Political Factors
There are several issues that Uber has been facing recently, all of which needs to be identified and changed with immediate effect. In order to identify certain external forces of changes within the organization a PEST Analysis needs to be done.
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Political Factors |
Uber has been said to be involved in activities such as lobbying in order to have an impact on the legislation of various countries all across the globe. This has resulted in an increase in the lobbying budget which has almost reached 263 million USD in 2020 (Shtal et al. 2018). There are a lot of local governments that have freely accepted the functionality of Uber, whereas some places such as London and Brno have banned Uber. Some of the other countries where Uber has been banned as a result of them failing to adhere to the safety standards and rules are Germany, Hong-Kong, Bulgaria (Grishko et al. 2020). Therefore, Uber has to keep in mind the consequences of not adhering to the rules and regulations of the government. Some of the other political aspects that affect Uber in the UK are instability of the Government as a result of the instability brought about due to the Brexit Movement, in 2016 which had caused it to withdraw itself from the European Union (Grishko et al. 2020) This in-turn had caused the government to restrict the entry and functionality of foreign companies into their domestic sphere. Uber fails to comply with the political decisions regarding the minimum wage strategies and compensation for the drivers or even identifying them as employees, which is one of the major political problems of Uber. |
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Economic Factors |
There are a lot of discrepancies regarding the constantly changing exchange rates in between the local currencies and the US Dollar. This factor directly affects the revenues of Uber and reduces their profit marginalities. The increase in the value of US Dollars against the other countries decreased the chances of greater revenues being collected from the foreign countries (Tao et al. 2019). The sudden decrease in the rate of US Dollars increased the chances of generating better profit margins from the international markets. This volatile currency exchange rate affects the economic growth of Uber to a great extent. The organization has been planning to reduce the revenues of the Uber drivers or cut out on the drivers in order to increase their profit margins in the long-run. The organization should adopt some sustainable measures in order to ensure that a certain level of economic stability is ensured within the organization. Uber is said to have lost about 968 Dollars in 2021, as a result of them investing in Didi, which is a Chinese Ride-hailing organization (Tao et al. 2019). The company needs to plan more effectively in terms of economy so that they do not have to cut down on their employees, as it will affect their business drastically. The organization is also said to have made a quarterly loss of 2.9 billion Dollars as a result of the current pandemic situation, which has affected their tendency to grow in the domestic as well as global sphere. The lack of customer base as a result of their unavailability and the other competitors such as Kapten, Bolt, Ola has been taking up their place (Friesendorf and Uedelhoven 2021). This has also given a tremendous blow to the economy of the company. |
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Social Factors |
There are in certain cases a lack of availability of Ubers in certain areas which makes it difficult for some people to access the rides. Some countries such as Germany, Bulgaria and cities such as London have banned Uber as a result of them being unable to value the social standards, putting the customers at risk. No proper verification of the identity of the drivers is made which leads to the customers facing threats associated with security. According to reports in 2019 it has been seen that there are about 80% of the cases of atrocities committed by the Uber drivers that remain unresolved till date (Rowe 2017). The unethical practices of the drivers have to be kept a check on by the organization through proper identity checks and enhancing security on the application. A check on the satisfaction of the drivers also has to be ensured by the organization by including proper HRM Strategies of their area of functionality. The model of functioning should be changed in order to resolve their social issues, instead of victimizing their drivers. The drivers of Uber are called “individual contractors”, which means a threat to the job securities of the drivers. They are not provided any employee facilities which have to be focused on in order to expand their business (Fan et al. 2019). Job satisfaction of the drivers will help in increasing the customer base of Uber. Uber also lacks proper communication with their customers on the social media platforms as compared to their other competitors (Friesendorf and Uedelhoven 2021). This is one of the greatest disadvantages of Uber. They have lower reach on social media platforms such as Facebook, Twitter, Instagram. |
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Technological Factors |
Uber drivers might have to face difficulties in the near future as there will be an introduction of automated cars. The organization also has to focus on enhancing their internet penetration in order to ensure that they can achieve a better edge over their other competitors in the long-run. Uber has currently been using “Big Data Systems”, with the aid of tools like Postgres, MySQL, Redis, Riak (Min and Jeong 2019). However, it is very important on the part of Uber to keep updating itself with the fast-changing global trends in order to ensure that they have good connectivity all over the globe. Security has been a major issue of Uber, as there have been several reported cases of false registration of drivers. The security of the riders is to be made a priority with a record of databases and records of all the drivers. Uber has also been lagging behind in the aspect of connectivity. The company faces a lot of cancellation from the customers due to a delay in accepting rides from the end of the drivers. This has been a major factor of the organization losing their customer base recently. |
Change management models are concepts, theories and methodologies that give an analysis of the changes that are required within an organization. These theories are a proper guide to making significant changes, bringing about transformational changes and ensuring that the changes add to the strength to the organization. There are certain changes that are to be adopted by Uber in order to ensure that they can attain better productivity over the years. Lewin’s Change Management Model can prove to be one of the most efficient change management models. This model involves three steps that includes unfreezing, changing and refreezing (Almustafa 2020).
