How Is the Sharing Economy Characterized? Can Sharing Economies Go Global? What Are Uber’s Core Competencies?

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Technology, Competition, & Cost

Uber’s competitive advantage of being able to pay for a ride with an app tied to their credit card, is negated as there are platforms with this same service that have captured most of the ride sharing market. Additionally, in some markets credit cards are not used often, and a mobile wallet platform is more suitable. Uber does not utilize this yet, and can be missing out on the expansion into a new market. Due to this, Uber’s business is vulnerable and easily imitated. The only protection they have is a patent filed for the surge pricing technology, limited to the U.S. Not only are competitors popping up in new cities and capturing the market before Uber has been expanded, but also other businesses such as car rentals and car sharing are modifying their business models. It is now very easy for a company to develop a matching system between a driver and a consumer. Uber also relies on the number of drivers it can pull, when all ridesharing companies are pulling from the same pool. In fact, Uber spends a sizeable dollar amount on recruiting and breaking into a new market. Many may not leave their current companies if the pay is not as good and are not getting as many rides per week. The cost of penetrating a highly competitive or less technologically advanced market may prove to be too high.

Foreign Governments

As Uber continues its quest for global expansion they are met with more resistance from local government. This is becoming costlier with the addition of every new city and can easily take down any company. On the alternative side, Uber is generating consumer enthusiasm, potentially in part of the “disruption” it is causing, creating a following and applying pressure on local politicians to develop new regulations that allow it to operate. This may not always work, but there is a following for Uber as it has expanded quickly. The challenges Uber faces from governments is increasing and can ultimately change Uber’s business model. The company must decide if their core values can be changed to align with government relations, such as following taxi guidelines. This will have an impact on the services and pricing; something Uber is fighting. Even domestically, Uber is in court to decide if Uber drivers should be considered as employees, providing insurance. The impact of this will hurt Uber’s bottom line.

If Uber wishes to continue its expansion globally, it should collaborate with foreign governments because they are the deciding factor. This does not mean Uber must agree to every term set by government, which is why they employ lobbyists, but they must be willing to negotiate on certain priorities laid out by the government. In return, Uber should continue explaining the benefit of ride sharing, the trend and highlights from the consumers. This may help some of the regulations around taxi companies to be re-evaluated. The pros to this position is Uber will be able to enter a new market easier with far fewer number of lawsuits, however it does not allow them to expand as quickly, which Uber must do to sustain its business and compete against local competitors.

Question 3

Due to the furious competition from rivals in global markets (China, India, or Southeast Asia) should Uber leave these markets and focus only on the U.S. market? What are the pros and cons of Uber’s choice?

STRENGTHS

WEAKNESSES

OPPORTUNITIES

THREATS

Pricing model

Cultural differences

Partnerships

Taxis

Labor model

Regulations

Specialized markets

(Assist, Rush, Eats)

International Governments

Investments

Technology

Europe: GetTaxi, Hailo

Growth Strategy

Financing

China: Didi Kauidi

India: Ola

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SWOT Analysis

Uber has a very strong business model for the U.S. market, but there are a great deal of obstacles to overcome with International expansion. Regulations and International governments seem to be posing a major threat to Uber’s core competencies. The attempt to expand into Europe failed because taxi drivers protested, claiming they bypassed safety regulations. UberX was subsequently banned in most of Western Europe. The main difference between Uber and European competitors was the integration of taxi companies. In China, Didi Kauidi collaborated with WeChat and become the first company legally allowed to provide online private booking rides in Shanghai. Uber was facing allegations of providing illegal rides in Hong Kong. Didi Kauidi also invested heavily in Uber’s competitors, including Ola in India. Ola tailored its offering to the culture with no plans to go global. The lowest tier pricing was on the same level as the auto rickshaw. They offered delivery of sweets for holidays as well. These culture specific offerings are unlikely to be included in an American business model.

The pros of global expansion may be limited to the generic benefits any company gains with expansion, such as increased revenue. Since the model is based on geographic location, expansion is not a matter of simply increasing riders and drivers because one country does not easily transfer to another. They have to build an entirely new consumer base and labor force. If regulations and technology were equal across all nations, Uber would genuinely make International travel much simpler though.

The underlying theme here seems to be that the business model, with some regional adjustments, is absolutely transferable on a global scale. The issue that Uber has is that accommodating all the regulations and cultural changes is proving too difficult. A local competitor is far more likely to simply take the ride sharing concept and build a company that fits their needs before a foreign entity can penetrate the market.