International Company Project: Uber South Africa

Introduction

The world has been affected immensely by how people have reacted to the Internet. Indeed, businesses have been established purely from the digital space with others shifting their core functions online. It is important to note that the need for such changes has been necessitated by the desire of consumers to get even better services and experiences. Today, the consumer journey is ranked higher than even product quality. On the same note, the more convenient the process of getting a product to the client is, the better it will do in the market. Many marketers believe that the paradigm shift changed in the industry in the 21st century due to the Internet (Yeshin, 2016). The rise of social media platforms further enhanced the concept of advertising and target marketing (Piskorski, 2014). Data has become an important currency in the digital economy as it allows for customisation of user experiences.

The essay will use analytic tools to do an environmental scan of the international company, Uber, in a host country, South Africa. The purpose of the scan is to identify some of the challenges that the company is facing and come up with suggestions for overcoming the same. Therefore, the question is what the company can do to improve their brand position and image in the identified market. Ideally, the work encompasses a complete look at the external forces that can shape the way a company performs in a market. The work will use the term “rider” to refer to the consumer or client. Additionally, the term “driver” will also be used interchangeably to refer to “supplier” and at times “consumer”. The differences will be clearly stated to avoid confusion. The paper will be divided into an introduction section, followed by a literature review, case analysis, suggestions and conclusion sections. A list of references that have been used will be provided at the end of the discussion.

Literature Review

The digital economy has grown in ways many could not have predicted. Indeed, more companies are shifting their focus onto the digital platforms as opposed to their traditional brick and mortar stores. This section of the paper will look into the digital economy as a whole applying some of the concepts learnt on the same. A case analysis which will further use the analytic tools specifically to the selected company will be done after this section.

Strategic Alliance Tool

The strategic alliance tool as the name suggests looks at how different parties come together and work out a partnership for the benefit of all the involved. Frynas and Mellahi (2015) note that the tool is useful in a couple of ways. First, it allows the user to gain a new client base that can be either in the same market or in a different market altogether (Smith and Hanover, 2016). It is important to note strategic alliances can be between parties within the same locality or even in different countries. Ideally, one reason why a company can seek such a partnership in an attempt to increase its client base is the issue of market penetration. Fraser (2019) notes that there are markets that are nearly impossible to penetrate due to political, social, cultural and even economic issues. In such cases, it is important that alliances be sought to make the process easier and relatively cheaper.

The strategic alliance tool is also relevant if the firm in question is seeking additional income by expanding its core business mandate. For example, if a company wants to explore whether a new idea in the market can help them improve their bottom line, they can seek partnerships with entrepreneurs to test out the same (Dahlén and Lange, 2018). The approach allows the corporation to put in enough effort to help the new idea succeed but also lower the amount of capital needed to do the same. Advantageously, strategic alliances reduce risk as they also spread out the possible risks that any of the parties involved is exposed to by entering that alliance. Significantly, this makes sense for any profit-making business as it saves costs. On the other hand, the tool can still be used by non-profit making companies as it ensures the proper management of reputation.

Five Forces Tool

The five forces tool is normally used to understand competition and the position of the company within the market. As the name suggests, there are five main components to this tool. The elements are threat of new entry, supplier power, competitive rivalry, buyer power and threat of substitution. Each of these elements is vital in understanding how a company or brand is performing the way it is at the moment. Indeed, it is important to note that the forces are not always constant. Therefore, this tool has to be used consistently in order for the firm to keep ahead of the trend. For example, the stated threat of new entrants cannot be tackled once as competitors will always try to enter the market. However, the specific company can put in place measures that ensure that even with stiff competition, its brand still captures the largest percentage of the market share.

As mentioned, one of the elements of the five forces is the threat of new entrants. Porter (2008) notes that this element fully focuses on something that is continuous, therefore, encourages constant monitoring of the same. According to Porter (2008), the theory does not encourage companies to make it difficult for other competitors to enter the market. However, it suggests that management have to fully understand the processes needed for new entrants to put their products in the market. The issue of globalisation has made this matter complex (Furrer, 2016). This is due to the fact that a significant number of international companies have been shunned for encouraging locals not to purchase products that are locally made. This affects the industrialisation capability and power of the host country. Many countries are now encouraging their citizens to support local talent, thus, also having a negative impact on international business.

Critically, a second element within the five forces theory is the buyer power. Towards this end, the buyer can also be referred to as the consumer or the client. In many instances, this power is critical if it is strong enough as it allows the consumer to drive down the prices that a company has set. There are numerous ways in which the buyer’s powers can grow within a market. First, if the market is highly saturated with similar products, then the clients will be the main factor used when determining the right pricing strategy (Porter, 2008). This is because they will always have options to the brand. Second, as Porter (2008) notes, the Internet has given consumers more power than before. This is due to the ease of accessing comparison information between products online.

Further, supplier power is also critical in understanding brand positioning. Porter (2008) explains that when the suppliers have more power than the company, they become demanding and drive the business down by pushing pricing up. It is important to note that despite the choice of pricing strategy, key elements such as investments made and operating costs have to be considered to ensure a return on investment (Gallino and Moreno, 2019). Ideally, there are numerous factors associated with supplier power. First of all, a market that has few suppliers will suffer from this concept. This is due to the fact that the firm will not have an array of choices to get the best price from when they are looking for supplies. There is no way of curbing supply power apart from ensuring that the pricing strategy used is comfortable for both the target market and the company’s bottom line.

Additionally, the threat of substitution refers to how easily a client can change brands. Many of today’s markets have high competition for almost all products. It is upon these companies to ensure that they have competitive edge in order to stay above the rest. It is important to note that competition is both in the form of alternative local and international options. The international aspect is brought in through the advance technology that has made it easier for consumers to buy goods from different countries and get them delivered right at their doorstep. the concern for substitution is also felt in product differentiation and branding. Indeed, as Strusani and Houngbonon (2019) note, companies that offer similar products albeit slight differences can have competitive advantages over others in the same market. This is especially the case if the pricing is similar or only slightly different.

Lastly, the overall competition in the industry completes the five forces tool. Porter (2008) notes that the presence of competitors will always be a force for any company. This is regardless of whether the affected company is new or not in the market. Often it has been recorded that new companies from inexperienced entrepreneurs have entered a market fully and heightened the competition. Therefore, it does not take experience or time for a competitor to be considered influential in the market. Goldfarb, Greenstein and Tucker (2015) explain that the concern of competitors raises the quality exposed to the client. This is because, as explained, when there are more competitors in the market, the buyer has more power. Despite the fact that the force cannot be resolved, it can be manipulated for the benefit of the company.

PESTLE Analysis Tool

The PESTLE Analysis tool is widely used to understand the environment of a select company. In many instances, the PESTLE analysis of two similar companies working in the same field will be the same. This is because they will be affected in the same way by the environment. The only way to ensure they are not rendered inoperable is by identifying all the elements of the PESTLE analysis that can make their business stall. Afterwards, the firms have to come up with ways in which to avoid the same negative outcome. Therefore, it is possible to find two companies producing the same product but one succeeding more than the other. Debatably, fully understanding the PESTLE analysis also allows corporations to think more about their competitive advantage and how to get ahead of the rest. Just like the five forces analysis, organisations have to conduct this analysis frequently as the business environment is ever changing.

The first aspect of the analysis is political. Gulati and Nickerson (2008) explain that it refers primarily to the political actions that can affect a business and/or its competitors. Initially, globalisation did not factor in the importance of political goodwill in the success of an international company (Eaton et al., 2016). This issue has been raised primarily by Third World countries. Mishra (2017) explains that these states have complained that the developed nations have taken much of their businesses to their economies making it nearly impossible for local industries to get clients within their regional boundaries. It is important to point out that the complains has been in regards to multinationals and not small foreign businesses. The political environment has to be considered to understand whether such issues will force the company out of the market in a few years. Change in governments is also key when discussing the political environment. This is due to the fact that a transition can also mean an intolerant government that does not show goodwill to foreign companies.

Secondly, the economic nature of the market has to be considered before a product is launched in the market. One economic factor a firm has to note is the ease of disposal funds that is available for the target market. In the event that the target population is able to buy the products, then the company can go ahead and introduce it into the market. However, in the event that the opposite is true, the company will have two choices (i) to change their costing strategy to come up with a price that is affordable to the target population or (ii) to change the plan and not launch the product or brand in that specific market (Floyd and Wooldridge, 2017). Importantly, the issue of economics also has to consider the stability of the nation. Countries that are prune to war will have unstable economies and this will affect the company’s bottom line.

The social aspect of the PESTLE analysis is often combined with the cultural attributes as well. Johnson, Scholes and Whittington (2008) note that one key element of the socio-cultural scanning is the norms of the people. Indeed, foreign companies that have completely ignored the norms of the people have struggled to penetrate those markets. An example can be given to explain further. A restaurant that wants to penetrate the Saudi Arabia market has to also respect the fact that young women cannot sit in the same space as men. This is a cultural belief that is tied to their religious beliefs. Therefore, such a restaurant has to consider having enough space to divide the areas, one for young women and families and the other for men. Additionally, social-cultural aspects also affect the way the community relates to the foreigner. An integration of some of the beliefs of the community will make the public feel like the company belongs to them as well. This sense of ownership will prove important in discussions pertaining local versus international trade.

As explained, the digital economy has shaped the world as it is today. The technological aspect of the analysis focuses on how companies can leverage on tech to advance their mandate (Ozuem, Patten and Azemi, 2019). Indeed, there are companies that have not incorporated any digital approaches to their mandate and this gives their competitors a competitive edge. On the other hand, there are institutions that were created online. Oyku (2018) explains that many such institutions believe that they have fully captured the technological aspect of the analysis. However, as Abere et al (2016) note, this is hardly true as technology is ever changing. Therefore, even companies that are hinged on technology should constantly review the environment for new, conflicting and supporting tech that can affect the company in one way or the other.

The fifth aspect of PESTLE analysis is legal. Hamilton and Webster (2018) note that this element refers to the legal policies/law that can affect the company. An example can be used to explain this notion further. In the stated argument of countries complaining that international companies are making it impossible for local manufacturers to thrive, a government can pass a law that such companies (international) have to get special licenses and also can only reside in one area of a city, which happens to attract higher taxes and have expensive infrastructure (Amankwah-Amoah, Boso and Debrah, 2018) A company that is interested in penetrating this market will have to either (i) consider the licenses, taxes and rent/infrastructure that they are allowed by law to have and compare that to their operating costs such that if still appropriate go ahead and penetrate the market and (ii) abandon the plans due to the legislature and look for an alternative market to penetrate.

