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Management Analysis of Uber
Author:
Aayushi Deohans (SC16B002)
Amisha Kumari (SC16B006)
Jagriti Saha (SC16B019)
KVNS JayaKalyani (SC16B020)
Samridhi Sharma (SC16B044)
Submied to:
Dr. V. Ravi
Contents
List of Figures 4
1 Introduction 6
2 History of Uber Cabs 8
3 How UBER Works ? 10
4 Leadership Qualities: 12
5 Management Strategies 14
6 How and Why Uber became successful? 23
7 Funding 25
8 Uber Revenue and Usage Statistics 26
9 Uber Finances 30
10 UBER Competitors 38
11 Criticism and subsequent changes in strategies and policies 42
12 SWOT Analysis 45
13 PESTLE Analysis 50
14 Further Extensions of Uber,Beyond Ride-sharing 53
15 Future Plans : Changing the future of autonomous transportation technology 56
References 57
List of Figures
Acknowledgement
We sincerely acknowledge Dr. V Ravi for giving us an opportunity to delve into this exhilarating
experience of team work coupled with insights to the amazing corporate world of tranortation
network companies and imbibing us with all the insights, knowledge and enthusiasm to under-
take research, underand and analyze eciently our topic of Uber. We would also like to thank
Ravi sir for teaching us with so many real-life examples and signicance of management in each
area or organization, which has inired us to take a cab service which is a part of our daily life as
out topic. We would like to thank our team members for immense contribution from each side
and making this proje possible and also IIST internet services which has been immensely useful
in research.
1
Introduction
In recent years, a concept known as the ”sharing economy” has taken the market by orm, giving
rise to a number of truly revolutionary businesses. While a number of companies have cashed
in on this trend, the sharing economy’s undiuted king is Uber as a ride-sharing company that
empowers anyone to art earning money with their vehicle and enables those needing a li to
quickly and aordable to nd a ride. e amount of success Uber has been able to achieve in
their short hiory is remarkable.
Uber’s disruptive technology, explosive growth, and conant controversy make it one of the
mo fascinating companies to emerge over the pa decade. e almo ten-year-old company
soon grew to become the highe valued private art up company in the world.
Uber Founders, Funding received and Time line:
•Founders: Travis Kalanick and Garre Camp.
•Company Headquarters: San Francisco, California, United States.
•Funding received by Uber: $22.2 Billion. (as of December 2017).
•Company Valuation: Over $70 Billion.
•Number of Users: More than 50 Million.
•Number of registered drivers: Approximately 7 Million (as of November 2017).
•Average number of daily Uber Trips: 1 Million
2
History of Uber Cabs
Uber was r founded in 2009 by Garre Camp and Travis Kalanick under the name Uber Cab.
At the time, Camp had recently ent 800 dollars hiring a private car to tranort him and his
friends on New Year’s Eve, and he was trying to gure out a way he could make the service more
aordable to the average person. Camp reasoned that allowing multiple people to share the co
of the service would drive it down, and Uber Cab was born.
In 2010, a man named Ryan Graves reonded to a tweet sent out by Travis Kalanick and be-
came the r Uber Cab employee. He was made a general manager and was given between 5-10
percent of the company. Not long aer, he was named the company’s CEO.
In 2011, the company’s name was shortened to Uber, and in 2012, Uber rolled out Uber X - a
service which allowed people to work for Uber driving their own car. Since then, Uber has been
on the cuing edge of a number of tranortation services and technologies, from self-driving
cars, to a carpooling service, and even a helicopter service.
Today, Uber operates in 300 cities across 6 continents, and in 2016 Uber grossed 20 billion
dollars. Intereingly enough, Uber aually lo 2.8 billion dollars on that 2016 gross, showing
ju how commied the company is to continuing to push the envelope and develop new services
and technologies that will revolutionize the tranortation indury.
While a lot of faors played into launching Uber into the level of recognition and success the
company enjoys, one of those faors was the ever-recognizable Uber logo.
2.1 The Uber Logo
In 2010, when the company was ill Uber Cab, they unveiled a logo that featured a red ”UC” with
the company’s name above the logo. When the name was changed to Uber, the logo dropped the
”C” as well as the word ”Cab” in the name above it. However, the re of the design ayed the
same.
e goal in this redesign was to make the Uber logo look more modern and luxurious – both
themes that Uber tries to touch on in their marketing.
In 2016, though, the Uber logo underwent another major overhaul, this time ditching the ”U”
and the company name entirely. Some described the new logo as bizarre, yet there is a lot of
meaningful elements to its design that really convey the type of company that Uber hopes to be
moving forward.
Speaking about the new logo, Uber said, ”is updated design rees where we’ve been, and
where we’re headed. e Uber you know isn’t changing, our brand is ju catching up to who we
already were.” In September 2018, ju two days aer hiring their r chief marketing ocer they
came out with a new brand.e new visual identity was designed by Wol Olins. Molly Watson
the direor of verbal identity at Wol Olins San Francisco, said the new logo was designed to
represent Uber’s growth ans security.
3
How UBER Works ?
• Step 1:
A rider opens the app:
e rider enters their deination, can see wait time, car sizes, and price; then conrms their
pickup location and taps Reque.
• Step 2:
e rider is matched with a driver:
A nearby driver sees and chooses to accept the rider’s trip reque. e rider is automatically
notied when the driver’s vehicle is about a minute away.
• Step 3:
e driver picks up the rider:
e driver and the rider verify each other’s names and the deination. en the driver arts
the ride.
• Step 4:
e driver takes the rider to the deination:
e app gives the driver the option to access turn-by-turn direions, so the driver can focus
on geing there and the rider can focus on enjoying a comfortable ride.
