Introduction

1st class:
Analysis of the industry:
5 forces of Porter + complements +
Government
Competitive advantage
Unique Resources and capabilities
Activities and Value proposition
2nd class
3rd class:
New game and Disruptive Technologies
Transportation industry
Differentiation

Introduction to Uber

https://www.youtube.com/watch?v=P2M0RD7bhYY

Uber is a transportation network company based in San Francisco that

creates mobile software connecting passengers
with drivers of vehicles for hire.
Founded in 2009 by Garret Camp and
Travis Kalanick
Users are able to reserve a driver through Ubers mobile application,
as well as track the location of their reserved car as it drives to the users
location.
It is free for users to join.
Payments are calculated in a manner similar to normal taxis and are
done through the mobile application, allowing users to split the ride fare
between all of the passengers.
The company partners with independent drivers and takes a share of
each transaction.
It already operates in 22 different countries.
Uber used to only offer luxury vehicles (BMW, Mercedes, Lincoln, etc.)
but now offers several tiers of pricing by also offering a range of lower
market options (Toyota, Peugeot, etc.) in order to be competitive with
conventional taxis.
We can also say that Uber has experimented with a number of
different transportation reservation services including a partnership with the
taxi companies called Ubertaxi that allows users to reserve normal taxis
using the mobile app and Uberchopper that allows someone to reserve a
chopper by 3000$.

1st CLASS
Analysis of the industry: 5 forces of
Porter + complements + Government

Threat of potential entrants

-

Uber has filed for several patents to protect their company

however most of those patents havent been aproved yet, so it
does not have any protection from new entrants as it has no
proprietary

elements

that

can

prevent

new

entrants

from

competing in the industry.

Low capital requirements to enter the industry makes the entry

into the market easy.

No switching costs since Uber offers their app for free and does
not require membership. This also makes new competitors easily
capture consumers.

Because of all of these elements we can say for sure that there is high
threat from potential entrants that will limit Ubers profitability.
Supplier Power
-

Uber does not own any vehicles so it depends entirely on drivers

with their own vehicles and partners. To make matters worse
drivers have the option to pick and choose between Uber and rival

services.
There is also no substitute for individual drivers which only

increases their power.

Drivers also own everything but the app so they have very low
switching costs making them very powerful.

However, in favour of Uber, we can say that there are many

drivers (many suppliers) to choose from and also the fact that
Uber can set terms and rates.

Taking all these facts into consideration we can say that while
suppliers have the power to negotiate for a higher price, Uber is not entirely
powerless so we can say that supplier power is moderate.
Buyer Power

Uber has many competitors and substitutes.

Most clients do not use Uber on a daily basis.
Low switching costs since app for Uber is free.
Taking this into account we can say that buyer power is significant

Threat of substitutes
-

The network transportation industry has many substitutes.

The taxi, although more expensive on average, has an established

presence in the market which limits Ubers ability to raise prices.

Public transportation, although slower and weaker in quality, offers

a much lower price.

Low switching costs make substitutes capture clients easily.
Uber is seriously impacted by the threat of substitutes.

Intensity of rivalry
-

Many competitors (the main 2 are Sidecar and Lyft) with very
similar business models and suppliers which causes intensive

rivalry.
The 3 main companies (Uber, Sidecar and Lyft) target the same

clients which only makes competition fiercer.

However Uber has much more capital than its two main rivals,
making it the industry leader.

Uber is the industry leader, however the reasons mentioned above,

along with low switching costs, make competition fierce.

Government

Regulatory opposition and lawsuits by governments since Ubers

new innovative business model allows them to bypass taxes.

Governments insist on a commercial insurance policy.

Governments also insist on charging fees for revenues.

Government is a major obstacle towards the goal of profitability.

Complements
Uber is an app that exists in iPhone/Android devices that have to be
used together in order to provide the service to the client. Since they are
complements when the price of these devices goes up, then their demand
goes down and subsequently so does the demand for Uber (cross elasticity
of demand is negative). The most common scenario would be that one of
the companies increases their price (demand going down) and other
companies demand goes up (averaging the demand for Uber). We can also
add that the launch of new attractive devices will increase demand and
automatically put people into contact with their apps.

