Uber, a worldwide name in cab services was co-founded in 2009 by Travis Kalanick. It had its mobile app officially launched in 2011. Since then, Uber has been subjected to various protests and litigations. The height of it came on the 21st June, 2017 when Travis Kalanick, the CEO was forced to resign due to pressure from the big investors. This was a follow up of the inability of the CEO to ensure a good employee relations in the organization. The firm is said to have an aggressive culture which encourages its managers to flout local regulations. The culture of the organization deteriorated to the point that some Silicon Valley programmers termed it as “poisonous” while some employees were being advised by friends to quit the organization.
Recently, Uber’s license was revoked by Transport for London (TfL) citing Uber’s conduct and approach as lacking in responsibility especially in relation to issues including reporting serious criminal offences, obtaining medical certificates, and how it carries out background checks on drivers. Also, there is a controversial piece of software called “Greyball” which can be used to prevent regulatory bodies from gaining full access to its app. According to Davey Alba, a science and tech writer based in San Francisco, “all these legal matters have been a major issue with Uber and they are a fall out of toxic workplace culture, cut throat business tactics and occasional public harassment”. This could have been avoided if environmental factors were considered in the management of the business. In this piece, I will highlight the key environmental factors that are important and the consequences of neglecting them.
Environmental factors in a business can either be external or internal. These are factors that can impede or accelerate the growth of a business and they have to be critically analysed in any business environment for any business to survive and stand the test of time. One of the models used in conducting an analysis on a business is called PESTEL. This is a consideration of the Political, Environmental, Socio-Cultural, Technological, Economic and Legal factors of an environment on the business and further analyse them to see what opportunities are available, the potential challenges and the risks they portend to the business. In the case of Uber, it is obvious that technology was taken advantage of when the app was launched in 2011 but it neglected the political and legal factors and its risks on the business. Political factors consider the level of involvement of government activities on the economy and how it can affects the business. This can include extant laws and policies whose implementation might impact the business.
On the other hand, legal factors include regulations, labour laws, tax laws, consumer protection laws and other policies that are for providing law and order in a particular geographical environment. Uber’s experience of facing different litigations rising from the toxic culture of the company to the misogynistic approach of Travis Kalanick to non address of reports of sexual harassment to protest from drivers in June 2014 in London, Paris, Madrid and Berlin and even in Nigeria in May 2017 all attest to the consequences of neglecting an environmental factor. These were all responsible for the resignation of the former CEO in June 2017. Meanwhile, by the time he was resigning, the brand image of the company was already in deep water. That was what the new CEO, Dara Khosrowshahi who resumed in August 2017 had to face when he joined the organization. Amongst other issues to fix, he needed to repair the battered image of Uber. He was yet to settle down when the TfL declined to renew the Uber license in London, a decision that will affect over 3.5 million consumers and 40,000 drivers.
However, he has risen up to the task and he has apologized with an open letter agreeing to the fact that certain mistakes have been made and that the company got some things wrong. He promised the consumers that the company will change with a renewed commitment to serve with humility, integrity and passion. Regards the culture of the organization, he has promised the employees that there is going to be a boost in confidence and make them proud once again to be part of the organization. Due to the consequences of neglecting environmental factor which include declined brand image, recurring losses from 2012 to 2016, boardroom rift and a demoralized human resource, the new CEO is expected to boost the reputation of Uber, return it to profit as it lost $2.8bn in 2016, deal with rising competition who have taken advantage of the crisis to provide alternative to consumers and address sexism concerns. The Uber experience is an example of the consequence of neglecting environmental factors in business analysis.