Tuesday 26th March 2015
STR4501- Strategy in Action
Prof. Duane Lefevre.
Scenario Planning Assignment: Uber
Uber is one of the most valuable private tech company in the world and it’s planning to expand internationally. In January 2015, the company raise $1.6 billion in convertible debt from Goldman Sachs Group Inc.’s. Uber has raised since its 2010 launch to more than $4 billion and valuing the company at more than $41 billion. But the company isn’t living the perfect dream. There are lots of competitors, regulations, and highly depends on underemployed freelance contractors. Here are some of the scenario that I think Uber will face in the future.
Underemployed freelance contractor: (Maya Kosoff, 2014)
Uber relies a lot on their independent drivers and claims that its drivers are making around $90,000 a year. But the truth is a lot of Uber drivers are making less than that amount and barely meet the minimum wage. In last year summer, as a strategy to gain an advantage over their competitors, Uber decrease the price of their cheapest UberX ride by 20%. This greatly affect the Uber driver’s income.
As the company keep expanding, it will need more drivers to attend the customer needs, also the quality and services of the company towards its customer need to increase. But Uber’s driver aren’t bound to Uber and can work and leave whenever they want. And when people realize they are not making much from Uber, they will stop and that’s when Uber will feel it.
Uber got ban in many countries: (Evan Khosla, 2015)
In many countries such as Belgium, Germany, Spain, France, etc…The main reason is because the governments and other competitors in foreign countries see Uber as unsafe for the customers and illegal under national and state laws.
The reason is because Uber is expanding too fast in many countries and still unprepared to enter the new markets. There are many stories that involve Uber’s drivers attack and sexual attack the passengers. These stories greatly affects Uber’s reputation and restrain their operation in some countries.
Uber is expanding rapidly and the company is getting more profit than ever. But as the company is growing, more problems will appear as the company relies heavily on contractors as their drivers. Uber’s drivers also have to pay their own gas, maintenance fee, depreciation cost, insurance, etc… And sooner…