Strategy
Uber Ansoff Matrix is a marketing planning model that helps the ride-hailing giant to determine its product and market strategy. Uber Ansoff Matrix illustrates four different strategy options available for the business. These are market penetration, product development, market development and diversification. Uber Ansoff Growth Matrix Within the scope of Ansoff Matrix, Uber uses all four growth strategies in an integrated manner: 1. Market penetration. Market penetration refers to selling existing products to existing markets. Uber engages in market penetration via application of various sales promotions techniques. These include distributing promo codes to allow users to have a discount for their next ride and “Uber VIP” loyalty program that rewards riders with special access to highest-rated drivers. Moreover, users can earn free rides by inviting their friends to sign up and ride with Uber. 2. Product development. This involves developing new products to sell to existing markets. The global transportation technology company consistently increases its service range. Currently, its extensive range of services include Uber X, Uber XI, Uber Pool, UberGO, Uber AUTO, Uber Access, Uber MOTO, Uber Premium and Uber Rush. Importantly, each new service introduced by the ride-hailing giant utilizes the same technological platform and competitive advantage of the business. 3. Market development. Market development strategy is associated with finding new markets for existing products. Launched only in San Francisco in 2009, the company currently operates in approximately 10000 cities worldwide. The global transportation technology company takes into account important aspects local culture when pursuing expansion strategy. The largest mobility platform in the world is expected to further engage in new market development business strategy. 4. Diversification. Diversification involves developing new products to sell to new markets. This is considered to be the riskiest strategy. Initially launched only as a taxi company, the ride-hailing giant has entered takeaway…
SWOT is an acronym for strengths, weaknesses, opportunities and threats related to organizations. The following table illustrates Uber SWOT analysis: Strengths 1. First mover advantage and global market leadership 2. Low operational costs 3. Effective implementation of ‘Think Global, Act Local’ strategy 4. Uber ecosystem 5. High levels of user convenience Weaknesses 1. Damaged brand image due to a series of various scandals 2. Increasing losses of the business 3. Uber business model is easy to imitate 4. Only technically savvy individuals can use Uber services 5. Low earnings by Uber drivers Opportunities 1. Increasing popularity of sharing economy 2. Self-driving cars 3. Improving brand image through CSR programs and initiatives 4. Increasing internet penetration in the global scale 5. Increasing service range Threats 1. More legal actions in certain countries to ban Uber from operating 2. Further intensification of competition 3. The risk of new scandals and ethical issues 4. Growing protests and retaliations from traditional taxi services 5. Drivers leaving Uber due to low earnings Uber SWOT analysis Strengths in Uber SWOT Analysis 1. Uber is the largest global taxi technology company in the world and it has a first mover advantage in the ride-hailing segment in the global scale. The company has effectively utilised its fist mover advantage to build momentum and achieve global expansion in a short period of time. Moreover, thanks to first-mover advantage, the word Uber has become synonym for ride-haling internationally and the new term uberisation has emerged describing commodisation of various services. Uber is an undisputed market leader in ride-haling the global scale. The largest mobility platform in the world has more than 93 million monthly active riders in approximately 10000 cities worldwide. As illustrated in figure below, Uber is much more popular than its closest rival Lyft in the largest…
Uber business strategy consists of the following 4 pillars: 1. Increased service range to cater for the needs of great amount of customers. Extensive offering is rightly considered as Uber competitive advantage. Depending on their budget, the occasion and purpose of ride, customers can choose among Uber X, Uber XI, Uber Pool, UberGO, Uber AUTO, Uber Access, Uber MOTO, Uber Premium or Uber Rush. It is important to note that the ride-hailing giant has been consistently increasing its range of service on the basis of the same platform and therefore, utilizing the same set of competitive advantages. Accordingly, each additional service comes for little additional cost for the company, effectively contributing to the bottom line. 2. High level of user convenience. Uber offers unprecedented user convenience at multiple levels. No need to call dispatch, wait in a line, or wave from a curb. Customers can tap ‘Request” on their phone from comfort of indoors and wait for notification that their driver is “arriving now.” Even in dense urban locations Uber drivers usually arrive in 1-2 minutes. When they reach their destination, customers just say thanks and get out of the car. No need to reach for cash or credit card. The payment is automatically charged to card on customer’s Uber account and receipt is sent via email. Moreover, dispute resolution with Uber is easy. Each ride receipt includes a map and a GPS track, customers can complain if their driver took a longer route and Uber is prompt with refunds. 