Understanding Uber’s Business Model And Strategies

Introduction to Uber’s on-demand transportation service

Uber is an on demand service in the transportation segment which is responsible for bringing about a revolution in the taxi industry all over the world. The business model which is utilized by the company has made it possible for the people to utilize their smart-phones to help book a cab. The company has a valuation of over $70 billion and it is present in over 600 cities all over the world (Cramer and Krueger 2016). This clearly shows that there has been a huge amount of trust of the investors in the business model and this helps in understanding the capability of the organisation in garnering revenue for itself. The company has created a revolutionary condition with respect to the status it enjoys and the way in which the number of customers has increased exponentially (Vazagar 2014).

The main objective of the research is to establish and properly understand the strategies which Uber has employed due to the development of a wide range of customers over a period of time by means of its successful operation. It is truly intriguing that, what started as a simple idea has now reached a global layer of logistics and this has been responsible for bridging the gap with a proper divide of bits and atoms with a demand network which is quickly expanding.

At present the current leading taxi company in the world is Uber. The company operates in several cities in numerous countries all over the world. The company has built its customer base by the employment of such strategies. The revolutionizing factor which has worked in favour of the company is the utilization of the modern facility of Uber application which has made it easy for the users to utilize the facilities of the application at any specific situation. Uber customers are capable access majority of the operations online which makes the operations of the customers easy to manage. By the creation of this specific app the users can call for a specific vehicle of their choice at a timing of their choice. Therefore there is the need to understand the factors which have contributed to the overall development of the company as well as has led to the increased count of its passengers.  The scope of the research if used in the correct way is worth noticing and highlighting.

The benefit for the Uber riders have been possible due to the specific symbiosis and the creation of the mobile application which has made it possible for the users to order for the rides with a tap of their devices. There is also the rating facility which is possible in Uber. This automatically is available to the users after a specific ride ends. The customers are required to pay for their respective rides by whichever mode of payment they find feasible. This can also be done after a specific ride is over. This helps in hassle free payment and the entire procedure is very easy to abide by and manage. The reason for customers choosing Uber is that competitive prices are offered by the company due to the well established base of the customers. In this manner, the potential drives possess the flexibility and the capability of properly utilising the relevant resources (Barro 2014).

Global presence and valuation of over $70 billion

Research has revealed that the business model which is utilized by Uber has made it possible for them to subsidize fares. It is also worth paying severe amount as payments to the drivers. These subsidies are comparatively the major reason which has cost the company severe losses. These need to be recovered by the company and it needs to take care of the existing problems (Pisano 2015).

It has been realised by Uber that the drivers need to be treated equally well just as the customers are treated. This is because of the reason that if the drivers are unmotivated it will not be possible for them to work suitably. However all the drivers have not been able to remain pleased with the company as they have felt that their specific needs have not been catered to. The payment details and the nature of the app is no doubt revolutionary. The company apart from helping customers to go from point A to Point B are also working towards the goal of bringing the future closer with the technology of self driving and urban air transport which also helps people order food very quickly and in an affordable manner. This also helps in the removal of the barriers to healthcare, which creates newer and better freight-booking solutions and helps the companies provide a travel experience which is seemless and enjoyable.

It is being stated by the company that the safety of the customer is essential to them. Be in the back or front seats the safety is most important. In this case technology is also at the heart of the approach of the engineers. There is also relevant partnership with the safety advocates and development of newer and better systems and technologies in order to help in the creation of a world which is safe and very easy for every person to use and get. The most important thing which works in favour of the company is the fact that a proper and suitable culture is being built with the company which helps the organisation in doing the correct thin and this is for the riders, the drivers as well as the employees.

Figure 1: The comparative line chart between Uber, General Motors and Uber

Figure 2: The comparative analysis between Uber and Taxi

Figure 3: The profits and revenues of the providers

Figure 4: The fare and the incomes of different types of taxis

Strategies to attract and retain a vast customer base

Figure 5: The growing global revenue and losses

This nature of analysis is concerned with the large generalised data set and analysing the data set in newer and different ways in order to yield answers to questions which are not considered to be answerable initially. This idea focuses on the role of empirical evidence in the formation of ideas regarding that of innate ideas and traditions.

The Uber drivers have several facilities in comparison to the normal app drivers and these people get paid more than 5-6 times in a day and in many cases these drivers can use their own cars rather than be dependent on any vehicle which they are being provided with. In this situation it can be mentioned that in case the situation can be tackled in a proper manner and the Uber drivers take care of their responsibilities easily it is possible for them to emerge successful. 

Gaps in the literature:

It is seen that the information which is collected from the specific sources is not often reliable and this is because of the fact that the professionals who are providing information like to keep the overall data and information private as they do not like to discuss the policies of the company with the people outside as the information which is often analysed is confidential. Therefore the information obtained is not always completely genuine.

The main research question which is to be studied is what the actual strategy is which Uber has employed which has helped it woo millions of customers all over the globe. Another idea is to be understood regarding the key management strategies which Uber has utilized in the maintenance of the competitive advantage in the taxi industry. The business models and its understanding is also important in this specific context.

Research Design:

Research design is basically a suitable plan or a proper framework for the overall understanding and the application of the knowledge in the creation of a trajectory of a specific path of work. There are different types of research design which can be applied at the time of conducting a research. The explanatory design of research assists in identifying diverse natures of incidents and their happenings. The exploratory research design is basically in depth perception of the events which take place which respect to a particular scenario. The descriptive research deals with the detailed perception and the enhancement of knowledge based on the type and nature of a specific study. This research design is by nature descriptive. The overall critical perception of the Uber business is necessary for an in-depth research of the topic specified (Myers, Well and Lorch Jr 2013. ).

