Uber is a technology company that operates an app allowing drivers and passengers to coordinate transportation services. It has experienced exponential growth since launching in 2010. Uber recently raised $1.4 billion in new funding at a $17 billion valuation. The company's primary revenue comes from taking a percentage of what drivers earn from each ride. Uber faces regulatory challenges as it disrupts the traditional taxi industry. The author analyzes Uber's business model and competitive strategies, and recommends a strategic growth plan to expand into new service areas like on-demand delivery to maximize the company's potential.

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JasonVineis
MGMT 450; ProfessorKeidel
July25 2014
“Uber Strategic Plan”
 Analysis
 Organization’s value chain & design
Uber isa privatelyheldventurecapital technologyfirmfoundedbyTravisKalanickandGarret
Camp.Uber has developedan applicationthatcoordinatesdriverswithpassengersfortransportation
purposes.Uberlauncheditsfirstappbasedservice inSanFranciscomid-2010 and has been
exponentiallygrowingyearoveryear.Recently,Uberreceivedfreshinjectionof capital tofurther
expandtheirproduct“We have some excitingnewstoshare thismorning.We have justcloseda
financingroundwithsome of the leadinginvestorsinthe world,raising$1.2B of primarycapital at a
$17B pre-moneyvaluation.The total raise will be about$1.4B witha secondclose of strategicinvestors
soon.We are thrilledtohave toptierinstitutionalinvestors,mutualfunds,private equityandventure
capital partnersjoiningus.”1
Uber’sprimarysource of revenue comesfromapercentage of the income driversreceive for
theirservice.“Uberkeeps20%of grossrevenue andgivesthe resttoits drivers.So$10 billionof gross
revenue wouldequate to$2 billionof netrevenue.”2
The benefitsof thischainare two fold,increased
jobsfor the transportationsectorandincrease incustomervalue asthe service isfarsuperiorinservice
and qualitycomparedtotraditional cabcars. Likewise,the value of thisservice isnotonlylimitedto
transportationbut,deliveryaswell.RecentlyUberhasbeentoyingwithsome new waystheir
technologycanimprove otherservicedbasedsystems. “Iscream,you scream,weall screamforUber ice
cream!Today,taxiapp company Uberwill serve up ice cream on demand to customersin 144 cities
1 http://www.businessinsider.com/uber-raises-1-2-billion-2014-6
2 http://www.businessinsider.com/uber-revenue-2014-6

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acrossthe globe.It's as simple as ordering an Uberdriver. Hit therequestbutton forthe "Ice Cream"
option on the app and waitfor the nearestice cream truck or luxury UberIce Cream-branded carto drive
up.”3
 Institutional, Corporate, and, Business (competitive strategies)
Uber has clearlypursuedadisruptive posture withinthe transportationservicessectorand
maintainsastructure where membersof the Ubercommunity,driversandpassengers,abide bythe
rulessetforthby Uber andnot the highlyregulatedcabcompanies. Likewise,Uberhasbuiltstrong
brand recognitionandcontinuestocreate value bybolsteringitsname andimage rapidly. “Uberisthe
mosttalked abouttopic in ourindustry.I havebeen in this industry fora while and haven’tseen anything
“upsetthe masses”quitelike Uber.”4
 Competitive context (5-force analysis, technology and product life cycles)
Uber is a first to market Company, which can have positive and negative effects. First,
being first to market with this technology has been very beneficial to Uber’s brand recognition
and the results are evident in the media recognition and early and swift financial success.
Unfortunately, they have been bearing the brunt of all regulatory and legal ramifications due to
their disruptive technology. This leaves the door open for imitation, leveraging the new found
knowledge of this new business model. Several smaller me too companies have sprouted up to
put pressure on Uber’s price model and are learning from their mistakes “.5
The Drivers they hire are the service providers and currently operate under the control
of Uber, if Uber need to continue to foster good business relationships with the drivers, raising
Uber’s percentage could create lower driver supply. This could be problematic if increase in
demand rises and there are no drivers to handle the increase.
3 http://money.cnn.com/2014/07/18/technology/mobile/uber-ice-cream/
4 http://www.lctmag.com/technology/article/42556/uber-app-brings-disruptive-innovation
5 http://www.nytimes.com/2014/07/12/upshot/uber-lyft-and-a-road-map-for-reinventing-the-ride.html?_r=0