Figure: Lewin’s Change Management Model
(Source: Almustafa 2020)
This model provides a proper understanding of the changes of the social behavior that can be observed at a collective as well as at an individual level of a group. The three stages may be included within Uber in which the first stage includes unfreezing in which the organization is in a certain stage, then comes the stage of changing as per the requirements of the stakeholders and finally refreezing which means that the change will be implemented in this particular stage. The current model that Uber has been following is the Agent Revenue Model (Cox Pinfield and Rutter 2019). The entire revenue is generated from the fees that are being paid by the drivers. The change that the organization needs is to change the status of their drivers to permanent employees, so that they are motivated to be more productive. The perks that are enjoyed by the permanent employees should be given to the drivers. The refreezing stage for Uber should include the changes and making that permanent in order to function more efficiently and reduce turnover rates (Chen et al. 2019). This change management model can be implemented within the organization with the aid of the management teams as well as cooperation from the drivers. However, this model is considered to be too simple for certain scenarios. If other models such as transformational leadership can be used in association with Lewin’s model of change, then the organization can attain greater heights of success in the long-run.
Another major model of change includes McKinsey’s 7-S Model which is one of the most complex yet most efficient change models. The 7-S includes structure, strategy, systems, style, shared values, staff, and skills (Rosenbaum More and Steane 2018).
Figure: McKinsey’s 7-S Model
(Source: Rosenbaum More and Steane 2018)
Uber needs to change their area of functioning by giving the drivers a status of permanent employees. This will ensure that the employees feel more secure about their jobs and therefore cooperate better with the organization. The strategic approach and system of generating greater revenues has to be altered by Uber. As per Parente, Geleilate and Rong (2018), the experiences can be customized by them, they can create loyalty programs, generate strategies to reduce driver downtime and a lot more can be done so that the company is able to branch out better. The style of Uber has to be altered in such a manner that they become a more sustainable organization, which in turn will reduce their chances of facing losses (Möhlmann and Zalmanson 2017). The shared values of Uber can be altered in order to ensure that they are more compassionate towards their drivers and look into the issues that they have been facing. The staff handling can be made better with an increase in the margins of incentives, training and equipping the drivers to handle the advanced technologies better instead of just excluding them from the business operations. Skill upgradation of the drivers is one of the major aspects of the transformation that Uber needs to bring about. Changing with the times is very important in order to ensure to keep up with the globalized world and to attain a greater edge over their competitors. The organization needs to schedule proper training sessions of the drivers in order to upgrade their skills (Ma Yuan and Ghafuraian 2018). This model however has some disadvantages as there is no empirical evidence to support this model.
Economic Factors
The inclusion of these change management models will ensure that Uber is able to manage better their stakeholders. Some of their stakeholders include investors, drivers, internet service providers and customers. It is very important for them to ensure that the drivers are satisfied so that they can provide better customer service. This will prove to be profitable for the organization as the profit margins will increase (Angrist Caldwell and Hall 2021). These aspects will attract a larger number of investors which in-turn will help Uber in spreading to various other countries where it is not operational. The changes within the organization will help it to spread its wings in all the major countries where it can earn greater revenues and this in-turn will prove to be profitable for the company. The organization will also be able to do better risk management with the aid of the required tools of change management. It will also gain a better competitive advantage over its other competitors in the global domain.
