Essay on 440006981 MSA 1 Economic Environment

Submitted By Manish-Sadhwani
Words: 1109
Pages: 5

Karen, M 2015, ‘Uber cars out space New York’s yellow cabs’, Sydney Morning Herald, 26 March, Viewed 27 March 2015, <>
Karen (2015) highlights the most recent developments for Uber. With reference to the article, Uber is taking over the ‘taxi’ business in New York. The issue here is that New York Yellow Top Cabs are losing business as the result of the rise of Uber cabs on the roads. This month is definitely a milestone for Uber as they surpass the number of Yellow top cabs on the roads. This has definitely become an issue for the Yellow Top cab drivers as they are earning approximately 30 to 40 percent less than usual.
Application of concepts
The focus of the economic environment analysis would be Oil Prices, Unemployment Rate, Affordability and Flexibility. Over the last year, oil prices have dropped by more than 50 percent (NASDAQ 2015). Over the past few months’ itself oil has dropped from $100 to about $60 in March 2015. Also the US unemployment rate currently stands at 5.5% (Bureau of Labour Statistics 2015); in particular the unemployment rate in New York currently stands at 5.8%. The unemployment rate has fallen as compared to a year ago in both US and New York. On its own New York City is a developed economy (Population Reference Bureau 2015. According to (Hansen 1973) a characteristic of such an economy is that the standard of living is very high, population is dense and the competition levels are high. Therefore people are always looking for different avenues to make money in this type of economy.
Drop in oil prices would naturally cause a drop in petrol prices as well, therefore making it more affordable to run a vehicle (Brownell 2015), or in this case a car. As it is now cheaper to fill up oil in cars, drivers are more inclined to join Uber, as it would be more profitable for them in comparison to the amount of money it would cost to run the vehicle.
The unemployment rate in February last year was 6.7%. Currently the unemployment rate stands at 5.8% (Bureau of Labour Statistics 2015) in New York. Uber has gained much popularity over the past year allowing people to easily be employed, giving them an opportunity to earn money for themselves and their family.
According to (Kosoff 2015), over the past year Uber cut its prices in New York and said ‘it was cheaper to take an UberX compared to a Yellow top’. Uber does not need to provide for insurance, employee benefits, training, vehicle etc. Drivers are individuals that use personal vehicles. These individuals are known as ‘independent contractors”. Therefore Uber’s costs are low; therefore the cost of hiring an Uber would also be lower as compared to Yellow Cabs.
The Uber system is extremely flexible. According to (Soch 2015) drivers that do choose to work full time do it for the same reason; having a good work life and home life balance. Many drivers use Uber as secondary income and do it part time. Uber’s rise in popularity is due to the simple application process and the low barriers to entry that allow anyone to join.

Corporate Social Responsibility and Sustainability
According to (Kaeokla and Jaikengkit 2012) CSR have benefits beyond economic gains. The CSR that Uber displays is proactivity according to (Burke and Logsdon 1996) by providing employment to veterans through their UberMilitary program (Uber 2015).

Last year during Veteran’s Day in the US, Uber announced the launch of a new program called UberMilitary. This program aims to provide 50,000 veterans with employment after military service (Research and Insights 2014).
Conversely, Uber is facing a lot of heat from many countries. According to (O’Reagen 2014), Uber has been banned from many countries due to many reasons. Some of these reasons are ‘lack in administrative authorization’, ‘illegal’, ‘rape’ and ‘risk to public safety’. There is enough evidence to show that Uber needs to