Case 24 Uber Technologies Case Study Analysis Questions

1.     Describe Uber’s business model. What service is Uber providing to the market? Is its business model financially successful?

·       Ride-Hailing Service. Uber provides a user-friendly mobile app that allows customers to request rides and track their drivers. Uber recruits independent drivers who use their transport to provide transportation services. Payments are made electronically, and Uber takes a percentage of each fare.

·       Uber Eats. Uber expanded its services beyond ride-hailing to food delivery through Uber Eats.

·       Financial Success. Uber has faced both successes and challenges. On one hand, it has achieved significant market penetration globally, becoming a dominant player in the ride-hailing industry. However, Uber had not yet achieved profitability. The Company has experienced losses due to high operating costs, investments in new technologies and competition with other ride-hailing services.

2.     How have Uber’s successes and challenges measured against its competitors and other companies within the software industry?

·       Success

                                      i.     Global Market Prescence. Innovation and Technology.

·       Challenges

                                      i.     Competition

                                    ii.     Labor issues

3.     Using SWOT analysis, what are some examples of external and internal influences that have impacted Uber?

·       STRENGTH

                                      i.     Global Brand Recognition. Uber has established a strong and globally recognized brand in the ride-hailing and transportation industry.

                                    ii.     Innovation. Uber leverages advanced technology to provide a user-friendly platform, real-time tracking and innovative services, contributing to a competitive edge.

·       WEAKNESS

                                      i.     Regulatory issues. Uber has encountered regulatory challenges and legal hurdles in various markets, impacting its ability to operate freely.

                                    ii.     Driver dependencies. Uber’s reliance on a network of independent drivers brings its challenges related to labor disputes, classification and driver satisfaction.

                                  iii.     Profitability challenges. Uber has struggled to achieve profitability, facing losses due to high operating costs, aggressive expansion and competitions.

·       OPPORTUNITIES

                                      i.     Expansion into new markets. Uber has opportunities for growth by expanding its services into new markets and regions, reaching untapped customer bases.

                                    ii.     Partnership and Collaborations. Collaborations with other companies, governments or organizations can open new avenues and strengthen Uber’s market position.

·       THREATS

                                      i.     Competition. Intense competition from other ride-hailing services, traditional taxi companies and emerging mobility solutions can impact market share and pricing.

4.     What are Uber’s options in handling California AB5, an attempt to reclassify Uber’s drivers as employees? What potential impact would each decision have?

·       California AB5. Aimed to reclassify many gig workers, including those working for companies like Uber, as employees rather than independent contractors.

·       Uber’s Options:  

                                      i.     Compliance with AB5. Uber could choose to comply with AB5. This would involve providing employee benefits, such as minimum wage, overtime pay, health insurance, and other benefits as required by California laws. Though treating drivers as employees would likely lead to high labor costs for Uber.

                                    ii.     Legal Challenge. Uber could choose to legally challenge AB5 but the potential impact of this is high legal costs and uncertainty.

                                  iii.     Compromise. Uber could engage in negotiations with relevant stakeholders, including labor unions and legislators, to find a compromise that addresses concerns while allowing some flexibility. Negotiations might lead to compromises that provides some benefits to drivers without full employee classification. Agreements reached through negotiations could set an industry standards for gig economy companies in California though.

5.     Of the options discussed, what is Uber’s best option to continue into the future? How does Uber’s financial situation affect its decision-making process?

·       Engaging in Negotiations. Actively engaging in negotiations with stakeholders to find common ground and compromise solutions that address concerns without a complete shift to employee classification.

·       Legal Challenges and Lobbying. Continuing to legally challenge AB5 while also engaging in lobbying efforts to influence legislative changes that provide a more favorable regulatory environment for gig economy platforms.

·       Uber’s financial situation plays a critical role in the decision-making process, as the company needs to balance the desire for flexibility in its business model with the need to address regulatory concerns and maintain financial sustainability. Ultimately, the best option will be one that aligns with Uber’s strategic objectives, ensures compliance with regulations and preserves its ability to operate in the long term.