CASE 12 Uber in 2016: Can It Remain the Dominant Leader of the World's Fast- Emerging Ridesharing Industry? Ales Filinger The University of Alabama Louis D. Marine The University of Alabama McKea Marin The Liversity of Alabama Melly Stepchuck The livesity of Alabama allerding the Wich Conceicao just complaining about the problem, in tre cainepencurial from the two developed an idea fie alimesise service that would be a mail, fax, and upper-clad option for travelers. Campus wachanuptim would accomplish his gull developing an iPhone olclplakke te was in San Francisca Campayan los work on the app in March 2009, und by mid-2009 Kalanick jemned the liems Uber's chief inculat. The first de run cumducted in New York in 2010 and the app was cally launched in San Francisco on May 31, 2010. Litle did Garrel Camp knew that his pretstyping an iPhone app would come therapist sincs, and impact al is kmswn aslay as the "kharis HH ។ As with many technologies that fundamentally challenge existing business modi in nilair, me dire chlogies, as Uber and the sharing any grew the company foda numero challenges including increased competition from entrant and locating the commerbe. Huwever, in liber's case the company ile Baccal questions regarding the company's commitment to couple cidropowity and click Dopile the potential social beneficial with rilekaring, has 2. in cahoda odunk and distracted diving, chical is playing the company included almal involving clemes and driven, cacers regarding the background servering fine drivers allegod handell competitive action by L'her exccutive C NCT the privacy of customers, and the clasification of her diversas independencia employee Copyright 2006 by ID). Marino. All righe arvad While some ci view her company with many fulls, he saw the same changing on como especially to these individuals who facol employment. In recent years were comic abipolit America anul countries alca harder than any time in real memory, L'her, anul the income the could be general though this service, implan lifeline mamy. While speaking at a conference in 2015, Travis Kalnic. Liber finderal del escrutive officer defendal er arguing that the company provided larger paychecks and more flexibility for i driver than they would otherwise have received and beveral philanthropic activities the company apported including "Ride fra Cancellationer vetera, and collecting donations list refugees in Europe Farihet research conducted by Mothers Against Drunk Driving MADD) in 2014 marshimoving drunk driver significantly delince where driven al Paper marrampatic places such User Indeel, the per colher with rolacing the number of drunk-driving choches by an estimated 1.200 che in Californien 2012 and 2014 While the company's commitment to this and reporterial sponsibility may have been a lespie upes kar delale, the Company's synowing both in the United States and intematically was mysle. In los cheven years since is funding, Uher had operations in der 400 cities that spannelmahan 60 and the company was valued a close S68 Has higher than Honda, General Makeup Fored. The question facing Uber's creatives going and was that faced the fies that experience explosive growth due disruptive imati. Specifically, could the company continuisie garwth rate in the face of growing competitie Bech domestically anulated lingering concerning the company's commitment to chical operations and comprescial ropuitility, and increasing regim? COMPANY BACKGROUND The Early Years From i origin on the sets of Paris, ly 2009 the then-cielles officially idol and by Ayant of that year the company had raised 200,000. In January 2010, Kick wenlo Twill be includere al manager, which a Foursquare business developer mamal Ryan Cranspoed with here's a lip. Email me."Graves became User's fine employee and would eventually secue a brillica. Graves briefly became hercat's CEO, but we replaced by Kalanick again in 2010, with Grave staying on the head of yledral operations for the company In 2010, Lilaca started prachlesing on the ris of New York City. It had conly the cars, but it believe if i could be acceflach a small scale in New York City, Surely it would be able to take it is the made in piling Uber, Kanick wcing a lifestyle rather than just a cheaper taxi ride. We jest wielopha Iullon sind get a ride," he said. "And we wanical bosges a clowy ride. We want to be boller in San Francis That's all i wa Everyone Kalnik Labegan aking lo primering in style with the Launch It didn't take long for hercabuke ia service San France. By July 2010, the company cablished here and driven cuale rides through the maile app via text me wing. I was animes. In just 18 miles alerthal coll night in Paris, le das al Camp and Kalanick ladimile a service that would interrupt taxi services in the traditional seme and bring 2 w kila tramplint general