Analysis Of Uber’s Two-Sided Network In China’s Ride-Hailing Market

Challenges of Two-Sided Network

With the growth of technology there has been significant growth in innovative models that have adopted large number of two sided network. There are many new platforms have been created that are better than various traditional models that are prevalent in today’s time (Werner, 2017). These new platforms help in matching the demand of the consumers with that of the products that are provided by the companies. For example there has been development in the power sector where the demand for consumer electricity is matched with that of the consumer’s requirement of power. However there have been issues with development of two sided platforms and many companies are suffering because of the same. The main failures that have been there is that there is presence of two platforms but lack of network connect between the two who will help them in connecting the two platforms effectively. These failures are rooted in one common mistake that has been caused because of the same. And all these are not good for the overall economics of the company. There concept of two way strategy have been developed as there were certain issues involved in the traditional system. There are three strategic issues that new concept of two platforms needs to address (Venezia, 2017). The major challenge is pricing strategy, as per which the company should think of innovative ways by which they can reduce the present prices and make sure to identify the target audience and then deploy the prices on basis of the same. The company should try to subsidize one kind of prices for one group and charge high prices from other premium customer. This is a developing model and hence there cannot be a particular strategy which any company can make full use to ascertain profitability. Therefore the company should try to develop their model in such a way that they are able to be better than their competitors. It is important to get the pricing strategy right which means that subsidize the price cost users and make sure to secure the premium customers to make sure that their participation is maximum during that time. This is how the system works (Belton, 2017).

The other problem is that many single platform providers believe that they can take over this dual platform and be the only provider. So that level of competition exists in such kind of system and therefore it must be seen that the take away all competition to be the only one existing power must be taken care of. The companies need to see whether they want to share that platform or go for the proprietary control in such kind of platform. So dealing and avoiding competition and making sure that is no such other system in the area that might cover the requirements of the consumer. The third issue that is there in such of system is that it must avoid envelopment. It means that there are many overlapping users in the system and many companies try to take over the premium customer groups in that area, It is important that constant change in the business model must be there to make sure that the company is able to develop such system which is sufficient enough for the consumers. The consumers are the king in such kind of system and the main aim of dual platform is to suffice the need of such customers. Now Technology helps in changing the issues that the company faces in such kind of platforms. Technology helps them in having better pricing policies, which help them in to track the demand of the consumer needs and make sure that there are able to identify the premium groups and the groups with specific demands. Technology also helps them to make sure that every player who is existing in such kind of system is able to grow with respect to the same. Thus that must be taken care of by all the companies who are operating in that system and make sure to deploy the competition from other ways as possible.

Feedback Loops and their Significance

The growth of Uber in case of Chinas hailing market has been very proficient and the company has used the same technological advances that have been discussed above and make sure the company is performing well. Uber has changed the way the world moves, they provide great services to people to travel from one place to another on the basis of the customer centric model. Consumer model has been based on providing the best services to the consumer’s at most cheap prices. It also has deployed better pricing policies, where it makes sure to use subsidized prices through coupons and reference link when people use Uber services for a long time. They also charge premium prices from some customer and this helps them to keep their prices at bay. The customers are also benefiting as they have get the services at their doorsteps. The customers don’t need to pay so much and also the services are very good. And technology plays an important role in that regard which means that technology helps in connecting the customer to the providers. In this way both are benefited. In China Company is following the same, over their rate of technology is also very proficient and they can use that accordingly for their growth and development in that zone. The overall marketing strategy of Uber has also been very good and that has helped them in getting an edge over their consumers. Even if there are other players in that zone where there are other competitors also, the best of the lot services is provided by Uber and they are trying to are variations in such services accordingly. So thus we see that how technology has helped in making this dual platform grow and has helped companies like Uber in achieving best consumer loyalty in that regard. Traditional model had a lot of issues which the new system has been able to solve very proficiently. The main issue that crops up in the traditional system has been taken care of in the new system.