Lastly, the environmental angle of the external scan has been made that more relevant over the last few years. The impact of international companies on earth’s carbon footprint has been highlighted by environment enthusiasts for years now. Dhar et al. (2016) go further to note that developed countries have even been accused of dumping the e-waste in developing countries. This has created much anger both among environmentalists and the governments of these Third World countries. On the same note, this affects the political goodwill that such large international companies get when they seek to penetrate a market. It is important to note that this does not mean that these companies cannot penetrate such developing markets. Through the environmental scan, they can learn about the concerns of the market in regards to the physical environment and align their objectives or activities appropriately.

The Case Analysis

The selected company for this case analysis is Uber South Africa. Tanneh (2017) explains that Uber entered the African market in 2013 and is currently in 14 markets in the continent. One of the reasons why the company was selected is that it has been receiving backlash in the specific country as opposed to the other countries in the continent. Alicandro et al. (2019) note that despite being the market, South Africa presented unique challenges that other African countries did not have. For example, the fact that the country has experienced several attacks on foreigners and their companies is vital in understanding why the company has not taken a significant percentage of the market as initially anticipated. Wessels (2016) explains that the xenophobic attacks not only target whites or Caucasians but also Africans from other countries within the continent. An environmental scan that should have been done before the product entered the market should have revealed this fact.

Further, like other African countries (and Third World nations) transition in politics has also affected Uber’s bottom line. This too should have come up with a proper scanning of the environment prior to the launch of the brand in the region. Importantly, the country was selected because it can still implement some of the concepts to ensure success. This section of the essay provides an analysis of Uber South Africa, not as a new brand in the market, but as an existing one. The findings that will be highlighted in this section will be critical in other sections as they will be used to form both suggestions and conclusions. It is important to note that this section will use the previously discussed analytic tools to determine the external organizational environment.

Strategic Alliance

It is crucial to point out that Uber South Africa undertook several plans to ensure strategic alliance. Kornberger et al. (2019) define the term as a partnership between two or more firms that come up with agreed goals that they all work on independently but for the benefit of the stated partnership. There are two levels of strategic alliances namely local and international. As the name suggest, the local partnerships occupy between partners within the same state boundaries while the latter involves various countries. Uber South Africa has enhanced both its international and local strategic alliances.

It is critical to note that several companies use strategic alliances to penetrate a market. The same can be said of Uber, which is headquartered in California USA. It is critical to note that the host country, South Africa, already had various taxi services that the public could use by the time Uber was entering the market. Appiah, Amankwah-Amoah and Liu (2020) further note that South Africans often prefer to use local companies as opposed to international ones. This is due to the desire to promote their local industries or businesses. Therefore, Uber required an international strategic alliance in order to succeed in the market. The nature of Uber allows for these strategic alliances to be done between the company and its potential drivers. Therefore, the public is chauffeured by local drivers who not only know the routes well but also understand the local dialect and can communicate effectively with the clients.

Critically, the company has also pursued some local strategic alliances. This has been done by the local Uber company and not the international headquarters. It is prudent to note that even though the firm is international, it has decentralised its functions such that the host countries also have their own decision-making approaches based on the intercultural interactions they experience during their operations. Therefore, the local Uber South Africa has partnered with event managers to be, for instance, the only digital hailing cabs for their functions. This has boosted both the brand image and profitability.

Arguably, there are two main external factors that influence strategic alliances. Moon and Baer (2018) explain that these two factors are technology and globalisation. Uber South Africa, as explained previously, is a digital hailing curb, which also means that it relies wholly on technology. The user has to have a phone in order to call the cab services. One factor that has to be considered is the ease of access to the technology needed by the user. Arguably, the firm has a user-friendly interface that encourages users to either call a cab, ask for help, or see the services offered. It is critical to note that the culture in South Africa is mainly to use cash or card for payment of services. Therefore, the clients rarely use e-wallets for the same. The company has insisted on the use of cash and card payments despite the fact that mobile payment options are also becoming popular in the country.

As stated, the second external driving factor of strategic alliances is globalisation. Tong, Luo and Xu (2020) define this as the unrestricted move of people and goods from one part of the world to another. Due to the fact that the stated firm is international, many foreigners who tour South Africa can also easily hail the cab services as they are used to the same in their home countries. There are several barriers to globalisation and the nature of Uber South Africa allows for the management of these barriers. For example, culture and language are a main concern for international companies trying to penetrate new markets. As mentioned, however, the application uses local drivers to ensure the end-user enjoys the services.

Debatably, Uber South Africa has also used internal drivers to ensure their position in the market. For instance, the company has spread its risk through the concept of risk limitation. Kee and Yazdanifard (2015) argue that it is critical for companies, either local or international, to spread their risk so that they can also cushion their assets from loss. Additionally, the nature of the business, where it does not own any of the vehicles but rather gets a commission from the drivers, can be viewed as a risk limitation approach. The company is, therefore, liable only for licenses, the management of the mobile application and the drivers. Additionally, the company has incorporated some cost minimisation strategies as part of their strategic alliance. As explained before, there were several cab hailing services in South Africa. However, none were based on digital platforms such as Uber. There are current new competitors who use similar digital platforms to hail cabs. Uber South Africa had to use cost minimisation strategies in order to stay ahead of the rest of the competition and maintain their position in the market.

It is arguable that the company has partnered with all the possible partners of strategic alliance. Khare (2017) argues that the main partners of strategic alliance are customers, governments, suppliers and competitors. A partnership with the government allows the company to get the required licenses and permits to run the business in the host country. On the other hand, a linkage with the competitors moves the industry forward while expanding on the quality of services offered to the clients. It is important to note that Uber South Africa has two main customers – the drivers and the end-users. The company has to attract the drivers in a way that allows the end-users an array of choices for the same service. On the same note, Uber South Africa has to ensure that the type of drivers they get for their platform is decent and respectful to the end-user in order for the latter to keep choosing the same hailing cab (Uber) whenever they require. Indeed, there are several other stakeholders who can be included in this list. As mentioned, partnerships with event managers, companies so that their staff can only user Ubers etc. are critical stakeholders as well.

Trust is a critical part of any strategic alliance. Žarkić-Joksimović and Marinković, (2018) explain that the partners have to trust that their associates will do whatever is necessary to ensure the success of the partnership. Mishkin and Eakins (2018) explain that trust can only be achieved after the partners have bonded (professionally) and have agreed that they are all working towards the same goal. Saunders and Cornett (2019) note that one of the biggest concerns for strategic alliances is proper communication. In the event that there is a fault in communication, then it will affect the trust that has already been established.

Five Forces

A critical and in-depth analysis of Uber South Africa also includes the use of the five forces concept. Backaler and Shankman (2018) explain that the theory suggests five elements that affect the competitive aspect of a company. These five aspects are rivalry among existing competitors, threat of new entrants, threat of substitutes, bargaining power of the buyers and the bargaining power of the suppliers. This section looks at each of these factors and how they relate to Uber South Africa.

Rivalry Among Existing Competitors

Initially, the company was competing against individual taxis that the consumers would hail from the curbs. However, today there are more digital hailing cabs in South Africa that have created stiff competition in the industry. Mishkin and Eakins (2018) note that one of the critical elements of this category of the five forces is product differentiation. However, the same is insignificant in the context of Uber South Africa. This is because a significant number of the cabs that use digital platforms offer the same product. Further, the user interfaces are highly similar. Differences can only be recorded in regards to customer experience and pricing. It is also arguable that there is an excess capacity of competitors in the market. Interestingly, despite the fact that there are relatively few companies that offer digital taxi calling services, the drivers are allowed to register with all these companies at the same time. It is this fact that has ensured the saturation of the market.

Critically, the competitors ensure the growth of the industry. It is arguable that Uber South Africa has tried to offer fixed costs in order to attract more clients and squash their competitors. Indeed, when the client enters a pick-up point and a destination, they get an estimate that they will pay. Whereas this is similar to what other hailing cabs have, the main difference with Uber South Africa is that these prices rarely change even if the person is caught in traffic longer than expected. It is arguable that this algorithm allows for the clients to plan their finances and adjust accordingly. Additionally, one can state that it is this aspect that makes Uber that more common in the country unlike its competitors.

Threat of New Entrants

The nature of the business makes it easier for new entrants to penetrate the market. It is critical to note that there are two types of entrants towards this end. The first is the international competitor while the second is the local taxi hailing company. The international entrant will have more barriers due to getting international permits and licenses. Therefore, it is arguable that they pose a significantly low threat on the market and the company itself. On the other hand, the local firms have an easier time getting the stated permits. Due to this fact, they offer a higher threat to Uber South Africa. The nature of the business makes it easier for local companies to start as it requires minimal capital. Indeed, the design thinking approach taken ensured that the company does not own any of the motor vehicles. Therefore, when starting out, a competitor also does not need any new cars to offer the drivers.

It is prudent to also note that the access to distribution channels is similar for Uber and its competitors. This is because they all depend on the sim card in one’s phone. A user has to register on the digital applications using their sim cards. However, the same sim card can accommodate all of the available digital cab hailing applications at the same time. It is then upon the client’s desire to use any of the apps installed at whatever time they wish. Mourdoukoutas (2017) argues that the issue of channels of access is often overlooked when business ideas are discussed. This puts many companies at a disadvantage. As mentioned, there is little product differentiation, thereby also enhancing the threat of the new entrants as Uber does not have a competitive edge.

Threat of Substitutes

There are three main things to consider when discussing the threat of substitutes. The first is pricing, which as explained earlier, has been kept in a fixed approach. Substitutes that have come up have not been able to copy the same algorithm. Therefore, although they will offer the price range for a client, they might not stick to it by the end of the trip. There are two main things that have to be considered under this realisation. The first is that Uber South Africa has to consider what its competitors are offering as estimates. It can be argued that if the competitor’s initial estimates are lower, then the client will most likely take a ride with the other company as opposed to Uber. This is despite the fact that the previous corporation does not offer the fixed element of transport fare. Secondly, one has to consider how much of a difference the client has to pay at the end of the trip for both Uber South Africa and its competitors.

The act of switching costs can be seen as a pain point for the user. Saunders and Cornett (2019) note that many clients expect that the agreed upon price after bargaining should stand at the end of the transaction/experience or in this case, trip. In the case of Uber South Africa and its competitors, the act of bargaining occurs when the client inputs his or her pick-up point and destination. Therefore, the estimated costs should not be higher but can be lower to ensure consumer satisfaction. The client’s propensity of the substitute will, therefore, only be relevant if the latter offers cheaper rates despite the switching of prices.

Bargaining Power of the Buyers

The bargaining power of the buyers is a critical element that allows companies to come up with best strategies for advancing their position in the market. One element that has to be considered in this context is buyer concentration (Rao and Klein, 2015). This refers simply to the action by a small number of buyers who purchase the most of a company’s product. This is a significant challenge for Uber South Africa as their product is mainly used by middle class citizens, who make up a significantly small percentage of the country’s population. A majority of the population is lower class/low earning citizens. Due to the high competition and the nature of the work, the buyer concentration experienced in South Africa has led to a reduction of profits for companies in the industry.