public. Oct 2010 octobre aller vill man in the young company. Uherlanca S1.25 millic in finding ima believe this app and ride would come lo rendon the last track stilling is peci hen the Calien Public Comisia cease and disconder het. Many believed her was perating in licemed campany, even though Camp and Kalbickimited can being alogy and lifestyle company This prompt the company officially change is namelis "Llenador simply be 3.10 there were loved her $37.5 million funding At this point, herba salatal549.95 milioand the com a vallalapping $130 mil.12 In December 2011. Uber singur pricing, which pavelcrical succes Surge prin curs when pic vay depending on the condities in the market. According to let, ar pricing was simply supply and demand: When the number of drivers were low and demand was high, prices went Jest two years later, he anched its app for BlackBerry device This sign of true continual growth led Calienia regulate rieturing programs such as her and Lyre Calibet gan referring to these companies. "Transportation Network Companies. "Sex, Liller del to become a technology communication platform that sell a certain Tape C-151 lifestyle. It did not want to be considered a different kind of taxicab service. In November 2013. Uber began helping driver sin vehicles in under les maintain the quality of cars cache driver w Someal these drivers may have haal varying level of croit bunyo Uhermed up with car and financing companies to help them in 2014. Uher worked with AT&T care every Android device would have a pelle Lep 17 Being in all of these pack immade her now into a larger make Uber's Growth L'her benefit from a quick increase in popularity bath with the manter of drivers and the number of use Acceding to User's uchi, il saw an exponential increase in drivers within the United State In July 2012 there were lower than 25,000 drivers. This number lal yun is over 150.000 driverly January 2015 EXHIBIT 1 Growth in the Number of Uber Drivers 200.000 135.000 125.000 100 DOO 75.000 50.000 25.000 Ar 12 Dat 12 May 13 N13 Jun14 Dec 14 Jul 15 Source and Chingo Tel Driver Jobs V. Driving with baca www.com, May 11, 2015, Jd July 2016 While he did not public plancial statements since it was publicly traded Bloombery.com septed in June 2015 that the company haqi tos pespective is that the generated annual revenue S415 millicealan peraling ka S470. Despite the pralinkos, Uber's valuabadania nalewhinneasing lepimi SIR Han er 56 billion in 2016 ( 21 EXHIBIT 2 Uber's Actual and Forecasted Revenue Growth 550 500 450 400 350 Hrvenu MEO of Doli 8 8 8 8 8 8 Ache Revenue - Foreca Uber Su Forecast Besed on Current Growth GI 02 03 04 01 02 03 04 01 02 03 04 01 02 03 04 2012 2011 2014 2015 Quarter Source Sum de larw Are the real Documents That Prowe Uber Money Law August 2015 UBER'S BUSINESS OPERATIONS L'her operated through an app cable devices. The mastile device pinned the user's locals and all the below a cah come list her exact location. The could then track the car's locate the app's mapas il appeachel. The rider could track the car's locals while comme which was peciemin at the time the ride was. Bielicially Toying a car, Uber riders could make the cool the ride. They could be che le split the fun with the Wilber users.se that part of the cost was charged is another ser's con Payment for the ride wascharel directly though the app is the wer's credit card. The money did not pass through the back of the drivers all and tips were expected. The fame was decermined by ciller dance or time, depending on the city and speed of the car. Le bal developed analyse de sange price levels during Limes of high del. Users were mille prices arged, and liter plis for a pultlar xary pricing Bis could be up accounts for employees to we. The business could restrict who was able use i Libercoran, where they could go and at what time. This was year and meetings, events, and, and late night in the dice When wing Liber, riders the opera few diferencana La Tascal liceo scala LeBlack-light-cludeh (Mercedes, Cadillac) all walks her X-2012 werden in circ sury cars TYCKX LS A-TI-THIET BI TIET THU TIE II THI II II II THI THI HTN. La XI-X There were abolcalice-specific services that her provided, such Les C-NYCH for $1,000 in Cape Town, SA Lher Relwale anche B Sensit in anul Les Papiersiched with drivers who did not have special la license, demedial . Uhelping for lesbadell in the same directie Le Gargherred with a basical drivers L'her experimented with piling Services as well: Uber Fashion Le Rusbackaye delivery service . Les Exceedinglab 100 cm . her ke July 2012: crs in scencillo cual sumen an ice cream crack and curge proces their count UBER'S BUSINESS MODEL L'her was part of what was known as the sharing commy, along with the companies such as Airbul, Tu, and Fisy. The sharing Cycle defined as a communicatiem