In late 2015 Uber as grown one of the largest app based service in the world and is having its operation all over the countries. There are many factors that have contributed to the overall success of the company and the most important in it is the feedback loop that drives the overall pace of relationship between the Uber drivers and Customers. It works in such a way that drivers are given ratings by the customers on the basis of various factors that includes their behaviour, their attitude, the kind of service they provided and how the overall experience was.In this way the company gets an idea on how well the drivers are perofrming and that may help it in screening those that do not live up to the policies of the company (Trieu, 2017). This is how the cross side effect functions as people who are complemenatry to each other work in union to provide and get service through a common model. The two are opposite parties consisting of the job providers that are the customers and the job seekers that consists of the taxi drivers and Uber is the network that connects both. Thus feedback loops helps both the opposite parties to provide feedback on their experience and this will help Uber in providing more quality services. In case of same side network it consists of players from the same industry, like Uber there are many other cab based service providers that functions along with it (Visinescu, et al., 2017). In case of the same, the feedback loop will help people in juding the services of these companies on basis of the reviews of the other customer and thus help them in taking necessary decsions.

Designing the Two-Sided Network

The cross sided effect can be said to be positive as both the buyer and the seller are able to satisfy each other needs hence there is  a positive outcome for each party, and in case of Uber it is positive as it is able to serve the needs of the cross parties. The same side effect for Uber can be said to be negative, as there are so many parties functioning in this service line hence increased competition makes the overall scenario negative for the company (Bromwich & Scapens, 2016).

Uber has worked very well in designing a model that works two ways. It asks the customer to provide the feedbacks in this way the customer gets a chance to voice his concern and it also pays the uber drivers more money in case the customer gives them good rating. So in both the cases we see that the company is benefited and it lets to follow of information to and fro from the customers to the company and from the company to the drivers. Technology has played a major part in developing this model, as the mobile app has been developed in such a manner that until a customer gives his rating, his trip will not end and he cannot book another trip. So it works out in that manner. The money side consists of the driver side as Uber has to pay off more in certain cases when rating are good but that in other way helps them to improve their overall business(Belton, 2017). The subsidy side is the customer side as customer gets rides at subsidized prices in cases they use Uber services for a loner time. This is how the system works and is beneficial for the people. In case Uber wants that the cost is not subsidized beyond a certain extent and they are there able to make money from the same. They can keep standard rates for certain areas and in case the customer feedback is not up to the mark they can deduct money from the driver. So in all cases if there is positive correlation or negative correlation the company can apply the same method. The only consequence it will have will be that it will help in making the drivers more aware and promote them to use their service extensively(Kew & Stredwick, 2017). This is how this system works and feedback policy is the best policy as it is good for both the customer and the drivers and most importantly for the company. Uber provides free rides and rides at cheaper rates for new users or users that make use of the company offers regularly. In this way it is able to build up its customer base and make sure that people are attracted towards using Uber services and do not go for other cab services that are there in the area.  It also helps in developing the confidence of the customer in the services of the company (Lavassani & Movahedi, 2017). Reputation plays a very important role in this context, because if the reputation of the company is not up to the mark the company won’t be able to get business. People use such customer centric services for the ease that they provide that helps them to commute from one place to another. If the customers are not happy the company will lose on its business. Thus customer is the king of the business and reputation is the main thing that keeps the business of the company going.

Uber’s Potential to Dominate in a Winner-Take-All Dynamic

The winner take all dynamic refers to a concept as per which the parties that performs the best in any market are able to capture the highest share because of which the distribution of wealth gets uneven and the remaining competitors are left with very less share(Hall & Rapanotti, 2017). In case of cab based services with app based models, there are many companies thriving to get the major share of the market. This is entirely a peoples based business and service is what these companies are selling off to individulas(Guragai, et al., 2017). The company that is able to satisfy the needs of the consumer will get the major share. In case of Uber this is possible given the overall growth of the company since the time of its inception and ways in which it has developed its model. An analysis of the same with respect to the presence of Uber in China is given below