• Step 5:
e driver and rider leave ratings and reviews :
At the end of each trip, drivers and riders can rate each other from 1 to 5 ars. Riders can
also give the driver compliments. In cities where tipping is available, they can also add a
lile extra to show their gratitude.
4
Leadership Qualities:
e sexual harassment claims, the bullying, the intelleual property lawsuit are aributable to
former leader Travis Kalanick’s brash and admit-no-errors leadership yle. Owing to such con-
troversies, Kalanick had to leave CEO po in june la year.e company’s newly named CEO,
Dara Khosrowshahi (who was also former CEO of Expedia), has maered good leadership qual-
ities which might be the medicine for the scandal-prone company.
In one of Leer from Silicon Valley says to Dara Khosrowshahi as :
”Dara Khosrowshahi is charged with turning the scandal-plagued startup into a traditional company—
without sacricing what made it successful.”
As per media reviews and opinions of working a, following Good leadership quality traits were
seen in Khosrowshahi leading the company.
1. Khosrowshahi expresses ju the sort of vulnerability that kills shame and allows a team to
tru that if they also experience failure and fear (both prey much a guaranteed part of
doing anything great), their leader will underand and support them.
2. Showing emotions with employees (which mo of the celebrated leaders don’t do) but any
company hoping for team cohesion, boldness, and innovation, it’s an essential one for a boss
to have, and Uber’s Dara Khosrowshahi denitely have that.
3. He is a reeive leader and a a relatable boss.
4. He cares about his team, including the interns and looks beyond the resume.
5. He is calm unlike former CEO who is reported to have aggressive and rude behaviour with
employees. He is also seen to ree women opposite to Travis Kalanick who is reported
to have sexual harressment cases.
6. He avoids diraions, takes risks that maer, and nd ways to simplify. (follows K.I.S.S.
Rule ”Keep it simple, stupid”)
5
Management Strategies
Uber’s Growth Strategy - Study User’s Problems and Requirements
For any artup owners or Entrepreneurs, before developing a ride-sharing app, in fa, any
application, it is important to underand users’ current challenges and requirements. Herein, we
have compiled top major challenges, which were noticed solved by Uber before the emergence
of any online ride-hailing services through the mobile app.
•Challenge 1: e Fear of Unfamiliarity
Uber noticed that people had a fear of unfamiliarity of drivers. Moreover, the majority of
people were not comfortable to ride with the unknown driver. Ju because they would not
be much familiar with the driver.
Solution by Uber
Uber had taken this challenge very seriously, and they came up with the idea in which people
can see the prole and atus of drivers before hiring the cab. rough the Uber app, users
can now see the driver’s prole, his pa trips, and the ratings. By inducing this trend, Uber
has broken the fear of unfamiliarity in people. Check out this image, for example.
•Challenge 2: Not Able to Get Real-time Notications About e Ride
Before Uber, people were not able to get the real-time notications of their rides. Due to
this, people had faced hurdles in their daily lives, for inance, reaching out to their oces
or door appointments.
Solution By Uber
Uber had noticed these issues were faced by people, and they came back with the feature in
which people could check out driver’s location aer booking the cab and they also get real-
time notications about their rides in terms of arrival and the cancellation of rides. If you
are planning to create apps like Uber, then this solution can wonder for your ride-hailing
business.
•Challenge 3: People Were Afraid to Stick in Trac for Long Hours
Due to the long waiting hours of a trac jam, people were usually uck in their routes. One
of the bigge challenges, users faced because of the lack of knowledge about the shorte
routes, where they could meet less trac.
Solution By Uber
Uber closely noticed this challenge, and they worked on it. Uber came up with the idea
in which Uber app only provides one of the shorte routes with less trac area to Uber
drivers. From now on, people have less fear of uck in trac for long hours while driving
through the Uber app. In fa, they have advertised this single feature in India with # Look
Before You Leave concept.
•Challenge 4: Users Wanted to Go Cashless in Taxi, too
In the pa, users’ r concern was – cashless payment while booking taxis. ey were not
able to pay their drivers online. And, this was the major challenge was faced by the majority
of people.
Solution By Uber
Uber noticed the above issue and came up with the solution – go with the cashless while
driving the cab through the Uber app. e cashless payment syem was induced by Uber
in order to prevent the people who wanted to travel cashless.
Lessons Every Startup Can Learn from Uber
•Have Safeguards in Place to Avoid Scandals
While Uber has earned an impressive reputation over the pa year, it has also faced criti-
cismovera fewscandals. Somecuomersclaimthatdrivers had cheatedthem outof money
or sexually assaulted them. Some of these ories have been conrmed, while others have
been thoroughly debunked – either way, they can ill have negative implications for Uber’s
brand.
ese types of scandals ree poorly on any company’s brand image. For this reason, the
company – and other entrepreneurs who follow its lead – would be wise to put sucient
safeguardsin place to keep issues fromarising and nullify any negative publicity thatfollows.
Mark Cuban onceoke of Travis, saying; “Travis’sbigge rength isthat he will run through
a wall to accomplish his goals. Travis’s bigge weakness is that he will run through a wall to
accomplish his goals. at’s the be way to describe him.”
Key Takeaway: Be proaive about the scandals that could ae your organization and have
a plan for how you’ll handle any that arise. Now isn’t the time to hide your skeletons away
in the closet.
•Minimize Infrastructural Requirements
Startups inevitably face higher expenses as their businesses grow. at said, there are many
ways they can minimize their cos by keeping a reduced infraruure in place.One of the
reasons that Uber has grown so quickly is that it doesn’t have the same overhead expenses
as traditional cab companies.Uber has been able to save money by hiring noncommercial
drivers.
Controlling expenses is a critical part of running a business, so rive to be as co-ecient
as possible.
