Uber’s Success in the Taxi Market

In this study, we purpose to research Uber Inc. as a market leader in ride sharing application market and sharing economy with considering internal and external factors that might be effective on the company’s development process. Besides, we try to collect recent news about Uber to illuminate its strategy has been taken according to circumstances.

INTRODUCTION

The aim of this research is comprehend the strategies behind sharing economy industry leader Uber Technologies Inc.’s unrestrainable success despite of all legal obstacles, law suits, protest upraised by taxi drivers that it is facing everyday. Since on-demand ride sharing mobile application Uber lunched by Uber Technology Inc., a number of companies copied its business model and that trend has been referred as “Uberification” (Boland, 2014). Today, Uber has reached $62.5 billion valuation with more than 8 million users in 68 countries that include Istanbul, Turkey (Newcomer, 2015). Uber’s rivalry competitor Lyft follows Uber as a market follower with attempt of new service innovations to became competitive in the market.

In this project, current published sources and daily news will be mastering us to prove our statements since Uber is an ongoing social innovation that catches a big trend and popularity around the world. We also consider users comments. Contemporarily, Uber face with various number of legal issues that we need to consider in our study. And in order to fit in the law, Uber has made several changes on their business model. In this sight, we need to mention law cases that Uber was one of the sides to make an inference about its strategies.

BACKGROUND

Carpooling technics has been using since World War II. At the beginning, it existed as a rationing tactic in the United States during the war years as a huge propaganda with the slogan of “When you ride alone, You ride with Hitler.” (Pursell, 1943) . Then ridesharing idea had been operated by Chrysler and 3M companies as employee vanpool during the 1970s due to 1973 Oil Crisis and following 1979 energy crisis.

Figure 1 World War II Propaganda Poster by Weimer Pursell, 1943. Printed by the Government Printing Office for the Office of Price Administration After 30 years of decline, with the advantage of developing technology, we started seeing carpooling idea again in 2000s. This time, users stand to benefit of communication opportunities. There are also times that ridesharing had occurred naturally in some places and more slagging way. For instance, people had been getting line in certain points to get ride share on their way to work, in Washington, DC.

Also as an innovative idea of slagging carpooling, people started using e-mail services to communicate with each other to get ride share. First in 2002, eSLUG had been created as a yahoo e-mail group list for the employees who want carpooling, in Navy Yard Area of Washington, DC. Destination was determined as Horner Road Park and Ride Lot. After a short time, RosslynSlugs had been created by Yahoo listserv in Rosslyn Area, Arlington to serve Route 17 Park & Ride, Stafford County on February 2004. It was only one way ride-matching system for about 45 miles distance with log in requirement. Especially in the United States, in an effort to reduce traffic and encourage carpooling, some governments have introduced high- occupancy vehicle (HOV) lanes in which only vehicles with two or more passengers are allowed to drive. In the mean time, all became conduced toward carpooling kind of applications for future.

Then, real-time-on-demand dynamic ride sharing has taken place in the market and now it shows themselves as mobile applications, since late 2000s. One of the most known transportation network company Uber has been established in 2009 in San Francisco, California and spread the world in 7 years. Beside the big success of Uber, they have had to face many lawsuits and protests against them. But still, Uber’s continues to increase its market share as a market leader.

ENVIRONMENTAL ANALYSIS POLITICAL FACTORS

Uber is challenging with some political issues due to state policies in the US. Since the sharing economy is a new trend on recent years and the lack of regulatory law about this subject lead to many problems for each side. Even during the Presidential Debates in the US, Democratic presidential candidate Hillary Clinton shared her approach the ride-hailing app and the “on- demand economy,” also referred to as the “sharing economy.” in her economic policy speech. Clinton referred his concerns about Uber, which is focusing instead on the implications for the labor market and the risks faced by drivers who aren’t shielded by benefits and job security (Che, 2015).

“This ‘on demand’ or so-called ‘gig economy’ is creating exciting opportunities and unleashing innovation, but it’s also raising hard questions about workplace protections and what a good job will look like in the future. (Clinton, 2015)” she said. Also in other countries, Uber has found itself running up against investigation. While it is banned in Spain and in Delhi, India while German city of Berlin, France, Netherland, Thailand courts attempted to ban Uber.

ECONOMIC FACTORS

With the sharing economy takes significant place as a hybrid market, it created new independent workers who works on-demand economy or as also referred as gig economy. Nevertheless, while some approaches refer that it is what future economic world will look like, others like Jacob Morgan’s, who is author, speaker and contributor in Forbes Magazine, supporting opponent ideas as he said: “While we will indeed see the trend towards independent workers increase, this trend will by no means reach the exorbitantly large levels that some are reporting.” (Morgan, 2015). Uber’s effect on the economy cannot ignored as we observed it as upraising toward the Uber by taxi drivers around the world. While it is received as a threat that will end the traditional taxicab business, it brings many conflict into current taxation system and even it triggered some regulatory for revising taxation system.