buillaund the horing of human and physical muco. Il inclus the solution, production, distribution, rade, and consumption of you and services by different people and cranial..." Ridoking services were the caly bricostal were part of the sharing ceny. Airtel was the world's finh Tape CSS largest lying company and it dial cwe single The sharing commy waysem e collaborative command could increase revenue for sellers while sinully minimising cool foyers. The rise of technology and entepechip for the growth of the sharing my. The sharing Chenol communities, deeree barriers of entry into business, and muced environmental impact. However, the sharing ceny abus perioda wykor poople doing business Lawal paying lase chaining proper insurance, ce following all meni regulations. Uher, just like other sharing any members, this case of the benefi, Isu also comes may making he way In a belse, liber clasifilisella tecnology company, rather than transportation company, and cried that it simply pewidiol a platform for riders and driver is come, and therefore dal nas pesvide the actual transportati. Berase ulitusel classificaties in this category, il dalmat cine same license and sales that arcular laxi company had obtain Liber's profits inercial bencil dal must have to pay car registration is to local governments in mano lack of registrative mas alwe her le can make more easily Another crucial and expect of ther's models that is die wete como complex Uber. Instead, they were said linnas. This locno Uhers like drivers and bigly certain late. Deiva were then able to corrective benefit from her. Liker claimed that this was necesary to ila na madeland D. Hinwever, we allurry line that he walled The IRS Wada 20-pin checklist that could be wel to determine them was independent contractor Drivers could be considered craciun given the fact that they done their com cartade their wcholuk, and we limited to just driving for her. However, divulla meward ile si cmployce as well as her ladhali was that service clic syncral public. Additionally, driver Services were an integral part of ther's business. Driven in eum could be dependienon Liber's lichnology to be a cui The interpolation of her diversas independence was challenged by a deiver who bught suit against the company in Calients in 2015. The Labour Commission ruled that in this specific case the liner driver hul becerdan employee rather than independent contract. However, the ruling was not meant to be precedent selling and Userseillac action in 2016 will drivers in Calien und Mac or 584 million and analitical S16 milioni Uber went public lice the enle 2017. As a cyclement of this ruling, he was wel is kapclassifying diversas independent curacies which allowed the company to maintain a lasebalcool advantage. The drivers won the right to a formal grievance prescriure with Uber and the slnility is pas sims in their cars saying that the drivers could acepclipe. While the won this sit perisining to the clification is workers.com.aught the sharing my regarding the employment clief is won COMPETITION IN THE RIDESHARING INDUSTRY The land services in the United Saws clively fragmented with the largest city than 3 percent of the indstry's all pojecial 16.2 billion revenue in 2016. The industry could be segmented into close types of companies including traditional and lime ervices and transparante companies (INC) or transportation Service (INS) they were sometimo callal, such as there who is facilitate ridesharingly cuting we will driven cling independent curacies who circwn business. Hiscell, Yellow Cab C the last part in the industry until 1960 when you call them and fol.com wanted to per le soos soms is have a headquarters including a repair center, an callie anul alat in cauch mice. Further complicating the intent of national operates were the diverse rules and regulations that existed areas. In 2016, the single largest operator wa Yellow Cab Chicago which misind 2,600 vehicles balades in percent of industry Inny xperia climate 236,000 paling in this industry, and TC14 perjete ihalyih would low noen an average annual rate of 1.3 percent between 2011 and 2016 an annual rate of 2.4 percent from 2016 - 20212 Industry growth was allri sa srcem, GDP wch, and increase in serie anul hasinos ravel. Industry polity was significantly influencally il prices, and tradiceal cani and limesine services clien face roulations including manlal chick inspections, and rules thal.comilled the prices they could charge le standard far the price they charge per mile racial, and any lialo Fairy into the traditional sex of the industry could be very cxpctive, with policah in metreye restrictes a purchase a license, shemale. These mos cualcolas Balea 1,000 in a small make a mach asi million in large makes the New York City. Access to these lice was controlled in many market