BUSI7280 Managing in a Global Context : Management Theories

Introduction:

Knowledge management has developed as an important area in today’s corporate world. The companies gain competitive advantage in the market by the virtue of their knowledge about external and internal environment. This has given rise to knowledge as an intangible resources which shared, obtained and applied using technology. The companies share the knowledge about their products with the customers on the digital platform. This sharing of knowledge in order to market and sell products is known is ecommerce (Ellison, Gibbs & Weber, 2015). The paper deals with these two interrelated concepts taking Uber as its base of study. The first section defines the two concepts, their theories and discusses their uses today. The next section throws light on the key details and the use of these two topics in case of Uber. The next section delves into contextual factors responsible for success of Uber in the US and abroad. The factors are followed by their respective impact on Uber to show their relevance (uber.com, 2017).

Knowledge management and ecommerce:

Knowledge management is the process of creating, obtaining, using and managing knowledge and information in business operations. Wang, Noe  & Wang (2014) in their work stated that knowledge sharing and application has become critical in today’s corporate world. The companies manage and regard knowledge synonymous to their competitive advantage.

The companies today use technology to obtain, store, share and apply knowledge and have knowledge management system. Their vast bodies of knowledge have allowed them to take advantage of market opportunities and acquire high market position (Siemens, 2014). KM has become a capital that organisations use and maintain to retain their competitive advantage (Aggestam, 2015).

Knowledge management theories:

The importance of KM led to its growth as a formal discipline which attracted the attention of the corporate, consultants and the other practitioners. Organisational knowledge management theory states that organisations are structure which is designed in terms of hierarchy and culturally to manage knowledge. Kianto et al., (2014) in their work state that organisational performances are increasing dependent on knowledge related issues. The theory considers knowledge as an intangible asset which results in value creation of the customer.

Techno-centric theory knowledge management theory:

Kaiser, Kragulj & Gächter (2014) in their work that there is a close connection between information management system and technology in the organisations. The techno-centric paradigm is new way of managing and using knowledge by use of technology. The power of companies to share their knowledge using technology decides their competitive strength.

Defination of ecommerce:

Ecommerce, like knowledge management is based on technology and power of the companies to use it to promote products. Ecommerce or electronic commerce refers to the process and digital environment which companies use to market their products. The companies use electronic third party websites and their own official websites to advertise their products. They also allow customers to gain information about the products like their prices, ingredients and variants (Liang, 2015). The customers can also place orders online and gain information like tax, delivery charges and other relevant facts. Ecommerce has given world business a new edge because it allows companies to market their products before a global consumer base. The customers can buy products online which are available in other countries.

Theory of ecommerce:

The theory of ecommerce state that ecommerce has made a wide range of products before the consumers. The theory stresses on maintenance of knowledge of products and make them available to the customer over the digital platform. The theory encourages the companies to share potentially information with the customers to gain more trust and reliability (Flanagin et al., 2014).

Key details and its use in Uber:

The development of technology and science has enabled sharing of knowledge between organisations and individuals. The advancement of technology has made it possible to exchange information between smart phones, laptops, computers and tablets. Today mobile phone or smart phone based applications can be installed and view a large of products from all round the world (Einav et al., 2014). The use of knowledge management and ecommerce has made it possible for the companies to sell their products thus increasing their revenue. The mobile based application has led to disruptive innovation and allowed ordering of several services like grocery services, cab services and so on. It has seen rise of transport companies like Uber Technologies Inc, more commonly known as Uber which is has its headquarters in San Francisco, the United States of America.

The figure above shows the key details of total projected ecommerce sales till 2020. It shows that the sales are projected to increase every year which predicts that the companies will see more revenue generation from ecommerce sales. This diagram also shows that the companies should bring about innovation in marketing on the ecommerce space which is likely to emerge as a new competitive space.

Use of ecommerce in Uber and its impact on the company:

Uber has brought about disruptive innovation by using ecommerce portal which can be accessed using smart phones. The company provides cab facility and is the pioneer in sharing rides. The company invaded the business of cab drivers who used to offer rides and had the option to refuse rides. The company introduced the system of ordering of cab service by a simple mobile application from and to desired location. The application shows price and other charges which allow the user to decide whether he wants to order a cab (Werthner et al., 2015). The application shows maps which made easier for people to move about in new towns and cities using Uber cab service. It also gave options for payment like payment via credit or cash. The company uses this transparent pricing to create an ethical and trustworthy image in the minds of the consumers (Kuah & Weerakkody, 2015).

