What are the ethical challenges that Uber faces in using app-based peer-topper sharing technology?

Read “Case Study 2 Uber Hits a Bump in the Road”. Provide APA-style citations for any resources used. The document should follow the following formatting principles for business documents:

• Use consistent formatting throughout (12 point font, Times New Roman, single-spaced);
• single-spaced;
• use clear headings and minor headings to organize thoughts and analysis;
• embed tables, charts, or graphs in the text;
• provide a title page; and
• an APA-style reference page.

These are the questions

 

2-7a Questions for Discussion

1. What are the ethical challenges that Uber faces in using app-based peer-topeer

sharing technology?

2. Since Uber is using a disruptive business model and marketing strategy, what

are the risks that the company will have to overcome to be successful?

3. Because Uber is so popular and the business model is being expanded to

other industries, should there be regulation to develop compliance with

standards to protect competitors and consumers

 

Uber Technologies Inc. (Uber) is a tech startup that provides ride-sharing services by

facilitating a connection between independent contractors (drivers) and riders with the use

of an app. Uber has expanded its operations to 425 cities in 72 countries around the world

and is valued at around $70 billion, making it the world’s most valuable startup.

Approximately 30 million users use Uber’s services monthly. Uber has become a key player

in the sharing economy, a new economic model in which independent contractors rent out

their underutilized resources such as vehicles or lodging to other consumers. The sharing

economy is quickly becoming an alternative to owning resources outright. Because its

services cost less than taking a traditional taxi, Uber and similar ride-sharing services have

upended the taxi industry. The company has experienced resounding success and is

looking toward expansion both internationally and within the United States.

However, Uber’s rapid success is creating challenges in the form of legal and regulatory,

social, and technical obstacles. The taxi industry, for instance, is arguing that Uber has an

unfair advantage because it does not face the same licensing requirements as they do.

Others accuse Uber of not vetting their drivers, creating potentially unsafe situations. Some

major cities are banning ride-sharing services like Uber because of these various concerns.

Additionally, Uber has faced various lawsuits, including a lawsuit filed by its independent

contractors. Its presence in the market has influenced lawmakers to draft new regulations to

govern this “app-driven” ride-sharing system. Legislation can often hinder a company’s

expansion opportunities because of the resources it must expend to comply with regulatory

requirements. Uber has been highly praised for giving independent contractors an opportunity to earn money as long as they have a car, while also offering convenient ways for consumers to get around at lower costs. Although its “Surge Pricing” technique has been criticized for charging higher fares during popular times, it is also becoming a model for other companies such as Zappos in how it compensates its call center employees. The biggest issues Uber faces include legal action because drivers are not licensed, rider and driver safety,protection and security of customer and driver information, and a lack of adequate insurance coverage. To be successful, Uber must address these issues in its marketing strategy so it can reduce resistance as it expands into other cities.

 

 

 

 

 

 

 

 

 

2-2 Background

In 2009 Travis Kalanick and Garrett Camp developed a smartphone application to connect

drivers-for-hire with people needing rides to a destination in their city. Earlier in the year the

founders had attended the inaugural address in Washington, D.C. and could not hail a taxi.

They recognized the need for a convenient, low-cost transportation service. This innovative

service was originally founded as UberCab Inc., a privately held company. It was renamed

Uber Technologies, Inc. in 2010. Co-founders Kalanick and Camp designed the mobile app

for iPhone and Android smartphones, enabling customers to get an estimated time of arrival

from the driver on their smartphone with the use of an integrated GPS system.

Consumers liked the Uber app because of its convenience and ease-of-use. After the

mobile app is downloaded to their smartphones, passengers can pay for the rides-for-hire

service through a third party, known as a Transportation Network Company (TNC), using the

UberX platform that scans or takes a picture of their credit card with the smartphone’s

camera. Uber does not maintain automobile inventory for drivers, such as a fleet of taxicabs

or limousines. Instead, each driver-for-hire supplies his or her own personal automobile,

gas, insurance, and maintenance of his or her own car. Drivers can drive their own cars

where they want when they want, providing them with freedom to run their own small

businesses. A surge pricing model is used during times of peak demand. While Uber initially

charged about a 20 percent commission, it later introduced a new tiered structure in some

cities that charged different commission rates depending upon the number of hours worked.

Due to the increased demand in the rides-for-hire industry, Uber makes about $4 billion in

revenue. The term uber has become so popular that people have started using it as a verb,

much like google. Founder and former CEO Travis Kalanick sees Uber’s services as a type

of disruptive technology, believing that the types of ride-sharing services Uber offers will one

day make it a viable alternative to owning a car. Younger generations appear more open to

using services as needed rather than owning them outright. In emerging economies such as

India, many people do not own cars, which gives Uber a major advantage. As ride sharing

continues to increase, Uber could find itself competing against car ownership.

Uber maintains a presence in major U.S. cities including Los Angeles, San Francisco, New

York City, Chicago, Washington D.C., and Boston. These cities have the most driver–

partners, although many other cities also have driver–partners. Uber technology-based

products are available under these various brands: Uber, UberX, UberXL, UberSelect,

UberBlack, UberSUV, UberLUX, UberPool, and the logistics-request brand UberEats. Uber

has also upgraded its current navigation service (Google and Apple) with deCarta Mapping

Company. This new mapping system continues to improve Uber’s navigation and location

technologies.

 

 

 

 

 

2-3 Uber’s Marketing Strategy

Like all companies, Uber must understand its target market and maintain a strong marketing

mix to be successful. Due to its technology, Uber does not have as many constraints as taxi

cabs, although it has encountered regulatory obstacles and some public resistance. The

Uber business model takes advantage of the smartphone technology of consumers and

links them with independent drivers as their cabs. This provides a more potentially efficient

and less-expensive way to purchase transportation.