Uber Case Analysis

This case analysis explores Uber's innovative approach to the transportation industry, focusing on its use of technology, market demands, and competition. It also discusses the enablers and obstacles of innovation for Uber, as well as how it has disrupted the industry. The analysis concludes with an examination of Uber's impact on the taxi market and the future of urban transportation.

Uber Case Analysis
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1. Introduction
Uber Tehnology Inc. is a software company which operates a mobile application that
helps to connect people in need of transportation and drivers. The company was founded by
Garret Camp and Travis Kalanick in 2009 in response to the growing need for flexible and
convenient transport solution in the modern metropolis (Uber, 2016). The innovators wanted to
create a service that could meet people’s desire for a speedy and comfortable transport service in
the urban areas without having to pre-book or hail down a cab as was the initial practice.
The idea of a service that could provide comfort and convenience to the masses at an
affordable price stemmed from the culture of the shared economy that was taking root at the time
(The Economist, 2012). Under this paradigm, anyone could enjoy high-end services such as a
luxurious room or car for a while without having to own it, and at an affordable price. They just
had to find someone who owned such an amenity. Uber and other similarly modeled services
such as AirBnB therefore only served to connect the facility owners with the demand, at an
affordable cost.
2. Nature of Uber’s Innovation
2.1. Focus on Innovation
Uber has been a revolutionary innovation, sending shockwaves throughout the transport
industry. The company leveraged on the use of technology in order to bridge the gap that existed
between drivers and clients in the cab business. Through the use of GPS and a mobile
application, drivers can receive a customer request for transport and be able to locate the exact
location of the client. In addition, analytical tools help the drivers to know where customer traffic
is high (Devan McClaine, 2012). The application also informs drivers of any customer within
close proximity of their position after they have made a drop. This increases the possibility of

them getting a client on their return run hence reducing down time. The multiple features of the
system helps drivers to maximize on business, therefore ensuring increased profitability.
2.2. Levels of Innovation
From the customer’s perspective, Uber has brought convenience that was missing in
previous services. The ability of the service to deliver a driver to the precincts of the customer on
short notice eases the process of getting a cab in today’s cities. Customers can therefore request
for transport on the application and relax as they wait for their ride to arrive as they are
constantly updated on the status of their request. Through its differentiated products; UberBlack,
UberX and UberTaxi, the company is able to provide unique service to the various market
segments. This product diversity is meant to address the varying needs in the market (McClaine,
2012). Customers who are in need of luxury vehicle services can use the UberBlack service
which provides high end Sedan and SUV transport such as for special occasions. For regular city
service, clients can settle for the UberTaxi or the UberX which enables any four-door salon
owner to make money off their car by signing up as an Uber driver on the site.
2.3. Types of Innovation
The new model of transportation that has been brought by Uber has completely
transformed the transport sector. It continues to appeal to many a city traveller with its cheaper
fares, ease of flagging and convenience. While the impact of the Uber revolution started in San
Francisco, the craze has since spread to other cities inside and outside of the United States. The
expansion has mainly been premised on understanding the local transportation culture in a city
and tailor-making the service to suit traditional practice while at the same time offering the
convenience of technology integration which Uber offers.

2.4. Open Vs Closed
Central to Uber’s upward growth tangent has been the operational model on which it is
built. Unlike the traditional taxi service, Uber considers its drivers as clients who are integral to
the success of its business paradigm. As such, it has endeavored to create a conducive
environment for them in which they can operate with unlimited potential and without the
bureaucratic barriers that impede the operation and profitability of the traditional taxi (Rusli,
2014). This has been achieved by eliminating the licensing requirement for drivers and paying
them attractive commissions on their job. This has helped to reduce driver turn over and
motivates them to work harder in order to earn more.
2.5. Speed of Diffusion
In addition, having the drivers use their own cars has helped the company cut on
operation costs arising from insurance and maintenance. The technology-based business model
has also aided the company’s expansion strategy as it is easily transferrable to a new locale
without much logistics of setting up an elaborate physical establishment for the company. In
addition to geographical expansion, the paradigm offers much leeway in terms of the expansion
of the business scope of the company. Uber can easily expand to the delivery of parcels,
groceries among other in a new model of urban logistics that could hold the key for its future.
3. The main drivers of innovation for Uber
3.1. Increased Competition
In a market that is worth over $11 billion in America, innovation is key for Uber to get
ahead of the competition (Christensen et al., 2016). The rideshare company has taken the
conventional taxi service head on. And they are feeling the heat that Uber is taking to them,
resulting in gimmicks such suggesting the illegitimacy of the company’s model in the scheme of