3. Cost-saving through innovation. Extensive user conveniences described above come for a little cost for the company, thanks to the app that integrates innovative features and capabilities. Therefore, it can be argued that operating at low costs thorough innovation is placed at the core of Uber business strategy. Moreover, first…
Tesla ecosystem at the moment comprises electric vehicles, charging infrastructure and solar systems. Energy solution products such as Powerwall, Powerpack and Solar Roof, enable homeowners, businesses and utilities to manage renewable energy generation, storage, and consumption. The following are important considerations related to Tesla ecosystem: 1. Tesla mobile app is the linking point of various elements of its ecosystem. Although Tesla ecosystem is rather small at present, nevertheless, it is highly sophisticated. Tesla mobile app provides customers control over many features of cars. The same app is also used to control solar panels and Powerwall so that customers have power flow detail and control in a single place.[1] The alternative fuel vehicles manufacturer can integrate additional range of products and services into the same app to further strengthen Tesla ecosystem. 2. Supercharging networks are competitive advantage and important element of Tesla’s ecosystem. Unlike its competitors, Tesla heavily invested in developing and spreading its supercharging networks from the early stages of its business operations. Currently, Tesla has more than 20,000 Superchargers globally, which is unparalleled in electric auto industry. Growing numbers of charging stations strengthens ecosystem of Tesla and creates solid foundation for long-term growth of the business. 3. Immense potential for development. There is a consensus among industry analysts about immense potential of Tesla ecosystem. Analysts forecast that “the electric vehicle will not be simply a plug-in replacement for the legacy gas-burner, but rather a part of a new paradigm that includes charging infrastructure, vehicle autonomy, new ownership models and renewable energy.”[2] Moreover, self-driving cars are widely seen as inevitable future of transportation for medium to long-term prospects. There are differences in strategies of leading market players to establish their firm presence in self-driving segment. On one hand, companies such as Alphabet Inc.’s (Google) and Apple are seeking to form…
Tesla McKinsey 7S model illustrates the ways in which seven elements of businesses can be aligned to increase effectiveness. According to the framework strategy, structure and systems are considered as hard elements, whereas shared values, skills, style and staff represent soft elements. McKinsey 7S model stresses the presence of strong links between elements. Specifically, according to this framework, a change in one element causes changes in others. As it is illustrated in figure below, shared values are positioned at the core of Tesla McKinsey 7S model, since shared values guide employee behaviour with implications on their performance. Figure 11 McKinsey 7S model Hard Elements Strategy Tesla business strategy is based on the focus on electric cars driven by company’s mission to accelerate the world’s transition to sustainable energy. The alternative fuel vehicles manufacturer pursues product differentiation business strategy. Tesla cars and energy products are differentiated on the basis of performance, design and environmental sustainability. Moreover, ownership of distribution via company-operated stores and galleries in shopping centres and other places is placed at the core of Tesla business strategy. Moreover, the alternative fuel vehicles manufacturer positions low costs of Tesla electric vehicles ownership as one of the solid bases of competitive advantage. Structure It is difficult to classify Tesla organizational structure into a single category due to its unique nature. Inability or unwillingness of CEO Elon Musk to delegate key tasks has certain implications on organizational structure of the company. Specifically, Musk has more people directly reporting to him than any other auto company and turnover amongst Tesla senior executive team is high. Moreover, there is no organizational chart or public list of senior leaders at Tesla. Nevertheless, Tesla organizational structure is closer to divisional structure compared to other known structures. The operations of the electric automaker are divided…
