The Uber Company’s Environmental Context

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Table of Contents

Introduction
PESTEL
Sustainability Issues Regarding Technological and Environmental Factors
Five Forces
Sustainability Issues Regarding Competitive Rivalry and New Market Players
Conclusion
References

Introduction

Environmental concerns are more acute than ever in the 21st century, when most countries are suffering from deteriorating infrastructure and congested roads. Queries like these force countries to look at how the entire transportation sector operates, including Uber. Experts from the non-profit organization Union of Concerned Scientists found that the widespread use of taxi aggregators increased harmful emissions into the atmosphere by 69% (Akintola, 2020). People have become much less likely to use public transport, walk and ride a bike. Experts say Uber could cut emissions by electrifying its fleet or incentivizing customers to take rides together (Kim & Suh, 2021). Uber has already announced its readiness to reduce emissions into the atmosphere; however, its efforts are not enough yet. Uber plans to introduce cash incentives for EV drivers in the US, but the vast majority of trips on Uber platforms are still made in gas-powered vehicles (Bliss, 2020). Companies have tried to promote ridesharing, but customers do not want to share cabs with strangers.

The principal purpose of this report is to examine the environmental context of Uber’s operations and draw conclusions about its prospects and safety. Pestel’s and Five Forces assessment systems were chosen as the mechanisms due to their comprehensive list of political, social, competitive, environmental, and other factors (Shabanova et al., 2017; Goyal, 2020). Today, environmental protection is not a trend but an urgent need. This Uber report is just a small part of a larger global effort to create renewed sustainable practices.

PESTEL

Political Factor

For a long time, Uber has faced a global debate fueled by virtually every country where the company operates. Most countries are concerned about the joint economy principles and their imperfections. The last political debate that Uber drivers are company employees and not contractors have led to a lawsuit in California (Chowdhury, 2018). Many countries are currently checking the boundaries between the individual enterprise and the degree of state influence.

Economic Factor

Uber and the social sharing economy have provided a large part of the population with stable earnings and public benefits. In addition, Uber is the number one choice among people for a favorable price tag that is much lower than the costs of other taxi companies. It causes reasonable dissatisfaction among competitors; however, it forces them to keep the price tag within acceptable boundaries (Akintola, 2020). Even the conditions of an economic downturn, such as a pandemic, do not prevent Uber from remaining profitable due to this stable pricing strategy.

Social Factor

Uber has a huge loyal customer base due to its exceptional service. The Uber app works without any complications; the customer can track the time and place of the car’s arrival, set special requests to the driver. An attractive price tag and positive brand reviews attract more and more users. The company has the resources to provide quality advertising, but most clients learn about the service through favorable reviews from people they know (Khavarian-Garmsir et al., 2021). The company’s prices have increased lately, but people choose Uber because of its comfort and safety.

Technological Factor

Uber is part of the global transportation system, so this industry sector always needs timely innovation. Uber is one of the de facto pioneers of mobile apps for users. Successful integration of geolocation, and open chat with the driver gives the client a sense of absolute security even in another country (Kim & Suh, 2021). In addition, contactless payment is available in the car, which is convenient in the post-COVID era (Punt et al., 2021). Many Uber cars used a protective screen between the driver and passenger for safety reasons during the pandemic.

Environmental Factor

Sustainability is currently a top global concern, so Uber performs a lot of research and regulation on this issue. At first glance, environmental problems are coherent; it is difficult not to draw a parallel between the increase in traffic density and air pollution. However, numerous studies do not witness significant changes if the taxi service is replaced by public transport (Bliss, 2020). The current urban infrastructure can not withstand such a major shift.

Legal Factor

National governments are actively discussing possible new laws and restrictions on the regulation of the transport system. Such concerns also affect other countries than States, for example, South Africa. Its government recently declared that it has the right to confiscate a car if the Uber driver does not have a special license (Chowdhury, 2018). Another question at the state level is the distribution of salaries in the transport sector; and whether Uber complies with the established rules.

Sustainability Issues Regarding Technological and Environmental Factors

Technological and environmental factors are inextricably linked to sustainable development. The transport sector has a significant impact on the environment. A lot of work is going on to create safer modes of transport that could change the way the service works in the future (Khavarian-Garmsir et al., 2021). Uber company is also looking for solutions and proposes to launch Uber Green with low-emission options based on hybrid or electric vehicles.

Five Forces

The Threat of New Market Players

The transport sector is already fed up with proposals operating on similar mechanisms. The company’s business model is in the public domain and is often used as the foremost booming taxi service example. New companies can easily recreate a similar prototype without additional financial support for external research (Akintola, 2020). Current market leaders such as Uber and Curb are regularly trying to defend their territory and core market power.