making any delficult. In some major market drivers could lease a licencia cupcele malalimwa, but these local con cache driver S100 a day. However, the entry User inter the transport industry second the value o modalicesine maju maha New York City with the average price da mong from Slik in 2014 500,000 in 2015, leading is the lover 54 billion in value in New York City aliye Exhibits 3 and 462 EXHIBIT 3 Total Percentage of de Ubers. Tad Services 100 90 80 30 20 10 Aug 14 Sep 14 How to Feb 14 Tel. Limo Airport Shuttle of Total Rides Uber of Total des Score: Tanga, Andrew. The Log Majoris Now York City. Show." W. Wall Stral, 33 15. Wah 14 July EXHIBIT 4 Percentage Change in New York City Since Jan 2015 in Avg. Daily Tips 70 60 50 40 30 Crow Cabo Yellow Cats 20 10 O len Feb Me AD May An Aug Source: Andrew Tagalbar Logs Mujer Caminiwork Chy, Pous Show." The Wall Street Journal Oct 2, 2015 Techmogyvolutiboal.changed the way ulical companies interact with their customers, causing some lo develop their cwn ridliling apps, and became theme of TNC companies that led to increasing competition from independen drivers entering the market. To combat Ller in der TNC Service, Traditional taxi comunitat de clop their services acha Curb that they bepal would powvide a similar service experience her. While msal the sporaditional taxicab companies me with me, it was lepe that Camb cu build com les came and help improve the level of service provided by taxicab Cars went of a chanch on the Taxi Mayis app and walked by VeriSiem which will enierisme ind payment services in abuut half of New York City's green and yellow laxia. The company was launched in 2016 and started small with cely 16,000 cubo, lui plan to expand chrapidly. Class allowed to build pay for mecleral taxis and solve the case waiting for a culmea a doll place and time. Cubschrala 51.95 service fee for each rile and the rider uitle normal life in all of service TNC companies such as Liber were not technically considera bedieci complex in this market, but werderal lobe cumplencary chaped facilitates that could becomes to trail asi Tap Services. The extent to which the independent contracce had adhere is the same selles as tradicional companic varial sumilly and these condities were set by the city independently. In some cili, drivers in the TNC Services were ne required to have a winess liceme but were required cely do pes a background check provided by the INC. In dhe ciles de TNC drive we will have their vehicles imperial, undamec clcsive background check powie pecaf of proper insurance (many personal policies will must cover accidents that occur while the clients are driving for a TNC), and love a business liceme lul nok a taxi license. By the end of 2015,37 esta catolar regulations relating to TNC especially having to do with imance yemen L'her was the first TNC company, Inulis aerise Loc. complich in the United States and becaul. In the United States.competits grow for her lathat the local and regional level, but ther's men significant competentilly Lyf, which was unded in 2012. Lyf was wel in San Francisco and workel similarly to Uher. Like User, Lyftaral multiple level of service including Ly Line (uset har tidiste save mercy), Plain Lyft single ribers car mall youp), Lyn Plus (SUV and layers and Premier luxury chick Lyf differentiis vehicles by having drivers we pink mustahil vchiel Similar i Uber, Lyft and its pink malactical canale Ital prices will below laxis. Hien, Lyn's Prime Time pricing manal cut three times the regular mate. Liher's sur pricing was known to seven bight times the neem con. Lyn also close Inclynund check, but driven only model to be 21 compuncis Liber's minimum age of 22. The big from beiconthew was the speel between the local server make the experience fel like a private dives. Lyftried to make the experience fel like a budly picking you up frumus." Oftentim lider were cncrage in the real scal, cung creme on the hallyspel palo the private driver for her. Smaller rival for her pull up reglarly as well. These companicolendid not have the funding to compie directly with Liberando, icchene starych niche in ciller services Uhe did not fire in markets in which he did not comple. One wach competitor w San Francisco Via which focus on driven in smart cars. Amischer was. Angels-wal HopSkiptive which wil screen Cure Divers give rides is unaccompanied mons, and which offerala similar service in San Main Califomi. In Beson, Faxien compied with her by paying driver me, oliering a minimum hourly guarantee is drivers and passing the cost saving cu locumen. In mix chau Austin, Tea, where he chosen los campele due to regulatory concerns, ridearingservices such as Gc Me developed to fill the meal. However, Tape C-158 was motywanied for these niche service and a number, including Hall, San Francisco restring service