Competitive advantage

Cost advantage

As we can see Uber through its UberX brand has a big cost advantage
compared to taxi companies. Its business model allows it to have
lower costs which in turn allow it to lower the price going for a share
strategy (attract more clients). Some examples of why Uber has lower
costs than taxi drivers:

Uber drivers do not need to drive around looking for

costumers, which saves fuel and time.

Uber does not possess any vehicles to purchase, maintain

and depreciate.
Uber has only 2 fixed costs (their app and software hosting
services) and employs technology to achieve economies of

scale.
Operating cash cycle is low since payments are electronically
made (more money to face costs).

Benefit advantage
However Uber also displays a benefit advantage by giving more value
to the consumer than normal taxis, creating a huge willingness to pay
(and thus value created). Despite having a bigger WTP than taxis, it
chooses not to raise price or maintain but decrease it as it was said
before, incurring in a very successful share strategy.
-

Uber allows you to call a car through its mobile app while, for

normal cabs, you have to wait on the street to catch one.

You wait less time for an Uber vehicle than you do for a

normal cab.
Transportation is more comfortable.
More friendly and honest drivers.
Electronic payments.
If you use the black car service (targeted for the luxury
segment) you have the prestige of cruising around like a
diplomat.

When comparing Uber with its two main competitors we can say that
price and and WTP are very similar. However, as it was said before,
Uber is an industry leader due to the fact it possesses 2 main
competitive advantages over its competitors.
-

First mover advantage: By being the first firm in the market

Uber had the preliminary opportunity to enter profitable
areas, recruit quality drivers and establish the brand before

its competitors. This advantage allowed Uber to grasp the

biggest market share and establish itself as a global
-

company.
Access to resources that are unavailable to competitors.
These resources are mainly funding which allows it to spend
more money on acquiring drivers, pushing into more markets
and developing better infrastructure.

Unique Resources and capabilities

As we have said Uber possesses many unique resources and

capabilities:
-

First mover advantage thats allows it to build brand reputation

and attracting clientele.

More cars than any other transportation company.
Widest distribution network operating in more than 50 countries.
Operations in various segments of the market (lower end with

UberX and higher end with Uber Black).

Very low costs.
Huge access to funding.
Celebrity endorsements.
Rated as the company that offers the best efficiency, safety and

elegance.
Fare split feature which allows customers to split the fare easily.
Best and nicest drivers.
Shortest waiting time in the market.
Daily updates and improvements of the mobile app.
Numerous successful partnerships with different parties to reduce
the cost of new car ownership for Uber drivers encouraging more
of them to join the fleet.

Activities and Value proposition

Uber is a company that plans to change the world step by step

offering to completely revolutionize and improve clients transportation in
the city. It plans to establish a global network of connectivity between
people and drivers and offer a service to society that is innovative,
sophisticated, elegant and efficient. Uber is superior in every aspect when
compared to taxi companies and its main rival Lyft, as we can see in the
above picture, and it plans to keep on doing so by:
-

Daily investing and improving its R and D division to increase

functionality and performance (Technology development).

-

Constantly seeking and training the best drivers out there,

offering them benefits and salaries way above the average (Human
Resource management).
- Establishing partnerships with companies like Spotify that improve
the transportation experience and Apple that improve the access and
contact between the company and clients (Procurement).

- Seeking investment from various types of financial experts that

contribute not only with monetary capital but with expertise (Firm
Infrastructure).
- Trying to get closer to every member of society through advertising,
sales

promotions

(mainly

discounts

that

occur

daily)

and

celebrity

sponsorship.
It is also a part of Ubers value proposition to ensure that not only the
costumer is satisfied, which it guarantees through post sale service with
rating and sugestion system (After Sales service), but the driver as well, by
implementing

the

principles

that

govern

the

company:

equality,

sustainability, fun, transparency, agility and pragmatism. Uber is a company

that always has the welfare and future of the client, the employee and
society as a prime concern. That is why maximization of performance is a
must.

