Accredited by: Member of: IACBE CCIG ECBE FEDE EDUQUA FSEP AGEP ACICS Assignment - 2017 DIGITAL ANSWER SCRIPT (PLEASE PRINT YOUR DETAILS IN CAPITAL LETTERS) Course Code: CST 620 Course Title: CASE STUDY - 1 Student ID: 17JUN1044MBAHR Name: FAHAR EDAVANA Mode of Exam: ONLINE 1. What are the ethical challenges that Uber faces in using app-based peer-to-peer sharing technology? Ans: Uber has become very successful within a very short period of time. People like to use apps or other digital devices when requesting for services nowadays whether it is for booking a hotel, paying online, ordering meals etc. We want to get things done on a mouse click. The other new development is we like to network and share like it happens with AirBnB as well and I am sure there will be more new services o that kind in the future. It’s the sharing economy and it’s something interesting and exciting for consumers. It shows new ways of doing things which is not bad either. At the same time this causes a lot of problems as well. Some of the serious ethical problems are: Uber seems to make its own rules and not care about government rules in the countries. This is unfair and not ethical business practice. U takes away business from professional drivers who are well experienced and trained, and who pay taxes. U increases fares for instance if there is an over demand. They did this when a natural disaster happened and which is very unethical for a company to take advantage and charge people higher fares in emergency situations. U drivers do not pay taxes like other professional drivers have to do. Uber company exposes consumers to risks like personal safety, accidents etc. which is unethical for a company to do. Uber does not provide insurance, training, cars etc. to their drivers so they can easily have bigger profits. 2. Since Uber is using a disruptive business model and marketing strategy, what are the risks that the company will have to overcome to be successful? Ans: Uber depends on managing future risks in below key areas: Drivers, Surge Pricing, Fares, Drivers happy, Competitors, 1. Drivers: Uber increasing the number of drivers is one of the most important steps Uber will have to take, it must be controlled. An overflow of drivers will cause a decrease in the number of customers each specific driver obtains. Inevitably, this will lead to less money for the drivers, causing frustration. In other words, Uber must find the perfect number of drivers in the streets. 2. Surge pricing: Uber must be careful with its “surge pricing”. Surge pricing is when Uber triples, even quadruples, their fare pricing on specific days (holidays, for example). Although this leads to an increase in net revenue for the company and its drivers, none of their customers will appreciate this. If Uber uses the surge pricing tool too often, it may lose customers. 3. Fares: Uber must also be careful with fares. This may come as no surprise, but Uber’s biggest selling point is having a lower fare than a taxi. If they raise their prices too much, Uber’s fares will Av. Blanc 53, 1202 Geneva, Switzerland T: +41 22 906 94 94 F: +41 22 906 94 90 E:
[email protected] W: gbs-ge.ch Av. Drivers for Uber and also AirbnB owners do not pay taxes. This also is a safety risk. An interesting note about Sidecar is that their drivers have the ability to set their own price. Coverage in case of an accident for driver: If they cause an accident with serious implications or if a consumer files a law suit against them because they are not satisfied with the service they are at a big financial risk. So nobody knows how many hours they work and if they are maybe exhausted from long working hours and not really fit to drive. Like in a hotel the passport is checked. Working hours: Some of U drivers are not employed with the company but contractors. With U fares it is different. Renting private rooms: A consumer who rents a private room does not know the owner. It’s a big challenge for countries how to deal with it. A similar business is Airbnb platform where you can book a room. If this means not taking a bigger cut from its drivers (currently set at 20%). it can also do the same with their drivers. if Uber looks to grow substantially. then so be it. Maybe there will be other such products in the future. leading to many customers switching back to a taxi as their preferred mode of transportation. Competitors also need to be protected. In many countries U has been facing law suits since there is not much regulation for this kind of business. meaning that they compete for the customer’s business by lowering their rates. 1202 Geneva. It’ s also called the sharing economy. Protection for personal safety in the car: Some U drivers are private people and non professional drivers. illustrated by some news that Uber employees were calling Lyft cars to jam up their service. This room is owned by a private person. Also the consumer does not know if this person has a clean criminal record. Taking more from drivers will increase Uber’s net revenue. Maybe it is a personal safety risk. Accredited by: Member of: IACBE CCIG ECBE FEDE EDUQUA FSEP AGEP ACICS not be as competitive as a taxi’s fare. I believe most important areas for regulations are: Accidents coverage for consumer: At the moment it is unclear how consumers are covered in a U car if there is an accident. This needs to be also regulated as hotels and taxi business needs to pay taxes. Like anybody can sign up with U and drive. The company which is private can change their fares anytime and harm other competitors. 4. The rivalry between the companies is fierce. Because Uber is so popular and the business model is being expanded to other industries. This is a big risk to consumers who do not know who this person is and if this person is an experienced driver. So governments must develop such regulations and laws which can be applied. Airbnb consumers: AirBnB owners do not know the person who comes to their apartment. 5. Competitors: Not only can these challengers steal numerous customers from Uber.ch W: gbs-ge. but it will anger the drivers highly. Switzerland T: +41 22 906 94 94 F: +41 22 906 94 90 E: info@gbs-ge. For instance Taxi fares and working hours are officially regulated by the authorities. At least if they do not have insurance coverage. Drivers happy: Uber should make sure it keeps its drivers happy. This allows for some extremely cheap rides! 3. I believe there must be regulations in place since it’s the same for any other business.ch . In the end. one of their priorities will have to be keeping their drivers happy. should there be regulation to develop compliance with standards to protect competitors and consumers? Ans: Uber is a new business model with a service that no one else has offered before. Road safety of private cars: These private cars used by U drivers are maybe not well maintained and all safe. This can also cause problems for the consumer and also hotel owners have been fighting against it. Blanc 53. Taxes for the government.