakness, which has stunted their growth, is their lack of focus on profitability with the attitude of growth first, profit later. Many analysts have struggled to see value in Uber’s future due to this. That said, there are ample opportunities such as driverless technology and geographic expansion and threats are simply future lawsuits and competition. Uber’s value chain is very efficient with major activities such as Uber inbound logistics, operations, marketing and sales and services.

The three recommendations provided are expanding through unrelated diversification into the grocery delivery market, global expansion via mergers and acquisitions and advancing technology towards driverless rideshare services.

Introduction

Uber Technologies Inc. or Uber is an American-based transportation company that uses technology to provide international services ranging from ride-hailing, freight, and food delivery. Uber was created on a cold evening in Paris in 2009 when entrepreneurs Travis Kalanick and Garrett Camp were stranded and needed a safe ride home. Uber allows people to tap a button on their smartphone and get a ride, almost anywhere (“About Us”, 2021). Uber has now become a global logistics service used across several industries. With 91 million active platform users and 3.9 million drivers, Uber is one of the largest firms in the gig economy.

Vision

Uber has no publicly espoused vision statement. However, according to their CEO Dara Khosrowshahi (2019), Uber “will optimize for the happiness and loyalty of our customers rather than marginal trip and transaction growth. And we will not shy away from making short-term financial sacrifices where we see clear long-term benefits." He also says that "our continued success will come from stellar execution and the strength of the platform," highlighting the firm's vision to provide a valuable service to their customers (Khosrowshahi, 2019).

Mission

Uber’s mission is "We ignite opportunity by setting the world in motion" (“Uber mission, vision & values”, 2021). Uber consolidates all of their service lines into a simple idea, a global operation that impacts the world. While describing what the business does, the statement fails to provide an overview of its strategy from a consumer perspective. Due to this vagueness, there is no effective differentiation of Uber amongst its competitors.

Business Model

Uber began their operations as an inventive digital ride-hailing service but has since grown into other segments such as UberEats, autonomous driving, and electric scooter rentals. Their agent revenue model revolves around a service fee paid by drivers and restaurants. This service fee varies from trip to trip. The Uber fee ranges from 20-25% of the total amount charged. The fares are calculated based upon a base rate, the rate for estimated time and distance of the route, and the current demand for rides in the area. In 2019, Uber made over $14 billion as an agent enabling rides and deliveries on its platform (Cuofano, 2020). This model is consumer-centric, with revenues being directly correlated to demand. This approach requires the firm to be sensitive to the drivers, restaurants, and customers' changing needs to remain profitable.

Objectives

Uber considers several financial and nonfinancial metrics when evaluating their business’ progress. Key operational metrics that the business tracks are Monthly Active Platform Consumers (MAPCs) (O’Kane, 2019). These represent the number of unique consumers using the platform at least once in a given month, averaged over each month in the quarter; trips defined as the number of completed rides or deliveries; gross bookings, which are included to be the total dollar value including taxes, tolls, fees, discounts, and refunds. Uber’s objective is to maximize MAPCs and gross bookings (Cuofano, 2020). Their objectives are centred around stakeholders which means that it is vital for Uber to ensure their drivers provide quality service. Driver compensation and benefits are possible extrinsic motivators that can be utilized in improving the value chain to better meet company objectives. It would also be beneficial to make these objectives specific, time-focused, and measurable. For example, increase gross bookings by 10% each month through increased driver compensation after a set target has been reached.

Industry Analysis

The threat of New Entrants: Uber’s current business model is not capital intensive. Unlike taxi companies, it is easy for drivers to sign up to work for Uber and the drivers use their own cars. As a result, the barriers to entry are low and the threat of new entrants is high.

The threat of Substitutes: In the ride-share industry, the threat of substitutes is high. There are direct competitors for Uber such as Lyft and indirect competitors from traditional public transportation such as taxis, subways, trains, and buses. These threats of substitutes make it harder for Uber to gain market share.

