Uber is an American technology company that owns various businesses. Initially, the company started as a ride-hailing firm in 2009 under the name UberCab. The company’s founder, Garret Camp, started his venture to decrease the cost of direct transportation. He also found a co-founder for his operations, Travis Kalanik, also known for his Red Swoosh startup.
Uber started its operations in 2010. However, it initially offered only a beta version. Its first stable app officially launched in 2011 in San Francisco. The application only allowed users to call for a black luxury car, which was overpriced. The company also went under a name change in 2011, officially becoming Uber from UberCab.
Over the years, Uber has made several changes to its business model. Currently, it operates a C2C business model through e-commerce. The company hires drivers or riders and connects customers to them through its app. On top of that, Uber also has ventured into several other ventures, including Uber Eats, a food delivery company.
Uber’s primary service is still its ride-hailing app. Within this app, the company offers several packages, including UberX, UberPool, etc. These offer customers alternatives that suit their choice and budget. However, Uber’s Uber Eat app also generates substantial revenues for the company. It is among one of the leading names in the online food delivery market.
Uber also has been active in the acquisitions market, acquiring several local competitors. For example, Uber successfully bought Careem out in 2020, one of its largest competitors in Asia and the Middle East. Similarly, it also recently acquired Postmates, a large competitor to its Uber Eats business. Apart from its acquisitions, Uber also invests in other businesses.
In 2020, Uber generated revenues of $11.139 billion. However, the company’s highest revenues came in 2019, which amounted to $13 billion. Similarly, Uber suffered an operating loss of $4.863 billion and a net loss of $6.768 billion in the year. These performances were primarily attributable to the COVID-19 pandemic that took a hit on the whole industry.
In this article, we cover Uber’s SWOT analysis which includes strengths, weaknesses, opportunities, and threats. By understanding these factors, companies can determine the primary forces behind their operations. Before getting started, let go through the company key highlights as below.
Uber – At a Glance
Given below is Uber’s company profile.
| Name | Uber Technologies, Inc. |
| Website | www.uber.com |
| Founder | Garrett Camp and Travis Kalanick |
| Year founded | 2009 |
| Chief Executive Officer (CEO) | Dara Khosrowshahi |
| Chief Financial Officer (CFO) | Nelson Chai |
| Headquarters | San Francisco, California, United States |
| Type of corporation | Public |
| Revenues (2020) | $11.139 billion |
| Key products/ services | Mobile app, vehicle for hire, food delivery, courier, package delivery, freight transport |
| Key competitors | Lyft, Curb, Via, DidiChuxing, Ola Cabs, Grab, Bolt, Cabify |
| Key subsidiaries | Uber Eats, Careem, Cornershop, Jump, Postmates, Zomato |
Uber’s Strengths
Strengths are internal factors that impact a company’s operations. These factors are things that companies get right or external resources. Similarly, strengths provide companies with a competitive advantage. These are usually exclusive to a company within a market. Some of Uber’s strengths are as below.
Market share
Being one of the first to offer ride-hailing services, Uber currently holds the largest market share worldwide. The company has over 93 million customers and 3.5 million drivers. Uber is also active in over 10,000 cities globally. This market share has been one of the most significant factors behind the company’s high revenues over the years.
Brand name
Uber has created a brand name for itself due to its quality services. It also helps that the company was one of the largest and oldest names in the industry. Uber’s brand recognition makes it one of the most prominent names in the technology market. Its brand name has also allowed it to launch other ventures and be profitable successfully.
Low capital requirement
Uber operates a unique business model which doesn’t require it to own vehicles to offer cab services. This business model has relatively low capital requirements, making it highly successful. The company hires over 3.5 million drivers worldwide. However, it does not own any of its vehicles. This feature has also allowed the company to expedite its global expansion over the years.
High quality
A company having the stature of Uber cannot last as long without offering high-quality. However, Uber’s quality primarily depends on its drivers. Through its unique customer-driven interaction feature, the company ensures customers get the best quality possible. Each customer and driver can rate their experiences, providing feedback to the company.
Uber’s Weaknesses
Weaknesses are internal factors that adversely impact a company’s competitive advantage. These factors usually come from the company itself or its competitors. Weaknesses are the opposite of strengths. These can significantly hinder a company’s growth. Some of Uber’s weaknesses are as below.
Controversies
One of Uber’s largest weaknesses is the controversies that the company has suffered. Usually, these controversies arise due to the drivers that the company hires. Although the company does not directly control them, these drivers still cause significant scandals. These controversies have caused several losses for the company, and there is no apparent end in sight to them.
Operating losses
Despite being the top name in the industry and generating billions in revenues, Uber suffers from losses. The company’s business model causes billions in losses despite growing revenues. These losses have also impacted the company’s assets and financial position. The lack of profitability is a significant weakness for Uber.
Dependent on the internet
Uber’s business model makes it dependent on the internet. Although it is not an issue in developed markets, it hinders Uber’s operations in other locations. In countries where access to the internet is limited or restricted, Uber cannot operate. Therefore, the internet dependency makes for a critical weakness for Uber.
Uber’s Opportunities
Opportunities are external factors that can result in future strengths. These factors apply to all companies within a market or industry. However, each company must exploit these to benefit from them. Some of Uber’s opportunities are as below.
Global expansion
Uber has been fairly active with its global expansion policies, currently operating in over 10,000 cities. However, the company still has the opportunity to grow and expand its business. Uber can enter various emerging markets to gain more customers. If the company exploits these markets early, it can capture a significant market share in them.
Diversification
Uber primarily works through the internet. The company has been active in the acquisitions market. However, it only acquired similar companies or competitors. Uber has also ventured into other industries, for example, with Uber eats. However, it still has the opportunity to diversify its investments to enter new markets.
Driverless vehicles
Driverless vehicles have become a hot topic for many people worldwide. Uber participated in the industry through its Advanced Technologies Group branch. Similarly, driverless vehicles have significant potential in decreasing costs and removing driver dependencies. For Uber, it presents a unique opportunity to achieve both.
Uber’s Threats
Threats are the opposite of opportunities, being external factors that can hinder business in the future. Similarly, these factors apply to all companies within a market or industry. It is crucial for companies to identify these factors. Some of Uber’s threats are as follows.
Competition
Uber faces substantial competition in its active markets. Companies like DiDi Chuxing and Lyft compete with Uber in several markets. On top of these, local competitors, for example, Ola Cabs, Grab, Bolt, etc., also hinder the company’s business. Having a replicable business model makes Uber prone to competition and raise a threat.
Litigation
Litigation isn’t a new issue for Uber. As mentioned, the company has been embroiled in controversies over the years. These issues aren’t going to end anytime soon due to the company’s dependency on drivers. Litigation is one of the primary threats that Uber faces. Any lawsuits have the potential to impact Uber’s brand significantly.
Low margins
The increasing competition and changes in local legislation may force Uber to become more competitive. The company already charges low margins on its rides. However, these issues can further the company’s revenues in the future. Uber is already suffering regularly from losses. Any further issues can impact the company’s margins even more.
Conclusion
Uber is the largest name in the raid-hailing business globally. The company operates in over 10,000 cities with over 93 million customers. Despite making billions in revenues annually, Uber usually makes losses. Several factors attribute to these losses. A SWOT analysis gives a better view of the company’s operations and external environment, as given above.