Challenges in recovering from subsidies and maintaining relationships with drivers

Research Type: 

The research type that is utilized in this particular survey is descriptive. It is a study which is utilized widely in case of many disciplines. The descriptive research method assists in the procedure of research by means of questionnaires and other survey processes. This nature of research helps in highlighting the issues at present, which helps in the description of the situation better and this is not probable by the employing of a precise method of survey.

Research Approach:

“There are three major types of research approaches which helps in the understanding regarding the way in which a particular problem can be tackled. In case of deductive approach there is the formulation of a set of specific hypothesis pertaining to the topic and based on the results the hypotheses are to be either accepted or rejected. In case of the inductive research approach there is no formulation of hypothesis of any sort. In case of abductive approach of research the procedure is basically designated to help in the understanding of the observations mentioned at the beginning of the research.”

In this specific study the research is actually abductive in nature. This actually aims to understand the impact of the questions which are to be identified. There is not any specific hypothesis in this particular research which has to be either accepted or rejected.

Sample Techniques:

“There are different techniques of sampling which include that of non-probability sampling, simple random sampling, systematic sampling, stratified sampling, cluster sampling, quota sampling and mini-max sampling among others.” In this particular case the quota Sampling method can be applied as the Uber users as well as the Uber drivers are to be considered for interview.

Sample Size:

The study population is basically the population on which the researcher needs to target and which the research study needs to be based on ideally. It is needed that there be an understanding of the study population in order to ensure that the requirements of the findings of the study are being met. In this case the study population comprise of all companies which engage in the outsourcing of their business operations. These companies are the focus which needs to be studied.

“The sample population in the survey is basically the part or a specific proportion which is selected to be studied. This is basically a proportion of about 10% of the total study population. It needs to be ensured however that the sample population is a proper representative of the study population.”

Insight into the research design utilized to study this topic

Primary Data Collection:

It is probable to collect primary data from the respondents by means of a questionnaire. Interviews can also be conducted by means of arranging for the managers to be interviewed. In this research there can be two separate interview questionnaires (Lewis 2015). There can be one for the drivers of Uber vehicles and the other for the users of the Uber application and service. This is bound to help in the collection and understanding of the opinion of both sides of the association namely the consumers as well as the individuals who assist the company by providing their service.

Reliability and Validity of Data:

A significant criteria of a research study is in the maintenance of the overall authenticity of the data which are being collected and also to ensure that the data which are being collected is genuine. Tests for validity can be conducted in order to ensure that the authenticity of the data has been ensured and the results which are being produced related to the research can be relied on. It also needs to be ensured that the data which are collected are not wrong or the information provided by the respondents is genuine.

Qualitative Data:

In order to understand the different problems which the Uber drivers face their responses to the survey can be collected in the form of a thematic analysis. The different themes or ideas which come forward can be collected for the purpose of better analysis. The same procedure can be conducted for the responses of the Uber application users. This helps in the overall analysis of the different types of reactions and also the responses that have been obtained in connection to the survey (Savin-Baden and Major 2013).

There are certain limitations of both quantitative and qualitative research. There can be ambiguity in the nature of the responses as well as the problems which are highlighted by the drivers of Uber vehicles and also those of the Uber application and service users. In order to maintain a certain amount of privacy of the company, it is possible for the drivers not to elicit genuine information. In fact the customers might also refrain from stating their problems clearly.

Conclusion:

There have been different opinions on the strategy and plan utilization of Uber. The original strategy of Uber has been discussed to have made it an agent of creative destruction. It is believed that Uber caused the disruption of the taxi industry. This particular agent of creative destruction had to face several adversities. In the current world scenario there are majority preferences and actions of individuals and groups of individuals. In case of innovation there are three major adversities the basic ability to maintain innovation, the response of the demand side of the market processes, the responses by other agents who are on the supply side. Uber might be losing its innovative edge. It is being believed that Uber is trying to utilize the principle of expansion for success rather than the principle of innovation. There is also the legitimization of the investments which have been made and also in the generation of a certain amount of profit for the company. The world awaits the decisions of Uber, hoping all of them are on the right track.

References

Barro, J., 2014. Under pressure from Uber, taxi medallion prices are plummeting. The New York Times.

Cannon, S. and Summers, L.H., 2014. How Uber and the sharing economy can win over regulators. Harvard business review, 13(10), pp.24-28.

Cohen, B. and Kietzmann, J., 2014. Ride on! Mobility business models for the sharing economy. Organization & Environment, 27(3), pp.279-296.

Cramer, J. and Krueger, A.B., 2016. Disruptive change in the taxi business: The case of Uber. American Economic Review, 106(5), pp.177-82.

Feeney, M. and companies Uber, R., 2015. Is Ridesharing Safe?.

Frizell, S., 2014. A Historical Argument against Uber: Taxi Regulations Are There for a Reason. Time Magazine. Glöss, M., McGregor, M. and Brown, B., 2016, May. Designing for labour: Uber and the on-demand mobile workforce. In Proceedings of the 2016 CHI conference on human factors in computing systems (pp. 1632-1643). ACM.

Lewis, S., 2015. Qualitative inquiry and research design: Choosing among five approaches. Health promotion practice, 16(4), pp.473-475.

Myers, J.L., Well, A.D. and Lorch Jr, R.F., 2013. Research design and statistical analysis. Routledge.

Pisano, G.P., 2015. You need an innovation strategy. Harvard Business Review, 93(6), pp.44-54.

Savin-Baden, M. and Major, C.H., 2013. Qualitative research: The essential guide to theory and practice.

Teece, D.J., 2017. Business models and dynamic capabilities. Long Range Planning.

Vazagar, J., 2014. Uber taxi services suffers setblack in Berlin. Financial Times.

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