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At this point, being a new, innovative technology, and, market disruptor, I feel there are
no immediate threats of substitution. In fact, the threat is on Uber’s competition as consumers
now have a better option within the transportation sector.
 Financial position
As mentioned, the financial position of Uber is very strong, as the recent influx of cash
leaves management in a great position to invest and grow the business in multiple directions.
With the low cost of maintenance and minimal overhead gross margins should remain high and
most of the cash can be focused on R&D, as well as, growth opportunities.
 Planning
 Plausible strategic directions for Uber
Uber has several optionswithregardtocorporate,business,and,Institutional strategiesmoving
forwardwithitsdisruptive technology.I’mgoingtotry andlinkthese potentialavenueswithananalogy
involvingthe optionsone hasina game of poker;hold,fold,and,raise.
Hold;Uber can continue itswar path,goingcityto city battlingregulatoryinstitutions,fighting
riotingunionworkers,and,tinkeringwiththeirdynamicprice model.Aswe lookwere the technologyis
on the technological s-curve,we cansay withconfidence thatthistechnologyisinitsinfancyandcould
sustainreasonable growthforseveral yearif nota decade unchanged.If we lookatwhere this
technologywouldreside somewhereinbetweenfermentationphase andtake off.

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Likewise,we can see the huge potential uptickinridershipbasedonwhere we canspeculate uberfalls
on the technological adoptioncurve.IbelieveUberhasleftthe innovatorspace andisstronglyplacedin
the earlyadopters’portionandprimedtoenterthe earlymajority“Asearly adopters,completely fed up
with thetaxi situation in the city, tried Uber,they tookto blogs,socialmedia and every other way
possibleto tell their friendsaboutthisnew way to ride.”6
Downside tothisstrategyisthe competition
will soonbe fierce asthe technologyislearnedandimprovedbyotherfirms.EventhoughUberwill have
brand recognition,grossmarginswill mostlikelydecrease dramaticallywhenthe marketgetssaturated
withcompetition.
Fold;Uber couldalsoand take the cash and run.Several large firmswouldlove tohave an
opportunitytoacquire the name Uberand its patents.Thinkof Amazonandtheirgoal for “same day
shipping”,addthe Google tothe listand the ideasare boundlessi.e.“GoogleCar”.Uberis valued at
roughly17 billiondollars “Ubervalued at$17bn afterraising $1.2bn in new funds” 7
The listof potential
buyerswouldnotbe shortand the potential tofuse the technologywithothervaluestreamsisendless.
The up side to thisstrategyisobvious, anice paydayfor stakeholdersof Uber,the downside tothis
strategyisthe potential forfoundersof ubertobe the nextZuckerbergorgateswithfortunesbeyond
belief.Also,whencompaniessellof like thatthere are noguaranteesthe value streamgrowsand
matures.Oftentime corporate culture islostandultimatelybrandrecognition.Palmtriedthisandfailed
“And then a long series of ownership switchesthrew theplatform’sfuturein the toilet. The result?
Microsoft’sPocketPCplatform(nowWindowsMobile)”8
Uber’sCEO,Travis Kalanick,andhiseclectic,
sometimesarrogant,personalitywouldneverallowthisscenarioanyway,Ifeel he hasbiggerandbetter
strategiesforhisbuddingcompany.
6 http://growthhackers.com/companies/uber/
7 http://www.theguardian.com/technology/2014/jun/06/uber-value-new-funds
8 http://www.davidlouisedelman.com/technology/failed-tech-companies/

