21854 Innovation - Creativity and Entrepreneurship For Business Model

Answer:

Introduction

Sharing, collaborative or peer economy follows a disruptive business model, which is affecting the traditional business models. Companies such as Uber, Airbnb and Lyft are the few famous brands in the peer economy, which has become a matter of concern for the traditional business model. A collaborative economy is like a technology platform, which is responsible for the exchange of assets and services between people across the different sectors (Hamari, Sjöklint & Ukkonen 2016). The study aims at analyzing the business models used for traditional transportation sector and the collaborative economy model.

Discussion

1. Advantages and disadvantages of the collaborative economy for workers, business and the government

Advantages and disadvantages for Workers

Advantages

The work nature is very Flexible in collaborative economy, which is also one of the points of attraction for workers towards the sharing economy. Here, they can plan their schedules on their own to meet their expectations with income and work-life balance. Moreover, it gives an opportunity to work in parallels with another permanent or temporary work. Flawless Payment is another difference between a traditional and collaborative freelancing works. Everything is taken care with a dedicated app which does not only educate about the payment, also enables the payment making through the online payment modes like Paytm or others. Cash payment can also be made. The feeling of independence is another factor which attracts freelancers towards the gig economy. Drivers are not required to work under any supervision rather they work on their own. They only supervise their work and manage it according to their needs (Martin 2016).

Disadvantages

Drivers are no

Pros and Cons for Business

Pros

‘Incremented profits’ is one of the attractions for businesses despite being imposed with strict taxation policies. It is increasingly becoming popular in terms of fulfilling the supply and demands of services. The disruptive business model is more capable in reaching to a large number of customers than the traditional model. These things make the gig economy a very profitable sector. It also has an advantage of Consumer trust. This is for its ability to do business in a smart way. One of such abilities is providing billing details which promotes transparent work behaviour. There is a feedback system which customers can use to post their views of rides. Apparently, it is a very transparent dealing with customer queries (Frenken & Schor 2017).

Cons

Consumer protection is a big issue and can really pose serious challenges to the company. Labor laws can also pose the unexpected challenges. For example, drivers working in the gig economy are not sure of their work status. Drivers working for collaborative economy are not sure of their work nature like whether they are the contractors or employees. Uber has already faced the Class action lawsuit (The Conversation 2018). Unfair taxes can alsobe imposed to prevent practices such as unfair profits making (Frenken & Schor 2017).

Positive and negative impacts on Government

Positive

The global government has a significant role to play in an increasingly growing gig economy to ensure that economic growth is maintained and unfair profits making is not entertained. In context to the impact, the rate of unemploymentshould decrease asthere will be flexible job resources to earn and fulfil the daily needs. A reduced unemployment rate will directly impact the government spending on recruitment & selection process.Thetraditional and disruptive business models will make increased spending on research & development (R&D) to stay alive in the competition. Such competitions will bring new technologies and will enhance the country’s technological capabilities.Moreover, foreign direct investments will improve and so the rate of employment (Kerr & Kerr 2018).

Negative

The nature of work for drivers working in the gig economy is a growing issue. For example, Uber, Lyft and other app-based taxi services have faced protests from their drivers for the nature of job. They do not currently have any clue on whether they work as contractors or part/full timers. It is also confusing whether Lyft and Uber will be monitored under local taxi commissions or the state regulations. Passenger security is one of the areas where businesses under gig economy will be strictly monitored. In the sharing economy, drivers work in flexible patterns and represent multiple brands. Passengers can potentially be at threats (Kerr & Kerr 2018).

Analysis of the traditional "Transportation Sector"

Industry's traditional business model

Incumbents:

Management policies in traditional modelare different from those in sharing rides. For every new taxi, owners are required to produce the entire document. Drivers are needed to obey the policies and strategies related to fares and all. Only licensed drivers are given the rights to drive vehicle on road. Booking takes place in two wayseither by a call on a dedicated telephone number or visiting the official website. The traditional taxi covers a wider area of service than the shared or app based. Feedback system was there as well but not as effective as in the sharing rides (Li 2016).

Creating and capturing value:

The traditional taxi services in Australia will very soon be switching to an “on-demand business model”. However, there will be the needs for some strategic plans to create and capture the possible values. One such traditional modelis "Porter's Value Chain Model".

The model can be broadly classified into two categories such as primary and support activities. Primary activities basically include the entire supply chain operation whereas the support activities are the internal operations activities.