Uber in China has developed largely since its first advent. Technological growth has spurred development of many cab based companies that provide services to the consumer. In August 2013, Ube tried its first testing in Shanghai before rolling it forward for the general public. Since then the total number of Uber rides have improved to more then million per day and accounts to more than 50 percent of the total Uber rides around the world. In August 2014, Uber launched People’s Uber that was the first localized services that the company was offering. Uber charged minimal fess in this kind of system where people who were travelling to the same location or near buy were polled together. This helped them to break down the total costs that they might incur in that ride. This was a huge hit among the people and helped them to make good use of these cab services to reach their destination safely. Peoples Uber is very affordable and popular means of transport in china in today’s time and Uber makes great revenue from that business model. Uber also lured many drivers that were close to twice the total amount of fare during peak seasons and close to 1.5 during other times. In this way the drivers were also ready to share such cab services and make sure people gave them good ratings. The Chinese market was already saturated with some cab services based company that provided such services to people, but that was not as regulated as it must have been and that improved the prospects of Uber in china and it tried to develop a model that would have suited the growing population of China and provided them with better revenue and that led to the development of Peoples Uber. It is one of the most popular cab services In China in today’s time and thus we see how efficiently the company was able to make use of the technological advances in the Chinese country.

Comparison between Uber’s Business Model and Traditional Business Model

Along with the above differences we also see that there exsists certain difference between Didi and Uber that operates in China. Both are cab service company, that satisfies the needs of the user by providing them with necessary services. However Didi is more of a cab based service, that connects the cab drivers with the user and the ride is confirmed on first come first basis (Eisemann, et al., 2017). On the other hand Uer has many private car owners who works for the same and there are different rates at which such services can be availed. Previously Didi had better market proposition in China, but with advent of time, we see that this position ahs changed, and Uber has been able to make its mark in the domestic circle of China (Wu, 2017). However there are many fronts on which the companies differs in terms of the technology used and Uber is one step ahead of didi in that aspect. Thus we see that the technological differences between the two companies has affected the kind of service they provide and that in the end affects the user satisfaction (Moon, 2017).

Business information system is a widely used phenomenon in today’s world and most of the companies rely on the same to get some insights on the consumers and their overall demand and how they are going to use the same. In this case study we will find how a company has made use of the information system for the growth of his business and to serve its customer in a better way.McKesson is one of the largest pharmaceutical distributortion company in North America and served thousands of people each day (Guragai, et al., 2017). The overall turnaround each day was huge , thus the company was having issues in managing the overall flow of orders. The main issues with the current distribution system of the company were –

• Most of the customers went for “just in time “ ordering , as per which they needed to deliver the products in the next business day.
• Most of the agreements of the customer consisted of the fill or kill cause as per which the need for a flawless system aroused.
• Moreover since the company dealt with distribution of mediicnes it was less of a package and more of a needs of a patient, thus it was required that a flawless information system was developed that would help in effective time out by the company and help in delivering the medicines without causing any real sabotage.

An article on the steps taken by the company was published in 2010 “Measuring e-Commerce Success: Applying the DeLone & McLean Information Systems Success Model” written by Delone and Mclean that highlighted how the effective use of information system in this business of E commerce contributed to the success of the company (Delone & Mclean, 2004).

The company developed the SAP Hana that provided the company a real time picture of the distribution scenario of the company and helped it in overcoming the problems associated with the same. The compay is having multiple distribution system throughout the country and the entire process of ordering the mdedicines and the same getting delivered consists of multiple layers and stages and each one has its own system and tools (Alexander, 2016). In any case if these systems do not coordinate properly it might affect the overall success of the company and lead to conflicting information. It is thus important that proper system must be developed that gives a clear picture on the overall requirement of all the stages involved and how each one can be regulated to get the best results.

It was thus necessary that such a model of information system is developed that helps in getting a insightful into the overall distribution process of the company. Thus the company developed SAP Hana that could have helped the company in the same. It was populated with information from non SAP systems, and it was replicated with the information through SAP data services. Then the company took assistance from Infosys and helped in development of such a custom application and dashboard with business objectives known as WEBI that provided help in indentifying real life problems (Arnott, et al., 2017). Thus this new type of setting helped the company in highlighting those orders that are under risk of missing required day delivery and thus the company can take necessary steps in this regard. Immediate actions can be taken and that has helped in reducing a lot of loss for the company.

