Question

Identify two critical stakeholders in the external environment that would affect the profitability of the ridesharing industry (e.g., Uber and Lyft). Explain why they can affect the profitability and what can be done by a firm to improve the firm’s profitability.

Answer 1

The two factors that can affect the profitability of ridesharing industry are:

1.) Government Regulations: Since companies like uber and lyft are operating in different countries. Changes in government policies and regulations can impact the profitability of these companies. Changes might include a review of fines, taxes, legal policies of a country in terms of MNC establishments. The steps these organizations can take may include strict driver's training to adhere to the laws of the country they are operating in, always keeping their accounts clear and as per the country's legal requirements, they must at all times ensure that the company is following all the legal and ethical steps while conducting business, always focus on creating positive word of mouth and goodwill.

2.) Technological advancements and Competition: The technological advancements taking place so rapidly may even lead to the complete elimination of these companies as in future there might be the introduction of self-driven cars, in that case, the companies have to start preparing to face the huge technology revolution and must invest heavily in R&D to meet the changing requirements and technology innovations taking place at such a rapid pace. Competitors might also come up with new innovations in the ride-sharing, to eliminate them strategies must be formed and implemented.

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