Uber analysis

Uber analysis

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Uber company is an organization that is well known for providing services such as freight transportation, couriers, package delivery, food delivery, cars for hire, and a partnership with a motorized rental scooter, electric bicycle and lime. Price discrimination being an essential aspect in the industry, the Uber company has put into place some of the conditions that tend to influence price discrimination. The Uber company came into existence and replaced the traditional taxi cab. The traditional taxi cab was associated with several challenges, but Uber, through the usage of technology, filled the gap. Uber company is a modern form of the Taxi but a more advanced one. The company system makes use of price surging and price discrimination to influence the customers and drivers. The essay involves analyzing the Uber company before its entry, areas it has exploited, and its potential for international entry into the market.

Analyze the market before Uber’s entry.

• Tradition Taxi Company was in operation before the entry of Uber into the market. At the moment, the taxi system had various challenges and gapped the Uber later came to fill. First, the Taxi was highly regulated in that the licenses were compulsory for the taxis to operate and had fixed rates. The licenses were rarely provided, and they were gaining significant importance as the population in the urban areas increased. On the other hand, after Uber’s entry in the market, cases of complaints among the riders reduced in New York. Besides, before Uber entered into the market, people were required to physically move to where the cabs were waiting to start the journey to the required destination: This contributed to plenty of inefficiencies, especially during bad weather conditions.
• Describe the inefficiency Uber exploited.
• The Uber company exploited some inefficiencies that were available during the operation with t taxis. First, the Uber drivers were very efficient as compared to the traditional taxi system. Some of the factors that have contributed to more usage of the Uber cars are because the Uber drivers are efficient as they use the technology, the system enhances fast matches, availability of flexible job supply, and inefficient taxi regulations. Secondly, the fact that Uber drivers depend on technology; thus, this improves efficiency as compared to the traditional method. The aspects of price discrimination make the Uber Company appear more attractive than conventional cabs, especially among the young generation. The world is changing and moving towards the technology face, and thus most individuals will spend most of their time on their phones or laptops. The aspect that Uber incorporates google map then makes it easier for a driver and the rider getting o the selected destination. On the other hand, the further inefficiency that Uber exploited is the issue of efficiency. The cab Taxi services often tend to park their vehicles around the areas associated with high demand and thus wait to be alerted by a client. It is a traditional approach, and it is not efficient in the modern world. Uber doesn’t need licensing as that of the Taxi, which entails back ward licenses and thus reduces the taxi drivers’ chances to meet their client demand. The Uber company works efficiently as its system facilitates the prediction of demand and supply changes.
• Explain Uber’s surge pricing in the context of shifts in supply and demand.

Uber surge pricing entails a standard supply and demand issue. In the year 2014, the Uber company services were available in about 200 cities and 53 nations globally. At first, upon the foundation of Uber only private limos ere operating. In 2012 the Uber company established a program whereby it facilitated almost every individual to sign up in the program. The program enhanced the growth and popularity of the company and eventually turned to be the most important startup in the field. The Uber company utilizes two different methods to enhance how much the customers are ready to spend. At some point the Uber company decided not to show the rider the information related to surge pricing. Instead the company decided to show the some information such as the prices have increase as a result of high demand. The company app also got rid of the notification about hen the surge prices have stopped. Ubers surge prices enhances the rare and thus more vehicles gets on the road and thus enhancing reliability especially during busy times. In situation when enough cars are on the road, the rates go back to their usual level. The act of increasing the prices is to persuade more drivers to get into operation until the prices go back to normal when there are enough drivers. However, individuals feel this is a kind of exploitation of customers, especially during holidays or emergencies. However, the price increase during high demand isn’t different hotels or airlines increasing prices as rooms or seats fill up.

• Evaluate Uber’s surge pricing in the context of price discrimination.
• Price discrimination usually occurs when an organization sells services or goods to various buyers at different prices, but the reason for different prices is not related to cost. Uber has created a variety of service lines o undertake the same role and thus generate a massive income range. For example, The Uber Company in Los Angeles can undertake price discrimination through 5 price levels. Thus the organization, through price discrimination, can generate passive income. Professional services, airline tickets, hotel rooms often offer different prices for various clients. In an airline, the prices vary depending on the seat position as some clients are willing to pay more. However, in economic terms, an economy or a business class seat has no difference as it is meant to take individuals from one place to another.

However, the Uber company has put into place some of the conditions to influence price discrimination. Some of the situations include:

The company should have the ability to control demand.

The company ought to avoid re-sale of services from one consumer to another.

There ought to have a variance of price elasticity in the various markets of the items.

Uber can put in control all three conditions. The organization highlights that individuals often have the willpower to pay a better price for a better car.for example, the estimated fares to Los Angeles Airport from Los Angeles Downtown include UberLux $110, Uber SUC$ 95, UberBlack $75, UberPlus $50, and UberX$20.