Buyer switching costs also play a critical role in the bargaining power of clients. Antonucci et al. (2019) refer to the term as the amount of extra money a client has to use in order to switch brands. At the onset, this cost is minimal for the taxi client in South Africa. This is due to the fact that all the taxi hailing apps in the country are free. However, one has to consider the costs of the new brand that the client will be adopting. If these fees are high, then it is likely the client will go back to the original brand. Buyer information is important in ensuring that the client already knows such information before they decide to change brands. It is critical that when providing such information highlighting competiti9ve advantage Uber South Africa not participate in unfair competition as stipulated in intellectual property law.

Bargaining Power of the Suppliers

Similarly, the suppliers have their own bargaining power that can be used to shape the industry. It is important to note that for the purpose of this analysis, the suppliers will be the drivers of the Uber cabs. Like the buyers, these stakeholders have supplier concentration, where a few suppliers work with the brand. This is a significant problem for Uber South Africa. This is because there are a few of the drivers who have registered for all digital hailing cabs. one significant problem with this fact is that it dilutes the user experience due to the different customer journeys the various applications or firms subscribe.

Critically, buyer information also affects suppliers in various ways. First, it ensures that the buyers are aware of all their options. This means that the company will face more competition. Arguably, the fact that the suppliers are allowed to register with all digital hailing cabs for free ensures that they also recommend the best service to the client. It is debatable that the supplier will be biased towards the service that offers them the best packages, not necessarily for the client’s benefit. This puts significant bargaining power to the supplier. The additional fact that the buyer switching cost is theoretically irrelevant makes their (suppliers) power stronger. Critically, the issue of international expansion also has to be considered when discussing supplier power. Uber South Africa was the first digital hailing cab in the country, region and continent. However, after its penetration, various international competitors such as Bolt also entered the market. On the same note, Uber penetrated other African markets. The competition across the continent, it can be argued, is therefore, similar as the one within South Africa.

PESTLE Analysis

Political

One of the key political challenges Uber South Africa faced was the government’s action towards traditional taxis. Critically, Uber South Africa is still seen as a foreign entity despite using local drivers. Additionally, many of the people who were working in the traditional taxi sector lost their jobs due to the introduction of Uber South Africa. Therefore, there was a need for the government to ensure that the locals could still go about their everyday lives and businesses despite allowing international companies to also offer services in the nation. Manderson, Cartwright and Hardon (2018) explain that a key political involvement is goodwill. Even though the company had this when they first penetrated the market, a change in government due to elections led to further political trouble for the multinational. The new government did not support the fact that a significant number of the local taxi drivers had lost work or were expected to compete with Uber’s systems.

The political trouble led to the seizing of the Uber drivers’ cars by the government. The issue was, however, resolved with the introduction of a new Uber taxi driver permit that is paid to the local government. Critically, the issue of government and politics has to be carefully considered. Hollensen (2019) explains that this is especially important in developing countries that are yet to fully take advantage of systems to ensure proper transition when government change. Arguably, the issue of transition from one government to another is a complicated element that can either affect businesses negatively or positively. In the case of Uber South Africa, the situation was made worse as the local taxi drivers went ahead and registered local firms at the same time Uber was experiencing political difficulties.

Economic

The nature of Uber South Africa can be defined as a sharing economy. As a result of this, Uber as a brand does not buy or own any of the cars used but works in partnership with car owners who would like to use their platform. One advantage of this type of economic approach is that it hires many people. This is due to the fact that car owners do not have to be the drivers, but can hire other people and share the profits. However, a disadvantage of the same is that there are no benefits across the chain. Therefore, the driver has to cater for their own health insurance and also pay his or her taxes separately. Uber South Africa has tried to resolve this issue by ensuring that people who drive the cars are the same ones who are registered on their platform. They receive the Uber taxi driver card to also help identify themselves to both the local authorities and the public.

Further, entry into the South African market also affected general economy. It was difficult for a significant number of the traditional taxi drivers to join Uber South Africa. One of the reasons for this is simply the fact that change is not easy. These drivers lowered their rates significantly in order to maintain their clients and keep in business. In turn, the market research that had been done prior to the penetration of the market was rendered null and void due to the new changes. In turn, Uber South Africa also had to rethink its pricing strategy in order to attract clients.

Socio-cultural

One key socio-cultural element that has actually made Uber South Africa retain a significant percentage of the population is the society’s uptake of the smartphone. Critically, like many other countries in the African continent, South Africa has more youth than elderly. According to Duffett and Wakeham (2016), the youth in South Africa are approximately 17 million of the population. Thus, more mobile users opt to purchase smartphones in order to socialise with family and friends online through digital services such as Whats App, Facebook, Twitter and Instagram. This ensures that the same clientele can be easily targeted through the same platforms for purposes of advertising and even accessing the Uber app. It is important to note that the advertising element of the company is critical as it sets the brand image among the target population.

As previously mentioned, the majority of the population can be described as low income or lower class. This is a vital socio-economic element that has to be considered when discussing socio-cultural aspect of Uber. What the premise means is that if the population was not able to use taxi services before, or even normal public transport, they will also not take up Uber services. The company has tried to resolve this particular issue by introducing new packages that are more affordable. Arguably, despite this, Uber South Africa is still facing challenges convincing the larger majority to take up their services. The company has ensured that their prices target the different social groups of the country. This is in regards to whether the users are in urban centres or rural areas. Those in the urban cities have to pay more than those in the rural areas as they are expected to have more disposal income. However, this is hardly the case as a significant number of the populates of the cities are actually living below the one dollar per day mark.

Indeed, the country has also faced xenophobic attacks over the years. Zenger (2016) notes that the state has approximately 2.3 million foreigners who have taken up some of the blue and white collar jobs that locals believe belong to them. The issue with xenophobia is that the locals feel entitled to the jobs regardless of whether they are qualified or otherwise. Interestingly, as Modiba and Kekwaletswe (2020) note, despite the anger being directed to the foreigners approximately 80% of the lives lost during xenophobic attacks are South African (local). This target is usually because the attacked are believed to be enablers of the foreign investors.

Technological

This is one of the key attributes associated with Uber. Barbour and Luiz (2019) explain that the technology behind the company is a disruptive one. Therefore, it changed how the whole world perceived businesses and consumer journeys. Further, it reinforced the importance of technology, innovation and the Internet. As stated, the user must have a smartphone and access to the Internet. This will allow the client to download the app and to input their pick-up and drop off locations, which are also guided by GPS. The calculation of costs is done through an algorithm that is also only made possible by technology. Still on the app itself, pop-up messages and SOS services are also included to ensure that the user feels safe and knows everything that is going on during the trip. Further, the client has to change destination by him or herself. This ensures more security for the rider as the company can easily trace the way the client changes destinations, or in the event that the driver uses a different route.

It is important to note that the nature of technology makes it ever changing. The technology that was being used when the concept of Uber was conceived has changed tremendously over the years. It is, therefore, important for the company to keep abreast of all the new changes in technology. This refers both to technology that has a direct impact on the app itself and other technology that affects both the user and driver’s experiences with the brand. It is important to also note that the technology should be available to a good number of the target population for it to improve the company’s bottom line.

Legal

One legal factor that has affected Uber South Africa is the wage laws. Indeed, wage laws differ from one country to another. For example, in the US, people are paid per hour whereas in South Africa, they are paid primarily on a monthly basis. Even though Uber US does not pay per hour, the payment algorithm factors this in when the firm determines the percentage it will take from the drivers. The same application cannot, however, be used in South Africa, where most bills are paid on a monthly basis. The fact that the process ensures drivers have payment daily makes it harder for the drivers to actually live a better life. It is critical that Uber South Africa fully understands the differences and importance of these legal issues.

Importantly, to ensure that the company is on the right side of the law, the company has to get all the required permits and licenses. Initially, it did not force drivers to take their taxi and Uber driver identification cards. As explained earlier, this led to the government seizing all the vehicles of Uber drivers. It is important for the company to ensure that its drivers and riders also adhere to the law in order to have a working relationship with the government. Currently, there is a debate on whether the drivers are workers of Uber or not. This is due to the benefits that they should also get as workers of Uber. However, such a legal debate is complicated b4cecause, as stated earlier, Uber does not own the vehicles and it changes their whole business idea. This is not a problem in South Africa, as of yet, but the company should use the legal challenges faced in other countries to shape their business in order to minimise losses.

Environmental

One crucial environmental factor that Uber South Africa has to consider is environmental pollution. The world is currently trying to curb the carbon footprint each company is producing. Uber South Africa, like all other country offices of the brand, is struggling to do the same due to the use of diesel and other similar fuel products in the vehicles associated with their brand. It is important to note that the use of fuel alternatives squarely lies on the driver of the taxi. This is due to the fact that the motor vehicle belongs to the that specific owner and not the Uber brand. Pedro and Cagica (2017) explains that when buyer information is limited in terms of things that can affect brands, then the larger brand will suffer the most. In this case, Uber South Africa suffers because it is renowned yet its drivers are using fuel alternatives that have been highly discouraged by environmentalists.

A second environmental concern for the company is sustainability of their approach in regards to the changing physical environment. The question here is whether the company will be able to convince its drivers to use alternative fuel that is environmentally friendly and still make profit. This is because the suggested alternative fuels are considered to be more expensive than the traditional diesel and petrol. The issue of cost, however, is only felt at the beginning where more capital is needed to buy an electric car than the traditional car in the region. After this initial investment it is significantly cheaper to maintain the vehicle as there will be no cost for fuel as the car uses electricity. However, the company also has to consider where the drivers will charge their vehicles and how this will affect their own profitability as they are paid per trip.

Suggestions

Customisation

The element of customisation misses out from the Uber South Arica experience and has contributed significantly to some of the problems the company is facing currently. First, customisation refers solely to the ability of the company to give individual experiences to both the rider and the driver. A push for this suggestion would mean more investment in the technological aspect of the company. An example can be given to enhance the discussion further. Many marketers agree that the algorithm used in social media platforms – such as Facebook, Twitter and Instagram – highly customise content to suit the user. Therefore, a person who has been viewing content related to fashion on Google will go to social media and find similar page suggestions. One advantage of this is that it enhances consumer experience while ensuring the client also spends as much time as possible on the application.

The challenge for Uber South Africa is to ensure that the same level of customisation is also considered in their app. Currently, only people who do not use the app can have such targeted communication with the brand. However, it completely ignored present consumers and does not factor in the fact that the clients can be easily convinced to switch brands due to low product differentiation. It is highly suggested that the company uses technological advancements such as user data to customise their experience. For example, the user might prefer certain types of music and these should be available throughout the ride without the driver asking for the same from the client. Additionally, return clients might prefer different routes over others. Such data should be saved to ensure better customisation of experience for the user and driver.

