Essay Sample on Understanding the Business Model

Published: 2022-11-09
Essay Sample on Understanding the Business Model
Type of paper:  Essay
Categories:  Uber Business plan Business strategy
Pages: 7
Wordcount: 1686 words
15 min read

A new business model in a shared economy gains most attention because of the explosive growth of the companies, for example, Uber and Airbnb foster collaboration and trust in the web. The main contributor to the shared economy is the internet- bound that is the big-data analysis, cloud storage availability, mobile devices, and social media (Zott, Amit and Massa 2011, p. 1019-1045). The internet raises the range and pace of the activities that individuals have been practicing for some time in a shared economy.

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The business model components are customer segments which encompass multiple target group's descriptions which the Uber Company is reaching. The understanding of targets groups is relevant since the company aims to create revenue by satisfying the consumer's needs. Another component is the values propositions, for example, the representations of services and products that are offered by the company to a specific customer group (Frederick and Barbara 2016 p. 19). The channels are building blocks that define the ways which company deliver the value proposition to the consumers, for example, sales channels, distributions, and communication that helps in creating a consumer experience.

Also, customer members build the relationships between customers and the company. Customers improve revenue in Uber operations hence links customer segments, services, and products together. The last business model element is the cost structure that responds to costs that the business company incurs and is crucial in computing revenues hence brings profits to the business (George and Bock 2011 p. 83-111).

How the model of case company's business was an opportunity and developed to a success

Business models of the case company's business help in value creation for the company's stakeholders and value appropriation for the organization owners hence developing into success. Value creation is obtained via providing proper and attractive value proportions to the stakeholders whereas value appropriation helps the case company's business to determine the ability to maintain the economic standards of the customers in a shared economy (Gregor and Hevner 2014, p. 217-239). Commercial organizations in a shared economy assist the global enterprise to obtain profits and market positions via functioning business models.

The business models of companies are globally scalable thus allowing international expansion of profitable companies. Organizational business model helps in preparing the analysis of market segmentation to determine the nature of the products to be sold in local markets thus defining long, medium and short-term strategy and set reasonable tasks or goals that measure the cost or benefit and progress of the business (Frederick and Barbara 2016, p. 19).It also assists in identifying success metrics, goals and objectives of the Uber Company.

Ansoff Model

Ansoff matrix entails the strategic planning tools that give a framework that helps senior managers, marketers, and executives to devise strategies that are needed in future growth. The Ansoff matrix explains why Uber is an existing product or service since it plays essential roles in the economy such as market penetration, product and market development, and diversification. Ansoff strategies assist the Uber organization to grow using existing services and products in the markets. The company increases sales for the products through distribution, promotion, price decrease, and products refinements. The company expands market using existing products and services by multiple customers segments, foreign markets, and economies of scale benefits the existing services and products in the market help in achieving products growth and development.

Role of Integration-Responsiveness Frameworks

The integration-responsiveness framework explains the strategies of the global or transnational and multi-national corporation, and it is mostly applied in the brewing industry to map the organization dynamics and multinational strategic change. Integration-responsiveness frameworks help the global integration to coordinates with Uber's value chain in all countries to achieve efficiency, cross-fertilization, and synergy to maximize the profits (Georg and Bock, 2011 p. 83-111). Local responsiveness and global integration are known as integration-responsiveness frameworks that help Uber managers in developing the understanding of trade between local responsiveness and global integration. Therefore, the Uber has global, transnational or multi-national internationalization strategy since it offers services to the foreign market.

External Factor Analysis of Uber


The opportunities of the Uber entails; raising consumer spending and economic uptick and low growth rate is an opportunity for Uber to get a new customer and improve market share. It provides the opportunity for the company to build revenues and new service diversity. The government opens procurement opportunity for Uber and contractors in the federal government. Stability in cash flow gives opportunities in an investment concerning products segments. The company can use cash in the bank to invest in new technologies and new products, and online channel customers have helped the Uber Company to open new sales channels.