• Apply the concepts of economies of scale and economies of scope to Uber’s business model.
• The economies of scale and the economies scale

tend to elaborate on the reasons as to why the expenses less for big companies. The economies of scope concentrate on the total average cost of different goods production. On the other hand, the economies of scale deal with cost benefits that emergencies due to the commodity’s high production. An organization that enjoys the economies of scope Apply the concepts of has minimal average costs are distributed through different products. About the Uber Company, it enjoys the economies of content as the overall cost is distributed to the various customers. An organization that wants the economies of scale gets a lower average price as the expenses are reduced as the production increases. Therefore, for the Uber company, as the clients or demand increase, the overall cost is concentrated in the organization as the prices increase due to price surging.

• game theory to Uber’s market.
• THe Uber company tends to control its rider through its organizational growth. It employs hundreds of data scientists, experimented with noncash rewards, graphics, and video game methods, influencing the drivers to work hard and long and often at locations and hours that are not favorable to them. In the past years, behavioral economists identified a trend referred to as income targeting. The employees decide how long they ought to work on a daily basis, such as the cabdrivers. However, through the Uber app, the game theory is applied at this moment; the drivers are manipulated to perform past their goals: driving to areas they couldn’t ant to and driving for more hours than they had planned. The Uber Company comes up with a feedback option, which makes it appear as if they are playing a game. Uber game is similar to video games like pogo, play station, and Xbox in that a driver can earn badges for exemplary achievements, excellent services, and an entertaining drive. The gaming features of behavioral commitment tools like blind customer acceptance, predictive, and real-time demand, as ell surge pricing, indicate an exact way Uber controls the supply and demand relationship.
• Assess Uber’s potential for international expansion and potential trade policy issues.

1. Uber has a significant advantage towards its international expansion as it is associated with some efficient features such as performance and accountability, technology, driverless technology, and logistics. First, performance and accountability are efficient, and customers do not like unorganized taxi services operating in the market. Thus, Uber stands in a better position. The uber company ought to provide its services internationally on the basis of good performance and accountability. The company can track its drivers’ performance and easy to identify the best performers. Through tracking, the organization can deal with the issue of sexual misbehavior previously reported.
2. Secondly, the company has great potential for international expansion as it uses technology instead of the traditional taxi system. More individuals prefer the use of an interconnecting network that ought to be easily accessed through the Smartphone. The company ought to invest in some services such as Uber Eats to increase the client base. The company should enhance its ground in some countries such as Denmark and China.

• Uber encounters several issues such as compensation and safety policies, absence of liability, lack of enough insurance coverage, and lack of protection. Also, in the near future, the uber company is likely to encounter some issues in the future, such as the government’s chances of taxation within the region into which it operates.
• Explain the incentive pay model Uber uses and how it affects the principal-agent problem.
• The need for companies in the past years to show appreciation to its employees has identified essential interests. The principal-agent problem refers to the principal’s capability; that is, the employer creates a pay model to prevent its employee; that is, the agent from diverging his interests. Thus the employee ends up performing according to the organization’s interests. However, the employees work under uber control; that is, the drivers always receive directives on where the drive to. Therefore, the drivers’ pay does not often correlate with the organization; thus, the Uber company tends to alter the situation through behavioral economics. The absence of the correlation between the company and driver’s incentive has led to significant lawsuits as the Uber drivers recommend a considerable law to put into place. The recommended regulation states that gratitude and tips ought to be included in the Uber company electronic receipt. Over the past years the Uber company came up with an incentive pay model whereby all drivers have participate in a certain number of trips then they are entitled for a pay. on the other hand, the company has come up with a reservation for drivers who have finished more that to thousand five hundred (2500)trips, hereby they can the Uber company shares.
• Discuss any asymmetric information issues with Uber’s business model.

Digital sharing market gives diversity of services with a clear emphasis on reduced cost, real time supervision , transparency and flexibility for giving services. The Uber company is controlled technologically and digitally as it is managed through algorithms and therefore it has provided a flexible jobs through its system. Therefore the digital platform facilitate advanced level of control, surveillance and monitoring enhancing worker empowerment as well as asymmetric data. The digital system replaces direct supervision through the use of detection algorithms, car monitoring, GPS, and CSRs. The system too has the ability to verify, partially detect and rate the evaluation performance of the drivers. Nevertheless, command asymmetries between the drivers and the Uber company is not ell handled due to the work remote command of the management of the work by the driver.

Conclusion

• The application od gaming theory by Uber isn’t a bad or good thing. the application of the theory by the company through apps has facilitated efficiency among the clients, growth of the company and increased income to the drivers. The Uber Company exploited some inefficiencies that were available during the operation with taxis. Tradition Taxi Company was in operation before the entry of the Uber into the market. At the moment the taxi system had various challenges and gap the Uber later came to fill