In a recent article, Fortune magazine questions Uber’s approach to global markets. Apparently, Uber has recently announced that it is loosing more than $ 1 billion in China annually, which is not a small sum to loose even for a unicorn valued more than $60 billion. One could easily attribute the losses to the fact that Uber is still engaged in a battle over market share with local competitor Didi Kuaidi. However, as the Fortune article correctly points out, local competition may just be one factor. There are also regulatory hurdles, friction with taxi drivers and unions, and challenges with consumer adoption – in China, and in other markets from “Rio to Rome“, as the Voice of America recently remarked. Similar troubles are reported in a recent online article by TechCrunch, which reports of Uber’s trouble with “aggression, legislation and government opposition” in Colombia. On the one hand, Uber has been remarkably sensitive to local conditions. For instance, they added motorbike service in India and auto-rickshaw serve in Pakistan, which is a smart way to localize its service offering. On the other hand, it seems as if Uber has often ignored the basics of international business that every student worldwide learns from standard textbooks. These basics include the necessity of a sound analysis of the external environment in foreign target markets. There is an abundance of simple analytical tools such as the PEST framework, the CAGE model or Porter’s Five Forces that can assist in these matters. Such analyses would probably have revealed to Uber that next to economic conditions (such as local competition) there are also political-administrative factors such as the regulatory environment, or socio-cultural factors (such as the importance of networks) that would pose serious questions for their market entry strategies. When it comes to regulation, rather than its aggressive John Wayne-style approach of shooting first and asking later, asking for permission first may have been better in some countries. For the same countries, a longer-term approach of building relationships first before executing on a strategy might also have been advisable. Then again, Uber is successful in many markets, and ignoring local conditions for the sake of a more or less standardized model may have been part of a deliberate strategy. There is, however, also the option that Uber is still a young company that will learn and get better overtime. Sometimes, learning from mistakes is the best way to learn.
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