Based on the cse please answer the following question: 1. How would you characte

Question

Based on the cse please answer the following question:

1.    How would you characterize Uber’s business model and strategy? What are the key elements of its customer value proposition? Its profit formula? Its approach to competing in the marketplace?

CASE 12 Uber in 2016: Can It Remain the Dominant Leader of the World's Fast-Emerging Ridesharing Industry? Alex Edinger The University of Alabama Louis D. Marino The University of Alabama McKenna Marino The University of Alabama Molly Stepchuck The University of Alabama tanding in the streets of Paris on a cold win- such as a reduction in crashes due to drunk and dis- ter's night in 2008, Garrett Camp and Tren tracted driving, ethical issues plaguing the company Kalanick had trouble hailing a cab after included accusations of assaults involving custom- attending the LeWeb Conference.1 Instead of just ers and drivers, concerns regarding the background complaining about the problem, in true entrepre- screening of its drivers, alleged hardball competitive neurial fashion the two developed an idea for a limo tactics by Uber executives, concerns over the privacy timeshare service that would be a mobile, fast, and of customers, and the classification of Uber drivers as independent contractors versus employees upper-class option for travelers. Camp thought such an option would accomplish his goal of developing While some critics viewed Ube r as a company an iPhone app to help tackle the taxi issues in San with many faults, others saw the business as a game Francisco. Camp began to work on the app in March changing boost to economies, especially to those 2009, and by mid-2009 Kalanick joined the firm as individuals who faced unemployment. In recent years where economic hardships have hit America ducted in New York in 2010 and the app was off and countries abroad harder than any time in recent cially launched in San Francisco on May 31, 2010 memory, Uber, and the extra income that could be Little did Garrett Camp know that his prototyping of generated through this service, was an important an iPhone app would revolutionize the transporta- lifeline to many. While speaking at a conference in tion business, and impact what is known today as the 2015, Travis Kalanick, Uber founder and chief execu arguing that the company As with many technologies that fundamentally provided larger paychecks and more flexibility for challenge existing business models in an industry, its drivers than they would otherwise have received, termed disruptive technologies, as Uber and the and touted several philanthropic activities the com- sharing economy grew the company faced a num- pany supported including "Ride for a Cause," efforts ber of challenges including increased competition to recruit veterans, and collecting donations for from new entrants and educating the consumer base. refugees in Europe.3 Further research conducted by However, in Uber's case the company also faced Mothers Against Drunk Driving (MADD) in 2014 questions regarding the company's commitment to demonstrated that crashes involving drunk drivers Uber's chief incubator. The first test run was con- "sharing economy tive officer, defended Uber corporate social responsibility and ethics. Despite the potential social benefits associated with ridesharing, Copyright 2016 by Louis D. Marino. All rights reserved.

Explanation / Answer

Answer 1:

Uber Business Model:

Find drivers with access to a car who want to earn money.

• Orchestrate them centrally to offer a highly scaled and distributed transport platform.

• Allow people who want to make journeys book these drivers via a mobile application.

• Create a review system to ensure great service.

• Take a 20-30% cut of all bookings.

• Leverage the data collected to minimize wait times and maximize drive times.

Uber Business Strategy:

The main focus of Uber is to align its business model with the innovative operating practices effectively to maiximze profits and optimize the experience of both the driver and the passenger. Let us take a look at the strategies that it employed, leading to disruption in the taxi industry.

1. Elimination of various transaction costs

2. Encouraging increase in productivity of assets and employment rates

3.use of cutting edge technology

4. Variable or flexible (generally affordable) pricing model

5. Convenient and frictionless payment.

6. Implementation of quality control through a rating system

7. Being Tough and Fearless

Key Elements of customer value propostion:

Uber Profit Formula

Uber makes its money primarily by charging clients for the rides, although it also derives advertising revenue from its website. Unlike a taxi service, the hiring of the driver and vehicle and the payment for the reserved ride is handled entirely through the Uber app rather than with the driver.

Surge pricing can be considered as one of the most prominent revenue generating streams for Uber. There are instances where the demand for Uber taxis increase. In such instances, the price per mile would also increase automatically. In here, the price would be entirely dependent on the number of people who are booking Uber for rides and the number of drivers who are available to cater the demand. Uber has already applied to receive the patent for surge pricing in United States as well.

Uber's approach in competing in marketplace:

Following are the approaches Uber implements to compete in marketplace.

1. Enters the market aggressively

2. Recruits the drivers aggressively.

3. Convert Riders to political base

4. Buy political influence

5. Ingore regulaitons or buy them

6. Remain Bullish in the face of protest from competition

7. Reduce Fares and increase ommisions

8. Rinse and Repeat

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