There are a lot of strategic ways with the aid of which the functionality of Uber can be made better. Uber works on the model based on “commissioning”, which is said to be its system of collecting revenues (Mendling Pentland and Recker 2020). The driver gets to keep 75% of the commission and the rest is taken by the company. Following this structure means that there is no fixed income on the part of the drivers. The drivers are also known as individual contractors; therefore, they do not receive any perks and benefits that are generally enjoyed by permanent employees within any organization. This is a major aspect that causes dissatisfaction among the employees. Employee satisfaction is one of the major aspects that adds to the success of an organization, therefore it is very important on the part of Uber to ensure that employee satisfaction is retained. In 2019 it had been seen that just 47.8% of the drivers of Uber were satisfied which a 10% drop as compared to 2018 (Feldmeyer et al. 2019). Therefore, the perks and benefits that a permanent employee receives should be provided to them so that they do not feel insecure about their jobs. It is very important for the organization to follow a “democratic management style”, as it includes the management coming to solid decisions with the input from all the employees. This management style will prove to be a more responsible way of handling the area of HR management of Uber. More efficient problem solving can be done with the aid of democratic management style within an expected timeframe of a maximum of 6 months. This style will also be advantageous as it helps to attain greater commitment from the employees, clear goals are set to the drivers, which helps them to act accordingly. The application of effective leadership style will also ensure a better functionality of Uber.
The utilization of “Transformational Leadership Theory” can also be a major leap towards a betterment of the style of functioning. This style of leadership will ensure that the company can deal with all the major changes caused as a result of the vastly changing method of functioning. Being able to cope with the changes is one of the major aspects of globalization (Volberda et al.2021). The adoption of this particular leadership style will ensure that the employees are satisfied therefore, bringing about a reduction in the turnover rates. It will also motivate the drivers to a great extent and help them to become more flexible under certain circumstances. It is expected that the organization will be able to achieve this change within a time span of about 1 year, with the aid of their managerial teams as well as the HR professionals.
Social Factors
Figure: Transformational Leadership Theory
(Source: Volberda et al.2021)
The adoption of transactional theory will also prove to be beneficial for Uber to a great extent. This theory relies on the aspect that the employees attain additional rewards and benefits in exchange for great productivity. The adoption of this theory will require constant monitoring and keeping a tab on the productivity of the drivers which will ensure that they are able to provide the organization with better profit margins. The inclusion of this theory within the area of functionality will provide a clear goal to the organization and will also ensure that there is satisfaction among the drivers. The more the satisfaction rates among the drivers the more is the rate of enhancement of productivity rates among the company,
The pandemic situation has also taken a toll on the organization which has proved to be disadvantageous for the economy of Uber. The organization has suffered a lot of losses due to the current situation but with the aid of certain steps they can overcome the situation (Göpfert Wamsler and Lang 2019). The supply and demand chain of Uber consists of the demand of the customers for rides and the supply of the available rides to them by the organization. This aspect has to be focused on to a great extent and it has to be ensured that the customers do not face issues in getting the rides. This will help in increasing the customer base for the company. Therefore, the greater the number of drivers that they appoint the better will the organization be able to branch out. The supply and demand chain are therefore one of the major aspects that has to be focused on by the company. A focus on greater availability of drivers has to be ensured by the organization. The price of the rides also plays a major role in attracting a wide range of customer base (Fettig et al. 2018). The rise in the prices of Uber rides in the recent past has caused it to lose a lot of their customers.
Figure: Supply Chain graph of Uber
(Source: Fettig et al. 2018)
The customers can be provided with loyalty points that they can use while using the application, this will ensure that they do not switch to other alternatives. The certain cases of indecent behaviors of the drivers towards their customers can be curbed if a proper background check of the drivers is maintained by the organization. This will boost the trust of the customers on Uber, which in-turn will increase their revenues. 80% of the cases of the drivers misbehaving with their customers that remain unresolved needs to be resolved by the company so that they can maintain a good image in the market. The organization has also to focus on the utilization of the latest technologies in order to ensure that it can attain a greater edge over its other competitors (Warner and Wager 2019). It is very important on the part of Uber that it ensures an upgradation to other faster technologies so that they can remain connected to their customers at all times. It is also very important on their part to keep a record of all the data of the transactions, for which they will require better and faster technological means. The utilization of Artificial Intelligence can prove to be very beneficial for Uber to cut down on their costs. Uber can also make the inclusion of Edge computing, virtual and augmented reality to ensure a better experience of the customers. The utilization of these technologies will ensure that the company can retain better connectivity and reach out to the remote locations and keep a backup of all the useful information. It is expected that Uber will introduce self-driving cars within the next 2 years with help from their investors (Ojha Acharya and Cooper 2018).