larga olib, and ideaalse San Francisco-led company. Cal operations de lack of funiling. One of the major challenger new star was bor sex salicice ſunding until the company cul adeve acey sale benefit free new clients that grow as the number of drive and comes in the palem expand Competitive produs against her grew instally as well. In China, Uber's Lypicmpc wDidi Kusii i was Limited in 2015 Dice 75 percent of the market compared to the Il percolanc. di Kili, a strategie purine of Lylt, www.funded in 2015 by a merge of China's two largest animailing companies and operatolin me than 400 cities in China. By the end of 2015 the company has 1.43 billion ride and in May 2016 Apple in Sibillion in Di. Apple had plamel help Didi expand its ridesharing platform that served 300 millioners in China and facilitate up all triosad 2 in India, anche market that was pued for significa wch, Olacale fume by a mere Oland Taxi Sure in spome she's alry in the market, console apposimally 14 percent of the market cumpara siers 4.5 In December 2015 for of Liber's internal rivals includingly in the United States GrabTan Holdings, Pe... walin Tartan woden cilic in South Asia in miris such as Victnm, Singapore, and Indice Oils in India, and Dali Kajal forces allow users cach plak amly fries in accomplice's reporte contey. For camp, GrabTaxicrraveling in the Limited States could be and pay barrido lughly in the Galaspilady incom the space E5 EXHIBITE Uber's Worldwide Presence and Composition Germany PC: My Taxi SC: Wundercar Uber, Bla Bla Car USA PC: Uber, Lyft SC: Grab, Sidecar, Flywheel, Via, Curb Canada PC: Uber SC: Cab Share Canada TAPPCar France PC: Bla Bla Car SC: Uber LeCab UK PC: Uber, Gett SC: Hailo Addison Lee Spain PC: My Taxi Hallo SC: Cabify Mexico PC: Uber SC: Bla Bla Car, Cabify Easy Taxi Uber Columbia PC: Cabs, PC: Uber, Easy Taxi Brazil PC: Easy Taxi, Peru PC: Easy Taxi, SC: Uber Nigeria, South Africa, Kenya Argentina PC-Primary Competitors PC: Easy Taxi, SC: Easy Taxi, SC-Secondary Competitors PC: Bla Bla Car, Uber Uber, Maranoja Uber Dominates Other Rival Dominates Lyft or Lyft Alliance Partner Dominates No Dominant Rival Source Liyen Cesar Wars to conquer the World, but the Companies Aigting Deck Mor, Sector 2, 2005 UBER AND ETHICS In secayco, Lilier came under lice a urity of chical issue. The company had been a largelo Serainy criticism from tual caly taxi anal chet transportation companies, but als from government agencies and the publice a whole. Some of the primary chiclismo Uher face included how they create the drivers, recruitment lactis, a lack of tecknand croche gre engagement of competitors, and surge pricing. However, Ulser had a response for each issue a face and maintained that il employed and williness practice Driver Treatment Despite he's 2016 selement of the che action sans bought by its drivers, for the majority of he's existence is rated its drive circula complices Cherrywol that the drivers were sically in business for themselves and there they dil must have adhere is any sort of labor protection. That meant Lloer die hele watty alcul minimum wag Sneri ), பாணடிப்பதாக பாலா, பாjutasthurius diariபப்பட்ட When off the clock drivers ended open up about their true feelings about like. One Uber driver pred that ther's like an exploring pimp. "The Los Angeles driver went on to say that "Liberiak 20 percent of my camins, and they treat me like shit- they cut prices whenever they want. They can destivale me whenever they feel like it, and if I complain, they tell me bucket Temat nie between the drivers and the management within the company as some of these divide like In 2013, many divers could make between S15 and 20 aan haar leweking full time. As many driven signal up, Uher began changing the pricing per mile due to complice in the marke. Since Uiler drivers al may in the pricing and they called cary de cance, they were faced with a-thin margins." Some drivers who wedel full imedialns make minimum However, there were certainly some per te leing an Liber driver. These contractors had mache free time than laxi and public transportation drivers. Additionally, the ability to become an Liber driver was simple compared to cal driver. Applying to become an Liber driver was cauyas visiting the website, filling out some form, and posing a criminal lackround chesk. Uber was selbe Lawn dola 5100 Sign-up bon 23 Uber's Recruitment Tactics L'her's serment lactic abus came under fun. In 2014, Liber's compete y experienced Uber trying to pachny of its complycollerbird cum independencias do sebumes plus and multiple croll can be ride from Lyflina perancallal Opera SLOG. These Brand Ameerida driver sind spend the triplying Levice the driver switch over la luming aller driver. The therapalive walther places and multiple calculate
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