NATIONAL UNIVERSITY

College of Business and Accountancy Home Work

#2 1ST Semester AY 2017-2018 BUSINESS POLICY
AND STRATEGY (BBUPOST)
Score

You want to use a systematic method to study whether Uber Technologies Inc. is going
to be profitable. Use Porters FIVE FORCES framework and provide three logical
answers to EACH of the FIVE FORCES.

Answers:
Uber Technologies, Inc.
Porters 5 Forces Framework :

1. Risk of entry by potential competitors

a. Uber's use of technology as a technology-based company. New ride-sharing
companies might copy their concept and other competitors thereby to not only operate in
the same way as Uber but to also charge less for the same distance.
b. Uber also lacks protection from new ride-sharing companies that can unfairly charge
less for the same distance.
c. Uber is not immune to raising rates, hence making it easier for other firms to penetrate
the industry.

2. Intensity of rivalry among established companies within an industry

a. It's obvious that Grab is one of the major competitors of Uber, they have almost identical
business models and operations.
b. Another competitor of Uber is Taxi. Although Uber offers less charges, the availability
of Uber cars when you need them without using an app sometimes is the problem
compared to taxi's that is almost everywhere.
c. Angkas is also a competitor, a motorcycle ride booking service. It uses the same
technology, like Uber and Grab but Angkas failed to reach the success of Uber and Grab
have enjoyed.

3. Bargaining power of buyers

a. Customers don't usually use Uber services on a regular basis. They only use it only on
specific circumstances like being late for work or going to a scheduled event.
b. The growing number of ownerships of private cars which means some customers will
no longer be using Uber if they have a private car already.
c. Customers are sensitive to price variations due to existence of alternatives and rivals.
Customers can freely choose between Uber, Grab, Angkas or Taxi whichever is offering
lower price for the same distance.
4. Bargaining power of suppliers
a. Oil and gas suppliers is one of the major provider. If oil and gas is high, Uber will raise
their rate. This also causes a level of uncertainty and non-predictability of oil to power
vehicles.
b. Another leading supplier of the transportation industry is the availability of Drivers/Car
owners who will register their private cars to be part of Uber team.
c. Uber owns no vehicle among its fleets. As such, the companys business model is
highly dependent on drivers and partners owning their own rides.

5. Closeness of substitutes to an industrys products

a. Taxi, the closest rival and a potential substitute. A slight increase of Uber rates can
result in customer embrace of its closest rivals and substitute.
b. Public means of transportation that offer similar services at a cheaper rate can threaten
Uber's existence and operation.
c. There are many ride sharing companies and taxis out there but none of them came
close to what Uber is offering so it's safe to say that at this very moment, Uber is winning
but once those substitutes learned how to play their cards well, Uber might lose its reign
as PH's best ride sharing company.