Consumer Journeys

The consumer journey is important in determining whether clients will take up a brand or otherwise. Viljoen and Henama (2017) note that the customer journey does not begin and end when the client starts and ends a trip. However, it begins when the client first interacts with the brand – either digitally or through traditional media. The adverts that are made to attract the client should ideally also shape the consumer journey. For instance, in South Africa, Bolt has been advertised as a “party cab”. This means that it has been advertised alongside events and people having fun. On the other hand, Uber South Africa has been promoted as a serious and work related taxi services. Therefore, companies prefer Uber to Bolt. All these factors affect the consumer journey as they affect the choice the client will make.

Prudently, the consumer journey ends when the client either recommends or tells family and friends why the service was not good. Due to the fact that the consumer journey is long, it is almost impossible for Uber South Africa to come up with viable solutions to all pain points. However, it is suggested that the company come up with a fast and reliable feedback service that makes the user feel appreciated. Currently, the company asks the clients to rate their driver. This information is used to show other users how the driver is rated, and also to rate the user for the drivers. However, no other information is provided on some comments that have been left by the previous users or drivers. This makes this element of feedback rather plain to advance the consumer journey. It is suggested that the feedback mechanism should be closely linked to the customer journey.

Adaptability

The ability to adapt to changing times is critical for any business. As explained previously, one challenge that Uber South Africa is facing is its role in ensuring environmental protection. Secondly, the company is also struggling with issues such as xenophobia, which is a socio-cultural element. It is suggested that the management consider becoming more adaptable in order to resolve these mentioned problems. In the first case of environment pollution, the company should consider providing all Uber drivers electric cars. Indeed, this might appear an extravagant and impractical thing for the individual drivers, but not for the company. The company currently provides cars on loans to potential drivers who then pay back the loan with interest. The recommended electric cars can also be distributed in the same way. Such an action will not only help the company tackle the issue and protect the environment but will also buy political goodwill for the company.

On the other hand, the issue of xenophobia can only be resolved through a complete integration into the community such that members of the public do not see the company as a foreign entity but one of their own entities. This can be achieved through thorough and sincere corporate social responsibilities. Further, the people leading the country team have to be local and not foreigners. Again, as explained previously, the issue of trust is key in such situations. The management in the Uber headquarters in the US should be comfortable enough and trust that there are competent South Africans who can run the brand to ensure it is fully accepted by the public. It is such actions that will help the company maintain a significant percentage of the market.

Product Differentiation

As explained earlier, there is significantly low product differentiation currently between Uber South Africa and its competitors such as Bolt. These companies have near similar systems and user interfaces. Despite the fact that they offer the same product (taxi services) they are free to become creative on other ways to diversify their product in an attempt to ensure product differentiation and record more profits. Uber South Africa so far also has Uber Eats, which is a food delivery service that primarily uses motor bikes and small vehicles to deliver food. Competitors are yet to take up the same business but it offers no competitive advantage as it can be easily copied. Additionally, there are separate companies that offer similar services (food delivery). To ensure competitive advantage in product differentiation, the company has to come up with ideas that cannot be copied easily by competitors.

One way of doing this is by incorporating the food delivery service within the app. Currently. users have to download a second app, the Uber Eats app, to get this service. It is strongly suggested that the company synch the two applications such that users do not have to download the latter app at all. Doing so will remove a pain point for the client in both downloading the app and using two apps of the same brand. It is important to note that the synching of the apps into one will ensure that the issue of customisation is also resolved. This is due to the fact that on its own Uber Eats is able to track the user’s preferences for food and even suggest restaurants that the client would like. The same algorithm can then be used to enhance the user experience.

USSD Control

Critically, the Uber app can only be used on smart phones. Further, the user must have access to the Internet in order to use the service. Whereas a significant number of the South African population is youth, 17.84 million, who have access to smart phones and are tech savvy, a good number is also elderly. This means that the app has completely ignored the older generation from the app. This is especially the case for rural areas where the need for such services is more compared to the urban centres where public transport and personal cars are also in plenty. Therefore, it is suggested that the company consider including a USSD control that can be used for people who (i) do not have smart phones and cannot download the app and (ii) do not have access to the Internet for one reason or the other.

The USSD control will work by allowing the user to press the selected umbers on their phone keypad and proceed through a series of instructions. The company should include the option for voice for people who cannot write. Such inclusivity will also boost the company’s plans to achieve sustainability. The rise of social media cannot be ignored even by transport and logistic companies such as Uber. It is further suggested that Uber South Africa also incorporate the use of Whats App, which is largely used in South Africa as explained previously, for user support. The link between the two applications can be put within the Uber South Africa product for easy usage. All these suggestions work to ensure that the client has an easier time using the application and that it is accessible to anyone who is in need. Therefore, it raises the company’s brand equity and overall profitability of the firm.

Conclusion

In conclusion, companies can still thrive within a foreign market. It is critical that the environmental scan be done to ensure that any concerns are identified early, preferably before the brand enters the market. The advantage with doing this is that it prepares the company for any future struggles that might happen in the market. One of the key analytic tools that firms can use to analyse the potential market is the PESTLE analysis. The term refers to six elements that have to be considered namely – political, economic, social, technological, legal and environmental. A second analytic tool that can be used is the five forces that looks at buyer power, threat of new entrants, supplier power, competitive rivalry and threat of substitutes in relation to the company. Further, the strategic alliances tool identifies and tracks the possible partners that would help boost the business within the target market.

The essay applied the stated tools to Uber South Africa in an attempt to come up with viable suggestions the company can implement to raise its market share. One suggestion that was made was product differentiation which mainly refers to the unique characteristics of products. It is critical that Uber South Africa loo for uniqueness and incorporate it into their competitive advantage. This will allow the company to stay ahead of its competitors. Additionally, the company has to come up with creative and user-friendly ways to reach more of its clientele. Arguably, the use of the USSD code will allow the rural South African residents to also enjoy the services offered by the company without necessarily having a smartphone and Internet.

Reference List

Abere, A. Capps, O. Church, J. and Love, A. (2016) ‘Mergers and market power: estimating the effect on market power of the proposed acquisition by the Coca-Cola company of Cadbury Schweppes’ carbonated soft drinks in Canada,’ Contributions to Economic Analysis, 255, pp. 233-290.

Alicandro, G. Malvezzi, M. Gallus, S. La Vecchia, C. Negri, E. and Bertuccio, P. (2019) ‘Worldwide trends in suicide mortality from 1990 to 2015 with a focus on the global recession time frame,’ International Journal of Public Health, 64, 785–795.

Amankwah-Amoah, J. Boso, N. and Debrah, Y. A. (2018) ‘Africa rising in an emerging world: an international marketing perspective,’ International Marketing Review, 35(4), pp. 550-559.

Antonucci, C. T. Ajrouch, J. K. Webster, J. N. and Zahodne, B. L. (2019) ‘Social relations across the life span: scientific advances, emerging issues, and future challenge,’ Annual Review of Developmental Psychology, 1, 313-336.

Appiah, G. Amankwah-Amoah, J. and Liu, Y. (2020) Organizational architecture, resilience and cyber-attacks. New York, NY: IEEE Transactions on Engineering Management.

Backaler, J. and Shankman, P. (2018) Digital Influence unleashes the power of influencer marketing to accelerate your global business. Cham: Palgrave Macmillan.

Barbour, O. and Luiz, J. (2019) ‘Embracing solutions-driven innovation to address institutional voids: the case of Uber and the middle of the pyramid’, California Management Review, 62(1), pp. 31–52.

Dahlén, M. and Lange, F. (2018) Marketing communications. Hoboken, NJ: Wiley.

Dhar, T. Chavas, J. P. Cotterill, R. W. and Gould, B. W. (2016) ‘An econometric analysis of brand‐level strategic pricing between Coca‐Cola Company and PepsiCo,’ Journal of Economics & Management Strategy, 14(4), pp. 905-931.

Duffett, G. R. and Wakeham, M. (2016) ‘Social media marketing communications effect on attitudes among millennials in South Africa,’ The African Journal of Information Systems, 8(3), pp. 20-43.

Eaton, J. Kortum, S. Neiman, B. and Romalis, J. (2016) ‘Trade and the global recession,’ American Economic Review, 106(11), pp. 3401-38.

Floyd, W. S. and Wooldridge, B. (2017) Handbook of middle management strategy process research. New York, NY: Elgar Online.

Fraser, C. (2019) Business statistics for competitive advantage with excel 2019 and JMP. Charlottesville: Springer.

Frynas, J. G. and Mellahi, K. (2015) Global strategic management. UK: Oxford University Press

Furrer, O. (2016) Corporate level strategy: theory and applications. New York: Routledge.

Gallino, S. and Moreno, A. (eds.) (2019) Operations in an Omnichannel World. New York, NY: Springer.

Goldfarb, A, Greenstein, M. S. and Tucker, E. C. (eds.) (2015) Economic analysis of the digital economy. London, UK: University of Chicago Press.

Gulati, R. and Nickerson, J. A. (2008) ‘Interorganizational trust, governance choice, and exchange performance’, Organization Science, 19(5), pp. 688–708.

Hamilton, L. and Webster, P. (2018) The international business environment. Oxford: Oxford University Press.

Hollensen, S. (2019) Marketing management: a relationship approach. New York, NY: Pearson Education.

Johnson, G., Scholes, K. and Whittington, R. (2008) Exploring corporate strategy. UK: Pearson Education Limited.

Kee, A. and Yazdanifard, R. (2015) ‘The review of content marketing as a new trend in marketing practices,’ International Journal of Management, Accounting and Economics, 2(9), 1055-1064

Khare, A. (2017) ‘Guerrilla marketing – innovative and futuristic approach towards marketing,’ International Journal of Advanced Engineering, Management and Science, 3(5), pp. 421-426.

Kornberger, M. Bowker, G. C. Elyachar, J. Mennicken, A. Miller, P. Nucho, J. R. and Pollock, N. (eds.). (2019) ‘Thinking infrastructures,’ Research in the Sociology of Organizations, 62, pp. 367-381.

Manderson, L. Cartwright, E. and Hardon, A. (eds.). (2018) The Routledge handbook of medical anthropology. New York, NY: Routledge.

Mishkin, F. and Eakins, S. (2018) Financial markets and institutions, global edition. New York, NY: Pearson.

Mishra, S. C. (2017) Creating and sustaining competitive advantage: management logics, business models and entrepreneur rent. New York: Springer.

Modiba, M. and Kekwaletswe, R. (2020) ‘Technological, organizational and environmental framework for digital transformation in South African financial service providers,’ International Journal of Innovative Science and Research Technology, 5(5), pp. 180-196.

Moon, G. and Baer, J. (2018) 10X marketing formula: your blueprint for creating ‘competition-free content’ that stands out and gets results. Bismarck: CoSchedule.

Mourdoukoutas, E. (2017) ‘Africa’s app-based taxis battle Uber over local market share,’ Africa Renewal, 10, pp. 20-21.