Bargaining Power of Suppliers: Uber has outsourced their cars and driver’s services, and it relies heavily on its drivers for the functioning of its business. Thus, their bargaining power of suppliers is low. However, the one area that Uber does have control over is the percentage of each ride fair the company takes. It is important for Uber to ensure a strong relationship with their suppliers as their main competitive advantage is high-quality and reliable service.

Bargaining Power of Buyers: The bargaining power of buyers is high. This is primarily because the cost to switch between service providers is nothing, as the brands are essentially in perfect competition. This means that brand loyalty is important for this industry to ensure that their consumers stay using their brand. Moreover, Uber is known for having an easy refund policy that is done through their app. If consumers are unhappy with their ride for any reason (i.e., unsafe driving, over-charged) then consumers can easily contact Uber and begin the process to get their money back. This is important for Uber to ensure customer satisfaction and retention.

Industry Rivalry: Uber operates on a global scale and there is intense competition in the U.S., Canada, China, India, and Middle East markets. Uber was one of the first in the specialized ride-sharing industry which gives them a slight advantage. However, their competitors have a lot of capital behind them and are able to occupy the market at a rapid rate. In addition, as mentioned above, the cost to switch is extremely low for consumers, making the industry rivalry high.

Industry Life Cycle

According to McGrath (2021), the taxi, limousine, and ride-sharing service industry is in the mature stage of its life cycle. There have been some regulation issues that have limited the number of taxi licenses on the road which has held back Uber. Moreover, the market is fairly saturated and the slow population growth in Canada means that there is little room for growth. Because of economies of scale limitations, it makes sense for the industry to stay within urban areas and not focus on growing in rural areas, another limiting factor for Uber. The industry value added is at a much lower growth than the estimated GDP growth for the next 10 years which also accounts to the lack of potential market growth. The new technology brought to the industry from Uber has now been adapted by most taxi companies. On a positive note, the Canadian economy is expected to continue to improve, predicting higher consumer spending. With COVID-19 becoming more manageable, the demand for the industry is expected to increase. Another effect from COVID-19 was the loss of income which has made it slightly more difficult or people to buy cars, thus the use of transportation services are expected to increase.

Driving Forces

Political/Legal: The ridesharing industry is susceptible to local governmental regulations and laws. As a newly established market, the ridesharing model is exposed to high risk of unprecedented legal implications that may impose limitations on the company (Yeo, 2021). For instance, legal changes regarding Uber’s ability to list their drivers as independent contractors, rather than employees could impact their entire business model. Uber would have to invest in a more robust HR system and ultimately pay more per employee if their drivers must be listed as employees. This increase in cost would drive Uber further away from their profitability goal for 2022.

Economic: The ridesharing industry is affected by changes in costs of labour, disposable income, and tax rates. Due to the global pandemic, disposable income is expected in decline by 9.5% and consumers are expected to focus on saving. Decreases in disposable income suggests that consumers may seek cheaper options to travel as opposed to ridesharing services. On the other hand, industry revenue is forecasted to grow at 14% to reach $48.6B over the next five years. Globally, China is rising as a major consumer in the ridesharing market, with most revenue of $78M, being generated in 2021 (Kalish, 2021).

Social: The global pandemic has slashed tourism and travel, resulting in a 35.5% drop in revenue this year in a market that has exhibited an annualized growth of 3.9% over the past five years (Cook, 2020). This suggests that less consumers will use ridesharing services because it is likely that they will have access to a personal vehicle or cheap travel if they are staying at home.

Technological: Businesses in the ridesharing industry are fuelled by word of mouth and social media advertising. For businesses in the ridesharing industry, convenience and timeliness remains as a key component, with an expectation that with a touch of a button, a car will arrive within minutes to provide a ride. That expectation could cause problems as there are less drivers that could limit the businesses to ensure immediate service, especially for smaller cities with even more limited drivers available. Due to 2021’s dramatic drop in revenue, technology that enabled cost-savings is a key component in ensuring profitability (Cook, 2020).

Environmental: Increasing consumer concern on fuel consumption and carbon emissions have been exhibited by consumer preference for public transportation or carpooling. Ridesharing could expand their service offerings by introducing an EV only option for ride hailing.

