Innovation and New Technologies in Taxi Business

Running head: TAXI BUSINESS 1
Innovation and New Technologies
Student’s Name
Institutional Affiliation

TAXI BUSINESS 2
TABLE OF CONTENTS
Coverpage....................................................................................................................page 1
Introduction and pestel analysis..................................................................................page 3-4
Porter’s five forces.....................................................................................................page 5-6
SWOT analysis...........................................................................................................page 6-7
Phases of innovation model........................................................................................page 7-8
Technology Cycle.......................................................................................................page 8-9
Solution outline...........................................................................................................page 9
References..................................................................................................................page 10-11

TAXI BUSINESS 3
TAXI VERSUS UBER: Introduction
An incumbent can be defined as a firm in position with a larger market share; hence
dominates the market. A challenger on the other hand is another firm that tries to compete
with the incumbent. The taxi industry has dominated many markets for a long time thus
acting as a monopoly in the transport sector. However, uber being the challenger has
emerged, and tends to throw stiff competition to the taxi business. It seems like this
competition may lead to a collapse of the incumbent if action is not taken. Uber is a service
of ride-sharing whose operations are similar to the taxi business, although key differences
exist that makes one preferable over the other. This paper seeks to analyze the current
conditions of the PESTEL, SWOT, Porters five forces among others while providing a
solution to the same.
PESTEL Analysis
It is important to analyze the broad macro environment of the industry in order to gain
an overview of the Taxi industry. Studying the macro environment takes into account the
external and often dominant and uncontrollable factors that influence an organization
(Aguilar, 1967). PESTEL analysis studies the influence of political, economic, social,
technological, ecological and legal factors on an industry. Political factor establishes the role
of the state and political forces such as government policies, labor laws, tax policies among
others. These laws impact how organizations operate in the sense that organizations must
adjust to both current and future legislations. Taxi legislation becomes necessity for all taxis
putting an imperative role of the state on the business.
Economic factors such as growth of the economy, exchange rates and business cycles
play an important role in the growth of businesses. Changes in fuel prices, falling turnover
rates in the market and slowdowns in businesses are some major forces that affect the taxi

TAXI BUSINESS 4
industry. For example, an economic crisis can lead to constraints in consumer traffic, market
spending and cash flow problems (Barney, 1991). Social factors refer to changes in
demographics and cultures with some factors creating both opportunities and threats.
Concepts such as an aging population has gained attention over the years due to its influence
on the businesses. Additionally, companies are required to engage in corporate social
responsibility, which is key in building an understanding between customers and marketers
(Tenant, 2015)
Technology advancement opens opportunities for businesses, but in some instances, it
can be challenging to others. Those companies that greatly benefit from technological
advancement are those that become the frontrunners and adapt to such changes. This is
because technology keeps changing and making influence the production and consumption
processes, as well as, marketing efforts. Comparing Uber and Taxi companies shows that
Uber remains at the forefront in terms of technology giving it an added advantage in the
transportation industry. The world’s climate keeps changing and more climatic disasters are
expected to happen in the future leading to environmental consciousness for companies. Such
disasters result from issues such as pollution, waste and climatic changes. It is therefore key
to consider such issues of ecological nature in the analysis of the external environment.
Lastly is the legal environment, which lays out the legislative and regulatory constraints.
Such laws include consumer rights, service and product safety and laws governing
employment. The current situation for businesses in the transportation sector calls for new
legislation hence affects those in the industry.