•Provide Competitive Compensatory Packages to Aract Workers
Since the company’s infraruure is more limited, it doesn’t require the same amount of
manpower on hand. As a result, Uber can oer more exible schedules to employees, which
are araive to people that need additional reams of income. Many Uber employees like
they idea that they can make money on the side while working a regular job.
Oering excellent compensation is a great way to ara high quality employees. Create a
compensation package that appeals to them and that diinguishes your business from your
competitors.
•Decentralize Decision making
Companyexecutivescan realiically managemofunions during a company’sinitial ages
of growth. However, delegation becomes more and more important as the company pen-
etrates new markets and grows its subscriber base. Uber faced this challenge head on by
outsourcing more remedial decision making funions to local organizations as growth ac-
celerated.
To see this in aion, consider that the company’s central headquarters in San Francisco ill
accumulates data from all of the cities that Uber operates in and uses it to make more com-
petent decisions. However, this oce has lile involvement in mo other aes of the
company, such as hiring. Inead, Uber believes that local management has a beer under-
anding of the measures that need to be taken to ensure services are provided eciently
and that both cuomers and employees are satised with the experience.Empower local
managers to make crucial decisions.
•Keep it Simple
Contrary to popular belief, elegant business models are rarely the way to go with art ups.
More moving parts in a business model means that there are more ways for things to go
wrong. Subrah Iyar, the co founder of Moxtra and Webex, argues that the genius behind
Uber’s approach lies largely in its simplicity.
–Develop a clear vision for your business model in advance.
–Communicate procedures to everyone in the organization and provide sucient train-
ing to incoming employees.
–Provide necessary internal controls to ensure the business operates in line with the
company’s vision.
–Monitor cuomer feedback, regulatory changes and other external variables so the
business can adapt as needed.
•Leverage Word of Mouth Cuomers are more likely to tru feedback from their peers
than advertisements. A report from Nielsen shows that 84 percent of cuomers take aion
from personal recommendations – the highe rating of any advertising method surveyed.
Uber encourages cuomers to share their personal experiences, because it recognizes that
doing so is one of the fae ways for the company to grow.
Word of mouth is a core part of Uber’s marketing rategy and it’s played a large role in the
company’s success.
•Find Genuine Solutions to Real World Problems
Cuomersgive their business to the companies that solve the problemsthey’refacing. Make
ityour prioritytoprovide genuine solutions to problems your competitors have overlooked.
•Be an Early Adopter
Being the r entrant into a new market is crucial. Uber was the r ride sharing company,
which allowed it to carve out a large share of the market. While Uber eventually faced com-
petition from other emerging ride-sharing providers like Ly and SideCar, the company has
a ronger brand presence because it was the r to market. As a result, consumers will al-
mo always think of Uber r when they think of ride-sharing companies – and that’s the
kind of brand recognition you can’t buy.
For this reason, there’s a signicant benet to entrepreneurs who take their ideas to market
as soon as possible.
You can gain a rong competitive edge by being the r company to market. Remember
the saying, “Ready, re, aim.”
Uber’s Revenue Generation Model:
If you have ever travelled in a taxi, you might have paid the driver in cash at the end of your
journey. e cash colleed by each journey is the only source of revenue for a traditional cab
company. Uber is no dierent. Neither does Uber have a dierent revenue model than the one
mentioned above nor it has any other source of revenue as of now. But ju imagine 1 million
rides a day. It will help you calculate those big numbers that the company earns. Let’s dig a lile
deeper to underand Uber’s source of income.
What has made them so successful is the fa that the revenue model is as unique as their busi-
ness model. It can be explained as:
• Dierent cab models to cater to everyone:
Uberhasnot limiteditself toa particular segment of carsortoa particular segment of people.
ere is Uber X, Uber Black for those who love to travel in a black car, Uber Taxi for those
looking for co-ecient solutions and Uber SUV for those who want luxury.
• Surge Pricing Technology:
Variation in cab fares according to situation is an important ae of their business model.
Whenever the demand increases, per mile prices are automatically increased. e new price
dependson the number of availabledriversandthe number of requesmadeby peoplewho
want to travel. It has applied for a price surge technology patent in the US.
• Other Uber rides:
Uber has come a long way from cabs. It now oers boats, helicopters as well as some other
tranortation means on demand. ey recently launched a motorcycle-pickup service in
Paris, a delivery service in San Francisco, and an ice-cream-truck-delivery service in a few
cities too. However, these means are available in seleed geographical locations but it has
led them to add new reams of revenue into its business model.
Salient Features of Uber
• A user can tap his smart phone and call a cab at his location or could also book a ride in
advance.
• One can have SMS, Email alerts, Notications to Passengers.
• e cuomer can track the driver as he arrives to his location. e driver can also track the
exa location of the cuomer and reach his exa location.
• e payment procedure is handled by them. In some countries like India, they have even
arted accepting cash payments which are paid direly to the driver. Its Automated gener-
ated e- receipts.
• Can get Travel Hiory, has Multilingual support
Value Propositions
Customers:
• No need to wait for a taxi for long times.
• Free rides on certain occasions and discounts from time to time. Prices lesser than the nor-
mal taxi fares.
• Uber’s tag line says - Your personal driver. It lets cuomers travel in yle.
• Fixed prices for common places like Airport etc.
Drivers:
• Additional source of income.
• Flexible working schedules. Can work part time or simply whenever they like.
• Easy payment procedure.
• ose who love to drive can earn money while pursuing their hobby.
• Uber pays drivers to be online, even if they don’t get any reque.
6
How and Why Uber became successful?
Uber’s business and revenue model ju can’t be ated as complete if this widely asked queion
about their successful journey is not answered. ere were certain faors that led to Uber’s suc-
cess. Here’s a brief journey that Uber went through when it launched. Similar journey can be
followed by any art up which aims to make it as big as Uber.
