Uber a modern age business strategy

Digital disruption is the change that occurs when new digital technologies and business models affect the value proposition of

existing goods and services.

Innovation and Disruption

The worlds most popular media owner creates no content The most valuable retailer has no inventory The world’s largest accommodation provider owns no real estate. Largest telecommunication company owns no infrastructure Fastest growing banks have no actual money Independent Software vendors do not write any code

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IN 2015, THE WORLD’S LARGEST TAXI COMPANY

OWNS NO VEHICLES?

[Personal Transportation Industry - TAXI]

License Fare

Taxi supply Regulations

Protective! Costly! No invest!

Gov. Taxi Firm

Low customer satisfaction

A study on modern age Business

strategy

Dhruvajyoti Roy

What is the

concept behind

Uber?

Someone who needs a personal drive from any point at any time

Someone who wants to have a side business, or a full-time business,

or a revenue generation hobby by driving people for money

UBER connects these two needs

in simple, fast, and predictable way

Uber is a Carpool & Taxi Assistance venture with main office in San Francisco, California,

and operating in several countries.

By 2015, service was accessible in 58 countries & more than 300 towns

worldwide, estimated more than US$68 billion in December 2015.

Uber is subject of current protests from taxi drivers, taxi houses & elective bodies

with belief that carpool companies are illegal that occupy unfair trade executions &

imperil passenger security.

In December 2014, demonstration has been staged in Germany, India,

Thailand, Spain, France, & England, among other nations, for disturbances

implying riders.

Uber was prohibited in Spain & two towns of India in December 2014, and pursues to find solutions with many governmental bodies, plus those of U.S. & Australia.

Image curtsey - http://onwardstate.com/wp-content/uploads/2014/09/o-UBER-

facebook.jpg

UBER

Marketing Strategy

Customer Segmentation

Do not own a car.

Do not want to drive themselves

to a party or function.

Like to travel in style and want to

be treated as a VIP.

Want a cost-efficient cab at their doorstep.

Partner drivers.

Targeting

Uber has such a vast customer segment that it has got something on offer for everyone. From Uber Taxis to Uber Black and from Uber X to Uber SUV, the company has got a vast range for its customers to make a choice.

Uber serves professionals as they hire an Uber cab to and fro work. For this Uber did few tie-ups with corporates in the beginning and does so when it launches in a new city in a new country. Apart from professionals, Uber tries to touch hearts of people by offering special services like:

Uber for Kids: A special service from Uber dedicated for parents who want their kids to reach home from school in an Uber cab.

Uber for Senior Citizens: Another special service from Uber where it targets senior citizens. As per the statistics, Senior citizens make for upto 30% to 40% of total rides in many cities. This made Uber have some special features for seniors and hence attract more senior citizens on the platform.

UBER existing product lines

Positioning

• UberX • UberXL • Taxi • Black • SUV • Lux • UberCargo • UberFresh

Product Lines

Uber product lines UberX, the low-budget option.

UberBLACK is for consumers who desire to have their own private driver in a high-end sedan.

UberSUV connects users with SUVs

UberLUX is the most expensive service with luxury vehicles

UberXL is similar to UberSUV but is 50 percent less

Other low-cost options include UberPool, which allows passengers to share rides and split the costs, and UberPOP, a service costing less than UberX because it utilizes non-professional drivers and smaller cars. Despite the opportunities UberPOP provides, its use of non-professional drivers have led to regulatory issues in different countries.

UberFRESH and UberEATS are meal delivery apps that partner with local restaurants to offer meals to consumers within 10 minutes. These new services are allowing Uber to branch out and expand its services into different businesses.

UberCARGO , Piloted in Hong Kong is the next market Uber

plans to capture

Areas where UBER plans to disrupt!!

Number of Customers (Demand) The Stability of Demand Organized Competition

Luxury Transportation Low (-) Stable (+) Low (+)

Mass Transportation Medium (+) Unstable (-) High (-)

Delivery Logistics High (++) Stable (+) High (-)

Home Services High (++) Stable (+) Low (+)

How UBER works?

Operations Strategy

Provides What Customer Wants

Reliable Customers get a cab within minutes

Ease of use

Easy to operate application

Affordable

uberX at least 10% cheaper than a Taxi

How it works

Uber's rates are alike to metered cabs, and entire lease & remittance is administered

through Uber.

Uber uses a smartphone application to accept ride requests, & then redirects these trip

applications to their chauffeurs.

Travelers use the app to demand rides & track the reserved automobile’s position.

In some towns, if Uber cab is travelling at more than 11 mph (18 km/h), then the

payment is decided upon distance, else the price is decided upon time basis.

On reaching the destination, the entire fare is automatically billed to the customer's

credit card.

Uber has categorized its high prices as premium being paid by the travelers as its

service is reliable, punctual as well as comfortable.

During festival season such as Halloween, New Year's Eve, or severe weather conditions, Uber reserves rights to increase its prices, alluring more business.

