Critical Review for Uber Technologies Inc

A disruptive innovation is any innovation that creates a new market and disrupts an existing one. Since its inception, the brand has changed the shape of the taxi industry. There has been a lot of ongoing debate regarding the status of Uber as a disruptive innovation. It is important to note that growing quickly and being disruptive are two entirely different things[1]. Products or services that target existing customers are better known as sustaining innovations.

Uber started its services as a high end car service. Since the beginning Uber faced a direct competition with several taxi businesses across the world. There are important questions that need to be answered in order to understand if a particular business is a disruptive innovation or not[2]. Many scholars believe that Uber is not an example of disruptive innovation because it does not offer anything substantially different. Even then, the contribution of the brand cannot be undermined owing to the level of convenience and technology it has introduced to the industry.

Upon entering the industry, Uber has been widely accepted across the globe because the brand has offered people with a lot of convenience. At the same time, the company has provided a source of employment to millions of drivers as well. Today customers do not need to worry about the weather or time in order to get a taxi. They can simply book a cab through a single click on their mobile phones and the cab would be made available at their doorstep.

The Uber ban

Since its establishment, Uber has faced several protests from various taxi associations throughout the world. Certain governments have done so to protect the already existing players of the taxi industries[3]. On the hand, in some countries, Uber has demonstrated a lack of corporate ethics and responsibility. At present, there are various legal battles that the brand is fighting. Several taxi drivers have protested against the use of Uber.

In Bulgaria, Uber was suspended post accusations of “unfair trade practices”. The company failed to meet the minimum requirements of legislations in order to register as a taxi service. Denmark law has made it compulsory for taxi drivers to cover certain taxi meters on a monthly basis. This law does not suit Uber’s business model and hence the brand was forced to pull out of the market[4]. Even in Italy, Uber is partly banned. The taxi company has been accused to constitute unfair competition. Hence Uber is not even allowed to advertise in the Italian market. Even in India Uber faced a lot of problems after drivers were accused of raping their passenger. Post that Uber is partly banned in India[5].

A severe disadvantage of Uber brand is that the organization does not have stringent background check policies for all its drivers. The problem with expanding in several countries is that it is difficult to adhere to guidelines, laws and policies of all these countries. Because of this, Uber has been banned in over 35 countries across the world. 

Promoting Car Pool

In the face of fierce competition, it is imperative that businesses work towards differentiating themselves in order to gain a competitive advantage. The foremost strategy adopted by Uber was the Uber pool service. This service allowed customers going to nearby destinations to share their cabs and pay half the price for their trip. This proved advantageous for customers as well as for the environment. Customers get to reach their destination at a lesser price. In fact, various customers consider Uber pool to be an effective way to enhance their social life.

On the other hand, some people have shown resistance towards taking pool cabs. This is because they feel a lot of apprehensions regarding the safety of passengers while travelling by Uber pool. In order to overcome this, the brand must consistently spread awareness through social media and traditional marketing platforms. Uber must also ensure the safety of its passengers.

On the environment front, car pooling has been promoted by several governments across the globe[6]. Car pooling through Uber is an excellent initiative by the brand to contribute towards the environment and work towards reducing high levels of air and noise pollution. This initiative of the brand is highly effective and has proven results across various countries of the world.

Safety

Uber’s safety policy has been in question since a long time now. There are several safety measures which have already been taken by the brand. However, increasing efforts need to be put in order to ensure further safety of customers as well as drivers. The primary need is to do a complete background check and a police verification of all the drivers that are associated with Uber. This would ensure that people with any form of criminal background will not take up this job thus ensuring the safety of customer.

Secondly, all the customers are also requested to rate the driver after their trip ends. A lot of incentives and bonuses of drivers largely depend on their overall ratings. Customers are asked to give these ratings on the basis of driver behaviour and mannerisms. Such efforts also ensure that the driver behaves well with their customers and ensures that customers have a positive travelling experience with Uber.

Despite such efforts, Uber’s safety has been questioned several times. Drivers have been accused of rapes and other forms of misconduct. Customers have even complained about feeling unsafe with the prospect of taking pool services. Therefore, Uber must introduce a lot more stringent strategies in order to ensure safety of the customers.

Employment through Uber

A major advantage of Uber is the level of employment the brand has generated across the globe. Uber drivers are paid higher than other taxi drivers from different parts of the world. Uber completes approximately 15 million rides per day which suggests that the brand has recruited over 2 million drivers that are associated with Uber right now. There are several incentives and bonuses that drivers can make while their association with Uber above and beyond their salaries. This provides a lucrative alternative for drivers towards working with Uber.