The Threat of Substitute Products

The public often talks about the environment and the need to replace taxis with public transport. Also, the constant increase in gasoline prices and increase in the cost of taxis pushes people towards alternative methods (Chowdhury, 2018). However, it is too early to talk about a significant change in the usual transport routine. No infrastructure can withstand the mass transition from personal to exclusively public transport.

Power of Customers

Consumers of any service can be divided into two so-called categories: price-oriented customers and quality-oriented customers. People who care about quality pay special attention to reliability, availability, and security. Price-conscious customers always go where it’s most beneficial (Angrist et al., 2021). Uber is an extremely successful combination of exemplary factors to attract both customer bases (Punt et al., 2021). The organization provides a high level of comfort, a good price range, and unconditional security due to the big name of the brand.

Power of Suppliers

Service providers are taxi drivers who, through a common platform, find customers and profit from it. The influence of the drivers increases significantly, as they often form trade unions, where they jointly defend their interests. However, the state does not want to recognize Uber taxi drivers as contract workers and continues to increase its legal influence (Punt et al., 2021). The bargaining power of suppliers has a huge impact on the business model and activities.

Competitive Rivalry

Uber is present in more than 80 countries and is very successful. Like any organization in the transportation industry, Uber is extremely competitive. Many companies have similar working mechanisms, price ranges, and comfort levels. The Asian market is still a challenge due to a large number of locally competitive services (Khavarian-Garmsir et al., 2021). However, statistics show that Uber is still the top choice among users. A large number of respondents cite Uber as the first choice for hailing a cab.

Sustainability Issues Regarding Competitive Rivalry and New Market Players

These factors have a major impact on the future course of sustainable practices. Demand for the service creates supply and, as a result, more companies are engaged in transportation (Khavarian-Garmsir et al., 2021). More cars, respectively, emit more harmful substances into the air and pose an increased threat to pedestrians. The correct approach would be state regulation of competition in the market to prevent the overloading of the infrastructure and the environment.

Conclusion

The study showed that Uber is a stable company with an established competitive level and public respect. Numerous studies do not see the possibility and necessity of a radical transition from taxis to public transport (Khavarian-Garmsir et al., 2021). However, the expanding transport sector has a direct impact on the environment. The most significant factors of the negative influence of road transport on humans and the environment are the following: air pollution, environmental pollution, noise, vibration, and heat generation (energy dissipation) (Bliss, 2020). Uber wants to solve this concern by switching to hybrid or electric cars. This decision is radically dependent on the level of current technology, but it is a big step towards a more sustainable future.

In this case, it is necessary to pay attention to the threat of new entrants into the sector. The transport services market is extremely attractive and always draws many new competitive organizations. In conditions of heavy traffic congestion, the uncontrolled withdrawal of new vehicles can worsen the environmental situation and, as a result, the quality of life. These issues can be resolved at the administrative level with the introduction of an appropriate restriction (Akintola, 2020). This case is especially sensitive due to the limitation of personal freedom to engage in one’s own business. However, the state of ecology over the past few decades does not tolerate half measures in favor of profit (Bliss, 2020). Society has to pay more attention to environmental protection, and its transformations due to technological progress, environmental pollution, and irrational use of resources.

References

Akintola, K. (2020). Uber marketing and business environment marketing and business environment global MBA.Berlin School of Business & Motivation.

Angrist, J. D., Caldwell, S., & Hall, J. W. (2021). Uber versus taxi: A driver’s eye view.American Economic Journal: Applied Economics, 13 (3), 272-308.

Bliss, L. (2020). Ride-hailing isn’t really green. Bloomberg.

Chowdhury, M. (2018). Is Uber a passing fad? India Forbes.

Goyal, A. (2020). A critical analysis of Porter’s 5 Forces model of competitive advantage.SSRN.

Khavarian-Garmsir, A. R., Sharifi, A., & Hajian, H. A. (2021). The social, economic, and environmental impacts of ride-sourcing services: A literature review. Future Transportation, 268–289. Web.

Kim, H. J., & Suh, C. S. (2021) Spreading the sharing economy: Institutional conditions for the international diffusion of Uber, 2010-2017. PLoS ONE 16(3): e0248038.

Punt, M. B., van Kollem, J., Hoekman, J., & Frenken, K. (2021). Your Uber is arriving now: An analysis of platform location decisions through an institutional lens.Strategic Organization.

Shabanova, L., Ismagilova, G., Salimov, L., & Akhmadeev, M. (2017). PEST analysis and SWOT analysis as the most important tools to strengthen the competitive advantages of commercial enterprises.Mediterranean Journal of Social Sciences, 6(3), 705.

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