Industry Diversification Strategies

The transportation industry follows a trend favouring related diversification. The largest cost for companies in the industry is their assets such as cars which can be used continuously. Within the transportation industry, taxi companies have diversified by venturing into airport shuttles and public transportation (Tanimoto, 2015). However, these industries are only attractive in geographic areas that are deregulated since government control increases the cost of entry significantly. Thus, to avoid high costs and regulations Uber can benefit from diversifying into various related and unrelated industries.

Global Strategies

The transportation and taxi services industry faces high pressure to lower costs and adapt locally to effectively compete on a global scale. Due to each country’s unique set of norms, firms must adapt their business model to meet the needs of various consumer groups. This strategy must also offer prices that incentivize individuals to choose the taxi service over alternatives such as competition and public transportation. Moreover, there is an increased focus on environmentalism and sustainability, so it is important to remind customers of the value the business offers, especially in geographic areas with advanced public transportation systems.

Other Economic Traits

In the ride-share industry, variable costs are primarily associated with the administration costs of the employees as well as the daily phone application and network maintenance costs. Besides this, the staff and rent expenses account for a large proportion of fixed costs. Additional fixed costs include professional fees, utilities, licenses, advertising, and maintaining the shop and its equipment.

Profit Pools

Profit pools in the ride-share industry come from a percentage of the ride fares. The corporation gets the money directly from the licensed drivers. For instance, each time the licensed driver finishes their assigned work, Uber makes money by taking a 20-25% cut from each ride. (“The economics of Uber”, 2014). Only having this single profit pool gives rise to potential risks. However, as more ride-share corporations are doing so, Uber has expanded their business model into the food delivery service. This expansion has provided Uber with another profit pool.

Key Success Factors

Flexibility in service offerings is a key component in the ridesharing industry to accommodate for different consumer segmentation. For example, corporate consumers prefer a more luxurious experience compared to private consumers who simply want a ride. Compliance with government regulations is another key component in ensuring that the business does not suffer from unnecessary fines or interruption to their operations. Companies in the ride-share business must also be efficient in passing on the rising fuel and wages cost to their consumers to encourage profitability. Quality control across a variety of services is a key component as the services provided in this market is often considered as a luxury to the consumer. Ensuring that a business has a secure and consistent source of revenue is also vital because consumers can quickly switch between competitors at no cost (Cook, 2020).

Competition Analysis

The ride-share industry is highly competitive, but Uber is still the leader in the U.S. with 68% market share (Yeo, 2021). Uber’s top competitors are Lyft, Curb, and traditional taxi companies. In countries such as Russia and China, Uber has either merged operations or sold their division with the top competitors in those countries. DiDi which is local to China, bought out Uber China and Uber now has a share in that company. Yandex Taxi which is local to Russia, merged their operations with Uber in 2018 (Russell & Lunden, 2016; Khrennikov et al., 2020).

Lyft is the most similar to Uber and is predominantly offered in the U.S. and Canada. Lyft runs a very similar business model where consumers can use an app to order a car. Like Uber, Lyft users can rate their ride and choose a standard or premium car. Lyft also offers car rentals and scooters for hire. Lyft has a market share of 32% in the U.S. (Yeo, 2021).

Curb is a ride-hailing app, but is different from Uber and Lyft because it works directly with taxi companies to help taxi drivers find and receive fares. Another difference with Curb is that it allows customers to pre-pay with debit/credit or give cash upon arrival. Uber only allows for credit card payments done through the app. However, it is not as widely used as Uber and is only used in 65 cities within the U.S. Moreover, if a driver fails to pick up a customer their account is suspended for five hours. This makes it less appealing for drivers to use the app (“Curb Mobility”, 2020).

Taxi companies, although they are now adapting to using apps such as Curb, have not been able to catch up to Uber. Taxis do not offer the same variety in vehicle choice or food delivery service (Sraders, 2019). Their fares are not predetermined which means the customer cannot reject the ride based on a price before they use the service. Moreover, taxi companies are faced with more overhead and legal regulations. However, with taxi companies complying with the legal regulations they do not face the same restrictions that Uber does.

