Question

At the moment, Uber appears to be the more successful of the two companies. In Chicago specifically, Uber appears to have more market share. a. Evaluate the strategy taken by both companies leading up to their IPOs, where both companies offered promotions to customers and incurred substantial losses. b. Going forward, what strategic moves would you make if you were Uber? c. Going forward, what strategic moves would you make if you were Lyft?

Answer 1

Ans 1: Uber has become very successful in a very short period of time. People like to use apps or other digital devices when requesting services nowadays whether it is for booking a hotel, paying online, ordering meals etc. We want to get things done on a mouse click. The other new development is we like to network and share as it happens with AirBnB as well and I am sure there will be more new services o that kind in the future. It's the sharing economy and it's something interesting and exciting for consumers. It shows new ways of doing things which not bad either. At the same time, this causes a lot of problems as well. Some of the serious ethical problems are:

Uber seems to make its own rules and not care about government rules in the countries. This is unfair and not an ethical business practice.
Uber takes away business from professional drivers who are well experienced and trained, and who pay taxes.
Uber increases fares for instance if there is an over demand. They did this when a natural disaster happened and which is very unethical for a company to take advantage and charge people higher fares in emergency situations.
Uber drivers do not pay taxes like other professional drivers have to do.
Uber company exposes consumers to risks like personal safety, accidents etc. which is unethical for a company to do.
Uber does not provide insurance, training, cars etc. to their drivers so they can easily have bigger profits.
Ans 2: Uber depends on managing future risks in below key areas Drivers, Surge Pricing, Fares, Drivers happy, Competitors,

1. Drivers: Uber increasing the number of drivers is one of the most important steps Uber will have to take, it must be controlled. An overflow of drivers will cause a decrease in the number of customers each specific driver obtains. Inevitably, this will lead to less money for the drivers, causing frustration. In other words, Uber must find the perfect number of drivers in the streets.

2. Surge pricing: Uber must be careful with its "surge pricing". Surge pricing is when Uber triples, even quadruple, their fare pricing on specific days (holidays, for example). Although this leads to an increase in net revenue for the company and its drivers, none of their customers will appreciate this. If Uber uses the surge pricing tool too often, it may lose customers.

3 Fares: Uber must also be careful with fares. This may come as no surprise, but Uber's biggest selling point is having a lower fare than a taxi. If they raise their prices too much, Uber's fares will not be as competitive as a taxi's fare, leading to many customers switching back to a taxi as their preferred mode of transportation.

4. Drivers happy: Uber should make sure it keeps its drivers happy. If this means not taking a bigger cut from its drivers (currently set at 20%), then so be it. Taking more from drivers will increase Uber's net revenue, but it will anger the drivers highly. !n the end, if Uber looks to grow substantially, one of their priorities will have to be keeping their drivers happy.

5. Competitors: Not only can these challengers steal numerous customers from Uber, but it can also do the same with their drivers. The rivalry between the companies is fierce, illustrated by some news that Uber employees were calling Lyft cars to jam up their service. An interesting note about Sidecar is that their drivers have the ability to set their own price, meaning that they compete for the customer's business by lowering their rates. This allows for some extremely cheap rides.

Ans 3: Uber is a new business model with a service that no one else has offered before. In many countries, Uber has been facing lawsuits since there is not much regulation for this kind of business. It’s also called the sharing economy. It’s a big challenge for countries how to deal with it. I believe there must be regulations in place since it’s the same for any other business. So governments must develop such regulations and laws which can be applie