Uber And Lyft: Market Innovators Or Just The Old-fashioned Taxi Business With An App?

Short Paper Assignment
Uber and Lyft: market innovators or just the old-fashioned taxi business with an app?
Context
Lyft, a company that has never had profits or positive cash flow, has just launched an IPO at a market valuation of $25 billion. Some analysts feel that the rush to go public was due to the looming shadow of its much larger rival Uber’s IPO, announced for a while but finally scheduled to happen later this year. Since there are no market comparison for either company Lyft, as the smaller company, decided to go ahead and set the standard and attract investors in the new industry, rather than wait for Uber’s IPO and possibly be faced with more stringent metrics and diluted investor interest.
Uber has since announced that they will move up their IPO, expected to be as high as $120 billion, to as early as May…
Assignment
Following points must be answered and addressed in the paper
I. Briefly describe the general business model of Uber and Lyft:
• What do they sell, to whom, what are the opportunities and challenges, the risks and the costs?
• How do they operate?
• What other services do they offer and why? Think about fast-growing hot-food delivery business and a costly self-driving car development effort.
• What do they create? What is new compared to the existing taxi business?
• What is the strategy and what are the growth opportunities?
• Is it a disrupting business model? Does it create new markets or just take away market share from the taxi / radio car business market?
II. Competitive firms versus Oligopolies.
• Are Uber and Lyft an oligopoly? Explain why or why not.
• Are they price takers or price makers? Explain why.
• Once you establish if they are part of a competitive market or part of an oligopolistic market, discuss the way Uber and Lyft are setting the price for their customers.
o Do they price segregate among customers?
o Do they price segregate geographically?
o If yes, how does it work and what is the reason behind it?
III. What is your opinion on the future of the ride-hailing industry and why is it named “ride-hailing” in the first place (Uber and Lyft often refer to themselves as ride-sharing businesses)?
• Does it signal the existence of a completely new market?
• How difficult is it for competitors to enter the market?
• Should drivers be employees or independent contractors?
• What other challenges are faced by companies in this industry?

Guidelines
The paper should be no more than two pages of text, although analytical appendices (graphs, tables, charts, bibliography, etc.) can be added if they are relevant to your reasoned argument [Hint: analytical support always makes for a better argument…]
You should also have 2-3 reference sources. Search the internet for relevant financial articles, public fillings of financial data, analysts’ opinions, your own experience and common sense.
Structure
You should have a short Introduction, setting out a clear position, a clear Conclusion which affirms the Introduction, and the main body of the paper discussing your arguments on the position you have taken. Since most of the items mentioned in the conclusion are very much subject to interpretation positively and negatively, you should also present counter-arguments to the opposing point of view from the one you are taking.
[Note: keeping this topic to two pages is not easy… It IS actually intentional! Just think of it as writing a concise memo to your CEO on a very important topic, but in a modified, more academic, format.]