the urban transport regulations. However, Uber has continued pursuing its business in this space
unfazed, leveraging on technology in order to amass as much market share for itself. This has
been achieved by employing technology in customer acquisition and billing and eliminating red
tape in the operations. Such tenacity and convenience has given Uber the upper hand over its
competition.
3.2. Market Demands
Reliability has been at the center of Uber’s philosophy of service delivery. With over 2
million daily rides in over 500 cities worldwide, the company is setting the trend for reliability
through innovation (Amna, 2016). The company has a support team which works round the
clock to ensure that the application is always working properly and that customers do not get
stranded. This has set the Uber brand apart for reliability and service.
With the launch of the new model of public transportation in cities, safety concerns were
integral to the success of the Uber brand. Client safety from impostor drivers and bad driving is
paramount to the company. As such the company has come up with a wide range of solutions
such as facial recognition and vehicle movement and driver behavior monitoring technologies.
Information security for customers is also important especially in today’s world of big data and
sharing. To this end, the company has a standing team to ensure proper encryption of data and
controlled access that will ensure adequate security. They also have troubleshooting tools that
help to identify potential problems in the system so that they can be fixed promptly.
3.3. Technological Drivers
In addition to the technological drivers for innovation that have been based on customer
requirements and market situation, the political environment in the areas of operation has also
spurred Uber to come up with ingenious ways of remaining lean and profitable. This has been

achieved through exploitation of regulatory loopholes that enable the company to avoid red tape.
For example, Uber drivers are not required to register with municipal authorities in America as is
the case with regular cab drivers. This saves them many thousands of dollars in licensing costs
hence making the service attractive to new drivers who are integral to the expansion of the
company. Billing is also done through credit cards or any mode that is suitable based on the local
culture.
4. Enablers and obstacles of innovation for Uber
4.1. Human resource and Technological Enablers of Innovation
Uber’s quest to come up with the most innovative products in the public transport sphere
have been aided and abated by many factors. Originating from one of the most technologically
advanced places in the world, San Francisco, the company was always going to employ hi-tech
solutions in its growth strategy. To develop this paradigm, Uber has been able to draw from a
pool of some of the best talent in the technology field. This has aided it in the development of
solutions that are secure, user-friendly and foolproof. In addition, the company has continuously
improved its product offering to improve the customer experience.
In a rapidly changing world where data security has been a major concern, Uber has to be
constantly evaluating their systems and put mitigate measures to ensure client information is
protected. This has been realized through the employment of the latest security algorithms in the
industry. The company also has a resident security team that tests and optimizes the system in
order to seal any loopholes. Driver training on the use of the system has also been crucial to the
success of the business.

4.2. Socio-Economic Obstacles to Innovation
One of the largest inhibitors of innovation in Uber’s quest to expand to new markets has
been socio-economic hurdles. The low operational cost model which the company uses means
that it can undercut the competition in prices (Bacon, 2012). The lack of licensing costs as well
as low downtime means that Uber drivers earn more that their regular cab counterparts. This has
ensured reduced driver turnover. In addition, the company incurs less operational costs as the
drivers own the vehicles and are responsible for the cost of running them. This ensures high
margins for the company which can then transfer the benefits to the passengers in terms of
reduced commuter fares.
The low pricing model has however not augured well with other players. There have been
wide protests about the entry of Uber in many cities where it has launched. In addition the
insurance model has drawn great controversy as to the extent of the liability of the company.
This has prompted the company to be more conservative in its pricing. This has resulted in a
situation where Uber prices are dependent on the prevailing local cab prices in the particular city.
5. How Uber is a Disruptive Innovation in the Industry
Uber’s phenomenal growth in such a short span of time (since 2009) has caused it to be
labeled as a disruptive innovation by many. Operating in cities in over 60 countries, the company
is said to be approaching the $50 billion valuation. It has also led to the creation of a new model
of public transformation that has many other startups such as Lyft trying to emulate it
(Christensen, 2013). The creation of a whole new business model has been a critical component
to the labeling of the company as a disruptive innovation. This has resulted in the complete

change of the norm of the taxi industry as the incumbent players scramble to remain competitive
and relevant.
The widespread protest about the low cost base that Uber operates on is evidence of the
industrial disruption that the new format has occasioned. This has precipitated a paradigm
change to greater technology integration by the old operators for them to stay competitive. The
reaction to Uber’s disruptive entry into the industry has been diverse. While some operators
decry high obligatory costs, some have been forced to adopt the driver-passenger connection
technology that has been so critical in driving up Uber’s profitability.
Prior to the entry of Uber, the taxi industry was a highly controlled space with municipal
authorities and other bodies having a large influence on fares. This resulted in a situation where
taxi fares were pretty standard and inflexible. Entry of new players was also limited by
bureaucracy. This limited innovation and ensured there was limited product offering in the
market for customers who were looking for variety. However, Uber’s disruptive nature is limited
to the market segment under consideration. While low fares and short notice service are
attractive in the economy cab business, the same is not the case in the high end limousine
business where customers prefer prior reservation and cost is not much of a concern to them. As
such, the UberSelect. Which is tailor made for this sector has not had much of an impact on the
industry as other products.
All in all, Uber’s entry into the taxi market caused much realignment in the industry.
Through its differentiated product offering, low cost model and flexibility, it was able to cause a
mass exodus of both drivers and passengers from the conventional taxi business. This had
competitors reeling and looking for ways to keep up through innovation as calls to regulate the

new entrant did not gain traction. Uber completely changed the face of urban transportation and
changed the way the taxi business is done, forever

References
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