Uber as an international business: The future of transportation
In today’s fast moving society, mobility is one of the essential factors in everyone’s life and good transportation systems make our lives much easier. Traditionally, if a person who does not own a car wants to go more than a walk distance, the basic options for the person in a developed country have been public transportations such as trains, busses or public/private taxi services. Yet those public transportations are often not flexible and might not be available late at night in many places and therefore, the only option for people will often be calling a taxi which is fairly expensive. Now, Uber has given people one more option by developing a totally new online transportation platform for those who are looking for an easy, flexible yet affordable transportation. The system works just like the traditional taxi operations, but with general public as their drivers and an app which controls the whole system. Nowadays, Uber is no longer staying within US, where it has started, and is becoming one of the most powerful international corporations. In this article, we will be focusing on the Uber’s key success factors as an international business, the biggest challenge that it had to overcome, that it currently has, or that it will be facing in the future, and our recommended solutions.
Ⅱ. Research – Basic information about Uber
As it is already mentioned in introduction, Uber provides an online transportation platform where people can ask a ride for a driver close to them anywhere anytime for a reasonable price, and keep track on it until they get on the car. Currently, it operates in 84 countries and across 789 cities in the world (Uber cities, 2018). In particular, its major markets are countries including US, Brazil, China, Mexico and India right now and it is trying to expand their market furthermore. For their market entry strategy, it simply uses franchising. Since it is a online platform, it is way easier and cheaper to franchise than other manufacturing or service based companies who have to invest a fair amount of money on a new office or new stores for every expansion. In other words, Uber can break into a new market everywhere in the world so long as there are demand, internet and people who drive vehicles.
Ⅲ. Key success factors and key reasons for the lack of success
The biggest success factor that contributes to Uber’s international success would be its dramatic differentiation from competitors. That is, it differentiates itself by setting lower price and still letting its customers demand high quality and convenience to create higher customer satisfaction. As a result, customers’ bargaining power has increased which is one of the Uber’s unique characteristics. Uber’s success could also be seen in its strong marketing mix 4P’s which consists of product, place, price, and promotion. The first P stands for product. Uber has launched a simple app to connect its drivers and users. With the app, customers do not have to make a reservation in advance like a taxi, instead they just open the app and type where they are. Furthermore, it also enabled users to pay automatically through the app. The second P is for Place. The Uber’s key success factor about placing is the small number of global offices which require the company fixed cost a lot. In fact, it just has few offices in significant locations such as San Francisco, Manhattan and New York. Thirdly, Uber uses cutting edge promotion strategies. Uber’s advertisements are basically done online through websites, apps, and social medias like Facebook in addition to the word of mouth promotion. It can also be a branding strategy as a modern and up-to-date company at the same time. Finally, the last P is for Price. Uber is very competitive in terms of pricing because it saves money on infrastructure to lower the price, and this could be a real thread for its competitors. What is more, the price is available before customers get on the car based on the distance and estimated time which means customers are always guaranteed the minimum fee for the ride (Pratap, 2017). As stated above, Uber is now becoming very successful and popular internationally; nevertheless, Uber might not have been as perfect as it hoped. As a matter of fact, Uber had been reported some troubles in China and is also struggling in Europe. The key reason for those probably is because of the difficulties which arise from economic, political, and cultural differences among different countries. It clearly underestimated the operational challenges when it goes global. More specific considerations about each markets should be required in order to be more competitive in new markets as well as in US.
Ⅳ. The biggest challenge that Uber had to overcome and how it had overcome
Uber had to overcome a huge internal problem related to sexual harassment within the company in the past. The internal harassment survey done in 2017 revealed that successive accusations of sexual harassment for an Uber’s employee who had been showing proven results at his work have been acknowledged but concealed by the company’s executives. According to the Bloomberg’s first report and the following report by Uber itself, 100 out of 215 issues investigated were considered that they do not need any reinvestigation while additional investigations were required for 57 people, 31 people were obliged to participate in counselings and trainings, and seven people received warning documents. Furthermore, Uber recognized that there were also various internal relationship problems other than sexual harassment such as discrimination, bullying, and other types of harassment within the company. For this serious company’s crisis, Uber has given punishment of dismissal for 20 employees who have done sexual harassment to prevent recurrences. Additionally, Uber announced that it had hired Francis Frei, an academic from Harvard Business School in the area of gender issues, as SVP (senior vice-president) of the leadership and strategy department.
Ⅴ. The current challenge and our recommendations
Now, Uber has got some new challenges to overcome again. One of their biggest concerns is about safety. Unfortunately, there are already a lot of negative Uber-related incidents reported around the world. For instance, the most recent accident has occurred in Tempe, Arizona on March 18th, 2018. In the accident, a woman walking across the road was killed by an Uber’s self driving car. After this shocking accident, Uber had to stop all operation not only in Tempe, but also in Pittsburgh, San Francisco, and Toronto even though this was the first time that a Uber’s self-driving car killed a human being. Another challenge is the regulation from the governments or the backlash from taxi industry. In fact, Uber has got a police raid on its European headquarters in the Netherlands and two top executives stood trial in a criminal court in France. In addition, its services have banned in Rio de Janeiro and new regulations were proposed in London and Toronto. These legal pressures could largely diminish its opportunity in those cities. Finally, Uber might be facing the competition with Lyft in the future. Right now, Lyft has not expanded its operation internationally yet. However, it is obvious that the competition will arise as soon as Lyft expands the business globally since it has been the Uber’s major competitor within US. Our recommendations are to improve quality of drivers and to reinforce the safety testing on self driving to assure customers about Uber’s safety. Motivating drivers and improving their driving quality would enhance the positive brand image as well. Then, they could also urge the easing of regulations. Consequently, increase in the company’s profitability can be expected.
To summarize, there is no doubt that Uber has become one of the most successful international organizations in the world by franchising with the great use of modern technology and its effective market strategies. However, it was never a easy flat way that it has been through. Uber once had to overcome its internal problems in the past and there are always new challenges coming on. Now, the continuing global success of the company would depend on how it can handle the safety issues, competitions, government regulations, and how it can adapt its operations to each different markets all over the world.
Legal Troubles — including 173 lawsuits in the US — threaten Uber’s global push.
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