The Uber faces the following threats; it is exposed to new currency fluctuations in a volatile political climate across the markets since it is operating in multiple countries. Skilled workforce shortage in global markets is a threat due to low profits growth in Uber markets. Low quality of commodity and counterfeit limitation is a threat especially in low income and emerging markets. Market disruptor and modern technologies developed by the competitors is a challenge to Uber industry in long and medium-term future. The uber company may face lawsuits in a given market that is the multiple laws and fluctuations concerning products standards in the market. Intense competition lowers profitability and sales in the Uber industry.


The strengths of the uber-company are; learning program and successful training that help in the development of employees hence lead to the skilled workforce which results in the improvement of Uber company production. Automation has improved the Uber products quality thus enables the company to scale down and scale up concerning the market demand conditions. Product innovations help in developing new products successfully.

The strength can be linked with opportunities and defend the threats when the Company achieves management department in customer relationships to acquire high consumer satisfaction and presents brand equity to potential customers. Uber has built expertise through venturing into new markets, and this has assisted the organization to acquire new revenue and diversify risk in economic cycle in the market. The raw materials suppliers that help the company to overcome bottlenecks in the supply chain

In analyzing external factors of the Uber, it is crucial to apply Porter's five forces; for example, powers of buyers, the power of suppliers, new entrants, rivalry among existing companies and substitutes of services or products. Another firm can replicate uber business model without capital requirements. Strong forces increase competition while weak forces reduce the competition. The buyer power is the major forces and is high or moderate if the consumers are more than sellers, they purchase a high volume of products while the buyer power is low when the substitute is not available, and buyers are less than sellers.

The Uber Value Chain

In analyzing the internal factors, there are basic strategies that enable Uber to obtain competitive advantages that are the focus, cost leadership and differentiation. Uber value chain is analytic tools that assist in identifying the competitive advantage and sources of value in transportation technology in the global economy (Cannon and Summers, 2014, p. 24-28). The drivers of Uber need smartphones to use app software of Uber. The Uber users for example customers have access to mobile websites or smartphones thus helping them to use the service easily. Uber uses media and print advertising, promotion, experiences, events and public relations as a marketing strategy to communicate the message to the target clients' strategy.


Uber is the most popular business platforms admired by entrepreneurs and innovators. Uber utilizes the business model platforms and indirect networks effects between the demand side, and supply-side. The business model explains the way the company delivers, captures and creates values. The model was oriented at the business practitioners manages business companies through model innovation. A business model describes the key elements of the organization activities in a shared economy. This assists in the better understanding of the roots of the success of companies in the shared economy and the business operations.

PESTLE analysis helps in identifying the challenges/ problems or threats that face the Uber Company today and future.

Uber Company faces challenges of an insurance policy as it holds accountability of the driver when the user is in an accident. Political factors that affect Uber are government stability, levels of corruption, bureaucracy, and the impacts of lobbying groups (Cannon and Summers, 2014, p. 24-28). Business models adhere to regulations and rules which fails to differentiate the Tax Company and Uber.

Economic factors entail how the Uber in a sharing economy operates based on intellectual and physical resources that takes place in the economy where Uber operates. Customers connect with the driver via the app. Uber has grown since inception where some countries face unfair competition against taxis. The economic factors that affect Uber business are inflation rates, macroeconomic climates, unemployment rate, and interest rates. Economic factors for example labor cost and changes in income for tax rates and consumers affect the Uber business operations. In social factor, the taxi services of the Uber are accessible and user-friendly thus individuals show interest to the Uber due to affordable ride.

Technological factors also affect the Uber as individuals post views on social media platforms. App gives service information like traffic, weather, and estimated ride charges. The users can sometimes pay chargers via the APP.

Uber faces threats as a result of labor needs, employee's safety, technical usage laws, and copyright laws. Safety and health rules are essential to maintain and sustain global reach. In environmental factors, Uber impact on the environment is not promising because of traffic congestion and fuel usage increase. Therefore, the Uber needs environmental friendly products which assist in gaining brand value and company sustainability. Also, Uber faces threats due to country's choice as it offers services without proper approval in regulatory authority, for example, France suspended Uber pop due to illicitly activity.

Also, the Porters five forces help the Uber to understand the interest of the industry, identify less or more attractive market or industry, identify risks and opportunities, how profits are distributed in a market and anticipate the changing trends in Uber industry.

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