Hanna (2016) while discussing the use of ecommerce has helped the companies to increase their trade. Uber uses its website to inform customers about special offers which make the customer perceive increase in the value of his money. The company uses the digital platform to bring about innovation in its marketing and customer management. This combination of knowledge and technology has helped to increase its presence and reach out to a global customer base. The company uses its global market to generate a huge income and generate new business.

Contextual factors and their impact on Uber:

Uber serves a huge customer base that is divided into six segments.  The company serves its high end customers who want luxury rides by providing Sedan or any other luxury car. The company provide ride for customers who want to avail rides at extra price during rush hours. Uber offers cost effective rides at lean time periods, pool car sharing and even group travelling facility (Solomon, 2014).

Impact:

The above factor is also applicable for international customers which have led to the success of Uber in the foreign markets. The management of the company stores and manages a huge body of data and uses their preferences, income pattern and other factors to price rides according to their requirements. The impact of this value creation is that Uber is able to provide satisfactory services to its customers which have earned it the top position in the industry (Constantinides, Wittenberg & Lorenzo-Romero, 2014).

Political support for local industry:

The Uber is an American company which is headquartered in Sanfrancisco. The political parties provide support to Uber and in fact, some of its investors are actively involved in politics.

Impact:

The political support from the local political parties allows Uber to bring about innovation because it get preferences on grounds like road permits and so on. The political support shields Uber against challenges from new entrants. The politicians who invest in Uber want the company to lead the market so that they can enjoy capital maximisation. The political support also helps Uber to deal with trade union and employee conflict. Thus, the political support helps Uber to bring about innovation and preferential treatments. The political parties help the management to handle conflicts and provide it security against protests from unorganised taxi drivers’ unions.

Dysfunctional taxi system:

The success of Uber lies in its power to make taxi system dysfunctional and establish a modern application based riding system. Prior to advent of Uber and ecommerce based transport services, the local taxis were the only mode of communication for the people in San Francisco and other places of the USA. The taxis were rare and far below the expectations of the commuters. The drivers often refused to offer rides which created problems for people with mobility issues. The management of Uber viewed this dysfunctional taxi system and introduced a system of transport that is based on KMS. The company offers rides to people during any time of the day as per their convenient pickup location and destination.

Impact:

The Uber service revolutionised the transport industry and introduced the system of knowledge based driving service. The management was able to cater a huge customer base including populated cities, outskirts and even villages. The management prices the services to suit the needs and capabilities of the passengers.

International contextual factors of Uber:

The price surging and its capability of understanding the need of the customers has led to success of Uber in the foreign markets. The company understood that the cities in the United Kingdom, France, India and other rich countries have continuous need for transport services. The company took to price surging and provides services at the convenient of the commuters.

Impact:

The price surging allows the management to earn huge revenue and expand its market in new countries. Uber have succeeded in disrupting the business of the uncooperative cab services in many countries like India to some extent.

Creation of employment:

Uber provides employment opportunities in the host countries and employs drivers. These drivers who work for Uber can both lend their cars or drive a car owned by Uber. This helps the drivers to earn secure salary because unlike the small driving agencies, Uber is an international company.

Impact:

This allows Uber to attract talented driver who can connect to the customers and guide them properly. The superior knowledge of these drivers about the local landscape adds to the company’s knowledge base. Thus, the management can enjoy competitive advantage in the market due to the expert drivers.

Conclusion:

It can be summed from the report that knowledge management has developed into an area of strategic importance. The competitive advantage of the organisations is dependent on their power to obtain, retain, share and use the knowledge to generate revenue. Sharing of product knowledge over the internet and using it to attract orders has led emergence of ecommerce as a crucial market space. These two concepst, KMS and ecommerce go a long way in ensuring success of multinational companies like Uber.

References:

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Constantinides, E., Wittenberg, K., & Lorenzo-Romero, C. (2014). Co-Innovation: motivators and inhibitors for customers to participate in online co-creation processes.

Einav, L., Levin, J., Popov, I. and Sundaresan, N., 2014. Growth, adoption, and use of mobile E-commerce. The American economic review, 104(5), pp.489-494.

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