Marketing Question
Uber: The Opportunities and Challenges of Market Disruption
Case Summary
Uber, a fascinating company that has frequently been in the headlines during the past few years. Uber is a ridesharing service. Consumers use the Uber app to contact a driver in the nearby vicinity when they want a ride. The app also allows consumers to get an estimated time of arrival on their smartphones with the use of an integrated GPS system. Many people use Uber as an alternative to taxis, which is upending the taxi industry on a global scale.
Uber is also having an impact on other industries as well. For instance, companies like Zappos are planning to adopt Uber’s surge-based pricing strategy. Drivers for Uber act as independent contractors who can run their own ridesharing business and drive whenever they so choose.
However, Uber is encountering a lot of challenges as it expands globally. Internally, Uber is facing some problems with its drivers. Despite the drivers’ status as independent contractors, Uber still exerts much control over the drivers, including setting rates. In California lawsuits have been filed by Uber drivers claiming that they should be legally considered as employees. One driver recently won a lawsuit against Uber in California. Uber might need to amend its strategy so that Uber drivers will fall beneath the employee threshold.
Additionally, Uber has faced many difficulties from the taxi industry. The taxi industry points out that it is unfair that Uber gets to offer taxi-like services without having its drivers go through the same licensing requirements that taxi drivers must go through. Many governments seem to agree, and Uber has been partially or wholly banned in places such as France, Germany, India, Australia, South Africa, Spain, and Indonesia. Protests of taxi drivers further discourage Uber’s expansion. Additionally, an alleged rape in India by an Uber driver has caused some governments to question how Uber vets its drivers, prompting Uber to implement more safety measures.
The sky appears to be the limit for Uber as it expands past ridesharing services to catering and food delivery services. However, Uber must be proactive in addressing challenges set forth by the large-scale worldwide taxi industry. This case demonstrates that innovative ideas do not limit opposition. It also supports that idea that Uber may have to adopt more discerning and considerate actions to mitigate opposition and continue expansion.
Questions – Each question should be answered in at least a paragraph.
A. Since Uber is using a disruptive business model and marketing strategy, what are the risks that the company will have to overcome to be successful?
B. Because Uber is so popular and the business model is being expanded to other industries, should there be regulation to develop compliance with standards to protect competitors and consumers?
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