Websites
http://pt.slideshare.net/MichaelReed11/uber-analysis-mgmt-180
http://pt.slideshare.net/OmarKhafagy1/uber-technologies-inc-businessanalysis
http://pt.slideshare.net/funk97/ubers-business-model
http://www.tofurious.com/marketing-strategy/uber-competitive-strategy-vstaxi/
http://uber.mbsf.org/benefits-of-using-uber
http://pestleanalysis.com/swot-analysis-for-uber/

3rd CLASS
New Game and Disruptive Tecnologies
How does competitive advantage emerge for uber?
With our growth and expansion, the company has evolved from
being a scrappy Silicon Valley tech start-up to being a way of life
for millions of people in cities around the world, says cofounder Travis Kalanick.
The company bears all the hallmarks of a disruptive start-up,
using technology to exploit a gap in the market and scaling so
quickly that it is now operating in 250 cities across 51 countries .
Perhaps therein lies the contradiction at the Heart of Ubers rise
from scrappy start-up to global corporate with a valuation higher
than Twitter, or Marks and Spencers
However there is much to be admired about a business that can
grow so big, so fast, but at what cost has it come, and what
lessons can other start-ups learn from Ubers story so far.
The Uber Creation myth?
In 2010 Uber launched in San
Francisco, providing full
size luxury cars for hire,
UberBlacks, as they were
then known. But they were also
marketing themselves as a
ride sharing Company to ease the pain of being unable to locate
a cab on the streets of San Francisco. Back in 2008, Kalanick
wrote, about co-founder Garrett Camp: Garretts big idea was

cracking the horrible taxi problem in San Francisco getting

stranded on the streets of San Francisco is familiar territory for
any San Franciscan. So what was Uber? The stranded
everymans friend, or a more exclusive chauffeur service? There
is a big social difference here: do I hail an Uber cab because I
am tired of established taxi firms hiking prices, or because I am
flash and can afford the best rides?
The answer is probably a bit of both. Both Camp and Kalanick
had begun as aspiring technology disruptors, but both, pre-Uber,
had sold successful businesses; in 2007, Camp had
Persistenc
sold StumbleUpon to eBay for $75m, and Kalanick
e
had sold Red Swoosh to Akamai Technologies, for
$20m. When the two came up with the idea for Uber, at Le Web
summit in Paris, they were not thinking like a lean start-up
founder. Global domination was probably on both of their minds.
Buoyed by their success, they could be confident and ambitious
in a way that most founders would struggle to be.
The Pivot
Its clear that neither founder would be satisfied with easing the
pain of locating a ride in a small, if hugely significant city. In the
end it was a lack of regulation that allowed them to hit the big
time in less than a year. Uber launched its UberX program in
2012, extending the franchise beyond a team of drivers to any
qualified driver with an appropriate vehicle. Traditionally taxicabs are heavily regulated for safety
reasons, but Uber, under no
obligation to comply with these
regulations, adopted their
own. The 50% premium Uber
was now able to charge its
customers
reflected the fact that its
customers
could use their smartphones to
find out
where an Uber car was, how
long they would
have to wait, and roughly how
much it
would cost. Exploitation of the law, or
perfectly
legitimate exploitation of new technology?
There is no national or model response to this emerging
market, and a Wild West environment is the current state of

play, commented Matthew Daus, former commissioner of the

New York City Taxi and Limousine Commission. Kalanicks reply
must have felt something like a declaration of war: Was Yahoo
upset when Google came out? Of course. In that industry, people
compete. In the cab industry, they try to curtail competition.
Every start-up needs publicity

