Uber Case Review

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- Legal aspects (some people and government think Uber doesn’t follow regulations and think it’s aggressive)

- In places where public transportation is already good, Uber might suffer

- Trust issues between drivers and passengers

Question 6: In its relatively short life span, Uber has attracted a lot of media attention. Why is this? What is it about the Uber business model that is both compelling and polarizing? In addition, why has Uber managed to achieve such a high valuation? What are the pros and cons of a high valuation?

Answer 6: In any general scenario, media attention comes from both-being famous and infamous. Uber brings in media attention due to the fact that it’s become one of the most innovative Cab service of all times but also at the same time, because its aggressive and some of its policies are often scrutinized and criticized by people. This leads to a very compelling and polarizing view of Uber. Some of these policies can be summarized as follows-

- Surge pricing system: Uber’s surge pricing system has attracted media as it sets the multipliers based on the demand and availability.

- Uber’s driver model: Uber treated its drivers as independent contractors who earn from their own cars by just giving share in the in commission generated by driving passengers.

- Uber’s aggressive market tactics and business strategies.

- Uber’s law suits. In one of the suits it ended up being banned in Austin.

The Uber business model is compelling as the services offered by the company are satisfying the riders with the simple app and cheaper prices but this it is also polarizing due to many legal suits filed against the company. Promises made by Uber like the big market, powerful network effects, and its sights on expanding into many other businesses have led the company to manage in achieving such a high valuation. The high valuation comes with pros and cons as follows-

With this growth of Uber, investors may feel safe to invest in the company and make more profits but at the same time the high valuation makes it’s subject to defined taxation policies. High valuation also puts a high burden of performance on Uber.

REFERENCES

https://uber-static.s3.amazonaws.com/web-fresh/legal/Uber_Chicago_CaseStudy.pdf

http://theconversation.com/how-does-ubers-surge-pricing-work-and-how-ethical-is-it-35574

Cannon, S., & Summers, L. H. (2014). How Uber and the sharing economy can win over regulators. Harvard business review, 13, 1-4.

Moon, Y. (2015). Uber: Changing the Way the World Moves. Harvard Business School, Case, (9-316), 101.

Cramer, J., & Krueger, A. B. (2016). Disruptive change in the taxi business: The case of Uber. The American Economic Review, 106(5), 177-182.

Hall, J. V., & Krueger, A. B. (2016). An analysis of the labor market for Uber’s driver-partners in the United States (No. w22843). National Bureau of Economic Research.

https://www.theguardian.com/technology/2016/dec/09/uber-drivers-report-sweated-labour-minimum-wage

http://nextjuggernaut.com/blog/how-uber-works-business-model-revenue-uber-insights/