Question

Are there any driving forces in the industry in which UBER company is competing? If so, what impact will these driving forces have? Will they cause competition to be more or less intense? Will they act to boost or squeeze profit margins? List at least two actions UBER company should consider taking in order to combat any negative impacts of the driving forces.

Answer 1

Exactly there are many driving forces that UBER is competing with in the industry right now and they can depicted as the porter's five forces also which can be briefly elaborated as follows with all the actions and reasons you've asked in your question, so please read it carefully:

A Threat of Potential Market Entrants - Uber lacks protection from new ride-sharing firms that can unfairly charge less for the same distance. At the time of its establishment, Uber's co-founders parted with a sizeable amount of capital. On the other hand, upcoming rivals are expected to lesser initial capital to jump start their operations.

The Threat of Substitutes - A Substitute is a common force in competitive business environments. Network Transportation Industry is an umbrella body that numerous member organizations that can substitute Uber. Taxi services, for instance, is the closest rival and a potential substitute. Taxi service is traditional to cities with ride-sharing operations like New York. As such, their abundance is enough to restrict Uber from raising the service rates.

Rivalry with other Competitors - Lyft is one of the major competitors of Uber. The company has an almost identical business model and operations. Not only are the two firms competing for market share but also the suppliers. A modern business environment demands corporations to target a customer base within a given geographical locations to cut on the operation cost.

Buyer Bargaining Power - Customers do not necessarily require Uber services on a regular basis. In fact, only specific circumstances like lateness for work or a scheduled event make the customers to order its services. Customers can freely choose between Uber, Lyft, or other emerging ride-sharing entities. The switching cost is also lower for customers because Uber’s free application software only demands customer registration.

Supplier Bargaining Power - Uber owns no vehicle among its fleets. As such, the company’s business model is highly dependent on drivers and partners owning their own rides. In fact, Uber utilizes an outsourcing strategy for its labor and assets to persons that meet the terms and conditions for use of their maiden web application. It is also hard to substitute particular drivers.