Founded in 2009 by Travis Kalanick, Uber provides transportation service in U.S.

Question

Founded in 2009 by Travis Kalanick, Uber provides transportation service in U.S., European, and Asian cities. In the year 2014, its gross revenues were $2.957 billion; net revenue after commissions and incentives, $495 million; cost of revenue, $400 million; operating expenses, $661 million; for an EBIT of $565 million. The original Uber model of operations was for the driver to use his or her own vehicle and offer services as and when they liked. The Uber webpage for drivers emphasizes that drivers can use their own car, set their own schedule, and get paid weekly. More recently, Uber has arranged for drivers to rent cars to provide Uber services.

Uber clients book and pay for rides through the smartphone. As noted in Business Insider’s article by James Cook, after each ride, the Uber client rates the driver on a scale from 1 to 5. If a driver’s rating falls below a particular level, Uber discontinues her or him from offering the service. Uber also allows drivers to rate clients. In January 2015, Uber extended fare cuts from the largest U.S. markets to 48 more cities. Uber asserted that the lower fares would benefit clients and drivers because the higher demand would allow drivers’ incomes to increase. The higher demand makes the drivers more efficient, so that they can get more trips every hour, which means more earnings for them.

By contrast with Uber, whose drivers provide service with private cars, the Chinese services, Didi Dache (backed by Tencent) and Kuai Di Dache (backed by Alibaba) are smartphone-based applications to book taxis. In 2015, faced with competition from Uber (backed by search engine Baidu), Didi Dache and Kuai Di Dache merged. Following the merger, they continue to operate as separate services.

Based on the case above, answer the following question:

Considering the abundance of consumer ethics-related concerns about Uber, do you think that the industry should be further regulated? Based on the literature presented in this unit and your own research, do you think the current regulations are fair?

Explanation / Answer

App based cab aggregators have become important part of urban & metropolitan transport system in different parts of world. They bring lot of advantages for all stakeholders. They provide flexible working hours to many drivers with maximum efficiency. They are popular among consumers because they offer low fares with easy accessibility. One can book these cars with few clicks. They have successfully minimized information gap between passengers, drivers & fleet operators which results in easy & consistent service.

In most of the countries these type of services do not fall under established regulatory framework. Some countries have formulated regulations for such businesses while many are still in process of making. This has created trust issues among passengers & drivers. These aggregators provide service by drivers with private cars. In this case drivers must allow unknown passengers into their vehicle and passengers must trust that drivers will not harm or cheat them. In case of Uber there have been incidents of where drivers have sexually assaulted passengers or cheated them. Taking into consideration of increasing incidents of sexual assaults, harassment & unsafe driving there is a need for additional regulation to be adapted. In some countries the licensing process is weak which can lead to unsafe ride therefore it requires attention that such drivers are differentiated & given proper training. For purpose of safety drivers must disclose their criminal background.

Related Questions

Navigate

• Browse (All)
• Browse F
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.