The strategic group map in Appendix A compares competitors of Uber based on the service availability and the service/vehicle choice. Although Lyft and Uber are very similar, Uber does significantly better than Lyft because it is available internationally whereas Lyft is only available in the U.S. and Canada. Moreover, Lyft does not offer food delivery. Most countries will have their own taxi companies. However, Uber offers a wider variety of choices when it comes to their vehicle type, as well as their services which include a ride-pool program and UberEats. Curb adopts the disadvantages of taxi companies, but is not as widely available. Although each competitor has their own advantage, Uber always comes out on top as the best because of its international availability and vehicle and service choice available to customers in the rideshare/taxi industry.

Company Analysis

Uber uses a combination of cost leadership and differentiation strategies (“Empirical analysis of the business strategy of Uber”, 2020). Uber is able to offer lower prices because it does not hire full-time drivers or own the cars that their employees drive. Since Uber does not carry the costs of the cars or the drivers’ insurances, they are able to cut costs and provide cheaper rides. Moreover, the maintenance costs of cars are passed onto the drivers. Uber has been able to differentiate themselves by using an app to book rides; letting consumers track their ride using GPS; giving consumers their fares ahead of time; allowing consumers to rate their experience and their drivers; offering different options of rides ranging from the standard car (Uber-X) to their premium cars (Uber Black) (Pratap, 2018).

Over the years, the introduction of segments like UberEats has signaled the company’s desire for diversifying. In 2020, the business indicated its intention to enter the world of grocery delivery. Uber’s previous move into food delivery has been the saving grace for the business amid the coronavirus pandemic with rides being down 80%. UberEats orders increased 89% showcasing the importance of unrelated diversification. Online grocery sales in the U.S alone reached $7.2 billion in June 2020 with total customers tripling within the same period (Levy, 2020). The choice to expand into grocery can be significant for business return on investment due to it being unrelated to current operations.

Uber is the largest ride-sharing company internationally. In 2018, the business made over $10 billion in revenue with 6 billion rides in 2019 (“Uber’s Strategy for Global Success, 2020). By avoiding the traditional taxi model of leasing or renting vehicles, the business can avoid a significant risk that comes with the lower cash flow from the expensive assets as well as differences in vehicles worldwide, including size of roads, vehicle capacity, and local preferences or trends. Additionally, the business has flexibility in different markets through various product offerings that cater to local markets. For example, in Istanbul, consumers have access to UberBOATS; in Shanghai, individuals can find a local UberCHOPPPER and even UberAUTO in New Delhi.

Regardless of these efforts to adapt to local markets, there are reported struggles within markets outside of North America. A failure to consider political and cultural differences reflects a classic globalization mistake. Uber follows asking for forgiveness instead of a permission approach. This strategy has been detrimental in countries that have rigid rules based on core principles and codified rules (Manangi, 2017). Uber’s aggressive entry tactics are not in line with cultural norms that respect local authorities and natural trust-building. If the business can adapt its business model more effectively with local support, the growth will result in greater profitability. It is also recommended that the business considers acquiring competitors in foreign markets as a part of its global strategy allowing for the exploitation of brand name and resources.

Since going public in 2019 in the highest-valued tech IPO since Facebook, Uber has struggled financially (Hawkins, 2019). The company took a $3 billion bath in 2018 and experienced another loss of $1 billion in the first quarter of 2019 alone (O’Kane, 2019). However in fiscal year 2020 and so far in 2021, Uber has swiftly navigated pandemic related financial challenges and made some gains for their shareholders. 2020 saw Uber exceed a revenue of $3.2 billion with revenue growth of 13% quarter-over-quarter, likely due to some easement of COVID related restrictions, but still down 16% year-over-year (see Appendix B) (Uber Investor, 2021). Increasing the cross-promotion of the Eats platform and standard transportation services is one way the company has highlighted a solution for the future. Eats generated $536 million in revenue for Uber during the first quarter of 2019, double the revenue it made during the previous year (O’Kane, 2019). Furthermore, Uber’s standard transportations services have seen an average growth rate of 9%, so using more financial resources on Eats is likely a smart choice for Uber’s financial positions (O’Kane, 2019).

