Ride Hailing Services - Compute the Total Market Potential - Business Assignment Help

Assignment Task :

The purpose of the Assignment is to forecast the revenue growth for a ride-hailing company like Uber.

We will be using for reference the case in the coursepack “Ride Hailing Services: Forecasting Uber’s Growth”.  This case presents a model, the Bass Model, that could be used to forecast Uber’s growth in number of drivers/riders and starting from there, to forecast the growth in its revenues.

All the necessary instructions, data and guidance are in the paper case and the spreadsheet attached.

Question 1

In the workbook labelled “Market Potential”, compute the total market potential (m) under the assumptions therein set forth and restated for your convenience below:

The smallest city size for a profitable operation is 50,000 (for a total population in such cities see Exhibit 7 of the paper case “Ride Hailing Services: Forecasting Uber’s Growth”)

The market potential in NYC is 80,000 drivers for a population of 8,622,698

The proportion of this number of drivers to population is the same across the US

The current ratio of Uber drivers in the US to the rest of the world is 1:3. We assume it's going to grow to 1:4 (meaning the number applicable for US should be multiplied 5 times to estimate the global number).

[Enter your answer in millions. For example, if your answer is 1,580,000, then you would enter 1.58]

Question 2

b) In the workbook labelled “Forecast using analogy”, use the coefficients of p (individual force) and q (social force) given for the analogous product “Electric Vehicles” found in the Exhibit 9 “Ride Hailing Services: Forecasting Uber’s Growth”. Use the global market potential (m) you calculated in part a). What is the forecast for the cumulative number of Uber drivers in 2021 (annual number)?

[Enter your answer in thousands. For example, if your answer is 8,000,000, then you would enter 8000]

Question 3

c) In the workbook labelled “Forecast using data” use the market potential (m) as derived above and from the best fit regression of forecasted data on the actual data estimate the p and q parameters. To do that use the excel function Solver as instructed in the workbook labelled “Instructions”. Solver find the best proportions p and q such that the forecast of the number of drivers is as accurate as possible given the actual data (historical Uber data in this case). What is the annual value forecasted for the number of Uber drivers in 2021?

Question 4

In this question, we will forecast Uber’s revenues for the year 2021.

Refer to Exhibit 10 of the paper case “Ride Hailing Services: Forecasting Uber’s Growth”. Take the data for year 2018 in respect of Rides per Driver and Fee/Gross Booking per Ride, assume the same data are applicable in the year 2021, and forecast Uber’s revenue for year 2021. Use the formula indicated in the paper case, i.e.: number of drivers in the period (for the year of 2021); multiplied by the average number of trips per driver in the period; multiplied by the average fee charged for a trip; multiplied by the platform’s cut (i.e. 25%).

[Round to nearest whole number. Do not round in thousands or millions]

Question 5

Explain how you would select the analogous disruptive technologies whose estimates could be used to predict the growth of Uber using Bass Model. Do you think Electric Vehicles is a good analogy to use to forecast Uber’s growth?

Question 6

Explain which assumptions used in the computation of market potential have high level of uncertainty. How would your account for that uncertainty in the models we used above?

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