GPS

RIDE

80% of Fare

20% of Fare

• Easy to start (no license)

• Individual business (have full control)

• Earn more than taxi

(simple cost structure)

[Incentive to join the network]

Dynamic Pricing Model (stably balancing quantity of

demand & supply)

• Easy to use (thru smartphone app)

• Reliable (arrival time & Fare)

• Cheaper than taxi

(simple cost structure) • Better quality

(ratings & feedback)

UBER’s Financial Strategy

Feb, 2016 $200M / Private Equity — LetterOne

Jan, 2016 $2B / Private Equity — —

Sep, 2015 $1.2B / Private Equity — Baidu

Aug, 2015 $100M / Private Equity — —

Jul, 2015 $1B / Series F — —

Feb, 2015 $1B / Series E — —

Jan, 2015 $1.6B / Debt Financing — —

Dec, 2014 $600M / Series E — —

Dec, 2014 $1.2B / Series E $40B —

Jun, 2014 $1.2B / Series D $18.2B Fidelity Investments

Aug, 2013 $258M / Series C $3.5B GV

Dec, 2011 $37M / Series B — Menlo Ventures

Feb, 2011 $11M / Series A $60M Benchmark

Oct, 2010 $1.25M / Angel — First Round

Aug, 2009 $200k / Seed — —

History : 2009–2011 - Establishment in the U.S. and Venture funding

4. UBER’s International Strategy

Global Multi Domestic

UBER services are available in 58+ countries and 300+ cities around the world

• Govt. regulations • Communication infrastructure • Cultural adaptation • Organizational structure

• The transferability and sustainability of the technology & information systems (Navigation system, apps, telematics)

• A very well positioned and easy-to- recognize brand

UBER

Five Forces Analysis

Threat of new entrants

Threat of substitutes

Suppliers’ power Buyers’ power

Intensity of rivalry

BARRIERS TO ENTRY: MEDIUM-HIGH Government policy

UBER’s strong brand identity

UBER first mover advantage

RIVALRY DETERMINANTS:HIGH Large number of firms

Fast market growth

(industry in apps segment) Similar cost structure

Low switching cost

Low diversity within rivals

DETERMINANTS OF BUYER POWER: HIGH Many substitute available

Switching cost is cheap

DETERMINANTS OF SUBSTITUTES THREAT : HIGH High buyer inclination to substitute

(Strong public transportation system/taxi/car-sharing…) Price elasticity is high

[DRIVER] DETERMINANTS of SUPPLIER POWER: LOW Many competitive suppliers

Low bargaining power

Low impact of input on cost

[Others] DETERMINANTS of SUPPLIER POWER: MED Navigation or Background check companies

[Porter’s five forces analysis]

• Lyft

• Gett

• Taxi drivers

• Sabotage

Global Competition

Challenges

[Three big challenges & Group suggestions]

Regulations 1 Imitators 2 New Technology 3

Challenges

• Current law systems says UBER is illegal in most cities (No licensed drivers)

• Total or partial prohibition of the services and advertising, fines, confiscations of cars and

other penalties

• Basically anyone with a car and a driver’s license could be a competitor

• There are many companies operating in very similar ways as UBER

(e.g. LYFT and Sidecar)

• New disruptive technology

• New business model

• Driverless cars

Suggestions

• Establishing better and earlier relationships with government

• Pushing drivers to obtain such permits by

themselves

• “Too big to fail” strategy

• Reinforce safety system & Improve PR

• Lock-in strategy through Google synergy (e.g. maps)

& UBER brand synergy

• Retain critical mass and achieve economy of scale

• Leverage big data

• Partnership/Acquisition of technology companies (Leverage Google)

• Invest R&D

Recent Setbacks

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1 Thailand announced Uber illegal. Regulatory

obstacles were slammed in Germany, Netherlands & San Francisco, where a chauffeur has been imposed

in a mishap leading to the demise of a six-year-old girl.

Judge in Spain prohibited Uber's

carpool on Tuesday, 9th December

2014, stating it breached laws.

On 9th December 2014, San

Francisco & Los Angeles formally

summoned Uber for deceiving users

about charges & background checks.

Monday, 8th December 2014, city

government in New Delhi prohibited Uber to

function in the Indian capital after a rider

charged one of its chauffeur of rape.

Recent Setbacks

An Uber driver in San

Francisco has been

accused with vehicular

killing of a six-year-old

girl in San Francisco

on New Year's Eve in

2013, last year.

An Uber driver in

Orlando was charged of

molesting a female

traveler and holding the

woman’s dressing

accountable.

In September 2014,

an Uber driver was

charged of hitting a

traveler in the head

with a hammer and

drove away.

During the week of December 9, 2014, a

Dutch court ruled Uber system as illegal

stating non-professional

chauffeurs offer trips in their personal cars at half the price of a

regular cab.

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