Uber’s organizational structure is dominated by a strict hierarchy.The company has been plagued with an overall demoralized workforce and poor organizational culture in the past (Dudovskiy, 2018). However since becomingCEO in 2017, Dara Khosrowshahi has exerted tremendous strategic management and sparked change within the organizational structure (See Appendix C) . Mr. Khosrowshahi has specifically worked towards de-layering some of the structure in order for it to be more flexible and respond to the changes in the external marketplace (Dudovskiy, 2018). Moreover it would be advantageous to further flatten Uber’s organizational structure to ease communication between top management and floor-level employees.

A set of norms defines the culture at Uber: we build globally, and we live locally; we are customer obsessed; we celebrate differences; we do the right thing; we act like owners; we preserve; we value ideas over hierarchy; we make big bold bets (“Uber’s new cultural norms, 2017). According to leadership, these norms preserve the best of the founding Uber culture that builds one of the world's most valuable and essential companies. These norms create a picture of a company that values its stakeholders and believes in accountability; however, the reality has proven to be different. Current and former employees describe the company as a ‘Hobbesian environment’ where workers are sometimes pitted against each other, and a blind eye is turned to infractions from top performers. Reports of discrimination and sexual harassment by managers that were shrugged off by human resources have come to light. Victims claim that the culture was stoked and even fostered by top management (Isaac, 2017). Uber’s treatment of drivers as contractors rather than employees has also created a history of tension and legal dispute. Drivers and employees are a critical part of the value chain, as explained in the business model. The mistreatment of key stakeholders puts their brand image and profitability at risk. Brand image is critical not only for promotion but also for the company to exploit when taking on new and risky diversification ventures which Uber plans to do.

SWOT Analysis

Strengths: Uber has a strong cash flow of $1M available, as well as a strong relationship with its investors (Krantz, 2020). The top-down focus on growth over profitability has been a key component in Uber’s growth, but their new focus on maximizing profitability enables quicker decision making and project mobility (O’Brien, 2020). Uber is also a market leader in ride hailing and captivated on this by holding the major market share in the industry. This also results in strong brand awareness, which is exhibited by a common understanding from consumers with phrases such as “let’s take an uber there”.

Weaknesses: Due to previous focus on ‘growth at all costs’, some analysts have been raising concerns if profitability of Uber is ever possible (Sherman, 2019). By not focusing on profitability, they are burning through cash at an unsustainable rate. In addition, Uber has been facing public backlash and possible legal implications from mistreatment of the drivers from both the consumers, and the company (Sainato, 2019). This is emphasized by Uber’s reliance on their drivers as an independent contractor, with the company’s revenue dependent on the willingness of the drivers to work with the company. Their reliance on drivers suggests that Uber has limited power to negotiate over their contractors. So, if the drivers band together to raise wages threatening not to work, Uber they would have no option.

Opportunities: Driverless technologies provide Uber with an opportunity to introduce self-driving cars (Berk, 2021). This could mitigate legal, safety, and human capital risks that are currently present. As well, Uber has been focused on expanding geographically, with international markets being an available avenue for Uber to captivate more of the global market. This increases their potential market and allows diversified revenue. In addition, their existing logistics and network allows Uber to be well positioned to expand into the last mile delivery space, following the footsteps of Amazon that uses their contracted drivers (Manangi, 2019).

Threats: Legal implications remain to be Uber’s threat in maintaining their consumer base and drivers as a contractor. This legal pressure can prove to be financially demanding and harm Uber’s public image. This could eventually decrease their market share as they’ll have less cash available to expand and consumers will look negatively upon them. There is also increasing global competition (Manangi, 2017). For instance, GLA taxis have been dominating the Indian market, exhibiting Uber’s limitations for global success, especially in nationalistic countries. This could limit Uber’s expansion into the largest countries in the world (China and India) who are ripe with a growing middle class and disposable income potential.

