In the last 8 years Uber has paved the way for new digital alternatives to normal transportation services such as taxis and public service. The now $70 billion company has cleverly used digital technology and has been able to quickly adapt to changes in this ever changing technological era.
Uber has utilized social media in order to achieve operations in a total of 633 cities and employing more than 12,000 people across the globe. Uber is available on a variety of operating systems which account for 99.7% of market share. Uber implementation into different cities is unique and is often uses large public events, such as the 2012 London Olympics. Uber knew that there would be excess demand and used clever social media services to publicise the new transportation alternative.
Uber can be described itself as a digital disrupter as it is encroaching on the normal business model such as regular taxi companies. However Uber has had to adapt to remain the number one taxi alternative company against new competitors such as Lyftt and Gett. Uber has therefore has expanded into new areas of services such as their new online food ordering platform UberEATS
UberEats promotes individual food retailers through their smart app and online website when a vender receives an order Uber will then bring it to the buyer for a small charge. Uber cleverly used the Uber image which is one of quick, reliable and cost efficiency. Which therefore help speed growth rate of this new service that Uber have ventured into. This therefore shows that Uber are willing to ensure that their business continues to grow although they are facing disruption from these new competitors.
Uber have also faced digital disruption from other services such as zipcar which is a car rental service which is quickly growing to become a global budget car-sharing company. Which continues to expand into more and more cities every month. Uber has responded to this disruption be joining together with Zipcar in an agreement where Zipcar will supply Uber drivers with the cars they need. Uber stated: “"This partnership opens the way for more people to drive when they want and earn what they need, even if they don't own a car.” This marketplace model which enforces Ubers ability to bring together buyers and sellers. This shows us that Uber are reacting well to constant disruption from online based services.
Uber has successfully dealt with digital disruption through diversifying into similar markets and have been able to partner with potential business threats which ensures marketplace dominance however with accelerating digital technology based companies which offer similar services become more integrated into the marketplace, how long can Uber remain a dominant force in the industry?
In 2017, the percentage of Uber in US ride-hailing market decreased from 84% to 77%. Although Uber still holds the dominant position in ride-hailing market of US, this shrink indicates that Uber faces some problems and challenges about its further growth. Thus, Uber should find a new way to increase its profitability. At present, the revolution around self-driving cars, which is also considered as a digital disruption, refers to one of the most crucial challenges for Uber. Many companies have started to develop self-driving cars to earn more money.
(Uber’s Bet on Self-Driving Car, Peter Chen)
Furthermore, the scramble to construct self-driving network has already started. For example, NuTonomy has not only launched its self-driving test in Singapore but also announced a partnership with Grab (a leading ride-hailing platform in Southeast Asia). Moreover, General Motors Corporation has invested $500 million in Lyft (the largest competitor of Uber) to help develop its self-driving cars. Without doubt, the company which takes the lead in offering official operating self-driving network will definitely grab huge advantages. However, it is more like a death and life issue for Uber because Uber cannot keep its current value of assessment if it falls behind its competitors in this new automatic era.
In the face of this digital disruption, Uber has responded sufficiently. Firstly, Uber predicts the future business model. Back to 2014, Uber’s Co-founder and Chief Executive Officer, Travis Kalanick, hired many experts in autonomous vehicles in Pittsburgh, meaning that Uber has studied self-driving technology since 2014. Secondly, the self-driving cars may not appear without support of mobility service. Uber has cooperated with the major automakers: Volvo and Daimler. Most importantly, Uber uses two strategies to partner with two companies. When Uber join forces with Volvo, Uber purchases the new base vehicles from Volvo and wants to develop its own automatic vehicles. On the contrary, regarding the cooperation with Daimler, Uber mainly focuses on the development of its software and ride-sharing network. It seems that Uber will open a self-driving vehicle platform in the future. However, no matter which strategy Uber eventually chooses, its belief of self- driving and the determination of leading this field are unshakable. Recently, Uber has also tested its self-driving cars in a fake city called ALMOND which is built in Pittsburgh. If Uber can successfully operate its own self-driving network, its prospect will be inestimable.
One way in which Uber did not react sufficiently to digital technology is when Uber expanded into China back in March 2016. This is because digital technology does not guarantee that a business can enter new international markets successfully especially if there is an existing domestic competition that is strong. Therefore, emphasising that not every international market has the potential to be disrupted by the technology of new entrants from other countries i.e Uber.
In China’s case, the domestic market leader in the taxi industry is of sufficient scale to enjoy much lower unit costs as well as benefit from strong customer loyalty. Therefore, this makes market entry harder for an outside business even though Uber takes advantage of technological change.
Uber located in China in March 2016, nevertheless they did not react sufficiently by not understanding the market that they were entering. This is because the domestic existing market
was much stronger than expected e.g the taxi firm; Xiaomi. Therefore; Xiaomi demonstrating they are already technological innovators making it hard for Uber to enter the market.
Therefore, this shows that Uber did not react sufficiently by failing to enter the market of China. This caused further problems for example; by the end of 2016; with estimated losses of $2.8 billion. This demonstrates they attempted to be a digital disrupter to the taxi industry in China but failed.
Another problem caused by digital disruption is that Uber have inadequately dealt with is the issue of improperly vetting their drivers. With an impressive 40,000 vehicles just with in the 40 towns and cities where Uber operates in the UK, as well as operations in 84 other countries, it is clear that expansion has been the main objective of the company, with the quality of their services being neglected to an extent. This is evidenced by the number of claims of sexual harassment the drivers of the company have been accused of; in London alone last year, 32 rapes and sex attacks were reported to the Police, equal to one every 11 days. This along with thousands of complaints globally that Uber drivers do not conduct the correct standard of professionalism towards their passengers shows that the company is failing to uphold a high standard of service due to the company’s intense focus on globalisation.
While it could be argued that Uber does attempt to investigate new drivers before hiring; just like black cab drivers in London, Uber drivers undergo enhanced DBS checks, the damage done to the company’s reputation show that this process of vetting is insufficient. Evidence of this problem is seen in the cancelling of Uber’s operating licence in London on 30 September of this year, which TfL referenced improper background checks of drivers and failure to report sexual assault claims as main reasons for. The damage to Uber’s business that being unable to operate in a major capital city will cause, as well as the damage to the company’s reputation globally because of this, could be seen as directly caused by globalisation, as Uber’s intense focus on expanding their services to as many cities and countries as possible has caused a decline in interest in quality of service. Therefore, while in many ways Uber has dealt with the challenges of globalisation and digital disruption sufficiently, many issues still remain.