• e problem with local Taxis:
Earlier, people had to and on the reet side and wave their hand in order to signal a taxi to
op. e wait time, the inconvenience and high rates were a problem for everyone. Quite a
few taxis were available and drivers / taxi companies used to charge whatever they thought
was right. ere was no control on prices and people were le with no other option. Apart
from this, the situation was worse during the peak hours as it was quite hard to nd an empty
cab.
• e launch of Uber:
Uber recognized the ongoing problem in regard to booking a taxi and gave a technological
solutionthroughamobile app. esolutiontobook a cab by tapping a smartphone brought
a revolution in the taxi indury. e app was ocially launched in 2010 and soon became
popular due to the value it provided to people.
• e early adopters:
It is quite dicult to market a newly launched produ or service in any geographical area.
What gave it the edge is that it launched in San Francisco, a city which is home to tech savvy
people. e r drivers on the platform came through cold calling. Many of them were
professional drivers with other cab companies or were self employed as a taxi driver.
To get their r cuomers, they took to social media and other mass marketing means. It
oered discounts, free rides and rates that were too less as compared to other cab services in
the city. e r cuomers were those who enthusiaically wanted to try the new service.
It oered rides from club venues to user’s doorep so the party people were amazed. It
oered rides to the corporate seor who worked in oces helping them to save time.
• Word of Mouth advertising:
Whosoever took a ride in Uber was baed by the r hand experience. is made the early
users to become regular cuomers and they also helped read the name by word of mouth
advertising. is word of mouth advertising was one of the major driving force
• Main Growth opportunities tapped by Uber:
–Party people who go to clubs, parties or events.
–Business Travellers and Touris.
–Cab at doorep in bad weather conditions.
–City’s Nightlife.
7
Funding
In total, Uber has raised $24.2billion from 22 rounds of venture capital and private equity in-
veors. e founders inveed $200,000 in seed money ¹ upon conception in 2009. In 2010,
Uber raised $1.25 million in additional funding. By the end of 2011, Uber had raised 4.5million
in funding. In 2013, Google Ventures inveed 58 million in the company based on a .4billion
pre-money valuation. In December 2014, Chinese search engine Baidu made an invement in
Uber of an undisclosed amount. e deal also involved conneing Uber with Baidu’s mapping
apps. In January 2015, Uber raised $1.6billion in convertible debt. In September 2015, Uber
raised another $1.2billion, led by another invement by Baidu.
In 2016, Toyota made an undisclosed invement in Uber and looked into leasing options,
which could potentially aid Uber drivers nancially, a move in reonse to the other partnerships
between Toyota’s and Uber’s counterparts. In June 2016, with plans to expand in the Middle Ea,
Uber received $3.5billion from the Public Invement Fund of Saudi Arabia.[140] In July that
same year, Uber raised $1.15 billion in debt nancing.
In January 2018, the company raised $1.25 billion in cash from an inveor group including
SoBank, Dragoneer Invement Group, and Sequoia Capital. e nancing valued the com-
pany at $48 billion. On Augu 27, 2018, Toyota announced a partnership with Uber to bring
an on-demand autonomous ride-hailing service to market, a deal that included a $500 million
invement from Toyota in Uber at a $72 billion valuation.
8
Uber Revenue and Usage Statistics
Uber is hailed as the archetypal disruptive business, and has certainly played havoc with the taxi
indury in majorcities acrossthe world by tearing up the rule book. is disdain forthe rule book
has, however seen it dogged by controversies throughout its exience. ough a ra of competi-
tors are gaining ground, it remains the dominant ride-hailing app across mo of the world.
8.1 Key Uber Statistics
1. Uber is available in 65 countries and over 600 cities worldwide.
2. 15 million Uber trips are completed each day.
3. Well over 5 billion trips have been completed worldwide.
4. Figures vary, but Uber′s market share of the US ride-hailing market is eimated at between
69%and 74%.
5. Uber revenue Q2² 2018 was $2.8billion, an increase of 63%(down from 70%in Q1).
6. Q2 net loss was 91 million, following prot of $2.5billion in Q1 (discounting sales to Grab
in Southea Asia and Yandex in Russia, a $312 million loss).
7. Total venture capital raised by Uber ands at $24.2billion.
8. Average Uber driver income is $364month.
9. 27%of US UberX drivers are female.
10. Chinese rival Didi Chuxing is the bigge international rival, valued at $56 billion.
Uber′s bigge marketis the US (with 41.8 million users in March 2018), though it is atruly global
enterprise with the exception of certain regions in which local business has been sold to regional
operators.
e second-bigge Uber market is Brazil, in which 17 million were using the app in March 2018.
London, UK is the bigge European Uber market, with 3.5 million users. In India, there were
reportedly over 5 million weekly aive riders as of Augu 2017.
8.2 Uber Demographics
US Uber users generally seem to mirror the population itself, being lit evenly along gender and
income lines.
Usage is mo concentrated among younger age groups, while there’s a relatively even lit in
terms of urban and suburban users - as we might expe from a service that is only available in
urban hubs.
9
Uber Finances
9.1 Financial Management:Introduction
Finance is the lifeline of any business and like mo other resources, nance is always limited.
On the other hand, wants or demands are always unlimited. erefore, it is important for a busi-
ness to manage its nances eciently. Financial management refers to the strategic planning,
organizing, directing, and controlling of nancial undertakings in an organization or an
initute to achieve organizational goals and objeives as we have learned in management by
objectives.
It also includes applying management principles to the nancial assets of an organization, while
also playing an important part in scal management.
Financialmanagementis anidealpraicetocontrol procurementoffunds, utilization of funds,
accounting, payments, risk assessment and every other thing related to money.
Proper management of an organization’s nance provides quality fuel and regular service to en-
sure ecient funioning. If nances are not properly dealt with an organization will face barriers
that may have severe repercussions on its growth and development.
