UBER PESTEL Analysis

Uber PESTEL Analysis

The rise of the sharing economy has affected several major changes around the world. When we are talking of sharing economy, we cannot help talking of Uber. The company has a staggering reach in 45 countries. All it does is to connect the rider and the passenger and takes a small cut for itself that generally lies between 5 to 20%. The idea is quite simple. You just need to tap a button on the Uber app to get a ride. Founded by Travis Kalanick and Garrett Camp, the brand that started as a simple app to request premium black cab in just a few metropolitan areas, has acquired a distinct position as one of the most talked of brands in the 21^st century.

Since its foundation in 2009, the brand has acquired high level of commercial success. For its drivers, it is a means to earn money flexibly. However, for the millions around the world that always had difficulty getting a cab, Uber has proved nothing less than a blessing. Still, Uber’s ride has not been so easy. It has been bumpy and also full of controversies of kinds. This PESTEL analysis analyses the various forces that affect Uber’s business around the globe.

Political:

Uber has ignited charged political debates globally. Several governments are concerned over the regulation of the sharing economy. On the one hand, while the sharing economy and Uber have their pros, they also have their cons. Uber’s rise has had a disruptive effect on the business of other traditional taxi services. This has given rise to opposition which even turned political at several stages. Even the authorities are concerned if they need to bring new laws for the companies like Uber.

In US, Uber is facing lawsuits and the Californian authorities ruled that it must treat its drivers as employees and not as contractors. These political issues are not limited to one corner of the world. In South Africa too, Uber is facing similar issues. It is facing issues related to ‘licensing there. The South African government started impounding the Uber cars because the drivers did not hold taxi permits. Thus, political challenges can have a deep effect even on the business of Uber. The rivalry between Uber and Lyft has also acquired political colors which is heating up with time.

Economic:

Uber is affected by and affects economic factors. Sharing economy has generated employment for people on a large scale who would otherwise be searching for jobs everywhere. It has created unique jobs and generated employment for a very large number of drivers. Uber has had other benefits too. It has reduced the costs of searching for taxis too and not just that, the traditional taxi services too were forced to cut down prices to not to be thrown out of competition.

It has generated extraordinary competition that has become a cause of worry for the traditional services. Low cost service providers are always ahead in terms of competition even in times of economic downturn. It is because people are always looking for cheaper products and services and especially so during times of economic recession. So, when it comes to being affected by economic factors, their effect on Uber is not so deep. Uber has seen very fast growth in the face of intense competition mainly based on low prices and great customer service.

Social:

The social aspect of businesses is also just as important as the others. It is because the two have a mutually beneficial relationship and none can hold without the other. So, for Uber too, it is important that it manages a socially acceptable and respectable image. It has gained fast acceptance and popularity based on two things. First come the prices and second is its quality of customer service. These are its points of differentiation. It offered the riders an advantage that was previously not available to them. Such businesses do not face big hurdles in order to find growth. Uber’s growth has been both rapid and easy. Something that finds popularity in the society will definitely rise. However, that does not mean Uber has not faced any controversies. It has faced controversies related to competition, laws, human resources and even related to background checks for its drivers. Still, if Uber has emerged as a tough challenge for its competitors then it is to a large extent for its social image has been strong.

Technology:

Technology is at the root of everything big in the 21^st century and to imagine growth without technology is difficult if not impossible. Behind Uber is also excellent technology. Uber grabbed a large piece of the ride sharing market based on excellent technology that provided both smooth access and great experience for drivers and the riders. Uber has integrated several special features into its app to provide an extraordinary experience. From geolocation to direction, push notifications, payment all are integrated into a single app.

Uber acts just as a platform to connect the two ends – the riders and the drivers. However, if not for excellent technology, this kind of differentiation would not have been possible. Uber uses technology to provide people what they need or want and when they want it. It was difficult to call a taxi as easily without long waiting periods. Now, Uber has managed it so well that one can call the nearest cab within few minutes. So, technology is one of the very important factors driving Uber’s fast growth. Moreover, Uber has continued to improvise and uses technology intuitively for marketing purposes too.

Environmental:

Sustainability has become an important concern for most businesses in the 21^st century. Sustainability concerns have risen about ride sharing services like Uber and Lyft too. Uber started a pilot project called Uber Green where the riders can request a green ride at the tap of a button.

Legal:

Legal compliance is an important challenge before the businesses and being unable to comply may result in large fines for businesses. The rise of Uber has come as a challenge for legal authorities, which are in a fix over whether the laws applying to traditional services must apply to it or not. Uber is facing legal problems not just related to taxes, but human resource issues too. A case was brought against two drivers of Uber related to the minimum wages last year. In 2015, California state regulators ruled that Uber must treat its drivers as employees and not as contractors. In France too, Uber was slapped with fines over illegal driving without proper permits.

Sources:

https://www.europarl.europa.eu/RegData/etudes/BRIE/2015/563398/IPOL_BRI(2015)563398_EN.pdf

https://www.cnbc.com/2017/01/30/the-battle-between-uber-and-lyft-has-become-political.html

https://fortune.com/2016/10/28/uber-legal-lawsuits/