Master in Decision Making And Innovation
Analyzing Uber’s strategy in Colorado!
It has been a pleasure to assess your assignments on the CORPORATE STRATEGY- unit’s activity. The starting point of this activity was for students to be able to analyze the Uber’s strategy in Colorado in the year 2012. In doing so, we wanted you to read thoroughly the case text and -supporting your opinions in the e-book’s content- answer 7 questions about digital-born vs. traditional companies and Uber’s strategy in relation to regulatory constraints and loopholes, ways to opening new markets and -broadly speaking- corporate reputation.
All these questions can be categorised as opinion-based questions open to your own interpretation. In this sense, I recall what we said in the activity definition: there is no right nor wrong answer because the purpose is to exercise your reasoning. Thus, insufficient argumentation will render any response invalid.
For making easy reading this feedback it helps us ordering the 7 questions in the following three sub-categories. As well, at the risk of sounding reductive, I’ve synthesized each question in a single sentence in an effort to capture its learning objective.
- Questions requiring e-books’ understanding and partially research on the present situation of the taxi industry. Answers must include essential features on the topics.
Q1 – Why is Uber a digital company? Name features which make its digital success.
In order to answer correctly you could look up to the chapter #1 of the ebook. It is indispensable to refer to the essential elements that distinguish Uber as a digital economy company, as for example:
- Being a digital platform with mobile friendly access.
- It should aggregate infinity of offers
- It should be a social platform.
Among others aspects to be considered for answering why being digital gives Uber a competitive advantage in contrast to the traditional taxi industry you could mention:
- Offering easy payment terms.
- Good contracting system.
- Include some improvements in the service.
- Having greater level of demand to the product or service’ supplier.
In regard to the taxi industry launching mytaxi platform to counterbalance Uber’s threat, you could broaden the information given before by means of highlighting the differences between analogical and digital-born business models. Finally, you could conclude that pure analog taxi operators will face mounting pressure when mytaxi affiliates fully incorporate digital capabilities similar to Uber and the likes.
Q7 – CSR, strategic COM and Geopolitics. Uber’s urges to shape its environment.
You have to answer one of the three questions depending on which elective unit you chose last time. In any case, the three topics exposes what are the actual challenges Uber faces and offer hints at what is the strategic approach Uber is currently positioned. We think Uber operates a shaper environment role since its inception. Due to explosive growth expansion combined with recent scandals, you could discuss if its ambitions may be somewhat constrained by regulation. According to BCG report, in several European countries popular resistance to ridesharing is likely to gain some legislative support. This and other intel gathered could lead you to advance any valid opinion.
- Questions which require e-book’s understanding and demand insights based on the text case. Answers widely open to your own interpretation.
Q2 – Uber’s sector positioning. Provide arguments supporting its claims.
Considering as possible categories: taxi, limousine, IT- your answer is valid in any given case and qualifies as follows:
- Your answer is considered adequate if you mention at least one
- Your answer is considered good if you mention two or more
- Your answer is considered perfect if you argument about the new typology of company.
We have reviewed your answers and arguments for each classification and organized your rationale in choosing one of them.
- Taxi—Many riders choose both UberX and UberBlack instead of a taxi; Uber pricing varies by distance rather than being set in advance like most limousine rentals.
- Limousine—UberBlack rides are provided in limousine-class vehicles, in some cases by licensed limousine drivers; like limousines, Uber does not pick up street hails.
- Technology and information company—Uber does not own vehicles or directly employ drivers and its main product is a smartphone app. Uber’s algorithms for surge pricing, matching riders and drivers, and route optimization are key competitive resources.
Q3 – Launching Uber in Colorado -2012. Identify Uber’s position and choose a strategy.
This is an opinion based question, extremely open to your own interpretation. Nonetheless, you have to use the BCG adequately which means foremost contextualising Uber in Colorado in the 2012, then describe the company according to the three dimensions: unpredictability, malleability and harshness.
These dimensions define five approaches to strategy:
As we have said in your specific feedback, in our view the most adequate positions for the moment the case was written would be to say that the company was in an unpredictable, malleable and slightly hostile moment, therefore for us the environment that better match is the Shaping due to the fact that Uber lacked predictability but still could try to change or reshape and influence their environment, as well as leading the definition of a new sector, because in many places, Colorado included the rules were not yet defined.
As it could be glimpsed in the case, the strategic recommendation, that the Uber team was carrying out, was to involve and promote collaboration among the main members of the sector in order to influence this sector’s direction.
Q4 – Did Uber adopt a Lean startup approach in Colorado?
Again we are in case of another opinion based question, though more narrowly defined in its conclusion.The case share many data that can make you think at Uber opening in cities with a small structure and that is increasing its deployment as it validates the viability of its product, while checking if there is demand or if the environment is going to allow its growth, etc. Despite all this we think it is important to clarify that the concept of MVP would not be applied “per se” given that the product has already been validated in other sectors. However, it would make sense to advocate that they have made tests or minimum releases and evaluate their viability before they grow.
Other aspects from the ebook could be useful in this analysis:
- The love for measuring and making data based decisions.
- The possibility to pivoting or iterating if the model does not work. Which in the case of a local office would mean to use new products that really in with the local demand or on the contrary close the office which done on time can be considered a success.
- Questions which demand insights based on the text case and research on one topic currently in the headlines and comparative analysis between Uber and Cabify.
Q5 – Uber vs Cabify. Using PESTLE analysis.
Answers should include a comparison based on the strategic elements and on the sectors on which each company is supposed to be competing. Students should use the different aspects included in PESTLE model: Political, economic, social legal, environmental and technological aspects. I have valued as positive a brief introduction of Cabify and its Spanish environment to frame this comparison.
Q6 – Uber’s scandals at present risk its performance. Has Uber react changing strategy?
A good answer to this question may take a skeptical tone. A company that is widely known for having a disruptive strategy, and a more-than controversial CEO can endure damages coming from explosive revelations of a sexist corporate culture. All that said we take as conventional wisdom that the general public will not turn its back if Uber keeps being conveniently cheaper and faster than competitors. However, I did not find any reference in your answers -please tell me if you did- to the fact that Uber is not a publicly traded company (it isn’t listed yet in Nasdaq stock market). For funding, Uber operates in private markets so its valuation has to be inferred from this secondary markets. Ex ante, this situation gives Uber some advantage in enduring financially many scandals because it hasn’t to recur to public markets. However, paradoxically, the illiquidity of private markets makes harder to gauge the potential imbalance between supply and demand in Uber’s stocks. I believe this situation forced Uber to change its strategy and was instrumental in Uber co-founder T. Kalanick’s resignation.