[3]
9.2 Elements of Financial Management
• Invement decisions includes invement in xed assets . Invement in current assets are
also a part of invement decisions called as working capital decisions.
• Financial decisions - ey relate to the raising of nance from various resources which will
depend upon decision on type of source, period of nancing, co of nancing and the re-
turns thereby.
• Dividend decision - e nance manager has to take decision with regards to the net prot
diribution. Net prots are generally divided into two:
–Dividend for shareholders- Dividend and the rate of it has to be decided.
–Retainedprots-Amount of retained prots hastobe nalized which will depend upon
expansion and diversication plans of the enterprise. [4]
9.3 Financial Model of Uber
Uber gross revenue has been growing eadily since the beginning of 2017.
Uber is basically a tranortation network company (TNC) oering services including peer-
to-peer ride sharing, ride service hailing, food delivery and a bicycle-sharing syem which is the
basic source of income for the company.
e Uber app gives riders a predetermined co of the ride before aually conrm the ride. Uber
uses a dynamic pricing model that is the prices for the same route vary based on the supply and
demand for rides at the time the ride is requeed.
9.4 Financial results
In 2014, Uber reported a loss of 671 million on 495.3 million dollars of revenue.
In 2015, Uber’s revenue grew to an eimated 1.5 billion dollars.
In 2016, Uber reported a 2.8 billion loss.
In 2017, losses grew 60 percent to 4.5 billion.
In 2018, Uber reported a 1.8 billion loss.
9.5 How does Uber make money and optimize it to make more profit?
• e company generates revenues primarily by charging clients for the rides and through
promotional oerings and partnerships involving third parties, although it also derives ad-
vertising income from its website.
• Clients reque a ride with an app on their smart phone from their current location which
generates money as one has to download the app from plays ore. Google play store and
Uber earn money through this.
• Drivers for this company use GPS mostly Google maps or similar navigational technol-
ogy to locate clients and determine the be route to retrieve these clients and deliver them
to their desired deinations which in turn generates revenue for Uber and would give a
share to navigation service provider and app developer.
• Real-time ride sharing makes use of seats that are not lled in vehicles, cuing down on the
co of tranortation and lowering the use of fuel in turn saving fuel and money.
• Driver payments and ride matching are inantaneously handled using an optimization
algorithm which can be similar to assignment problem algorithm thatwe havelearnt,
which is a tool that lis all necessary information and organizes and sorts it accordingly to
provide the mo ecient use of time and fuel, as well as to make the ride as pleasant as
possible for the clients.
• In 2012, it initiated UberX, a program that began oering smaller vehicles at a reduced co.
Uber Pool, a great endeavor for tackling heavy demand and the lesser number of available
rides for busy locations was launched to ara more cuomers who couldn’t aord luxury
vehicles or travelling singly in a cab, now could travel at a 65 percent less price.
• Uber initutes surge price fares that ara drivers and increase the company’s overall rev-
enue, servicing clients who are in need of tranortation that is otherwise unavailable in
severe weathers and important holidays.
• e payment to be made by the client is syematized through an algorithmic procedure
which takes into consideration the faors of time taken, diance traversed and fuel used.
In fa, surge pricing also makes use of these algorithms.
• On bad weather days, hours of trac congeion and on public holidays, when the demand
for cab rides is higher than their availability, Uber clients have to deal with price surges. e
company is totally tranarent about this dynamic pricing rategy and informs the riders
beforehand if there’s an increase in the price of the cab.
9.6 Why is Uber in losses?
• Competition from local companies as shown above like Ola adds up to excess expenditure
on advertisement and free trips to ara cuomers.
• Ithaving a higher co base than it does revenuegeneratingcapacityoroperatingcos greater
than its gross prot.
• Operating cos are much more than the revenue generated.
• Uberhasbeenforcedintoperennially aggressiverecruitmenteorts, oeringsign up bonuses
that can run well in excess of 1,000 dollars (on top of normal compensation) for new drivers
which has led to loss of a lot of money.
• Multiple management miseps have further hindered Uber’s performance, fueling growing
diru from cuomers, drivers and regulatory agencies.
• Invements into self-driving trucks and bikes has led to lot of expenditure but minimum
income.
• Uber also ent 142 million dollars on promotions, paid drivers incentives, ent on re-
funds, and paid millions in taxes which exceeded the revenues or prot made.
• We can analyze that this company aually failed in invement decisions of the nancial
management because of which even aer it’s Gross revenue geing increased year aer year,
it is ill in losses.
9.7 Uber valuation
Its valuationhas shot up over itsyears of operation, anding at a minuscule-seeming $350 million
in early 2012, shooting up to $18 billion two years later. By the end of that same year, 2014, this
had more than-doubled. With the exception of the Sobank re calibration, the value has been
on the up since. Its rocketing in value has led it to be labelled a ‘unicorn’ – that is a art up that
has achieved a valuation of over $1billion. Technically, with a valuation of over $10 billion, Uber
now classes a ’decacorn’.
10
UBER Competitors
10.1 Uber vs. taxi usage
In New York, perhaps the home of the world’s mo iconic taxis, Uber became the mo popular
form of private hire tranort in termsof rides per day in September 2017. Since then, bar a couple
of minor dips, it’s been in front - and continuing to pull away.
As of Augu 2018, 436,000 Uber rides took place per day, compared to 275,000 taxi rides, and
122,000 Ly rides.
Oneof the reasonsUber is able to command such aleadis due tothe considerablylargersizeof
its eet. Around 63,000 Uber vehicles were available to New Yorkers in Augu 2018, compared
to 34,000 Ly vehicles and a mere 16,000 yellow cabs.
