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Uber - Competing as Market Leader in the U.S. versus Being a Distant Second in China

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Added on  2021-04-09

Uber - Competing as Market Leader in the U.S. versus Being a Distant Second in China

   Added on 2021-04-09

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1 | P a g eUber: Competing as Market Leader in the US versus Being a Distant Second in ChinaIntroduction Technology is giving rise to many new services today. Uber’s rapid rise as a prominent, disruptive business model in the personal transportation industry is one of the best known which brought a revolution in taxi industry all across the world. Uber was founded in 2009 by Travis Kalanick (current Chief Executive Officer) and Garrett Camp (Co-Founder) in San Francisco. Its business model rested on the use of an app to call for a driver at any time and location. Its main American competitor is Lyft positioned itself as a more informal, cheaper and community-centered way to travel. But still Uber managed to capture most of the US market using their aggressive approach to get more drivers and popularity among customers. Uber was looking to expand into the Chinese market but not successful. After intense competition for Chinese market during two years, Uber decided to merge its Chinese operation with Didi Chuxing on August 1, 2016. The Problem Despite enjoying international success, Uber flopped in the Chinese market. •Uber failed to understand the local markets. China is an incredibly complex market that differs culturally, politically, and economically from the economic structures present in many other countries. it very tough for a western company to grab the market in a complex nation such as China. •For Western companies expanding to China, it is critical to align with the right local business partners or investors. Local companies typically have a better handle on the cultural, economic, and political environment, and can help foreign firms navigate the full set of risks they face. This is where Uber failed
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2 | P a g eand Didi succeeded, they alone tried to tackle a risky and a complex market in China. •Uber found itself in the position of the much smaller late entrant as a company called Didi had already started to capture the market well ahead of Uber making it difficult for Uber to expand. Although Uber gave the same offers to drivers and customers people didn’t have a reason to switch from Didi to uber as the race to grab market share was critical because it was understood that whoever got ahead first would remain the dominant player for a long time. And Didi did understood the local market’s needs well enough to carry out effective customer segmentation to target the differentiated needs in its product development. This allowed for the building of customer loyalty to the main corporate brand. •Uber was suffering a loss of over 1 billion USD per year in China, Unfortunately, Mr. Travis realized that it was near impossible for Uber to make inroads into the Chinese market without having the support from the government, and local businesses. Losses were running high and simply put, Uber could not cope up with such massive losses. Case Analysis Technology has made Uber’s business model possible, and consumer willingness to collaborate underlies its success. Technology is providing approaches for delivering existing services in more accessible, convenient, productive ways. Through technology Uber is able to link individual drivers, driving their own personal cars, with customers who are seeking a ride. The technology track’s locations, availability, payment, and evaluations of both drivers and riders, making the service extremely efficient and yet customized. Ubers brand power is very powerful and driving force for its business growth, is the brand recognition that reaches to over 40 million monthly users and the service operates in 633 cities worldwide with high brand equity and awareness. However, Uber China failed in creating a winner-take-all situation in the Chinese market, where there are huge potential customers who are difficult to get taxi, particularly in peak hours. The big difference in the market share implies
Uber - Competing as Market Leader in the U.S. versus Being a Distant Second in China_2

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