Progress

What catapulted Uber into the

public consciousness was the
cease-and-desist order they
were issued with by the San
Francisco Municipal
Transportation Agency and
California Public Utilities
Commission. Uber quickly
Passion
became a cause celebre, although
perhaps the public did not completely
understand what is was they were supporting when they chose
to side with the ride sharing firm. Uber were hardly victims, and
taxi companies far from the villains of the piece. In Kalanick,
however, Uber had a founder who was ready for a fight; Uber
head office quickly became known as the war room, the
company changed its name from UberCab to simply Uber, and
things began to get serious. What we maybe shouldve realized
sooner was that we are running a political campaign and the
candidate is Uber, and this political race is happening in every
major city in the world. And because this isnt about a
democracy, this is about a product, you cant win 51 to 49. You
have to win 98 to 2, Kalanick has said.
The product and technology have to be right
Before you can use an Uber driver, you have to use its software.
The Uber app first launched on IPhone, but within 4 months it
was available on Android, and in September last year, it
launched on Blackberry. When the Company wanted to expand
into Asia, it made the service available via SMS messaging,
conscious of the fact that Asia has fewer smartphone users per
capita. The company has also had to overcome language
barriers, different currencies, and alternative measurements of
distance travelled. Many countries populations, Germany for

instance, do not tend to use credit cards,

partner with PayPal, in November 2013,
to prevent it from losing out on
customers.

so Uber decided to

Amidst all of the court cases, PR

backlash, and fundraising, Uber
have done
extremely well to make the user
experience consistent and effective.
Apple
CEO Tim Cook has often said that he
values user
experience above all else in his
Prospectin
products, and, whatever else you hear
g
about Uber, you rarely hear a bad word said about the quality of
the service, which is incredible when you think about complex
their operations are.
Beware the backlash and the competition!
No Company, particularly an early stage one, can expect to have
everything their own way. Obviously there has been the recent
bad press, with Buzzfeed journalist Ben Smith flagging Uber
Senior Vice Presidents Emil Michaels comments that the
company should consider hiring researchers to dig up dirt on
its media critics, but, Twitter apology aside, Kalanick has not
taken any action against his employee. This reflects the kind of
siege mentality that many successful enterprises can adopt
when times get tough. In many ways it reflects admirably on
team spirit, but there is also the issue that a business that stops
listening to anyone but themselves can become a dangerous
beast. Careful judgment is required, and clearly, opening up the
marketplace to make room for its competitors is not top of
Ubers priority list.
But there are an increasing number of competitors; Lyft is one,
French company Bla Bla Car which has recently closed a $100m
funding round, and Sidecar is another. Inevitably Ubers preeminence means it will be the most shot at. The company has
recently challenged a court ruling in Paris preventing the use of
its UberPop service, which puts customers in touch with drivers
who do not have professional licenses, citing its for profit nature
as illegal. Predictably, Uber has challenged the decision, and
continues to make the service available while the matter is

resolved in the courts, but how many more such battles can it
afford to take on. Kalanick has indicated that he wants an Uber
service in every city in the world, and the scramble for
customers is on, but ironically, it may well be the customer who
loses out. So:
Remind yourself why you started in the first place!
Uber is an extreme, but extremely relevant example of what can
happen to a Company that grows exceptionally quickly. Its
success is down to a number of factors; the celebrity
endorsements, the staggering amounts of capital raised, the
product itself, the publics goodwill, and the determination of its
founders. These are the companys strengths, but also their
weaknesses. In the end, when success finally arrives, thats
when your good judgment is truly tested. It is worth asking
yourself, is my product really good enough to justify all the
fighting I am doing, or is the world trying to tell me something?
Getting what you want, believe it or not, is the easy part.

Transportation industry

Uber has repeatedly

argued that they are
an app-based
technology platform, connecting
drivers. However, financing, owning,
a fleet of cars makes them identical to
company.

rides and
and managing
a taxi cab

Supporters of Uber laud its

convenience
for customers who are
justifiably tired
of unreliable and shoddy taxi services. Critics of Uber point to its
pants-on-fire lie that it is merely a software company and not a
car service as well as its misclassification of drivers as
contractors. Both sides are wrong and both are right, which
shows there is more consensus than most observers realize for a
comprehensive overhaul of the entire taxi industry in a way that
serves riders and drivers

The data will provide strong talking points for both sides. The
best news for the Uber camp is that the advent of its service has
coincided with a significant increase in the total number of rides
in New York. Although Uber has not shared statistics for 2013,

a leak to Business Insider last year revealed an average of

140,000 Uber trips per week in the city during December 2013.
Assuming a steady compound growth rate during the past two
years, that suggests that there were 333,000 Uber rides in June
2013. Adding that to the 14.4m yellow-cab trips that month
yields a total of 14.7m. In contrast, by the same month of this
year, the combined sum for Uber plus traditional taxis was
15.8m. This 7.5% increase in two years makes clear that the
market is not zero-sum, and that the benefits enjoyed by Uber
and its customers and drivers have not come entirely at yellow
cabs expense.

