Question

The PESTEL analysis focus on key components of the micro-economic environment. Cite two components of the micro-economic that are or could have a major on the impact on Uber and support your selection with specific information related to UBER?

Answer 1

A PESTEL analysis is the acronym of Political, Economic, Social, Technological, Environmental and Legal aspect of a component in an economy. It is done to study the market and make situational analysis before commencement of an organizational activity in an economy. Micro-economic analysis always focus on the individual contribution to the economy like households, workers and business whereas a macroeconomic model focus on the whole economy and issues like growth, unemployment etc. UBER is an American multinational that focus on providing riding services, food services and micro-mobility services and is estimated to have more than 110 million users across the globe. Some of the major micro economic components are Scarcity of choices and choices available in the economy, efficiency, price system, type of competition, labour market etc. Let us now analyse two major microeconomic concepts that has impact on the operation of UBER services

1.Scarcity of a choice and availability of options [demand and supply]: All the microeconomic concepts revolve around the theory of supply and demand. Here, the demand refers to various scarcity of choices available to the consumer in the market. Before the concept of UBER networking was introduced, the riding services followed a traditional approach that gave only less options for the rider. UBER revolutionised the riding experience across the globe. By combining technology with customer servicing, it was able to find a place for itself. For example, consider a customer who has more time to reach a destination and would like to spend less money. Here, UBER provides the networking via UBERPOOL which offers this facility. For those customers who have pets to move around, it provides specific service to that also. UBER Auto and UBER Eats are also innovative practices that have been able to quell the thirst of customers in having wide variety of choices available in the market.

2.Pricing mechanism: Pricing mechanism refers to the way in which consumer pricing are fixed so as to maintain the consumer base of an organization. UBER offers varied pricing mechanism to satisfy a customer according to his/her needs. As discussed above, for riding experience it offers varied mechanisms like UBER GO, UBER POOL and Luxury services. The UBER GO provides faster services at market prices whereas the UBER POOL services focus on integrated sharing rides which can cater to many of the customers at the same time. Although it takes more time to travel, it offers a lower pricing model so as to compensate for the time spent. The Luxury services offers the customer with luxury vehicles at increased costs. Thus, with this varied pricing mechanism, it could attract more customers thereby increasing the customer base of the organization.

                                              Although there have been several critics to the working culture of UBER, that it could hamper the traditional organization in these sectors, they are providing better services to the customers and hence have a major impact in the society.