Uber Porter’s 5 Five Forces (2021)


In order to understand the competitive environment of Uber in 2021-2022, it is important to analyze Porter’s five forces. The first force is the threat of new entrants into the market. This refers to how easy it is for a new company to come in and compete with existing players. In general, industries that are more fragmented have higher threats of new entrants because it is easier for a new player to enter the market and gain market share. The second force is the threat of substitutes. This refers to whether there are alternative products or services that can be used instead of the product or service being analyzed. For example, people could use taxis or public transportation rather than ride-sharing services like Uber. The third force is the bargaining power of buyers. This refers to how powerful the customers are in terms of being able to negotiate lower prices or better deals from the company. The fourth force is the bargaining power of suppliers. This refers to how powerful the suppliers are in terms of being able to negotiate better prices or deals with the company. The fifth and final force is rivalry among existing competitors. This refers to how intense the competition is among existing players in the industry. Let’s now go over Porter’s Five Forces of Uber in more detail.

 

Uber Threat of New Entrants:

The threat of new entrants is high in the ride-sharing industry. This is because it is a fragmented industry, meaning there are many players competing against each other. In addition, it is easy to enter the market since there are no major barriers to entry. For example, all that is required to start a ride-sharing company is a smartphone and an app. As a result, new players can easily come into the market and compete with Uber.

 

Uber Threat of Substitutes:

The threat of substitutes for Uber is also high. This is because there are many alternative products or services that can be used instead of ride-sharing services like Uber. For example, people could use taxis or public transportation rather than ride-sharing services. In addition, there are many other ride-sharing services like Lyft and Didi that people could use.

 

Uber Bargaining Power of Buyers:

The bargaining power of buyers is high for Uber. This is because customers are able to negotiate lower prices or better deals from the company. For example, passengers can often get discounts on their rides by using the promo codes provided by Uber. In addition, customers can choose between different ride-sharing services like Uber, Lyft, and Didi. As a result, Uber has to compete hard for customers’ business.

 

Uber Bargaining Power of Suppliers:

The bargaining power of suppliers is low for Uber. This is because there are many alternative products or services that Uber can use instead of ride-sharing services. In addition, suppliers are not essential to Uber’s business and the company does not need them to operate. As a result, Uber can easily switch to other suppliers if it needs to.

 

Uber Competitive Rivalry:

The rivalry among existing competitors is high for Uber. This is because the competition is intense among existing players in the industry. For example, Lyft and Didi are both major rivals of Uber in the ride-sharing market. As a result, Uber has to compete hard for customers’ business.

 

Uber Porter’s Five Forces Conclusion:

Overall, Porter’s Five Forces analysis of Uber shows that the company faces many threats from new entrants, substitutes, buyers, and existing competitors. However, the company is also well-positioned to compete in the ride-sharing industry due to its strong brand name and technological capabilities. As a result, Uber is likely to remain a major player in the ride-sharing market for years to come.

 

References:

Uber. Annual Report (2021). Retrieved from Uber website:

Lyft. Annual Report (2021). Retrieved from Lyft website:

Didi Chuxing. Annual Report (2021) Retrieved from Didi website:

Porter, M.E. (1985). Competitive Advantage: Creating and Sustaining Superior Performance. New York, NY: The Free Press. ISBN-13: 978-0684810872)

 

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