10.2 Uber vs. Lyft vs. Grab vs. Didi Chuxing
Uber was the r mover in terms of ride-hailing apps. Chief among its rivals are Ly, Grab, and
Didi Chuxing. e r operates solely in the US market (and a tiny part of Canada), while the
laer two operate in the lucrative Southea Asian and Chinese markets reeively. Didi Chux-
ing controls 90%of the market in China.
While Uber’s key focus is on North American market, the global ride-hailing market is concen-
trated in Asia.
Uber controls 46%of the market in India - the world’s third-biggest.
Ly is the only true dire rival in the US, with local operators Didi Chuxing and Grab operating
in markets in which Uber does not have a signicant presence - in both cases because business
was sold to the local rival.
User and driver ratings play a big part in the ride hailing experience. In this ree, Ly can
claim the edge over Uber, with scores of 4.8 on average, compared to 4.4. A normal taxi ride is
likely to average a mere 4.0
10.3 Uber vs. Lyft drivers
In a survey of 1,200 drivers condued in early 2018 found that over half of US ride-hailing app
drivers only used Uber - not too far under four times those who used only Ly. One in ve re-
ported using both.
11
Criticism and subsequent changes in strate-
gies and policies
11.1 Driver criticism of classification of independent contractors
Unless otherwise required by law, TNC drivers are independent contraors and not employees.
is designation may ae taxation, work hours, and overtime benets and lawsuits have been
led by drivers alleging that they are entitled to the rights and remedies of being considered ”em-
ployees” under employment law. In reonse, TNCs say they provide ”exible and independent
jobs” for drivers.
In O’Connor v. Uber Technologies, a lawsuit led in the United States Diri Court for the
Northern Diri of California on Augu 16, 2013, Uber drivers pleaded that according to the
California Labor Code they should be classied as employees and receive reimbursement of busi-
ness expenses such as gas and vehicle maintenance cos. In March 2019, Uber agreed to pay $20
million to sele the case.
e Central London Employment tribunal ruled that Uber drivers are ”workers”, rather than self-
employed individuals, and are entitled to the minimum wage under the National Minimum Wage
A 1998, paid holiday, and other normal worker entitlements.
In March 2018, the Federal Department of Economic Aairs, Education and Research of Switzer-
land, gave the legal opinion that under the conditions that bind drivers to Uber that they should
be classied as employees.
11.1.1 Driver criticism of compensation
Driver’s have complained that in some cases, aer expenses, they earn less than minimum wage.
As a result, in some jurisdiions, such as New York City, drivers are guaranteed a minimum wage.
11.2 Misleading drivers of potential earnings
In January 2017, Uber agreed to pay $20 million to the US government to resolve accusations by
the Federal Trade Commission of having misled drivers about potential earnings.
11.3 Criticism for collecting fares during a taxi strike
In late January 2017, Uber was targeted by GrabYourWallet for colleing fares during a taxi rike
in New York City in prote of Trump travel ban Executive Order 13769. e Order had trig-
gered a taxi rike in New York City, to which Uber reonded by removing surge pricing from
JFK airport, where Muslim refugees had been detained upon entry. Uber was also targeted be-
cause then-CEO Travis Kalanick joined an Economic Advisory Council with Donald Trump. A
social media campaign known as #deleteuber was formed in prote, resulting in approximately
200,000 users deleting the app. Uber added user account deletion to meet the resulting surge in
reques. Statements were e-mailed to former users who had deleted their accounts, asserting
that the company would assi refugees, and that CEO Kalanick joining the Council was not an
endorsement of President Trump. On February 2, 2017, Kalanick resigned from the business
advisory council.
11.4 Aggressive strategy for dealing with regulators
When Uber was ledby Travis Kalanick, Uber took an aggressive rategy in dealing with obacles,
including regulators. In 2014, Kalanick said ”You have to have what I call principled confronta-
tion.” Uber’s rategy was generally to commence operations in a city, then, if it faced regulatory
opposition, Uber mobilized public support for its service and mounted a political campaign, sup-
ported by lobbyis, to change regulations.
In 2014, while in the mid of a regulatory bale, Portland, Oregon’s tranortation commis-
sioner called Uber management ”a bunch of thugs”.
In November 2017, CEO Dara Khosrowshahi dropped the ”win at all costs” rategy and im-
plemented new values for the company, including ”we do the right thing”.
11.5 Allegations of inadequate background checks and vetting of
drivers
Concerns regarding Uber’s background checks were raised aer reports of sexual abuse of pas-
sengers by Uber drivers. In November 2017, e Colorado Public Utilities Commission ned
Uber $8.9million aer discovering that 57 drivers in the ate had violations in their background
checks. e ne amount equaled $2,500 per day that an unqualied driver worked.
11.6 Settlement with victims
In Augu 2018, Uber agreed to pay a total of $7million to 480 workers to sele claims of gender
discrimination, harassment and hoile work environment.
12
SWOT Analysis
12.1 Strengths:
1. Dominant leadership position :
Uber has dominated the ride hailing market operating in approximately 83 countries and
over 674 cities worldwide with over 77%share of the US ride hailing market. As of 2017,
the company’s cuomer base rose to 40 million per month (Dogtieve 2018). Fir mover
advantage has given it an opportunity to capture the bigge share of the ride sharing indus-
try.
2. Big brand name and awareness :
Uber has become the world’s bigge ride sharing service operating in more than 83 coun-
tries and 674 cities globally. As of 2018, the company commands 73%share of the market
in USA (Statia 2018). is is in line with a consumer survey in the US that showed 76%
of ride hailing app users used Uber more frequently compared to 10%for main rival Ly.
Another 70%surveyed, who hadn’t used the company’s services ated they were familiar
with Uber brand name (Kulkarni 2017).
3. Adaptive :
Uber is also known to adapt very well to business conditions. Because of its international
exposure, Uber faces various problems in various regions. Uber is known to be a smart mar-
keter and has adapted very well wherever it has eablished its business.