However, the figures also suggest that the majority of Ubers

growth has come from substituting for taxis rather than
from complementing them. While Uber expanded
approximately tenfold over the past two years, from a bit over
an estimated 300,000 rides in June 2013 to 3.5m in June 2015,
yellow cabs hail volume has fallen by 2.1m during the same
period. As a first approximation, this implies that just 35% of the
growth in Uber rides during this 24-month period has been in
addition to the preexisting market demand, leaving 65% that
has replaced trips that would otherwise have gone to taxis. (A
complete analysis would need to account for the growth trend in
the industry before Uber arrived, any expected changes in
demand from the overall state of the municipal economy and
the impact of Citi Bike and boro taxis, among other factors, and
could yield a substantially different ratio.) A further indication
that Uber bears significant responsibility for the drop in cab hails
is that the decline is most pronounced in the middle of the night,
when passengers place the greatest value on Ubers advantages
in convenience and comfort. Taxi rides between 11pm to 5am
have fallen by 22% since June 2013, whereas trips at all other
times are only off by 12%.

Differentiation

Fare Estimates
Getting into a taxi in an unfamiliar city can be nerve wracking.
You have no idea how much the trip should cost or if the driver is
taking the most direct route. In New York City, taxi riders cannot
get an advance estimate for taxi fares. The NYC Taxi and
Limousine Commissions official stance is that it is impossible to
pre-calculate a fare, because the meter rate depends on traffic,
construction, weather, and route to the destination. Uber does
provide fare estimates within the Uber app, but it does not
guarantee the final fare because road conditions can change
during the ride.

Airport Fares
Yellow cabs have regulated fares to and from the Newark
International and John F. Kennedy International airports. For trips
between Newark International Airport and New York City, the
price is the regular metered fare, plus a $17.50 surcharge, plus

tolls. For trips between John F. Kennedy International Airport and

Manhattan, it is a flat fare of $52 plus tolls. The regular metered
fare applies to all trips to and from LaGuardia International
Airport. Uber offers a $65 flat rate between Manhattan and
Newark airport and a $60 flat rate between Manhattan and JFK.
These rates are for an uberX car, the least expensive option. You
can also get a higher class of car at a higher flat rate.

Payments and Tipping

Before you can call an Uber, you must download the app onto
your smartphone and register a credit card, Paypal account,
or Google Wallet to your account. Uber automatically charges
your account at the end of the ride. When you take a cab, you
will need a wallet. NYC cab drivers are required to accept
MasterCard, Visa, Discover, and American Express credit cards
and MasterCard and Visa debit cards with no minimum fare
requirement. Passengers pay for rides by swiping their card
through a card reader and can see the transaction details on a
monitor in the backseat. Passengers must sign for card
transactions over $25. Cab drivers also accept cash, unlike Uber
drivers.
Tipping is different with each service, too. The Uber app does
not allow passengers to add a tip to their electronic payment.
Uber's webpage on tipping says, "Being Uber means there is no
need to tip drivers with any of our services." There is nothing
stopping you from tipping an Uber driver in cash, though Ubers
official stance on letting drivers accept tips is murky. The
exception is the uberTaxi or uberT service (calling a yellow cab
using the Uber app) where a 20 percent default tip is
automatically added to the metered fare. Passengers using
uberT can also go to uber.com to set a different default tip
percentage. Tipping is customary for cab rides. You can add the
tip to your credit card or pay it in cash. Most riders who pay by
credit card tip 20 percent, which might have something to do
with the automatic tip options offered by the credit card
machine: 20 percent, 25 percent, and 30 percent. You can

always calculate your own tip or decline to tip altogether for bad
service.
Vehicle Types
Taxicabs hold either four or five passengers, depending on the
vehicle model. The most common vehicle model for older taxis is
the Ford Crown Victoria. In 2013, the Nissan NV200 vans
became the official model for new taxis. All taxis are painted
yellow, except for boro taxis, which are green. If you want a
fancier ride, you will need to call a traditional private car service
or use Uber. Ubers vehicles range from standard consumer cars
like Honda Accords in the uberX class to upscale vehicles like allblack Cadillac Escalades under UberSUV. Uber policy is that all
cars must be a 2008 or later model and must be easy to enter
and exit (so no pickup trucks or compact cars).

