Uber Going Global from Day One Case Study - Management Assignment Help

Assignment Task

Uber, the controversial San Francisco–based ride-for-hire service, has made a virtue out of disrupting the established taxi business. From a standing start in 2009, the company has spread across the globe like wildfire. Uber’s strategy has been to focus on major metropolitan areas around the world. This strategy has so far taken Uber into about 600 cities in more than 80 countries. The privately held company is rumored to be generating annual revenues of around $10 billion.

At the core of Uber’s business is a smartphone app that allows customers to hail a ride from the comfort of their own home, a restaurant, or a bar stool. The app shows cars in the area, notifies the rider when a car is on the way, and tracks the progress of the car on screen using GPS mapping technology. The rider pays via the app using a credit card, so no cash changes hands. The driver takes 80 percent of the fee and Uber 20 percent. The price for the ride is determined by Uber using an algorithm that sets prices in order to match the demand for rides with the supply of cars on the road. Thus, if demand exceeds supply, the price for a ride will rise, inducing drivers to get on the road. Uber does not own any cars. Its drivers are independent contractors with their own vehicles. The company is, in effect, a twenty-first-century version of an old-style radio taxi dispatch company. Interestingly, Uber’s founders got their idea for the app-based service one snowy night in Paris when they were unable to find a taxi.

Historically, taxi markets around the globe have been tightly regulated by metropolitan authorities. The stated purpose of these regulations has often included (1) limiting the supply of taxis in order to boost demand for other forms of public transportation, (2) limiting the supply of taxis in order to reduce traffic congestion, (3) ensuring the safety of riders by only allowing licensed taxis to offer rides, (4) ensuring that the prices charged are “fair,” and (5) guaranteeing a reasonable rate of return to the owners of taxi licenses.

Case Discussion Questions

1. Companies like Uber, Lyft (one of Uber’s main competitors), and Airbnb (an online marketplace that enables people to lease or rent short-term lodging) are innovating in fields that traditionally have been very complex and regulated. Can Uber’s business model be applied in other industries globally?

2. Are cities around the world doing a disservice to their citizens or their visitors, or both, by banning Uber outright from operating in their community?

3. Uber’s strategy has been to break these regulations, establishing its service first, and then fighting attempts by regulators to shut the service down. This goes along with the old saying that “do first, ask questions later.” Is this business approach viable globally in the long run?

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