UBER Technologies Inc. Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

UBER Technologies Inc Case Study Help

Return on Equity (ROE):

The return on equity of the organization had increased to -57% in the year 2019 from -14% in the year 2018. The declinein the return on equity represents the fact that the organization has an income of the organization had declined to a lower level and is becoming inefficient at to increase the shareholder value and to maximize the profits. The reason fora lower return on equity as compared to 2018 is the decline in shareholder’s equity of (7385) US dollars and a decline of $ 997 US dollars in Net income.

Dividend per Share (DPS):

The dividend per share decreased to -0.000000008US dollars per share in the year 2019 from 0 US dollars per share in the year 2018. This mainly represents thenegative cash flow position and inefficient organizational performance in the sharing economy marketensuring the fact that the shareholders of the organization do not follow stable dividend policy. However, the increase in dividend might indicate that the organization is raising its dividends to attract additional equity investors to finance the aggressive growth and expansion strategy of the organization.

Shareholder Value Added (SVA):

The shareholder value-added performance measure is used for the analysis of the efficacy of the management and profitability of the organization. The performance measure is considered important for the evaluation of whether the shareholder value is added or not i.e. company’s profits have exceeded the overall cost. It was thus evaluated that Uber created shareholder value worth 684million US dollars which indicates that the organization outperforms the expectation of its shareholders.

However, the organization created significantly less value as compared to last year as shareholder value worth -562 million US dollars was created in 2018. The reason for less value created is due to the decline of -2880 million US dollars in the net income and investments in total assets.

The shareholder value added is calculated by deducting the cost of capital from the net operating profit after tax. The cost average cost of capital is calculated using the current weighted of capital of 9.5% ad multiplying the difference of total; assets and current liabilities by the weighted average cost of capital. (CHEN, 2020)

Dividend Yield:

The dividend yield decreased from 0 percent to -0.00000002% percent from the year 2018 to 2019. This is primarily assumed due to the increase in the share price of the Uber.

Total Shareholder Return and Value Creation:

The evaluation that the total shareholder return of 0 percent was achieved in the year 2019 which is calculated using a dividend yield of -0.00000002%percent. Also, the value created for shareholders was estimated to be -5152129249million US dollars which are based on the cost of equity. (Michael Canly, 2018), the market capitalization of 60684673350million US dollars and total shareholder return of 0percent. The value created for shareholders is calculated by multiplying the equity market value with the difference between shareholder return and the cost of equity. (Oana, 2020)

Findings:

Based on the analysis of the internal and external environment of the organization, the core findings of the research report represents the key points regarding its performance which are as follows:

The uber is application software and can be accessed easily it provides just tap to logout from the application.
Uber has become very common/prominent among a variety of individuals because of its fastest-growing organizational background. Uber shared 67% of market shares in providing transport and 24% in food delivery.
Uber manages to publicize its brand among 50 countries. Various organizations have given their hands for the brand recognition of Uber which includes Toyota, Soft Bank Group Corp. and many more.
The dividend per share decreased to -0.000000008US dollars per share in the year 2019 from 0 US dollars per share in the year 2018.
The basic earnings per share of the organization declined from 0.000002 to -0.000005 dollars per share.
The market capitalization of 60684673350 million US dollars and total shareholder return of 0 percent.
The organization created significantly less value as compared to last year as shareholder value worth -562 million US dollars was created in 2018 as compared to-2880 million US dollars in 2019.

Recommendation:

With the wide-ranging adoption of mobile communication and the advanced development of technological approaches in the online sharing platforms, the sharing economy had demonstrated significant growth for the past many years. The sharing economy is known to exhibit an increased trend related to consumer behavior associated with the change in the provision and consumption of products and services. Although Uber has been considered as the form of sharing economy disrupting the traditional market of transportation and accommodation through the theory of disruptive innovation. (Zhenfeng Liu, 2019 )But, Uber has been experiencing a significant loss in revenue growth as shown in Appendix B – Income Statement 2019.

Improve products and services:

Considering the performance of Uber, the organization is recommended to bring significant improvement in the process. This is primarily due to the reason that Uber has been demonstrating dramatically slow growth since 2018 representing negative profit margin and net profit. Thus, focusing on bringing improvement in the products and services would significantly allow the organization to meet the needs and demands of the customers. This will allow in the occurrence of few flaws based on devotion and energy. It would also serve as a crucial part of the effort for effective quality management of the products and services.

Offer a reward to passengers:

On the other hand, to increase the sales of the services provided the organization should offer its loyal customer base with reward. The provision of reward grabs consumer attraction and bring improvement in revenue growth by 5 to 10 percent. It serves as a key factor in customer retention which assists the organization to profile its best customers based on their data. Reward offerings tend to increase demand for the service even in slow seasons making it easy for the customers to trust to rely on.

Advance Booking:

Furthermore, Uber can provide its potential customer base with an advanced booking option leading to increased consumer attraction, management of existing ones to allow customers with easy and convenient traveling service. Because most of the reservations either a hotel booking or a traveling seat is known to be booked less than one day in advance. Easy customization, confirmation email, and free cancellation would eliminate the prevalence of possible misunderstandings that might occur at the time of reservation. As free cancellations allow other potential customers to make reservations making it convenient for the customers to manage.

Cost reduction:

In contradiction, despite the provision of transportation service in about 785 metropolitan areas throughout the world, the application is primarily used by no less than 110 million subscribers. (WHALEN, 2020)the inconvenience and high-ride price ranges restrict passengers to avail services from Uber. Therefore, Uber is recommended to reduce the cost i.e. from premium pricing to affordable cost of the services.

Conclusion:

Uber is a software-based program whose business strategy is to attract individuals who are willing to travel around with minimum costs fixed by the company.It provides a link between both the passengers and the driver which will provide benefits to them like they can contact each other in order of any miss guidance of the location. Despite the fact,Uber has been considered as the form of sharing economy disrupting the traditional market of transportation and accommodation through the theory of disruptive innovation.Considering the performance of Uber, the organization is recommended to bring significant improvement in the process in order to bring improvement in the market share and net profit.................................

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