Getting a Ride
Yellow cabs accept street hails anywhere in New York City. You
can also arrange a yellow cab through uberT (by calling a yellow
cab through the Uber app). Green boro taxis, which operate in
the outer boroughs and parts of Manhattan north of certain
streets, can either be prearranged or hailed on the street. Uber
is only accessible through an up-to-date smartphone. If you do
not own a smartphone, your smartphone is not up to date, or
you forgot your phone, you will not be able to use Uber. New
York City regulations prohibit street hails for private ride services
(also called livery services).
Customer Service
Since passengers request all Uber rides through the app, there is
no waiting on the street and getting drenched trying to hail a
ride in bad weather. Nor will you find yourself standing alone on
an empty street late at night trying to catch a cab. The app lets

users know when the driver has arrived, so passengers can wait
indoors. This is also true for uberT.
What if you have a bad experience during your ride?
Despite what the NYC Taxi and Limousine Commission would
have you believe you can expect from a cab ride based on its
passenger bill of rights, New Yorkers are familiar with dirty,
worn-out cab interiors; old, shoddy vehicles; inconsiderate and
even dangerous drivers; drivers who dont speak English well;
and rides that dont come when theyre supposed to. The taxi
medallion system, which makes it incredibly expensive to
operate a cab company, may cause some owners cut corners on
vehicles and drivers.
Choosing Uber over a cab doesnt guarantee a good customer
experience, however. Many Uber drivers are also recent
immigrants with limited English skills. And because Uber is a
relatively new service, many drivers have little experience and
dont know the most efficient routes through the city at different
times of day. High-profile news stories have reported on an Uber
drivers who locked passengers in the car while giving himself a
five-star rating using the passegengers phone.
To file a complaint about a bad taxi ride, make sure to get a
receipt from the driver that shows the taxis unique fourcharacter medallion number. You can also get the medallion
number from the taxis license plate, roof, or inside the car on
the back of the partition. You can then file a complaint online
through the NYC Taxi and Limousine Commission website. If the
driver pleads guilty, he will pay a fine and the case will be
closed. If the driver pleads not guilty, there will be a hearing
which requires you to give testimony by phone or in person.
Uber actively seeks and reviews passenger feedback on drivers.
After each ride, Uber asks the passenger to rate the driver
through the app and add comments. Uber will stop using a
driver who gets too many low ratings. Uber drivers also rate
passengers, and passengers have to contact Uber or ask a driver
to find out their scores. Some drivers avoid passengers with low
scores. Uber may temporarily ban passengers for inappropriate

or unsafe behavior and permanently refuse service to riders who

have been aggressive, violent, or disrespectful.
What if you leave something in a cab? Again, you need the
medallion number to report to the NYC Taxi and Limousine
Commission for help tracking down your belongings. If you leave
something in an Uber, you can open the Uber app and click on a
link to your electronic receipt for the ride to find and contact the
driver.

Websites used:
http://newsroom.uber.com/2012/07/choice-is-a-beautiful-thing/
http://www.businessinsider.com/proof-that-uber-is-obliterating-new-yorkcitys-taxi-industry-2015-8
http://newsroom.uber.com/2015/01/uber-expectations-as-we-grow/
http://prospect.org/article/its-not-just-uber-why-taxi-industry-needs-overhaul
http://www.theguardian.com/technology/2015/oct/04/uber-challenged-taxitoo-late-to-regulate-it
http://america.aljazeera.com/articles/2015/9/16/taxi-wars-uber-destroyingthe-taxi-industry.html
http://www.investopedia.com/articles/personal-finance/021015/uber-versusyellow-cabs-new-york-city.asp