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Lastly,youhave the raise option,where astrategyof grander scale ispossible.Thisisthe growth
strategy. Imagine all of the scenariosoutlinedwithinthe buyoutoption.Uber’spotential isboundless
and nowtheyare receivingcapital toputthisnew technologyexistingandnew value streams.For
instance,Insteadof Amazonsnextdayservice,How about“Uberday service”but,insteadof Uber
utilizingbulkywarehouses,theycouldutilizeinventorylocatedinexistingbrickandmortar stores.For
example,you’reworkingona projectat home andneeda stupidpipe fitting,or2”x4”, you justpull outa
smart phone andrequest“Uberday” and take a lunchbreak,afterluncha deliveryvehicle arrivesand
dropsthe itemsoff,backto workyougo. Now youmightsay; are the deliverychargesgoingtobe
outrageous?Well,whenyoufactorineconomiesof scale,volumeprice discounts,and,membership
fees,the costscan be mitigatedtoa reasonable premium.Likewise,sayyouhave adate and don’tknow
whatto do, or where togo, “Uber concierge”cansuggestand setupthe whole thing;transportation,
tickets,stay,and,dinning,all withacouple tapsonthe screen.The wayto approachthis strategyis
startingwitha robustmarketingplanthattrialsthisnew service ona smallerscale tosee whatworks
and whatdoes not.Aftercollectingthe dataUber can confidentlyinvestlarge sumsof cashto launch
intobiggermarkets.
In Conclusion,Iwouldsuggestutilizingthe lastscenarioandcommittingtofull scale growth
strategy.Imagine aworldwere goodsandservices are instantaneouslyavailable andthe swipe of a
screenor tap of a keyboard.NotonlywouldUbercreate manynew revenue streamsbut,anew
economyall together.Insteadof deliveringpizzas,youngadultsorevenolderadultscanfindwork
deliveringjustaboutanythingyoucanpickup at a store withoutthe hasslesof traffic,lines,and,people.
I finditveryinterestinghowimagesof the future drive innovation.Forexample,the creative
innovationsillustratedin“Backto the Future”capturedthe audience andsome ideasare now reality
almostthirtyyearslater.Uber issetto provide ourimaginationwithsome neatandconvenient
technology’sif theyimplementthe rightstrategies.

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 References
(1)Kovach, S. (2014, June 6). Uber Raises $1.2 Billion At $17 Billion Valuation. Business Insider.
Retrieved July 28, 2014, from http://www.businessinsider.com/uber-raises-1-2-billion-2014-6
(2) Blodget, H. (2014, June 11). I Just Heard Some Startling Things About Uber .... Business Insider.
Retrieved July 28, 2014, from http://www.businessinsider.com/uber-revenue-2014-6
(3) Gayles, C. (2014, July 18). Meet the new ice cream man: Uber. CNNMoney. Retrieved July 28,
2014, from http://money.cnn.com/2014/07/18/technology/mobile/uber-ice-cream/
(4) Uber App Brings Disruptive Innovation. (n.d.). - Technology. Retrieved July 28, 2014, from
http://www.lctmag.com/technology/article/42556/uber-app-brings-disruptive-innovation
(5) Irwin, N. (2014, July 11). Uber, Lyft and a Road Map for Reinventing the Ride. The New York
Times. Retrieved July 28, 2014, from http://www.nytimes.com/2014/07/12/upshot/uber-lyft-and-a-
road-map-for-reinventing-the-ride.html?_r=0
(6) Uber - What's Fueling Uber's Growth Engine? - GrowthHackers. (n.d.). GrowthHackers Uber
Whats Fueling Ubers Growth Engine Comments. Retrieved July 28, 2014, from
http://growthhackers.com/companies/uber/
(7) Rushe, D. (2014, June 6). Uber valued at $17bn after raising $1.2bn in new
funds.theguardian.com. Retrieved July 28, 2014, from
http://www.theguardian.com/technology/2014/jun/06/uber-value-new-funds
(8) Ten Tech Companies That Blew It in the Past Two Decades. (n.d.). (David Louis Edelman).
Retrieved July 28, 2014, from http://www.davidlouisedelman.com/technology/failed-tech-companies/