Uber: leading the sharing economy

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Executive Summary

Sharing economy is a term that is used to describe a business transaction that is carried out via an online platform. This is a business model that has grown rapidly over the years due to the advancement in technology. Uber is one of the leading businesses that has gained popularity in the world of “sharing economy” and in 6 years the company has managed to beat top companies like Ford and General Motors in terms of valuation. Being one of the major contributors to the sharing economy, in this essay, we are going to discuss the role Uber has to play in the society.

Strategic Problem

As one of the leading companies providing Taxi services, Uber has a major role to play in the society by ensuring that the clients have received quality service and the drivers’ needs have been met. Sometimes balancing the two becomes an issue, and this is the greatest challenge for the company.

In the recent past, we have seen Uber drivers going on strike due to low pay. Uber provides an affordable cost to the clients and this lowers the income of the drivers, hence demotivating them. This mostly affects the drivers who have been hired by the car owners because they have to meet and surpass their daily target to ensure that they earn an income after all the expenses. This is the major problem that is being faced by the company because they are torn in between hiking the prices, which will see them lose some customers and maintaining low cost at the expense of their drivers. Other than that, there is also the issue of excess cars being registered by Uber. This makes the business to be competitive internally and is another demotivating factor to the drivers.

Solution

The best solution to ensure that the drivers are well catered for by the company is to make them permanent employees where they will be entitled to salary and other packages. This will give the drivers some piece of mind and they will work to the optimum. By doing this, the company can also do a background check on the drivers before employing them so as to avoid misbehavior by the drivers.

SWOT Analysis

Conducting a SWOT Analysis is key for the growth of any business model. This is an exercise that requires one to come up with the Strengths, Weaknesses, Opportunities, and Threats for the business. Following is the SWOT Analysis for the Uber Business:

Strength

  • Popularity- The Company was grown so fast over the years and currently it has expanded to over 50 countries with a valuation of over $68 Billion. Its high value continues to attract investors globally.
  • Low cost of Investment: The initial cost required to invest in the Uber business is considerably fair as long as the car meets the required standards.
  • Quality Service: The Company majorly focuses on customer satisfaction by ensuring that they get customer feedback from the clients. The company also ensures that the only register car which meets their required standards.
  • Fair Pricing: The prices are fair which works for all classes of people.

Weakness

  • Relies on the Internet: The business cannot operate in areas where there is slow or no internet connection, especially in the developing countries.
  • Technological knowledge: The application cannot be used by someone who has no knowledge of technology.
  • Controversial Articles: Various articles have been published about rape cases by uber drivers. This makes the clients have trust issues with the company.
  • Drivers are the Brand Ambassadors: This is tricky because the company relies entirely on the image of their drivers. Any misbehavior by the drivers will affect the reputation of the company.

Opportunity

  • Logistics: It is an efficient mode of transport with no logistics required to travel.
  • Poor Public Transport: In countries with a high population the public transport system is poor. In this case, the option of using an Uber becomes convenient especially when one requires privacy.
  • Alternative Transport means: In other countries, Uber has launched Uber Choppers, which provides a range of options to choose from.
  • High Internet Penetration: The Internet is penetrating fast in the developing countries. This means an opportunity for the growth of the business for the company.

Threat

  • Competitors: Due to the high completion, some companies will emerge offering lower prices than Uber, which will offer a cheaper alternative to the Uber clients.
  • Low margins: Due to the fewer profit margins gained by the drivers, they can be easily swayed to join Uber’s competitors.
  • Legal Regulations: In countries like Germany, they will execute new regulations which will prohibit Uber from operating in the country.

Social and Ethical Responsibility

In the recent past, Uber has been sued by rape victims over rape allegations made against their drivers. This has painted the image of the company in a negative way hence affecting the business due to lack of trust by the clients. To avoid this occurrence, the company should invest majorly in conducting a thorough background check to all its drivers. The company is reported to have spent lots of money is fighting lawsuits from various complainants.

As much as Uber makes a lot of revenue from the online platform, it is high time the company comes up with a different method of connecting the drivers to the clients. Currently for the driver to know of a client’s request, he or she needs to access the phone. The driver will, therefore, shift focus from the car to the phone responding to a client’s request and at the same time rushing to meet the client in the shortest time possible. According to a study done by the American Automobile Association’s Foundation, it is risky for a driver takes their eyes off the road even for a few seconds. It has higher chances of getting into an accident.

There is also a need for privacy on the client’s side. The fact that Uber monitors the whereabouts of its clients is not ethically right. Especially if the reasons behind the monitoring are not pegged on the safety of the client, but the business interests.

Legal Issues

One of the main legal issues that Uber faces is the lack of a properly stated employment terms. The company states that the drivers are independent. If that is the case, then they should not have a say in how much the driver is supposed to charge the client. If it’s the main role is to connect a driver to a client via its online platform only, then it should not dictate the charges.

There are no rules to govern how the drivers and clients should behave while using an Uber. This is perhaps one of the reasons causing misbehavior by either of the parties.

Alternatives

There are various alternative options to go for in case one prefers another taxi service provider apart from Uber. Some of them are:

  • Lyft
  • Sidecar
  • Curb
  • Hailo
  • Public Transport

These are few of the many options one can choose from apart from Uber.

Recommended Course of Action

For Uber to continue operating efficiently and be among the leading businesses in the sharing economy sector, they can do the following to ensure that both the drivers and the clients are satisfied with their services:

  • Allow privacy for the driver and the client. They should not be monitored unless there arises need to do so.
  • Kids below a certain age should not be allowed to travel on their own. They should be accompanied by either a parent or a guardian for safety purposes.
  • A thorough background check should be conducted on the drivers to avoid bad cases.
  • The company should also ensure that it does not violate any laws in the countries where it operates.
  • The drivers should be given competitive packages as much as they are independent.

Conclusion

In conclusion, I would point out that Uber indeed renders good services to its clients by ensuring their comfortability, but it also has to tackle some of the issues that may hinder the company from continuous growth.

For any company to be successful, it has to minimize potential risks that may give the competitors an edge over them.  As Uber expands in operation, it should also work on mitigating threats which might greatly affect the success of the company.

Did you like this sample?
  1. Ravenelle, Alexandrea J. “Sharing economy workers: selling, not sharing.” Cambridge Journal of Regions, Economy and Society, 2017. doi:10.1093/cjres/rsw043.
  2. Rauch, Daniel E., and David Schleicher. “Like Uber, But for Local Governmental Policy: The Future of Local Regulation of the Sharing Economy.” SSRN Electronic Journal. doi:10.2139/ssrn.2549919.
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