Traditional taxi companies:It is important to improve the value chain operation to yield the desired benefits from the new business model. Communication will be an important factor as both drivers and customers are moving gradually to Lyft and other shared ridings. Efforts should be put into variety of works to help customers realise the difference.

Human resource management shouldhire the newly licensed drivers. Themove will be an option to fill the gaps created by the exit of a few drivers. They also need to work upon the decision-making skills to be able to identify the potential and emerging technologies. Third party service providers should be approached to purchase the dedicated app required to switch over to the “on-demand business model”.

Drivers of innovation:

Drivers of innovation can be broadly classified into three categories such as strategy, structure and processes. The strategy can further be classified into innovation strategy, evolving strategy thinking and dynamic capabilities. For the traditional taxi industry, the drivers of innovation strategy are the evolving strategic ideas for adopting a new business model and its dynamic capabilities. App-based taxis are still behind to traditional taxis in terms of market shares. Also that sharing rides such as Uber X are banned in a few big cities in Australia (Hong et al. 2016).

Now, there will be a need to have the appropriatestrategy to support the innovation. An effective implementation of the Post-bureaucratic strategy will be required to reduce the gaps in internal communication and promote the individuals’ ideas. Workplace factors such as wages’ distribution, eligibility factors for drivers and nature of employment must also be fulfilled. Physical designs such as training procedures, strategic handling of legal policies and customers’ complaints must be effectively dealt with to ensure the good outcomes (Soto-Acosta, Popa& Martinez-Conesa 2018).

The last stage of drivers of innovation is the processes that speak about the open innovation. It means that firms should not remain limited with its internal innovating capabilities but also expand to the external resources (Laperche& Mignon 2018). Traditional taxi industry seems to have learned from the disruptive innovation being adopted by the app based taxis. They may soon be in process to implement the innovation.

Level of competition:

Table 1: Five Forces Framework

(Source: Wu & Zhi 2016) 

‘Overall Cost Leadership’ and ‘Differentiation Focus’ should be the priorities for traditional taxis considering the industry-based competition. Differentiation is required to make everything look a bit different like the app interface, customer service standard and others. Cost-leadership is to attain the competitive advantage.

Analysis of Lyft

Reasons for how "Lyft" is able to create and capture superior value 

Creating and capturing value:

According to the Value Net Model, four factors are critical to operational success such as customers, suppliers, complementors and competitors. Sharing rides have used the model to perfection and also been able to disrupt the industry. They identified a few areas which passengers had disliked about the traditional taxis. They worked on those areas like the cheaper fares and customer service.

Lists of suppliers were limited just to the vehicle owners; however, app-based taxis went a step further to approach the third party service providers. Third party service providers were being approached to get the required pieces of equipment like the app interface. App interface allowed customers booking from the internet resources, the fact which never existed.

The use of technologies such as the app-oriented interface and GPS and the ability to identify the customers’ desires with a ride helped shared model to succeed. ‘Complementors’ is the one area where many companies do not succeed. However, sharing taxis such as Lyft have successfully managed it and is still expanding. It is doing even better than Uber in some regions like the United States (Cramer & Krueger 2016).

Compare and contrast:

Table 2: Compare and contrast to incumbents

(Source: Hall & Krueger 2018)

Sustainability of its competitive advantage:

Lyft like other app-based model is doing exceptionally well. The factsuggests that there will be barriers to any new entrant. ‘Brand image’ of shared taxis is a point of attraction forbothdrivers and customers. Organizational culture is another asset that is problematic to a many industries. It means that gig economy will continue to improve its innovating capabilities.Drivers relentlessly work for longer times which mean that there will be no shortage of drivers in peak hours.Operational excellence is one of the competitive advantages that gig economy has. There should not be any threat to its sustainability except a cost-effective approach(Cannon & Summers 2014).

Conclusion

In summary, it can be said that the conflict between traditional and sharing models will affect the government, workers and firms and industry. The government will have to look after so many tasks such as ensuring a legal adherence for the shared rides, promoting a fair competition policy and others. Workers will be confused between an old and new system of rides. The old system is less innovative than the new.However, there are no regular employment benefits in the disruptive business model. Traditional firms are looking to switch to a new business model seeking resurgence; however, a lot will be required to do in many business divisions. The competition between old and new business models is expected to continue. 

References

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