Even despite these efforts, the disadvantage faced by the organization is a very high rate of attrition. Rate of attrition refers to the number of employees that leave an organization for any particular reason in a given year. Uber unfortunately does not offer a long term job security to its drivers. All the drivers associated with Uber are freelancers. They have flexible working hours and get paid per ride that they take. This is a risky proposition for the driver in terms of employment. Therefore drivers are not willing to work with Uber for longer durations.

The contribution of Uber in any economy by providing high level of employment cannot be undermined. There are millions of drivers associated with the brand. Retaining employees is an important aspect of effective human resource management of any organization. Uber must introduce unique strategies for improved levels of employee retention in order to ensure long term and sustainable relationships with employees throughout the globe.

Ease of payment

Uber has adopted a dynamic pricing strategy. This strategy ensures that the price of a product or a service is not fixed and fluctuates on the basis of demand and supply[7]. Uber technologies Inc. is focussed on bridging the gap between drivers and travellers. Therefore Uber has also adopted this dynamic pricing strategy wherein the price of the ride fluctuates on the basis of demand from customer end and supply for driver end. This strategy is unique to the business model.

The advantage of this unique pricing strategy is that drivers can earn more during a peak season while customers can get to travel at a lesser price during lean season. A major benefit of travelling by Uber is that the mobile application depicts the exact fare to the customer in advance. After getting a clear idea about the price, the customer can decide if they wish to avail the service or not. Customers can also decide to pay online or by cash.

Uber has ensured an ease of payment to the customers. Taxis run by meter in most countries. However, there are certain countries where the governments have not fixed any meter or cost per kilometre. In those cases, Uber is sign of increased awareness because customers can now know the amount they are going to pay beforehand.

Profitable business structure

When Uber was first launched, the taxis already existed in the market. So it is not that Uber created a new market. However, Uber as a firm used technology and innovation in order to introduce a better business process for the same service. Uber has bridged the gap between travellers and drivers. The business structure on the whole is highly profitable and has created a lot of convenience for customers as well as drivers. Drivers can rest assured that they will get a fixed pay while customers can avail taxi service from the convenience of their homes through a single click on their mobile phones. Even payment structures are highly flexible and very expedient. Customers continue to pay lesser for their travel while drivers are earning more per ride. The current growth rate and reach of Uber has also made it a trusted platform. Hence drivers also feel safe while associating with a brand as strong as Uber. The entire business process is enabled ease in the process of booking cabs. Similarly, the whole process is a lot more efficient and better managed. Drivers are provided with mobile phones with active GPS systems so that they can reach the desired destination in a hassle free manner. Their salaries as well as incentives are credited into their accounts on time. Lastly, drivers and customers are both rated on a scale of one to five by the other party. This helps in ensuring safety for both.

Recommendations and conclusion

There are certain aspects of the business that are not working well for the firm specifically with regards to safety and legal issues faced by the firm. In order to address the same in an effective manner, Uber must introduce stringent policies for customer safety. Employees at Uber and driver’s interests must also be safeguarded and efforts must be put in order to retain drivers and bring down their levels of driver attrition. The growth in technology must be adopted by the business in order to continue delivering value to customers as well as drivers. Efficient stakeholder engagement and effective marketing strategies are essential in ensuring long term growth and sustainability of the firm.

Bibliography

Cramer, Judd and Alan BK, ‘Disruptive Change In The Taxi Business: The Case Of Uber’ (2016) 106(5) American Economic Review

Frierk, T, Disruptive Innovation (GRIN Verlag GmbH, 2012)

Jacob, Jagan and Ricky RG, ‘Ride Solo Or Pool: The Impact Of Sharing On Optimal Pricing Of Ride-Sharing Services’ (2017) 21(1) SSRN Electronic Journal

Revell, Timothy, ‘Black Cabs Beat Uber On Speed In Taxi Races’ (2017) 233(3109) New Scientist

Sara AB, Curt D and Drew G, ‘CNN Investigation: 103 Uber Drivers Accused Of Sexual Assault Or Abuse (2018) CNNMoney’ https://money.cnn.com/2018/04/30/technology/uber-driver-sexual-assault/index.html.

‘These Are All The Places In The World That Have Banned Uber’ (2018) The Independent https://www.independent.co.uk/travel/news-and-advice/uber-ban-countries-where-world-taxi-app-europe-taxi-us-states-china-asia-legal-a7707436.html.

Zha, Liteng, Yafeng Y and Yuchuan D, ‘Surge Pricing And Labor Supply In The Ride-Sourcing Market’ (2017) 2 Transportation Research Part B: Methodological