uber case study

Running Header: UBER and the Taxi Industry Case Study

UBER and the Taxi IndustryCase StudyMAN 3025

Group 7 Group Assignment #3

Group MembersMonica Amy Sandoval,

Morgan BurnsWesley DolinskiJonathan Padron

Chris GipsonAdrian Wise

UBER is a transportation service that provides convenient, inexpensive, and safe services to customers around the world. The allure of UBER is that it allows customers to use technology to find a ride nearby easily and quickly. UBER has been successful due to their company qualities of directness, openness, efficiency, and simplicity. In over 300 different cities, UBER is able to provide multiple services to every kind of customer with the intention of accommodating all reasons for travel and final destinations. Although UBER has found great success worldwide, UBER still faces forces that shape their competition within the transportation industry.

UBER and the Taxi Industry Case Study

1. UBER has made an aggressive and quick impact on the taxi industry since their company

launched in March of 2009. Although UBER has altered the way consumers hail for taxies, the company faces several internal and external forces that could hinder their sustainable growth within the taxi industry. When examining a SWOT analysis of UBER, there several strengths, weaknesses, opportunities, and threats that will impact the future of the company. UBER’s strength is that they are easily accessible. Consumers can use the mobile app to communicate and track nearby taxies and makes transactions quick and easy. Their weakness is pricing. The price of the taxi tends to change based on time, location, and destination, in which could hinder the usage of the app in high volume cities and areas. Their opportunity is expanding into the international market. Since UBER is predominantly a mobile app, they can quickly expand the business to other countries through the global mobile network. Their threat to the company is the government. UBER currently operates outside of certain government regulations that have drawn many lawsuits for illegal cab practices. UBER is already banned in several cities and other countries. UBER has many positives for a 7-year-old startup company, but also has an equal number of negatives. UBER’s competitive position within the taxi industry is strong but if the company cannot turn its weaknesses into strengths and eliminate the threats, the company will soon be outgrown by their competition in the industry.

2. The supplier pressure is mitigated on UBER’s end by providing flexible hours to drivers

and allowing them to use tactics such as surge pricing to their benefit. UBER also provides the capability of the UBER driver to use their own personal car. One problem that needs to be addressed that affects supplier power is that UBER drivers can sign up for initial offers and leave, hurting the consistency. One way to solve this issue could be using incentives to encourage drivers to stay with continuous rewards for hard work and great service. Incentives could be seen through having driver priority or becoming a preferred, senior UBER driver after staying with the company for a certain length of time, thus attracting more customers to decide to ride with you.

The buyer pressure is mitigated on UBER’s end through technological advantages, the quantity of drivers available for customers in different locations, and the quality of choices available for purchase. With the technological advancements within the UBER app, the customer knows exactly who is coming to get them, what they look like, what car they are driving, and the driver's exact location when they are in route to pick them up. The customers are also able to pay for UBER’s service through an online credit card transaction which creates a fluid, fast, and safe transaction. The customer has the option to choose between different UBER services according to the situation and the accommodations they desire. UBER could have an advantage with the customer if they did more thorough background checks on their drivers to ensure the absolute


safety of the passengers as well as allowing the driver and customer to be more descriptive about their preferences. For example, if two girls were traveling home late on a weekend night, they may prefer to be picked up by a female UBER driver.

Competitive pressure is decreased through UBER’s expansive services, investors, and the fact that UBER is not subject to certain regulatory requirements. The expansion process has made UBER the most popular choice for cheap and fast transportation. This amount of expansion gives UBER a competitive edge. Investors, such as Baidu, have provided UBER with a degree of local knowledge and insurance to avoid problems that have occurred in the past. UBER drivers can avoid extensive government regulations that other competitors have and can therefore avoid hefty fines and penalties.

UBER can mitigate this threat of substitution by taking some intelligent aspects of these other companies and applying it in their own company in a more efficient and customer effective way. For example, like BlaBlaCar, UBER can provide more information about driver and customer preferences. Another example would be to use local authorities to license the drivers, like Hailo does, to show that the company takes customer security seriously. UBER could continue to meet the demands of a lot of people by extending their services as they have with their different UBER services just as Didi Kuidi has done. This would allow UBER to show potential customers why they should choose UBER because of their all-encompassing services and focus on the needs and feedback of the customer.

Some threat to entries that UBER is facing now include being accused of aggressive behavior toward their competitors and the states drafting legislation to update government regulations. Aggressive competition could be solved by changing the company mindset to a positive one, learning to share customers because one sole company cannot handle 100% of transportation needs, differentiating the company, and by realizing that competitors can open you up to more business through potential partnerships. UBER is already the first choice that comes to most people’s minds when making their transportation decisions, so if UBER focusses on maintaining their competitive edge within the company, they will not have to be so overly aggressive towards competitors.

3.UBER has a sustainable competitive advantage over alternative taxi services in the

United States. That is not to say that UBER is impervious to failure. The company must continue to grow and adapt as the market and technology changes. UBER must remain ahead of local and national regulations that could derail UBER as a ride-share service. If UBER intends to succeed in the marketplace, it must keep one step ahead of its competitors. Then UBER will continue to have a sustainable competitive advantage in the U.S.


UBER announced recently that they would employ a new fleet of automated Tesla vehicles (computerworld.com, 2016). This will give UBER an advantage over the competition by removing the human element from the driver seat. UBER will assume insurance, payments, and maintenance for the vehicles. Due to the environmentally sound nature of the Tesla vehicles, UBER will receive green credits for the purchase of the electric fleet. This will give UBER an advantage over competitors its competitors like Lyft and Wundercar.

UBER has struggled to gain ground in Asia where local operators like Sidecar, Zipcar, Easy, Grab, and Didi are already established in the ride sharing industry (htxt.co.za, 2016). The trouble in Asia and India could be due to improper research and development of media applications, advertising, and cultural norms not present in the United States. In order to gain a competitive advantage over other ride-sharing companies UBER must take into account cultural differences, advertising saturation rates, and economics of the markets they are entering.

UBER has taken the necessary steps to stay relevant in the United States. The verdict is still out if they will continue to be successful in the rest of the world. UBER has done a good job of planning, marketing, and lobbying in the U.S. UBER is not as strong overseas due to cultural, economic and advertising markets, which require a modified approach different from what UBER has established in the United States. The long-term success and competitiveness remains to be seen. UBER will only remain relevant if they are willing to change with the ever-changing ride sharing industry, technology, and regulations.


References

Computerworld.com. (2016) news. Referenced fromhttp://www.computerworld.com/article/2945817/telematics/uber-will-buy-all-the-self-driving-cars-that-tesla-can-build-in-2020.html htxt.co.za. (2016) News. Referenced fromhttp://www.htxt.co.za/2016/08/25/uber-most-used-taxi-app/

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