Oyku, N. I. (2018) Creating business value and competitive advantage with social entrepreneurship. Istanbul: IGI Global.

Ozuem, W., Patten, E and Azemi, Y. (eds.) (2019) Harnessing omni-channel marketing strategies for fashion and luxury brands. Boca Raton, FL: Universal Publishers.

Pedro, I. and Cagica, L. C. (2017) User innovation and the entrepreneurship phenomenon in the digital economy. Istanbul: IGI Global.

Piskorski, M. J. (2014) A social strategy: how we profit from social media. Princeton, UK: University Press.

Porter, M. E. (2008) ‘The five competitive forces that shape strategy’, Harvard Business Review, 86(1), pp. 137-145

Rao, P. M. and Klein, A. J. (2015) Strategies for high-tech firms: marketing, economic, and legal issues. New York: Routledge.

Saunders, A. and Cornett, M. (2019) Financial markets and institutions. New York: NY: McGraw-Hill.

Smith, K. and Hanover, D. (2016) Experiential marketing: secrets, strategies and success stories from the world’s greatest brands. Hoboken, NJ: John Wiley & Sons.

Strusani, D. and Houngbonon, G. V. (2019) ‘The role of artificial intelligence in supporting development in emerging markets,’ EM Compass, 69, pp. 1-8.

Tanneh, T. (2017) Environmental scanning practices in South African top performing companies. South Africa: University of Pretoria

Tong, S. Luo, X. and Xu, B. (2020) ‘Personalized mobile marketing strategies,’ Journal of the Academy of Marketing Science, 48, pp. 64–78.

Viljoen, J. and Henama, S. (2017) ‘Growing heritage tourism and social cohesion in South Africa,’ African Journal of Hospitality, Tourism and Leisure, 6(4), pp. 1-15.

Wessels, B. (2016) Uber, ‘Dominos, and the Shawshank Redemption: The inevitable legalization of daily fantasy sports’, Gaming Law Review and Economics, 20(9), pp. 1-15.

Yeshin, T. (2016) Sales promotion. London: Thomson Learning.

Žarkić-Joksimović, N. and Marinković, S. (eds.) (2018) Doing business in the digital age: challenges, approaches, and solutions. Serbia: University of Belgrade

Zenger, T. (2016) Beyond competitive advantage: how to solve the puzzle of sustaining growth while creating value. Boston: Harvard Business Review.

Uber Technologies Inc.: PR Campaign

Uber Technologies Inc. is an American global enterprise which permits its clients to use a mobile application to submit a request for a car trip, which is then satisfied by car owners using a similar application and traveling in the same direction. Thus, Uber allows for sharing a car ride. In most countries, this service is cheaper than a taxi; however, in Dubai, UAE, the service is, on the whole, more expensive, which is compensated by certain other advantages (Crompton, 2016). In this paper, a PR campaign is offered to popularize the services of Uber in Dubai.

Planning

Background

Preliminary fact finding

An interview with a representative of Uber revealed that the company is interested in increasing the amount of rides provided via popularizing its services as environmentally friendly, innovative, convenient, and always available for use.

Secondary research

The services of Uber are currently popularized mainly by using the Internet. Numerous reviews of the service in different countries are available on the Web (Proud, 2015; Stone, 2014), as well as the critique of the innovative model of business and comments pertaining to its legal situation; the latter is challenging because a completely new model of business has to develop in an obsolete legal environment that tries to regulate an innovative enterprise using old means (The Economist, 2015a; The Economist, 2015b). Negative reviews can also be found on the Web (Crompton, 2016). Scientific sources also contain information about legal issues that Uber faces (Posen, 2015; Ross, 2015); furthermore, scholars note that Uber’s model of operating presents a disruptive innovation in the taxi business (Cramer & Krueger, 2016), and that this model is likely to become considerably widespread in the future, when “consumer goods will be available as a service” (Smith, 2016). No information about Uber was found on government websites.

Priority Audiences

The campaign will be aimed at middle- and upper-middle class people working in Dubai who have to travel around the city a few times every day, and who either do not possess a car or might prefer using something else due to a variety of reasons (such as traffic congestions).

Goals and Objectives

In the short term (nearly two or three months), it is expected to raise the potential clients’ awareness of the services provided by Uber and their advantages (fast, convenient, easily available, high-quality), and increase the number of provided rides by 3% by launching a social media campaign and advertising Uber via radio.

In the long term (1 year), the financial goals are to increase the number of provided rides by 10% (and, respectively, to raise the company’s profits by a roughly similar amount). The informational goal of the campaign is informing clients through the social media and radio about the societal benefits of Uber (environmentally friendly, innovative, improving the situation with traffic congestions by reducing the number of cars in use, etc.); thus, the motivational goal is stimulating them to use its services not only because of their convenience but also due to its positive effect on the society.

Messages and Themes

There will be two key themes in the campaign: convenience for the customer and beneficence for the society. The first theme will contain messages advertising Uber as a convenient service providing top-quality rides that is easily available via mobile apps. The second theme will contain messages informing the customers about the causes of traffic congestions (too many vehicles), the environmental pollution that cars cause, and about a possible way to address the problem (lowering the number of cars by using shared rides); information about the possible extensive use of consumers’ goods as services in the future (“sharing economy”) (Cannon & Summers, 2014; Smith, 2016) should also be included.

Communication Strategies and Channels

Communication will be aimed at promoting the image of the company as beneficent and convenient. The strategies will include using messages advertising the availability and convenience (such as “A fast ride that is always available on your phone”) and, in a longer term, the societal benefits (such as “A ride that preserves the environment,” or “Uber: the first step into the sharing economy”). Information about the crux of the service should also be provided. Social media will be used (it is expected that the users will share the messages containing information about societal benefits), as well as radio advertisement. In addition, some information may be provided/leaked to reporters and reviewers to gain positive reviews.

Implementation

Media Tactics

The radio advertisement can be used especially during the rush hour (radio is often listened by drivers and by clients of taxis while they wait in traffic jams). The social media campaign may employ visual materials demonstrating overloaded roads during a traffic congestion, and free roads; a city with smog and a city with clean air; angry drivers sitting alone in their cars in a traffic jam, and happy drivers and passengers communicating during a ride on a free road.

Non-Media Tactics

Non-media tactics may stimulate word of mouth by urging the owners of cars who sell their services to Uber spread the information; in addition, the media messages may prompt clients to tell their friends about the benefits of the business if they enjoyed the rides (by using slogans such as “Liked our service? Inform your friends and save the environment!”), thus also promoting the word of mouth.

Logistics

Staffing

The campaign should be staffed by hiring a social media campaign specialist, who would be responsible for creating messages for the social media, as well as groups and pages in these media; and by using the services of a PR agency, which would be responsible for contacting the radios and creating messages for them within the proposed strategy.

Budget

The budget should include money that will be spent on a social media campaign specialist; these wages will be regular, as this specialist will have to work on the campaign on a regular basis (approximately 20,000 AED per month over 12 months). It should also include money for hiring a PR agency (nearly 30,000 AED monthly, for the amount of services purchased will not be large), and the costs to pay for advertisement on the radio (nearly 1,000 AED per 10 seconds; using 3 radio stations to broadcast messages four times per hour during six most loaded hours a day means 72,000 AED daily, 2,160,000 AED monthly for three months; then, the amount of advertising could be reconsidered depending on the results).

The funding will be covered from the budget of the Uber company.

Timing

During the first three months, the radio and the social media campaigns will be utilized. Focus will be made on the convenience and quickness of the service. Some elements advertising the societal benefit (in particular, the potential of the mass use of the service to decrease the number and severity of traffic congestions) will also be employed. After that, the social media campaign will be more focused on environmental benefits; the use of radio advertising might be decreased, depending on the summative assessment, and the stress will also be made on the societal benefits of the mass use of the service.

Evaluation

Formative

Formative assessment may include registering the number of times that the social media advertisements will be shared and viewed. Also, assessing the overall number of customers in Dubai might reflect the effectiveness of both the radio and social media campaign. It is possible to launch the campaigns at different dates in order to be able to better separate the effects of the radio campaign from the results of the social media campaign.

Ongoing

The ongoing assessment will include estimating the overall number of customers per week. Also, because the service is ordered via a mobile phone app, the new clients installing the app on their phone can be asked about the source of information about Uber (the possible answers should include the radio, the social media advertisement, word of mouth, etc.).

Summative

The summative assessment should include the comparison of the number of purchased rides during the months in which the campaigns were mounted to that during the months prior to the start of the campaigns. In addition, the data about the number of shares/views of social media advertisement, and the information gathered from the clients surveyed during the app installation process, should also be analyzed.

Reflection

Creating this campaign allowed me to better understand the process of PR campaign planning, and to gain some practice in this area. In particular, I learned to formulate strategies and tactics for a PR campaign that would address the desires of the potential clients of a company. Because a specific audience had to be reached, I also had to choose the appropriate media (the social media, because users of mobile phones capable of utilizing the Uber app probably also view the social media through their phones; the radio, because the users of taxis are probable to listen to it while traveling), which also provided me with useful experience for the future.

References

Cannon, S., & Summers, L. H. (2014). Web.

Cramer, J., & Krueger, A. B. (2016). Disruptive change in the taxi business: The case of Uber. American Economic Review, 106(5), 177-182.

Crompton, P. (2016). Web.

Posen, H. A. (2015). Ridesharing in the sharing economy: Should regulators impose über regulations on Uber? Iowa Law Review, 101(1), 405-433.

Proud, A. (2015).Web.

Ross, H. (2015). Ridesharing’s house of cards: O’Connor v. Uber Technologies, Inc. and the viability of Uber’s labor model in Washington. Washington Law Review, 90(3), 1431-1469.

Smith, J. W. (2016). The Uber-all economy of the future. The Independent Review, 20(3), 383-390.

Stone, B. (2014).. Web.

The Economist. (2015a). Web.

The Economist. (2015b). Web.

Disruptive Innovation: Uber Taxi

Introduction

The case of Uber, the project that has changed the way taxi passengers are transported by, describes how the impact of an innovative approach to organizing a business can change market views on specific goods or services. The introduction of an updated system of interaction between drivers and customers has become a new round in the development of urban transport.

Main body

One of the main drivers of this success for Uber and the globalization of this brand is that in many countries, road transport is not within the scope of federal jurisdiction. This means that owners of such services as Uber can set their individual regulations and take into account the needs of the market in order to offer consumers an innovative project. As a result, the lack of control and stringent restrictions at the highest level leads to the reorganization of market trends and the emergence of new approaches to traditional businesses.

Different carrier companies began to introduce applications and other digital tools for interacting with customers, which indicates a new trend proposed by Uber. In Figure 1, the key outcomes of such a market intervention are presented, which reflect the changes in the whole system of taxi driving.

