Lego Group

Question 1

Qa

Uber is a personal transportation network that connects available drivers with passengers in need of a ride through a lightweight user-friendly smartphone app.

At first, the Industry of Uber is transportation. What this implies is that it provides transportation services (product) to the passenger (customer group) so that the section can be put into passenger. More details, the section is private ride-for-hire transportation (not public transportation). 

When Uber competing in, the industry life cycle (ILC) of transportation industry is in mature. We can see most large urban markets are served by a significant number of local taxicab companies operating fleets of cars. No firm is dominant. In traditional transportation industry, the business model is as the taxicab (driver hold or a company hold) has a license to pick up passengers who hailing on the street (taxicab) or though prearrangement (like limousine).

While Uber is a growing transportation firm with a commanding presence. It brings a new model which develop a smartphone app that would facilitate the creation of a new ride-for-hire service. That’s the most important key successful factor Uber has.

We can see Uber is successful fit for the needs of its target customs (both drivers and passengers). Drivers can stay at home finding a new way to gain independence, they can choose a fixedly time to work whether it is a part-time or full-time job. Passengers can hail a car immediately from a comfortable place.

Look at the macro-economic background (DNSTEP— Demographics natural environment, socio-cultural, technological, economic and political) of Uber. (MGT-BB820_u02_171, p30).

1. Demographic/ socio-cultural

Low population growth rates; age of getting married is increasing. But Uber’s target customs are people who use smart phone and network. On one hand, more and more countries continuous to strengthen their networks coverage. On the other hand, more and more people would like to use smart phone to do more things.

1. Global/ political

There are lots of competitors using similar technology in different countries. Those domestic competitors become serious barriers for Uber in developing its international business. Most of political is not protect Uber. Also Uber has been faced with many protests, and lawsuits. The protesters including Taxi Unions, Taxi company’s own drivers due to unfair.

1. Technological/ resources

Technology can supply better than before. product has newer rate whole of fast

1. Economic

Enter high growth development countries helps to strengthen Uber's production scale, enabling it to take international leadership. However, they also represent new, open markets for Uber's competitors. The large developing countries are not only important markets, but may also become key manufacturing bases.

Thirdly, use Porter’s five forces to analysis the industry environment and competitive Analysis. A framework considering the interplay between (1) the intensity of rivalry among existing competitors, (2) the threat of new entrants, (3) the threat of substitute goods or services, (4) the bargaining power of buyers, and (5) the bargaining power of suppliers. (MGT-BB820_u02_171, p26).

1 The industry rivalry is highly competitive. There is no proper patents and licensing the application so that the services can be switched at zero cost. As the need to offset cost becomes imminent, Uber is not immune to raising rates, hence making it easier for other firms to penetrate the industry. This is a strong force because it determines the firm's survival in the sector. 

2. The threat of entry is median. Uber cannot contractually lock down their early mover advantage. The main problem Uber has had to solve is how to get a driver to be able to pick up a passenger in less than five minutes. To do this, Uber has done the hard work of selling to both sides of this marketplace, but they cannot lock them up with contracts, leaving them vulnerable to later entrants who operate more efficiently. However, there is great difficulty for a potential entrant to fully imitate Uber’s operating model, e.g., its scale and culture.

3 The bargaining power of buyers is median. Uber’s major target customers who are in need of cabs instantly, early and late majority of business professionals. Customers only need Uber in specific circumstances like lateness for work or a scheduled event make the customers to order its services. Customers can freely choose between Uber, Lyft, or other emerging ride-sharing entities. The switching cost is also lower for customers because Uber’s free application software only demands customer registration. However, the buyer have no power to individually drive down price and presents a variety of

services from the low-cost Uber X to the luxurious UberLUX that attract both price sensitive and quality seeking riders.

4 The bargaining power of suppliers is low. Uber has no own car among its fleets. The major supplier for Uber is people who with a car willing to drive for extra income. So supplier are accorded the freedom to choose between the rivals thus can negotiate for a better attention to the company’s expense. That means, if Uber want more fee split the supplier can easily switch to competitors and provide the same service.

5 Lyft is one of the major competitors of Uber. Not only are the two firms competing for market share but also the suppliers. Uber as the first one in the ‘app transportation’ has a well-established business network and large capital investment. But insignificant differentiation strategies limit the firm’s potential, like Lyft let its drivers and passenger can rate each other on five-star scale.

Finally, In business level strategy, Uber provides a new way in managing transportation. Uber invented an app which helps connect drivers. With the help of GPS system, all users can check the fee and driving record. The application will record all information such as distance, time and price per kilometer. It will then automatically bill a portion of the fee's a user has charged a customer to the company Uber pursues a focused cost leadership strategy. That will make both Uber and its users easy to control and keep the record. Even Uber split some of the money which driver make, it still gives drivers an opportunity and extra income. However, Uber faces some difficulties with this strategy. Uber's dual business model yield value to both drivers and satisfied alike by catering to each group's unique incentives in constructing a symbiosis between the two. Uber need to balance the fee for drivers, the money they own make and the price offer to passengers. If driver cannot get enough payment ,they will feel unsatisfied so that drivers will not be received any consumption from driving people around if it were not for Uber creating a platform that allowed for the creation of this revenue stream.