Technological Factors
One of the major management tools that can be kept a check on by the managers is known as “Balanced Scorecard”. It is a tool that is utilized to measure the strategic performance, keep a track of the completed activities by the employees, and to monitor the functionality of an organization (Thelen 2018). A balanced scorecard can also be known as a detailed and well-structured report. With the aid of a balanced scorecard of Uber a check on the aspects of their financial gains, new inventions, efficiency of the process of functioning and the customer satisfaction has been assessed.
As per various sources of reports Uber has been said to have lost more than 5 billion Dollars in the second quarter of 2019 and more than 1 billion Dollars in the third quarter (Eisape 2020). The organization also was said to have a low growth of revenue in that phase. Uber was denied to operate in one of the major hubs of the world, London due to a lack of their security measures, which had been a major blow to the economy of Uber. It had lost one of its major sources of business in the global market. They had also been banned in countries such as Bulgaria and Germany causing them to face staggering losses.
The organization has lost 2.4 billion dollars in the third quarter of 2021 as a result of investing in a Chinese ride-hailing app, Didi. However, with the aid of devising new efficient management strategies, the organization had reported over 1.64 billion trips in 2021, which is a 39% rise from the previous year (Verschoor 2017). Their consumers have been said to reach a count of more than 109 million people in the third quarter. This had increased the revenue of Uber causing the drivers to earn an aggregate of 8.6 billion dollars during that phase of the quarter. However, with the aid of new sustainable management steps the organization expects to increase their gross bookings by 51%. They expect to do gross bookings of about 25 billion dollars in the third quarter of 2022. The current net income of Uber is about 892 million dollars inclusive of a benefit worth 1.4 billion dollars as per the equity investments of Uber (Pepic 2018).
In 2020, Uber had announced the inclusion of new features that were very beneficial for the customers and to make the pickups seamless. A re-design of the application had included transparency on the status of the arrival of the ride. An inclusion of language translation has also been included in order to ensure that the customers do not face any issues in communicating with the drivers. Uber has very skillfully attempted to mitigate the issues associated with the discrepancies in the supply and demand of transportation. The application itself is an innovation that has facilitated the availability of transport within a short span of time with the aid of technology (Shapiro 2018). Uber has been trying it’s best to attain a greater edge over its other competitors such as Kaptan, Lyft, Ola cabs. The inclusion of advanced technologies such as the Big Data System, the organization has been thriving well enough in the competitive sphere of the market.
Change Management Models
Uber is considered to be one of the most efficient applications that focuses on the technology of driver-passenger matching. The “Flexible Labor Supply Chain Model” helps the organization to function more efficiently. Uber has attained a better competitive edge over the market with the avoidance of regulations (Rowlson 2020). The use of non-commercial vehicles, the use of which ensures that the drivers do not opt for costly insurances for commercial purposes, Therefore, Uber has a greater advantage over the other traditional modes of transportation. The innovative strategies formulated by Uber is focused on the development of self-driving cars, which is quite cost inducing.
Uber completes 14 million trips on an average on a global basis and aims at achieving a greater count. The present drivers of Uber are considered to be “independent investors” which therefore does not make the company liable for any losses of the drivers (Jin and Chen 2020). The perks and the benefits that permanent employees are supposed to receive are not attained by the drivers. This is quite unethical and demotivates the drivers, but however proves to be beneficial for the operation of the organization as it reduces the cost of the company in the long run.
Uber makes use of a rating of 5 stars, which is quite similar to that of CSAT. The efficiency of the drivers depends on the number of stars that they attain. This is one of the most effective measures to better understand the rate of satisfaction of the customers and then upgrade themselves accordingly (Siagian 2020). The utilization of this rating system is introduced by the organization in order to attain customer loyalty by improving on their areas of lacunas. The organization believes in providing the customers with transparency and a fair access to information about the driver. This instills a sense of security and trust of the commuters on the application. According to various surveys and statistical data collected from the U.S, it has been seen that the satisfaction rate has been about 35% in the year 2019 (Jin and Chen 2020). Uber has been focusing on spreading out its branches to the several remote places in the world to make transportation easier and to enhance the scope of customer satisfaction globally. The customer satisfaction rate has been increasing over the years as the loyal customers have been provided with coupons on rides or free rides in order to maintain customer loyalty all across the world. With the aid of various effective management strategies, the company has been aiming to attain greater heights in the future. Uber has also been aiming to give a tough competition to its other existing customers with the aid of strategic actions.
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