There has been several changes that has taken place after deploying the new system namely

• The overall average shipping time of the company has dropped from 35 percent, from two days to one.
• The company can perform their job better and make sure that the medications are delivered on time.
• The company can easily solve many real time scenarios that is a part and parcel of the e commerce industry.

Overall the application of the correct information system will help the company in getting the right amount of information and that to at the right time, which will help it ultimately in providing seamless service to its customer. Hence we can see how powerful the concept of information system is in todays world and how important it is for companies to be proficient in the same.

Slide 1 – Information System Strategy is one the most emerging technology of today’s time and many companies have been utilising the same. Two ways system is one of the basis that has been providing effective consumer services to the people, be connecting the consumer with the service provider and Cab rentals are one of the most popular of such services.

Slide 2 – Uber is one of the most prominent cab services that operate all around the globe. It provides great consumer service and has made effective use of the technology to make sure that the consumer gets the best returns. Recently the company has started its operation in China also.

Slide 3 – Strength of Uber – Low fixed investment which helps the company in achieving the net cost benefit standards. The company is having a dynamic pricing strategy as per which the company is able to subsidize and surcharge the price as and when possible.

Slide 4 – Strength Of Uber – Focus on consumer satisfaction. The main aim of the company is to provide the consumer with the best services and that is achieved with the very effective feedback mechanism that the company has. It helps the consumer in presenting their grievances to the company in abetter way.

Slide 5 – Technology used by Uber – Uber uses the two way system mechanism and is an app based platform from where the people who need the cab , books one. Uber then uses network to transfer the information to near buy drivers and connects both of them. The company has a great user based platform that makes use of all the latest technology.

Slide 6 – Didi in China- Didi Kuaidi is a very popular taxi riding company in China, and has the largest market share in the country in this sector. The company uses the local taxi drivers and connects them with the passengers..

Slide 7 – Didi in China- Didi works on the basis of voice system and needs to improve on the technological front. However the company has been in operation since a long time.

Slide 8 – Difference between Uber and Kuaidi- Uber is more dynamic in its approach and has better utilisation of technology. Didi is more based on the traditional approach and has fewer resources in comparison to Uber. Uber is more expensive and Didi is less expensive. Didi is having better market position and Uber is having better global presence.

Slide 9 – Difference between Uber and Kuaidi- Uber has mostly private cars that ply for him and in return the company pays the driver commission. In case of Didi the company has no lesser cars and has mostly tied up with the local taxi drivers that connect with the passengers over the network and it works on first cum first basis, both for the driver and the consumer. People who use Uber are more satisfied because its feedback mechanism is very good.

Slide 10 – Difference between Uber and Kuaidi – When it comes to technological front, Uber is having better app based platforms that helps people to easily book a cab as and when they want. While in case of Didi, the company has no such platforms and the data is transferred through voice calls to the drivers and whosoever books the ride before gets to travel.

Slide 11- Conclusion – If we see through a consumer prospect the company that is making the most efficient utilisation of the resources and providing the best services to the consumer is Uber. However we cannot ignore the fact that economically Didi is better than Uber. But both are having their own share of advantages and disadvantages.

Slide 12- Conclusion- Information technology has evolved a lot over the years. In times to come it is very much possible with the newly launched cloud computing and other technologies that this business of consumer satisfaction will improve more. But what companies need to see is that they are spending money on doing effective research in that regards.

Slide 13- Recommendations – In case of Didi it can be said that if the company wants to improve its position then it needs to be more active technologically and make sure that overall consumer satisfaction is improved.

Slide 14- Recommendations- The companies should also try to make better research and analysis and choose better technological advances that will satisfy their main goal of consumer satisfaction. Consumer is the king and should be treated like one.

Slide 15- Recommendations- In case of Uber it should see to it that prices and subsides are regulated and also the service should be spread to remote areas

References

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