Outcomes of Uber Market Entry
Figure 1. Outcomes of Uber Market Entry

Conclusion

Updating obsolete principles of interaction with customers is the most effective method. The feedback and rating system proposed by Uber in digital format has contributed to a change in the dynamics of the entire passenger transportation system. Although the project’s creators were not guided by the principle of disruptive innovation, their decision to personalize the taxi service and make it more accessible and convenient had a significant impact on this industry.

Uber in China: Driving in the Gray Zone

Introduction

Since its introduction in 2009, Uber has become one of the most popular internet-based businesses around the world. It has improved the transport businesses around the globe combined with an increase in market share. However, this is not the case in China which has hundreds of millions of commuters. Uber has incurred substantial losses of up to one billion dollars every year (Kirby et al., 2016). It is struggling to replicate its success story in the U.S. As evidenced in the case study, the inception of the company revolved around unique value propositions. A smartphone application was introduced to help connect ride-seeking users to drivers with fares being determined using a pricing algorithm. Unlike in the U.S and UK where it registered immense success, the company failed in China due to the adoption of strategies that failed to take into consideration the Chinese Market characteristics. It therefore follows that Uber’s strategy did not work in China because it failed to address issues of product localization, competition, fraud, and legal implications.

Internal Analysis: SWOT

Strengths

Firstly, the company’s diverse product portfolio has enabled it to expand into different segments in the domestic market. This has guided Uber China in developing diverse revenue sources. Secondly, unlike its close competitors, Uber is widely known for charging a premium. As explicated by Kirby et al. (2016), this has ensured the company acquires the needed resources to eschew competitive pressure and invest in research. Lastly, Uber China’s track record can be seen through the successful launch of new products in the domestic market as well as aligning to the needs of local consumers.

Weaknesses

The two main weaknesses of Uber China relate to the type of business model and lack of diversity in its workforce. Regarding the former, the business model is easy to replicate despite the number of copyrights the company has. According to Kirby et al (2016), it is more difficult to try and implement Intellectual property rights in the market that Uber China operates (Liu and Kim, 2022). On the latter, it can be argued that Uber China has yet to achieve some level of workforce diversity because most of its growth is limited in its domestic market.

Opportunities

The two main opportunities for Uber China relate to globalization and advancements in Artificial intelligence (AI). For instance, Globalization has played an important role in creating more opportunities in the international market. In fact, Kirby et al. (2016) argued that the international market will help the company diversify risk by being less dependent on the domestic market. Similarly, Uber China can utilize these advancements in AI to come up with accurate predictions on consumer demand and, at the same time, develop better recommendation engines.

Threats

The greatest threat to Uber China lies in its fierce competitor, Didi-Kuaidi who is looking for ways to weaken not only in China but globally. Another threat is the company’s new environment does not allow quick adjustments in prices to reflect the ever-changing economic conditions (Liu and Kim, 2022). As evidenced in the case study, this makes it difficult for the company to increase prices based on its premium process.

External Analysis: PESTEL

Political Factors

The first factor relates to the involvement of non-governmental organizations and protest groups. China has one of the most vibrant civil society communities, and as such, Uber China must look for key areas to foster cooperation. For instance, civil society has much influence in policy making. Another critical factor for consideration is regulatory practices which are aligned with global norms to ensure the country adopts new ways of doing business. Lastly, democratic institutions, as evidenced in the case study, need to be strengthened to allow businesses such as Uber China to thrive in a stable and transparent environment.

Economic Factors

The first factor is inequality in ranking on the Gini Index which is a critical indicator for harmony and development in the society. This means that a huge gap in income inequality translates to a surge in crime and conflict. This, in the end, creates a high level of uncertainty and consumer suppression both in the short and long term. Another critical factor is the level of household income and savings (Liu and Kim, 2022). This was a major problem in the U.S. – stagnant income contributed largely to credit binge consumption. In fact, the majority of them had abandoned the culture of saving because of an increase in consumption.

Social Factors

The first factor that is critical to Uber China is societal norms and Hierarchy. It is imperative to note that the type of hierarchy and norms that exist in a given society have a major impact on the consumption of different services. For instance, the power of decision-making, specifically in a highly hierarchical society, is top-down. Secondly, the level of social concern also plays an important role in the decision-making process. More specifically societies that are dominant with high levels of social concerns often lead to increased consumer activism from pressure groups and non-governmental organizations.

Technological Factors

Uber China is better positioned when it comes to utilizing technological advancements such as digital drives. For instance, it can opt to digitalize most of its processes to prevent corruption in the local economy. Secondly, before the company makes a decision to tap into a new market, the focus should be on understanding the country’s intellectual property rights. Finally, the issue of mobile payments is one of the areas that require scrutiny in an effort to maintain simplicity in transactions (Liu and Kim, 2022). Therefore, Uber China should first determine the most preferred payments in the local market and then come up with a model that reflects these needs.

Environmental Factors

Firstly Uber China should strive to understand the specific recycling policies and then come up with a plan of complying with them. Secondly, the company must address some of the issues related to corporate social responsibility (CSR). For instance, Uber China must determine whether it can replicate its CSR efforts or adopt new initiatives as per the dynamics of the prospective market. Lastly, the company must consider how climate change will disrupt its business model as well as its supply chain. For instance, it needs to figure out what ought to be done in the event shipments are delayed due to climate change.

Legal Factors

The two most important legal factors to be considered are employment laws and intellectual property rights protection. The former requires Uber China to focus its attention on understanding the specific employment laws present in the country and whether they align with its business model. As noted by Liu and Kim, 2022), the company’s employment system is not consistent with French laws. On the former, the country should try and assess the available level of protection as per the country’s legal system.

Business and Corporate Level Strategies

The corporate-level strategies should strive to provide solutions to the issues the company is facing on a strategic level. For instance, the company should introduce a product that is tailored to the Chinese people’s way of operation such as the use of both credit cards and Alipay. This strategy aims at resolving the issue of product localization. On the other hand, the business-level strategy revolves around the need for differentiation in order to gain a competitive advantage. This strategy will help the company eschew competition from Didi, Kuaidi, and Didi-Kuaidi.

Global perspective and position

From a global perspective, Travis Kalanick’s strategy was mostly successful in other countries such as the UK and the U.S. Travis managed to propel the company to greater heights for five consecutive years after its inception in 2009. The company registered significant growth and its valuation surpassed that of Facebook (Liu and Kim, 2022).

Despite the challenges in China, the company continues to maintain its dominance in the market with an outreach stretching across 374 cities and 68 countries (Kirby et al., 2016). In essence, its position in the market remains intact regardless of the challenges witnessed with Uber China.

There are several alternative courses of action for Uber China. First, the company should focus on creating a new user base by providing networking services to taxi drivers. Second, it should consider cooperating with other taxi industries and local governments in order to avoid regulatory challenges. Lastly, the company should eliminate subsidies and come up with a different strategy to attract drivers and customers – this will reduce fraud. However, the recommended course of action is that the company should incorporate the needs of the supplier side (drivers) into its service processes such as matching functions and payment methods.

Conclusion

Uber has become one of the most popular internet-based businesses around the globe. It has contributed a lot to the overall improvement of transportation around the world. Despite its successful story, the company encountered a lot of challenges in its attempt to penetrate China market. Some of the issues contributing to this failure as highlighted in SWOT and PESTEL analysis revolve around competition from Didi, legal implications, product localization, and fraud.

References

Kirby, W. C., Eby, J. W., Frost, S. L., & Frost, A. K. (2016). Uber in China: Driving in the gray zone. Harvard Business Review.

Liu, Y., & Kim, D. (2022). . Journal of Open Innovation: Technology, Market, and Complexity, 8(2), 90. Web.

Uber: Poor CSR Performance Index

Introduction

Over the decades, Uber emerged as one of the controversial corporate entities that prominently influence the effect of corporate social responsibility (CSR). Despite its leading position in the transport and logistic industry globally, researchers argue that there is a poor performance record on efficacy levels based on CSR activities (van Eck & Nemusimbori, 2018). In a study, Dudovskiy (2021) indicates that the lack of CSR initiatives led to the loss of the company’s operating license in London. As a result, the managerial team developed dynamic approaches promoting sustainability across the multidimensional spectrum. The incorporation of sustainable CSR projects is attributed to the institution’s alteration of the organizational culture, public perception, and relation with the contractors. Since Uber has a few inefficiencies regarding its CSR, specific practices can help improve the organization’s performance in this sphere.

Main body

To begin with, one should clarify what CSR specifically denotes. This term represents a management approach stipulating that organizations incorporate social and environmental values into their operations (Stobierski, 2021). For example, businesses are concerned with eco-efficiency, pollution reduction, philanthropic activities, and fair relationships with stakeholders. Companies should follow these requirements because they are believed to have sufficient resources to improve the quality of life for the community.

Now, it is reasonable to identify specific examples that can demonstrate that Uber has problems regarding its CSR. Even though Uber (n.d.) has a special page on its official website to highlight its CSR practices, an analysis of third-party sources proves the opposite. The organization is one of the international companies with a significant percentage of employees across different countries. The workers primarily rely on the Internet for marketability hence the promptness to adhere to an aggressive sales culture. Despite acquiring a competitive market position, Uber faces a prominent challenge concerning developing a dysfunctional organizational culture (Jeon, Lee & Jeong, 2020). Poor networking among the counterparts compromises the quality of service rendered. As a result, it is crucial to assess the abound efficiency scale of Uber’s working environment indicators relative to the laborers’ welfare. This information demonstrates that the business fails to meet its CSR regarding its employees.

Uber primarily sells the transportation service to the population at a price determined by timeliness during the travel. At the company’s onset, the aggressive sales approach was an efficient strategy to intensify the optimal customer service portfolio. However, Lyft, as one of the competitors, poses a significant threat to Uber due to the dynamism in the delivery process. While Uber prioritizes enterprise profitability, Lyft focuses on establishing a teamwork-oriented corporate culture. Lyft’s strategy renders an optimal mark to the customer satisfaction index than Uber due to the high-quality consumer service experience. In 2017, an Uber employee confessed to sexual harassment while working while the administration indicated a concern for the rise in the number of laborers’ suicides around New York City (Jeon et al., 2020). The distinct issues contribute to bad press for the firm based on the intensified flow of information locally and internationally.

Particular economic aspects have also highlighted the CSR issues of Uber. The researchers indicate that Uber insisted that it operates as a technology organization while the drivers are independent contractors (van Eck & Nemusimbori, 2018). However, Barbara Berwick contested the relationship establishing that she operated as an Uber employee. In this case, it is crucial for the company to reimburse the costs incurred during operations. In a different approach, Uber faces another hurdle that involves the employment taxation rate. Currently, the company incurs minimal employment taxation costs, while the legal clause enhances the business profitability margin at the expense of workers’ well-being. Thus, the Uber business model is an evolutionary scale concerning the importance of adjusting regulations based on employee-employer relationships.