4. Convenience, ease of use and low costs :
With its dierent services, Uber has made its services easy to use with a press of a buon
in the mobile app and the close driver to your location will be hailed. It is thus easy to
use and also aordable for dierent classes of people, which has increasedits cuomer base
and market share. According to research, mo of the cuomers who use Uber services
have mentioned price, easy of use and convenience as their top reasons for using the service
(Kulkarni 2017).
5. Highly diversied :
Uberhasdiversied its services through oering alternativetranort modesincludingtran-
sit tickets, food delivery (Uber Eats), rental cars (Uber Rent), bikes (Uber Bikes) and cash
payment options. is is a major rength that has enabled it to take a big share of consumer
expenditure across diering public tranortation modes, short term rentals, package deliv-
ery and short haul services, helping it grow market share, revenue and prots.
6. Dynamic Pricing strategy :
Uber has adopted the dynamic pricing rategy which works on the demand supply prin-
ciple of economics. Higher the demand, Higher the price. is becomes really benecial
for the company and the drivers. In peak hours as well as in Night time, drivers earn a good
amount of money.
12.2 Weaknesses:
1. Sexual harassment accusations :
According to a report by CCN, at lea 103 Uber drivers have been accused of sex abuse
by clients in USA in the pa four years (O’Brien et al., 2018). As the mo valuable pri-
vately held tech art-up in the world operating in over 630 countries, the sexual assaults
have ruined its reputation in some US geographies with many women turning to other ride
hailingservices like Ly. Similarincidences havebeen reported in Indiawherea rape charge
again an Uber driver in New Delhi led to its temporary ban (Gordon 2015).
2. Highly dependent on Internet :
Uber is heavily dependent on internet conneivity to expand and develop itself in devel-
oped countries. us, it is facing problems in developing and emerging countries where
internet is slow or poor.
3. Falling market shares :
As of 2017, Uber’s market share fell from 84%to 74%while Ly’s grew from 20%to 22%
mainly because of the various scandals and the delete Uber campaign (Bhuiyan 2017).
4. Highly Dependent on Manpower :
Driversarethefaceofthe companyandthusthecompany’simagedepends on thebehaviour
of drivers towards the cuomer. is is a highly uncontrollable situation even though ri
guidelines are provided to the drivers.
5. Caters only to Tech Savvy individuals :
Digital Literacy in developing nations is low and hence technology based applications such
as Uber only cater to those who are technologically updated.
6. Low barriers to entry :
Uber is in an indury where the barriers to entry are very low so it will face competition
in multiple fronts. Already in India, Meru, Ola and others are giving tough competition to
Uber.
12.3 Opportunities :
1. Dissatisfaction with unorganized market :
Cuomers are unsatised with the unorganized cab market which presents an opportunity
for Uber to take advantage of. is is one of the main reasons for the success of Uber. Local
cab drivers are known to be rude and do not comply.
2. Increasing internet penetration :
With Government’s move to digitize India, Number of smart phones are increasing and
technology based applications like Uber can expand their services to other cities and en-
large its footprint over the country.
3. Partnership with hospitality brands :
Uber can partner with hoitality and hotel brands to serve millions of touris who reg-
ularly need taxi services while aying at a hotel.
4. Rising Disposable income :
With rising diosable income, cuomers are willing to end higher on convenience. e
growing income of the middle class consumers globally has also proved protable for Uber.
5. Caters only to Tech Savvy individuals :
Digital Literacy in developing nations is low and hence technology based applications such
as Uber only cater to those who are technologically updated.
6. Alternate transport :
Uber has launched ’Uber chopper’ in various countries and can look for other tranort
medium catering local needs. In India, Uber can launch Bus aggregator syem.
12.4 Threats :
1. Government regulations are unclear :
e primary point of disagreement between cab aggregators and government regulators is
about their legal atus and whether they should be treated as conventional taxi companies
or as IT companies.
2. Customer retention and brand switching :
As competition rises, it becomes all the more dicult to retain cuomers and drivers for
Uber. Any monetary advantage can sway the cuomers and drivers from Uber.
3. Low margins :
Uber helps the drivers to get a high number of daily rides but it does not have a high-prot
margin for the drivers and thus they can easily be swayed away.
4. Revolt from unorganized market :
e unorganized market of cab drivers can revolt again such companies which are taking
away the bread and buer of drivers from unorganized market. Such a revolt will direly
ae the operations of a brand like Uber.
5. Competition from Ly :
While Uber has been enjoying superior growth through technological innovation which
came at the co of traditional taxi companies’ business, things seem to have arted chang-
ing with the emergence of Ly.
13
PESTLE Analysis
13.1 Political factors :
When Uber arted its operations in 2009, there was no other ride-hailing taxi app. Accordingly,
legislation related to the regulations of such services did not exi. With the advent of Uber, the
following and other queions needed to be answered by local governments and authorities:
• Who is reonsible in case of car accident: Uber or the driver?
• Does it need to be compulsory for Uber drivers to have taxi licences?
• Can ride-hailing giant li thousands of its drivers as contraors, but not employees?
• Does the company has to comply with minimum wage requirements?
Dealing with above and other related queions in dierent countries and regions have caused
charged political debates. While some local governments have been favourable towards the com-
pany taking into account its modern business model, others demanded ri adherence to the
rules and regulations making no dierence between Uber and regular taxi companies. As a result,
Uber has been banned in a number of countries and such as Bulgaria, Hong Kong and Germany
and certain cities such as London and Brno.
13.2 Economic factors :
e range of economic faors aeing businesses is extensive and the mo important faors
include macroeconomic climate, ination rate, intere rate, currency exchange rates and unem-
ployment rates. Moreover, economic faors such as co of labour, changes in diosable income
of consumers and tax rates also ae businesses.