Tesla Ansoff Matrix is a marketing planning model that can be used by the alternative fuel vehicles manufacturer to make strategic decisions. According to Ansoff Matrix, there are four different strategy options available for businesses: market penetration, product development, market development and diversification. Tesla Ansoff Growth Matrix Within the scope of Ansoff Matrix, Tesla uses all four growth strategies in an integrated manner: 1. Market penetration. This strategy involves selling existing products to existing markets. Tesla uses market penetration strategy extensively. The company is focused on selling its Model S, Model X and Model 3 electric vehicles, Powerwall 2 and Powerpack 2 energy storage products, as well as, solar panels, inverters, racking, electrical hardware and monitoring devices in the US and 35 other countries[1]. 2. Product development. This strategy implies the development of new products to sell to existing markets. Tesla engages in new product development infrequently. This is mainly due to overly high cost of new product development in electric vehicles and power storage sectors. In Battery Day event in September 2020, CEO Elon Musk announced that the electric car maker had plans to enter into mining business. The company acquired the rights to a 10,000-acre plot in Nevada. In this site it plans to extract the metal using simple table salt, and would build a lithium refinery to supply a new factory in Texas. While the initial plan for Tesla is to use lithium for its own needs as raw material, the electric automaker can start selling this expensive material to others as well. 3. Market development. Market development strategy involves finding new markets for existing products. Tesla is evaluating a number of new markets to enter, India being in the shortlist. CEO Elon Musk “indicated it was the company’s Indian-born chief financial officer, Deepak Ahuja, who was…
Tesla business strategy can be broadly classified as product differentiation. Accordingly, the electric automaker differentiates its vehicles on the basis of sustainability, performance and design. Tesla business plan announced by Elon Musk in company’s website blog in 2006 was the following: Build sports car Use that money to build an affordable car Use that money to build an even more affordable car While doing above, also provide zero emission electric power generation options Tesla mission statement is to accelerate the world’s transition to sustainable energy. Tesla business strategy aims to accomplish this mission via the following three key principles: 1. Focus on electric cars. Tesla was founded on the belief that “people didn’t need to compromise to drive electric – that electric vehicles can be better, quicker and more fun to drive than gasoline cars.”[1] Accordingly, the company produced its Roadster, Model S, Model X and Model 3 fully electric cars that quickly became successful among the target customer segment attracting billions of dollars of advance payments. Tesla “aims to disrupt the automotive industry by creating many innovative pieces that fit together.”[2] 2. Ownership of distribution. Tesla does not work with dealers and distributors. Instead, the electric automaker is engaged in direct sales through its website. Moreover, Tesla has company-operated stores and galleries in shopping centres and other places popular among the target customer segment in the US and 35 other countries and regions worldwide. 3. Low cost of ownership. Tesla cars run on electricity, which is considerably cheaper than oil and gas. Moreover, owners of electric vehicles are offered various tax breaks and incentives from local governments in some areas. Tesla has a calculator on its website to tell customers exactly how much they save. Low cost of ownership is one of the main sources of Tesla competitive advantage. 4. Unconventional…
Apple McKinsey 7S model illustrates the ways in which seven elements of businesses can be aligned to increase effectiveness. According to this model, strategy, structure and systems represent hard elements, whereas shared values, skills, style and staff are soft elements. McKinsey 7S framework stresses the presence of strong links between elements in a way that a change in one element causes changes in others. As it is illustrated in figure below, shared values are positioned at the core of Apple McKinsey 7S framework, since shared values guide employee behaviour with implications in their performance. Apple McKinsey 7S model Hard Elements in Apple McKinsey 7S Model Strategy Apple pursues differentiation business strategy with a particular focus on the design and advanced features and capabilities of products. The company aims to benefit from the first mover advantage to a maximum extent as it was the case with introduction of iPod, the first device of its kind that stored thousands of songs with simple shuffle capabilities through songs and the development of Macintosh, the first computer to use a graphical user