A Case Analysis of Uber

Analysis of Uber
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Analysis of Uber
In December 2008, Garrett Camp and Travis Kalanick tried to get a ride on a cold evening during winter in Paris without success. That was the time when the idea of what if a person could request a ride from a smartphone came up. In March 2009, the two individuals developed an app that allows people to request a ride using their smartphone with just a tap (Uber Newsroom, 2022). Today, Uber has become a global company, and the ride-sharing service has facilitated individuals' mobility in different parts of the world. The paper analyzes Uber by starting with how it entered the transport industry and the business model that has made the company successful internationally.
Before Uber's Entry and Inefficiency that the Company Exploited
Before Uber was established, individuals used to hail taxis on roadsides when they were in a hurry or the public transport was unavailable. In that light, a person who needed a taxi was required to stand by the roadside and wait for a passing cab without a customer. At a time, it took an extended period for an individual to get a ride. In that light, one of the inefficiencies before Uber was time wastage waiting for a taxi. Since numerous taxis were found in towns or areas with numerous people, it was difficult to get a taxi in remote areas. The cost of paying for a taxi depended on the driver, meaning there was no standard pricing strategy for the services provided. As such, weather conditions, such as rain and snow, caused the price to hike. Besides, it was challenging to get a taxi during harsh weather conditions since individuals were unable to stand on the roadside waiting for taxis, which had high chances of not turning up. Camp and Kalanick encountered this problem during a cold winter evening when the idea of developing Uber struck their mind. As a result, before Uber was established, taxis led to numerous inefficiencies that the company has exploited to grow and expand domestically and internationally.
Uber's Surge Pricing in the Context of Shifts in Supply and Demand
Uber has a surge pricing algorithm that is used to balance the demand and supply. For the company to manage fluctuating demand for cars across different zones, on-demand platforms are used to share market forecasts with available Uber drivers informing them of the area the services are needed the most by numerous clients. If the demand for Uber services is high in a specific area, prices surge temporarily above the normal cost (Guda & Subramanian, 2019). Uber's surge pricing leverages the demand and supply. When there is a high demand for Uber rides, the prices are raised, and a surge icon appears on the app. Individuals who are in a hurry can consent to the high costs to be taken to their destinations. However, those who are not in a hurry can wait until the prices return to normal. Uber reduces the surging prices by re-allocating more drivers to areas with a high demand for rides (Lee, 2017). As such, when more Uber drivers arrive at the on-demand area, the prices go back to normal.
Uber's Surge Pricing in the Context of Price Discrimination
Price discrimination refers to the ...