For example, due to a new tax law introduced in the US in February 2018 ”freelancers and other
independent contraors will be able to dedu 20 percent of their income from their taxable in-
come before paying the new lower tax rates”. is particular change in external economic faor
has positive ee on Uber, because it increases araiveness of becoming it’s driver from a -
nancial point of view.
13.3 Social factors :
Cuomers of Uber enjoy its easy to access platform. Choosing an appointment and pick-up time
is easy using the app on smart phones. It requires no communication rather than a few presses of
a buon. e cheaper price is enticing to many, which has led to the explosion of Uber’s growth
all over North America. As consumers enjoyed their rides, they poed about their experience
on social media sites. Word of mouth read awareness quickly. But with the popularity increase,
prices in major cities rose too. Good for Uber, but not welcome by riders. Still, because of the
ease of use, cuomers choose Uber frequently. e more accessibility Uber provides, the more
people will use its services rather than taxis or even public tranortation.
13.4 Technological factors :
Uber read like wildre through social media. People explaining their riding experiences online
readand shareories. Itencouragednew users to do thesame. Buyersaresearchingfor cheaper
tranortation options and Uber fullled this need. Consumers make appointments through the
app. An eimate for the ride co can appear in the app - it depends on many faors like drop
o location, trac and weather. ey can pay for the ride up front through the app too. And
drivers who are on duty reond and pick up the passengers to take them to their deination. e
app is incredibly important to Uber. It can’t funion if the app goes down or suers diculties.
e company mu ensure everything is working, reliable and ready to go. Many drivers use 4G
networks to conne to the app - it’s deemed critical to do their jobs.
13.5 Legal factors :
Traditional taxi companies have to buy expensive licenses for exclusive rights to oer reet-hail
trips, whereas under Uber’s new rules, its drivers a as independent contraors rather than em-
ployees, so there are signicant risks to both riders and drivers to sele any diutes should ac-
cidents occur. ey are not entitled to the minimum wage, paid vacations or health insurance
(Petropoulos 2016). us, the company undercut prices due to lower overheads (e.g. admin-
irative and running cos). Uber is reported to be banned in many countries (e.g. Belgium,
France, Germany, Italy and Spain) for its unique business model. e consequences are more
regulatory reriions, nes and bans as governments in Latin America crackdown on taxi licens-
ing that could derail its regional expansion plans (BMI 2015a).
13.6 Environmental factors :
rough sharing economy, rms can promote the concept ’suainability’ as a value proposition
via either reduion of new resources acquisition by fully utilizing exiing idle resources or re-
ducing the carbon emissions as in the case of Uber as argued by Schor (2014). Uber’s ee on
the environment is ever shiing. Many believe it increases trac congeion and fuel usage. But
udies have shown Uber hasn’t increased congeion. People may use Uber inead of public
tranortation. Analys will have to compare Uber fuel usage versus public transit versus own
tranortation for a thorough analysis of Uber’s environmental impa. As many dierent faors
can contribute to the nal number.
14
Further Extensions of Uber,Beyond Ride-
sharing
Uber oers various levels of service like UberASSIST which provides additional assiance to se-
niorcitizensandpassengerswitha physicaldisability,but cannottranorta non-folding wheelchair
(though there are UberWAV for wheelchair-accessible vehicles). Also UberBOAT, UberBlack,
UberGO and many other services there.
Apart from these ride service, Uber has following subsidiaries:
1. Uber Eats
In Augu 2014, Uber launched UberEATS, a food delivery service. Uber Eats market share
grew from 3%to 24%in 2018.
2. Uber Freight
Uber Freight is a free app that matches carriers with shippers. Shippers tap a buon to in-
antlybook theloadstheywanttohaul. Andthanks to upfront pricing, carriers alwaysknow
how much they’ll get paid.
3. Uber Health
Uber Health is a HIPAA-compliant technology solution for health care organizations that
leverages the ride hailing power of the Uber platform. e web-based dashboard allows
hoitals and other healthcare professionals to reque, manage, andpay for rides for others,
at scale.
Healthcare organizations are using Uber Health to help get people to and from the care they
need, and to get a to and from work.
4. Uber for Business
Whether it’s employee travel or cuomer rides, Uber for Business gives you an easy way to
manage your tranortation needs. Built for work, it oers a clear view into employee trip
aivity with automated billing, expensing, and reporting.
5. JUMP bikes
One can use Uber app to rent an easy-to-use eleric assi bike provided by JUMP. Uber
Bike is currently available in San Francisco and Washington, DC.
15
Future Plans : Changing the future of
autonomous transportation technology
1. e road to self-driving vehicles
is innovative team is dedicated to building safe, reliable, and co-eeive self-driving
technologies. With teams in Detroit, Pisburgh, San Francisco, Tempe, and Toronto, the
group is bringing self-driving cars and freight trucks to the Uber network.
2. UBER ELEVATE : e future of urban air transport
Uber is developing shared air tranortation—planned for 2023—between suburbs and
cities, and ultimately within cities. We’re working with our Elevate Network partners to
launch eets of small, eleric VTOL (vertical takeo and landing) aircra in Dallas, Los
Angeles.
References
[1] UBER Website
https ://www.uber.com/in/en/
[2] Uber App Features
http ://www.allrideapps.com/taxi −app −feature −list/
[3] hps://www.managementudyguide.com/nancial-management.htm
[4] hps://www.toppr.com/guides/business-environment/business-funions/nancial-
management/
[5] Wikipedia
https ://en.wikipedia.or/wiki/Uber
[6] Uber Statiics
hp://www.businessofapps.com/data/uber-statistics/
[7] SWOT and Peel Analysis
hps://pestleanalysis.com/pestle-analysis-ub