interface. Accordingly, Apple products and services are generally more expensive compared to the competition. Moreover, Apple business strategy involves the creation of a sort of closed ecosystem, where it’s various devices and software sync easily and work well with each other. Advantages the company gains from this strategy include high switching costs for customers and this provides the opportunities to leverage relationships with existing customers to offer other products and services. Furthermore, the multinational technology company has developed a strategy to reduce dependence of the business on the sale of iPhones. This strategy involves putting greater emphasis on services divisions of the business and more investments on research and development of new products and services. The iPhone maker has also specified…
W.W. Grainger business strategy relies on two business models depending on the type of customer: high-touch solutions and endless assortment. High-touch solutions business model focuses on large companies with complex needs mainly in North America and Europe. The endless assortment business model, on the other hand, targets customers with less complex needs with a broad range of products sold online. Endless assortment business model comprises Zoro in the US and MonotaRO in Japan. Grainger business strategy consists of the following three elements: 1. Widest range of MRO products. An extensive assortment of products is Grainger’s unique selling proposition. The global industrial supply company sells about 1,7 million types of products supplied by about 5000 suppliers worldwide[1], along with offering value-added services such as inventory management and technical support. 2. Offering differentiated sales and services. Grainger pursues differentiation business strategy and differentiates sales and service practice on the grounds of speed and convenience. The global industrial supply company employs thousands of product segment specialists that can advice about technical aspects and specifications of products offered. Advanced onmi-channel sales practice is another ground for differentiation for Grainger. The industrial supply company utilizes a wide range of sales channels such as online, mobile devices, sales representatives, local branches and product vending machines on customer sites. 3. Many branches in strategic locations. Grainger is one of the B2B distributors with the most branches. The company has 31 distribution centres in strategic locations and 457 branches worldwide. In the US alone, the industrial supply company has 16 distribution centres, 249 stand-alone branches, 32 onsite branches and 2 will-call express locations.[2] The great numbers of branches and their strategic positioning allows Grainger to delivery MRO products to end-users in a shortest period of time. W.W. Grainger Report contains the above analysis of W.W. Grainger business…
Founded in Illinois, US in 1928, W.W. Grainger Inc. is a B2B distributor of maintenance, repair and operating (MRO) products and services. The global industrial supply company has more than 3,5 million customers and about 25000 employees worldwide. (Fact Book, 2020). The global MRO products distributor works with approximately 5000 suppliers internationally. In 2019 Grainger generated revenues of USD 11,2 billion, 3% increase compared to the previous year (Annual Report, 2019). Grainger pursues differentiation business strategy. Specifically, the B2B distributor differentiates on the basis of products, offering the widest range of MRO product categories. Grainger’s use of differentiation business strategy also extends to differentiated sales and services. The company delivers its products with high level of speed and convenience and employs highly qualified sales representatives with deep technical knowledge. Grainger has hierarchical organizational structure and its organizational culture is based on diversity and inclusiveness and value for technology and innovation. Moreover, focus on teamwork can be highlighted as one of integral components of Grainger organizational culture. Business development strategy for the B2B distributor integrates market penetration, product development and market development strategies. The industrial products distributor immensely benefits from the economies of scale and the company has an extensive experience and knowledge in selling MRO products. At the same time, Grainger has certain weaknesses that can have negative implications on long-term growth prospects of the business. High level of indebtness is a major issue for the company and as of December 2019, Grainger’s consolidated debts amounted to USD 2,4 billion. Moreover, with total 72% of revenues generated in the US in 2019 (Fact Book 2020), the B2B distributor is over-dependent on the home market in the US. W.W. Grainger Inc. Report contains the application of the major analytical strategic frameworks in business studies such as SWOT, PESTEL, Porter’s Five Forces,…