Since the essay has located a few examples demonstrating that Uber is not behaving as it should, it is reasonable to find an explanation of these processes. Some organizations engage in poor CSR practices because this approach requires more economic resources. Thus, businesses want to retain more profits, which makes them save money on promoting social, environmental, or other values. Other companies face CSR issues because they do not understand the importance of engaging in this behavior. These organizations fail to comprehend that environmental or philanthropic activities can improve the brand image that, in turn, can promote sales and revenues. Often, it is impossible to identify a single factor that leads to CSR problems, which denotes that a combination of various phenomena leads to this negative state of affairs. That is why it is possible to suggest that Uber suffers from the stipulated issues because of economic motifs and insufficient understanding of how effective CSR practices are.

The information above demonstrates that it is necessary to take specific steps to improve Uber’s CSR. Firstly, it is possible to make business processes more transparent for all stakeholders (Lu et al., 2019). This decision will prove that Uber is sure that it relies on credible and reliable practices. Secondly, economic investments can be an effective intervention because specific awards, subsidies, and training programs can promote CSR values (Lu et al., 2019). For example, Uber can invest in specific initiatives and programs to improve living conditions in the community. Thirdly, the organization can use its informative resources to promote some environmental, philanthropic, and other social values among its stakeholders (Lu et al., 2019). Finally, Uber managers can do research to find a company that is famous for its effective CSR strategy. This information denotes that the given organization can borrow an effective approach to achieve positive outcomes.

Conclusion

In conclusion, the essay has demonstrated that Uber has experienced many issues in its corporate social responsibility sphere. Examples include a dysfunctional organizational culture, improper employee behaviors toward clients, and maximizing the company’s profits at the expense of workers’ well-being. Numerous factors can explain why these practices exist, which denotes that no single problem leads to corporate social responsibility issues. That is why it is possible to rely on different activities to solve the problem. Suitable interventions include making business practices transparent, relying on economic incentives, advertising appropriate values among stakeholders, and utilizing an existing strategy that has proven its effectiveness. Uber can utilize them to improve its performance in the corporate social responsibility area.

References

Dudovskiy, J. (2021, July 22). . Business Research Methodology.

Jeon, M. M., Lee, S., & Jeong, M. (2020). . International Journal of Hospitality Management, 84, 1-10.

Lu, J., Ren, L., Lin, W., He, Y., & Streimikis, J. (2019). s. Business Administration and Management, 22(1), 82-98.

Stobierski, T. (2021, April 8). . Harvard Business School.

Uber. (n.d.). 2021 . Retrieved July 25, 2022.

Van Eck, S., & Nemusimbori, N. E. (2018). Uber drivers: Sad to say, but not employees of Uber SA. THRHR, 81, 473-483.

Legal Liability and the Gig Economy: Uber

The Main Principles of Agency Law

Agency law is a commercial law area that revolves around the principal-agent relationship. Most of the organized human activity, including commercial one, is carried out through an agency, which makes this concept of particular importance. Furthermore, business organizations and enterprises depend on agents and how well they perform their responsibilities. In particular, the gig economy as a free-market system based on freelance work and short-term contracts identifies a new context for employers and employees to operate in.

A number of concepts are involved in the law on the agency. An agency relationship refers to a scenario where one party (the agent) provides consent to act on behalf of another party (the principal) and take on a range of duties, rights, and liabilities by virtue of a contract (Jennings, 1). A principal is a person, corporation, organization, or government agency that has the legal capacity to enable an agent to perform a task. In turn, an agent is an individual representing the principal and carrying out tasks on their behalf. A principal owes the duties to compensate, reimburse, and indemnify the agent (Jennings, 1). An agent owes the fiduciary duty and a number of general duties to the principal, as per agency law (Jennings, 1). In this regard, the agency is a consensual and fiduciary relationship that involves responsibilities for both sides.

In relation to Uber as part of the gig economy, a number of agency law principles apply. In particular, the express authority principle suggests that Uber (the principle) enters an explicit agreement with drivers (agent) and provides them with authority to deliver people from one point to another. Another principle is the apparent authority which provides that the principal has agreements with the third party, namely, customers, if they are led to believe that there is an agency relationship (Loewenstein, 2).

The principle of ratification is another concept that applies to Uber and suggests that the principal can decide that the contract can be honored as if the agent has the full authority if when they do not (Jennings, 1). The working status of Uber drivers has caused numerous discussions even though their status is defined as independent contractors in the Service Agreement. However, as reported by SAY Hukuk Burosu, “on 19 February 2021, UK Supreme Court delivered a ruling which classified app-based UBER drivers as workers, instead of independent contractors” (2, para. 10). In other words, an agency relationship exists between Uber and the drivers.

Uber’s Liability for the Conduct of a Driver

When it comes to the liability of a principal for an agent’s torts or wrongful acts, the principal can be held responsible as a result of the legal authority given to the agent. Moreover, according to Jennings, “the liability of the principal for contracts made by an agent is controlled by the perceptions created for and observed by the third party to the contract (1, p. 570). There are several scenarios that might be involved, such as the disclosed, the partly disclosed, or the undisclosed principal.

In this regard, Uber might be held liable for the driver’s conduct when the agent’s actions were within the scope of the apparent authority. Furthermore, the principal is also accountable for any fraud committed or misrepresentation made by the drivers acting within the action of apparent authority (Loewenstein, 2). However, it is complicated due to the discrepancy between the drivers’ status of independent contractors proclaimed by Uber. For instance, in a scenario where a driver sexually assaults a passenger, the agent will be subjected to face the law while the company will not be held liable. In turn, Uber company should be held responsible if an agent causes an accident and a passenger succumbs to injury. It is worth noting that the most evident party at fault is the driver; at the same time, in this case, the driver acts within the scope of apparent authority.

According to the same principle, Uber should be held liable for the conduct of a driver who, while intoxicated, caused an accident involving personal property damage and bodily injury. At the same time, the independent contractor status implies that the principle is not liable for the tort and an illegal act of the agent in this scenario (Jennings, 1, p. 575). Such a statement suggests that the driver would be personally responsible for the damage caused.

The Uber company has a commission agent type of relationship, which involves supplying the service of connecting the drivers with the customers online and providing navigation services for consideration. Furthermore, the company controls the drivers’ activities and has a zero-tolerance policy towards drunk driving (Loewenstein, 2). It can be complicated for the injured passenger to take legal action directly against Uber. The company has liability policy limits, and a number of factors need to be considered, including whether the application was in use at the time of the accident.

Steps Uber Should Take to Limit its Legal Exposure for the Conduct of its Drivers

The Uber company claims that the drivers are considered independent contractors and not employees. In doing so, it limits its legal exposure for the drivers’ conduct. There is a broad range of law issues that can arise in the company’s business environment. According to Loewenstein, an employer’s failure to establish and implement effective policies promoting the safety of agents and customers can result in clients’ and employees’ claims (2). Indeed, the company has faced numerous lawsuits since its establishment. In most cases, Uber was held liable for the misconduct of its drivers in spite of the fact of the Independent Contactor relationship and often unawareness of the misconduct itself (Loewenstein, 2). In order to prevent such situations, the agency should initiate relevant legal inclinations that will bind the agent to take prudence and be liable for their conduct.

There is a number of steps Uber can take to limit its legal exposure for the conduct of its drivers. In particular, the company can display the terms and conditions as the customer signs up and uses the application, explicitly stating that the driver should be held personally liable for illegal acts. Another step to limit Uber’s legal exposure is to include the subject of ensuring safety and following the legal terms of locality in terms of the contract with drivers. Furthermore, another option for the company is to include a section in terms of the contract with drivers that provides that the driver shall be personally liable to the customer for any damages occurring due to their misconduct. According to Jennings, “principals are not generally liable for the torts of independent contractors” (1, p.575). Hence, it is worth noting that the Independent Contactor relationship would limit Uber’s exposure most.

Sources

Marianne M. Jennings. 2016. Business: Its Legal, Ethical, and Global Environment. Web.

Mark J. Loewenstein. 2017. Agency Law and the New Economy. Web.

SAY Hukuk Burosu. 2021. Web.

Case Study of Entry of Uber in China Market

Introduction

Uber faces some challenges with its entry into the Chinese market that were not previously present with its entry into alternative markets in the United States and other countries. The first major challenge that Uber faces is stiff competition from companies such as Didi Kuaidi, which offers similar services to Uber, and Yidao, primarily an application for booking chauffeurs. The permeability of these applications and their inherent relations with Chinese users makes them a significant challenge to the success of Uber in China. The second challenge is the ubiquitous attitude that the government has toward ride-sharing apps such as Uber and Didi (Xu et al., 2015).

The applications operate in a grey zone with no clarity on whether they are legal or illegal. The third challenge for Uber is to find a customizable and profitable platform on which it can base its Chinese operations because, as the corporation stands in China, it is consistently making losses due to price wars with the major competitors.

Analysis of the Problem

Competition

The first major problem for Uber is the stiff competition it faces from ride-sharing companies already established in Chinese cities. Uber entered the Chinese market in July 2014 with a plan to outcompete the existing ride-sharing apps and become the primary taxi service in Chinese cities. The company tested the market first with Uber Black in Chinese. Uber Black is a luxury offering granted to individuals willing to pay more. The reason for opting for sedans was that the company could work directly with car-hire services and avoid the regulatory frameworks surrounding private individuals using their cars as taxis (Xu et al., 2015). However, the fare for an Uber Black was higher than a regular taxi, which dissuaded individuals who were simply looking to get a cheap ride from one point to another.

For this reason, Uber decided to slash the prices by fifty percent on base fares and thirty percent on per-kilometer fares. To truly make a dent in the Chinese market, Uber created the ‘People’s Uber’, hailed as a not-for-profit sort of Uber. The company did not make any money from the drivers, but the drivers themselves would keep all the financial revenues they gathered from their trip. Uber raised about $2.4 billion for developing the Chinese and Asian markets, meaning it was not profitable the entire time (Xu et al., 2015).

Most of these funds went into giving first-time riders coupons and extending financial favors to the drivers based on the number of rides they booked via the ‘People’s Uber’ (Xu et al., 2015). Uber slashed the ‘People’s Uber’ prices by 20-30 percent depending on the Chinese city (Xu et al., 2015). The set of actions taken in the approach was to slash prices far below the competition and hold most of the Chinese market. However, this approach failed catastrophically, and Uber did not clinch the percentage of the Chinese market they hoped to acquire.

By April 2015, Didi Kuaidi, including Didi Chauffeur and Chauffeur One, had captured 78.3% of China’s online chauffeur marketplace (Xu et al., 2015). It is where Uber was hoping to gain more profits through the provision of Uber Black, their only revenue-generating platform at the time in the Chinese market. The second application that followed Didi Kuaidi was Yidao, with a 10.9% market share (Xu et al., 2015).