Competitive Advantage

Brand name recognition: Uber has a strong brand recognition within the riding share industry and is the top 1 in terms of market share (Iqbal, 2021). The goal of Uber is to commit to becoming a fully electric, zero-emission platform by 2040 (‘About Us’, 2020). Through the convenient services and lower transportation costs for the public, Uber has created a reliable atmosphere to bring customers a ‘faster’ lifestyle.

Strong company culture: Uber has built a strong company culture. This culture has been written from the bottom up. As the Uber’s CEO said, “a culture that’s pushed from the top down doesn’t work, because people won’t believe it” (“Uber’s new cultural norms, 2017). At Uber, people are open to new values. They can share their ideas to the top. As a slogan in Uber culture said, “we act like owners and we celebrate differences” (“Uber’s new cultural norms, 2017).

Services, quality, and standardization: Uber focuses on providing a reliable ride-sharing service from start to finish. Using the app, passengers locate rides, pay for the service, give feedback to drivers, and can comment on safety. The driver’s history is also public which helps to regulate the drivers daily performance,strengthening the consistent quality of service.

Customer loyalty: Uber strives to retain every customer and build a long-term relationship. Starting in 2020, Uber provides in-depth training to ensure a high level of service. Uber also sends out promotions for discounted fares to keep existing customers as well as strives to respond to customer complaints within 24 hours.

Value Chain

Uber’s value chain drives efficiency and value through major activities such as Uber inbound logistics, operations, marketing, sales, and services. Uber does not own the cars and their employees are actually contractors. Therefore, the value-added of Uber is derived from the internet-based nature of enterprise operations and the business model of the company. Uber's inbound logistics is mainly limited to the hardware and office equipment needed to maintain its business. Moreover, Uber operates its business within more than 760 cities all over the world and ensures their operations are consumer-centric. As a result, the Uber app is one of the most important sources of value for Uber’s daily operations. In terms of marketing and sales, Uber relies mainly on social media marketing and word-of-mouth marketing to drive sales. Uber also uses print and sales promotions, experiences and events and public relations. Convenient and reliable online payment through the app is also a value-added source for Uber. Finally, Uber’s primary goal is to provide customers with a high level of customer services. This is its core competitive advantage. Driver ratings are publicly available and used as a way to motivate drivers to provide top level service.

Recommendations

Uber should focus on three recommendations for the future. The first recommendation suggests tech advancements, specifically driverless ride sharing.

Recently, Uber has been given critical feedback regarding a lack of drivers being available. As well, overall, all industries have begun to implement more technology based services. This provides a small market gap for Uber to capture in the near future. With the rideshare industry forecasted to grow 14%, Uber can take advantage of this forecast and provide a technologically advanced rideshare service. Furthemore, this would decrease the need for drivers and mitigate the problems currently being faced. Workforce costs would decrease drastically, allowing Uber to use them for expansion purposes.

The second recommendation for Uber would be to consider mergers and acquisitions of potential competition. Its global expansion, while obtaining a good brand image worldwide, has not been successful. In countries like China, local services have been preferred more than Uber. In fact, Didi bought Uber China. This is a great example for Uber to try to meet local requirements of the countries in which it chooses to expand to. Rather than competing with the local preferred company, Uber can acquire them or merge with them. This will allow Uber to use the local company’s brand presence and resources. Moreover, this will decrease the competition for Uber and promote an easier transition to the different markets.

Lastly, it is recommended that Uber expand into the grocery delivery business. From a financial perspective, the return on investment would increase a noticeable amount due to the unrelated diversification of its services. The number of assets needed to expand into this market would also remain relatively the same, indicating that investment costs will not increase by a lot either. Since the pandemic, there has been a greater demand for groceries being delivered to homes rather than being picked up from the stores. As well, due to the greater convenience that this strategy allows to its customers, this can prove very successful for Uber. Uber’s brand recognition and image in North America ensure more customers choose them over the very little competition that exists.

Appendix A

Strategic Group Map for Uber