Uber Business Model
Uber is a ride-sharing service started in 2009. If you are not familiar with Uber, you can learn more about the services it provides at Uber.com.
Construct an eight-page analysis of Uber using the following criteria.
* Analyze the market before Uber’s entry. Describe the inefficiency Uber exploited.
* Explain Uber’s surge pricing in the context of shifts in supply and demand.
* Evaluate Uber’s surge pricing in the context of price discrimination.
* Apply the concepts of economies of scale and economies of scope to Uber’s business model.
* Apply the concepts of game theory to Uber’s market.
* Assess Uber’s potential for international expansion and potential trade policy issues.
* Explain the incentive pay model Uber uses and how it affects the principal-agent problem.
* Discuss any asymmetric information issues with Uber’s business model.
Your essay must be at least eight pages in length (not counting the title and references pages) and include at least five peer-reviewed resources. Adhere to APA Style when writing your analysis, including citations and references for sources used. Be sure to include an introduction. Please note that no abstract is needed.
If you wish to include a supply and demand graph in your paper, view the video How to Graph in Word for some guidance. Also, not that any graphs you include in your paper should be placed in the Appendix of your paper.
Analysis of Uber Business Model
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Analysis of Uber Business Model Introduction
One of the most critical aspects of Uber is how the company develops in the early stages. In the early days of its establishment, the company spent almost no money on marketing but relied on word of mouth to spread the word about its services. In an interconnected world, the speed with which persuasive proposals can be conveyed by word of mouth is surprising, which is another reason why analysts and observers generally underestimate the growth and potential scale of simplified procedures (Calo &Rosenblat, 2017).
Uber succeeded because it found some exceptional needs that traditional taxis or car services could not meet. As stated briefly on its website, these three needs are requests from anywhere globally, stylish and comfortable walks, and carefree payments were the needs and inefficiencies that present modes of transportation and rental services did not offer.
Discussion
Uber's Surge Pricing in the Context of Shifts in Supply and Demand
Uber surge pricing based on the concept of supply and demand increased. Uber explained: "When the travel demand exceeds the supply of cars, the cost starts to rise, raising the price. The company will automatically see the start icon. If the customer still wants to utilize their services, Uber will show the start multiplier and then ask for your consent to pay a higher price. The price jump has two effects: people who can wait to travel often decide to wait until the price falls, and nearby drivers traveling to the area may receive a higher fare. As a result, the number of people willing to drive and the number of available drivers increase, reducing waiting time. "
Overall, Uber's goal is to maximize the number of trips and drivers it can provide, regardless of human-made or natural phenomena that may prevent traditional transportation methods from meeting customer needs. Any increase in price does not mean that the Uber game is over. It uses calibrated models to meet times and areas in high demand. Ideally, Uber's growth is to balance supply and demand by redirecting cars to these areas, thus ensuring that growth slows due to the influx of drivers.
Uber's Surge Pricing in the Context of Price Discrimination
When Uber launched its preliminary pricing in the United States earlier, its fixed-price passenger charging system when booking a trip and also separated the driver's income from the fee paid by passengers, the price Uber charged for passengers is the best guess for the price of the trip; the amount the rider pays the driver depends on the time and distance (Helling, 2020).
The issue which arose was that Uber did not tell the driver (or anyone else) what they were doing, and they began to doubt it. Different governmental and regulatory agencies asked Uber about the parameters it sets for prepayment - and whether it uses the difference between the driver's fees and the driver's income to increase its profits - and received various unsatisfactory answers. Most of them are informal answers. However, Uber finally revealed more info...
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