Uber came a distant third with only 8.4% market capitalization in the Chinese market. The overall interpretation is that Uber could not actively compete with other companies, especially Didi Kuaidi. Didi Kuaidi was formed via a merger of two ride-sharing companies, Didi and Kuaidi. Both companies were founded in 2012 as high-tech startups and taxi-hailing applications. Kuaidi launched in 2012 with the support of Baidu maps to gain better knowledge of the terrain. Didi launched in 2012 with the support of We Chat, the most common direct messenger service in China. The application used WeChat Pay, which made it much more convenient for users to pay for their rides. The merger between Didi and Kuaidi occurred on Valentine’s Day in 2015 (Xu et al., 2015).

Through this action, Uber met a giant competitor who owns most of the ride-sharing and chauffeur market in China and has a more sustainable business model than offering rides at the lowest prices. Yidao offers executive rides to the clients and allows the clients, rather than the drivers, to choose their rides. Yidao placed relatively fixed prices on its offerings and never entered a price war. Due to this, Yidao has a more economically sustainable business platform as opposed to Uber.

The Government

The government has yet to fully define the legality of ride-sharing applications such as Uber, Didi Kuaidi, and Yidao. The companies operate in a grey zone, and the drivers initially avoided roads with checkpoints to avoid getting fined or detained (Xu et al., 2015). Different municipalities have tried to take the lead in addressing the legalities of ride-sharing applications like Uber. Shanghai’s managerial database of ride-sharing applications was recently announced and developed. A similar move is in place in Beijing. However, uncertainty remains as to the legal repercussions of ride-sharing applications in China.

Potential Solutions

One of the main potential solutions for Uber is to exit the Chinese market due to its low market penetration rate. Uber has spent billions of dollars attempting to penetrate the Chinese market in an economically viable way. Its main profit-making ride-sharing platform, Uber Black, had not permeated China to the extent the company hoped when it started promoting its services therein. The ‘People’s Uber’, its most popular outfit, does not make any financial remuneration for Uber (Xu et al., 2015). The lack of profitability would lead to the idea that Uber should cut its losses and pull out of the Chinese market.

The second solution would be to eliminate the not-for-profit aspect of the ‘People’s Uber’ and raise the rates for the taxi-hailing service. The main advantage stemming from this action is that Uber would have an economically viable platform that has widespread use in mainland China. Making the ‘People’s Uber’ a profitable avenue would include raising the prices so that the company can take a percentage of the earnings. The price raise should be commensurate with the commissions the organization aims to get from the drivers.

Recommendation

The recommended solution from the two options would be to pull out of the Chinese market. The size and nature of the competition, coupled with general Chinese attitudes towards external companies, would lend itself more to the idea that Uber should pull out of the market. The Chinese government tends to favor Chinese businesses in offering permits and awarding contracts. For instance, the Shanghai Taxi Information Service Center, initiated by the Shanghai Committee of Transport, is co-sponsored by four major Chinese taxi companies and Didi Kuaidi (Xu et al., 2015).

Further, Didi Kuaidi controls most of the Chinese market, and its exclusive use of We Chat Pay, which stems from China’s most popular connectivity application, means it is unlikely to waiver in its market dominance. The combination of Didi and Kuaidi means that Uber can no longer compete via a price war. Consequently, further investments into the Chinese market would not be viable, and the organization should start working on a viable exit strategy.

Reference

Xu, X. C., Wang, X. S., & Bendle, N. (2015). Uber: Managing a ride in China. Richard Ivey School of Business Foundation.

Uber Company

Introduction

Nowadays, the taxi industry has been considerably improved and varied. There are many interesting options on how to satisfy customers, offer appropriate services, and gain a number of financial and organizational benefits. Though there may be certain challenges and mistakes in a decision-making process, taxi companies try to solve the problems in a short period of time and make sure employees and customers are satisfied with the conditions offered.

Uber is one of the well-known taxi companies around the whole globe. Its services can be offered in a number of the American cities, as well as in the European cities such as Rome, Minsk, Lisbon, Turin, etc. Uber is the company that offers a good work for drivers and high-quality services for passengers.

However, like any developing or developed company, Uber can be under a threat of some financial instabilities or organizational challenges. The current paper aims at analyzing Uber’s current and potential future business issues, the factors that define the success of the company or may challenge it in different countries. In fact, the analysis of the Uber’s financial perspectives is a good chance to understand different aspects of the international market and define the most appropriate solutions.

Current Business Issues

Uber is a young company. It was founded in 2009 by the Americans, Travis Kalanick and Garrett Camp (About Uber, 2015). However, during the last five years, the company has survived a number of conflicts, discussions, and evaluations. The current business issues are based on the experience gained from 2009 till today.

Being introduced as a private taxi company, Uber expanded its services from a city to a city. In 2012, Uber became an international company and offered its services for the citizens of Paris. Nowadays, Uber is available to people in 58 countries of different continents. The citizens of more than 300 cities worldwide are able to use the Uber’s services any time they need.

The company is valued at about $50 billion (Higson, 2015). These indicators may tell a lot about the current situation of the company and make some predictions about its possible development. On the one hand, it is evident that customers are satisfied with the possibilities to have more convenient as the company’s founders can open new departments in different parts of the world.

On the other hand, the information that can be found online proves that Uber faces a lot of challenges with other international and local taxi companies (Cheok, 2015). For example, French and Russian representatives admitted that Uber could not offer its services to the citizens without appropriate licenses.

In Germany, Belgium, and Spain, Uber has to solve many legal problems (Cheok, 2015). The Taiwan government identified the services of Uber as illegal. In fact, the current business affairs of the company under consideration are not as good and satisfactory as they are expected.

As a sprawling logistics company, Uber has already achieved a lot in the taxi industry (McAlone, 2015). Despite numerous misunderstandings and the necessity to prove its appropriateness and correctness, Uber has survived. Its current situation has good prospects. Its founders admit the justification of the attempts made during the last six years. Now, they enjoy and use the benefits Uber offers.

Potential Future Business Issues

Sometimes, it is hard to realize what to expect from such companies like Uber that have been developed within a short period of time and become successful at the international level. The evaluation of its potential future business issues is unpredictable. Still, it is possible to offer several ideas.

For example, one of its co-founders, Kalanick believes that Uber has all chances to spread its services in the way it can be more effective to be the Uber’s passenger than to own a car (Shontell, 2015). In fact, the prospects described by the owners of the company and the abilities help to realize that the future of the company can be successful.

It is possible to provide people with taxi services for affordable prices around the whole world. Even the point that some people want to travel without drivers does not create a problem for the company. Kalanick thinks about the possibility to provide people with taxi services without chauffeurs (Shontell, 2015).

It is expected that people learn more about Uber and want to have such services available in their towns. It is possible for the company to think about the possibility to offer its services in small towns. The access to the Internet is possible in villages nowadays. That is why it should not cause a problem for a person to register and become a passenger of Uber within a short period of time. Still, the business issues that can be developed in the nearest future are connected with the possibility to have more countries and towns being involved.

It is also possible to have more benefits due to the possibility to offer diverse services of various qualities. Passengers with various incomes can use Uber. Another potential issue is the cooperation with huge international companies. The question of comfortable and appropriate transportation rises in a number of companies. Business people want to be sure in the services they order. That is why Uber can offer taxi for people as well as cargo transportation around the whole world.

Factors for Uber’s Success in International Markets

The concepts of international marketing help to understand what skills should be developed, clarify what knowledge is necessary to work effectively, and make the decisions that can define the success of companies under analysis (Doole & Lowe, 2008). The factors that account for a success of the company in international markets can be defined on the basis of the company’s strengths and opportunities. In other words, a part of the SWOT analysis of Uber should be done.

The main Uber’s strength is its recognized brand. Many people from different countries have already known about the services offered by the company. They are eager to use them. Such recognition is the most crucial factor for future success. The possibility to create and follow the standards of service is another powerful aspect of international marketing.

Besides, there are not many competitors in the taxi industry on the international level. There are such organizations as Sidecar, Lyft, or Haxi that can compete with Uber. Still, its low-price policy is the strength that can hardly be overcome.

The list of benefits and opportunities for the company can be continued by its high investment ratings. People of different countries are eager to invest in the development of the company and earn benefits within a short period of time. As soon as financial support is clarified, it is possible to talk about the development of the services.

There are many old and young people, who want to know that even transportation services are credible when they try to get to a hospital, bank, or store. Uber has all chances to meet the needs and expectations of different people using its international popularity and credibility. A specially developed app help to find the necessary services within a short period and with few efforts spent.

Challenges to Expand Business in Other Countries

The challenges that can be dangerous for Uber while developing business in other countries can be identified with the help of another part of the SWOT analysis where weakness and threats can be clarified. For example, some cities and towns can discover that the company has faced a number of legal challenges. Some counties even call the company illegal. That is why the challenges of the past can become the challenges of the future.

At the same time, it is possible to admit the fact that the company has already solved many similar questions, and the success of the company is the best evidence of the quality of services offered. Besides, it is also necessary to underline the role of competitors in the taxi industry. It is not very difficult to create a company with the same services and challenge Uber. However, such factor as the company’s brand and reputation should help to cope with this challenge.

Finally, the business model of the company is not as perfect as it should be. Drivers work independently using the base offered by Uber. Not many drivers can have a high salary. Even the ethical aspects of the cooperation between Uber and its drivers are not clear. Drivers’ dissatisfaction is the threat that should be considered by the company and solved in a short period. Uber’s managers should not put the gained reputation in the first place. They have to pay more attention to the internal problems and concerns of the drivers.

As soon as Uber starts improving the internal challenges, the external challenges that can be identified while expanding business in various countries can be solved.

Conclusion

In general, the example offered by Uber can be used by many developing companies. Nowadays, it is not a difficult task to create an organization and introduce some new, unusual services. However, it is always challenging to gain a good reputation, prove the quality of the services, and create appropriate working conditions.

Uber is the company with a complicated history. Still, its founders had made something that was impossible: they survived sabotages, strikes, and discontents of the governments of different countries around the whole world. The necessity to provide people with good services at affordable prices is urgent nowadays. Not all people are able to use the quality they want. Uber opens new perspectives and possibilities.

However, its attempts to cooperate with big cities only are not enough to become one of the best. It is necessary to make more improvements and encourage changes. Drivers are eager to work at different places. Uber can provide drivers with jobs and citizens with transportation services. The factors for success and challenges discussed in the current paper show that Uber as all chances to succeed in international marketing. The only thing that the company has to do is to continue developing and thinking about its employees.

References

About Uber. (2015). Uber. Web.

Cheok, D. (2015). . Bloomberg Business. Web.

Doole, I. & Lowe, R. (2008). International marketing strategy: Analysis, development and implementation. London, UK: Cengage Learning EMEA.

Higson, C. (2015). . Forbes. Web.

McAlone, N. (2015). . Business Insider. Web.

Shontell, A. (2015). . Business Insider. Web.