Uber: Critical Review of Disruptive Innovation, Safety, and Impact

This essay critically analyzes Uber's impact on the taxi industry, examining whether it represents a disruptive or sustaining innovation. It explores the controversies surrounding Uber, including bans in various countries due to safety concerns and unfair trade practices. The essay also discusses Uber's carpooling initiative, its dynamic pricing strategy, and its role in generating employment. While Uber offers convenience and flexible payment options, the essay highlights concerns about driver background checks, safety, and employee retention. The analysis concludes by weighing the advantages and disadvantages of Uber's business model, considering its effects on both customers and drivers. Access more essays and study tools on Desklib.

Is Uber good or bad?
Critical Review

Contents
Introduction................................................................................................................................3
Disruptive innovation or sustaining innovation.........................................................................3
The Uber ban..............................................................................................................................4
Promoting Car Pool....................................................................................................................5
Safety..........................................................................................................................................5
Employment through Uber.........................................................................................................6
Ease of payment.........................................................................................................................7
Profitable business structure......................................................................................................7
Recommendations and conclusion.............................................................................................8
Bibliography...............................................................................................................................9

Introduction
Uber technologies Inc. is a recent development in the taxi market. Established in the year
2009, Uber has transformed the shape of taxi industry throughout the world. At present, the
company operates in over 633 cities across the globe. The brand offers customers with a taxi
services that is made available to them through a mobile application. With the help of the
website, customers can create an account and book a cab which will arrive at their doorstep at
their desired time. Payment to the driver can be made via online wallets or in cash. The
organization has completely eliminated the culture of waiting for taxis and hailing cabs in
order to reach their destination.
The application was devised with the aim to bridge the gap between travellers and drivers.
The business model is new and one of a kind and has proved largely beneficial for the growth
of industry. As a firm, Uber consistently aims to innovate new strategies in order to reach out
to their customers and deliver value. This report aims to critically analyze the advantages and
disadvantages of the taxi firm, Uber.
Disruptive innovation or sustaining innovation.
A disruptive innovation is any innovation that creates a new market and disrupts an existing
one. Since its inception, the brand has changed the shape of the taxi industry. There has been
a lot of ongoing debate regarding the status of Uber as a disruptive innovation. It is important
to note that growing quickly and being disruptive are two entirely different things1. Products
or services that target existing customers are better known as sustaining innovations.
Uber started its services as a high end car service. Since the beginning Uber faced a direct
competition with several taxi businesses across the world. There are important questions that
need to be answered in order to understand if a particular business is a disruptive innovation
or not2. Many scholars believe that Uber is not an example of disruptive innovation because it
does not offer anything substantially different. Even then, the contribution of the brand
cannot be undermined owing to the level of convenience and technology it has introduced to
the industry.
1 Judd Cramer and Alan B. Krueger, ‘Disruptive Change In The Taxi Business: The Case Of
Uber’ (2016) 106(5) American Economic Review.
2 Thorsten Frierk, Disruptive Innovation (GRIN Verlag GmbH, 2012).

Upon entering the industry, Uber has been widely accepted across the globe because the
brand has offered people with a lot of convenience. At the same time, the company has
provided a source of employment to millions of drivers as well. Today customers do not need
to worry about the weather or time in order to get a taxi. They can simply book a cab through
a single click on their mobile phones and the cab would be made available at their doorstep.
The Uber ban
Since its establishment, Uber has faced several protests from various taxi associations
throughout the world. Certain governments have done so to protect the already existing
players of the taxi industries3. On the hand, in some countries, Uber has demonstrated a lack
of corporate ethics and responsibility. At present, there are various legal battles that the brand
is fighting. Several taxi drivers have protested against the use of Uber.
In Bulgaria, Uber was suspended post accusations of “unfair trade practices”. The company
failed to meet the minimum requirements of legislations in order to register as a taxi service.
Denmark law has made it compulsory for taxi drivers to cover certain taxi meters on a
monthly basis. This law does not suit Uber’s business model and hence the brand was forced
to pull out of the market4. Even in Italy, Uber is partly banned. The taxi company has been
accused to constitute unfair competition. Hence Uber is not even allowed to advertise in the
Italian market. Even in India Uber faced a lot of problems after drivers were accused of
raping their passenger. Post that Uber is partly banned in India5.
A severe disadvantage of Uber brand is that the organization does not have stringent
background check policies for all its drivers. The problem with expanding in several
countries is that it is difficult to adhere to guidelines, laws and policies of all these countries.
Because of this, Uber has been banned in over 35 countries across the world.
3 Timothy Revell, ‘Black Cabs Beat Uber On Speed In Taxi Races’ (2017) 233(3109) New
Scientist.
4 These Are All The Places In The World That Have Banned Uber (2018) The Independent
https://www.independent.co.uk/travel/news-and-advice/uber-ban-countries-where-world-
taxi-app-europe-taxi-us-states-china-asia-legal-a7707436.html.
5 Curt Devine and Drew Griffin Sara Ashley O'Brien, ‘CNN Investigation: 103 Uber Drivers
Accused Of Sexual Assault Or Abuse’ (2018) CNNMoney
https://money.cnn.com/2018/04/30/technology/uber-driver-sexual-assault/index.html.

Promoting Car Pool
In the face of fierce competition, it is imperative that businesses work towards differentiating
themselves in order to gain a competitive advantage. The foremost strategy adopted by Uber
was the Uber pool service. This service allowed customers going to nearby destinations to
share their cabs and pay half the price for their trip. This proved advantageous for customers
as well as for the environment. Customers get to reach their destination at a lesser price. In
fact, various customers consider Uber pool to be an effective way to enhance their social life.
On the other hand, some people have shown resistance towards taking pool cabs. This is
because they feel a lot of apprehensions regarding the safety of passengers while travelling by
Uber pool. In order to overcome this, the brand must consistently spread awareness through
social media and traditional marketing platforms. Uber must also ensure the safety of its
passengers.
On the environment front, car pooling has been promoted by several governments across the
globe6. Car pooling through Uber is an excellent initiative by the brand to contribute towards
the environment and work towards reducing high levels of air and noise pollution. This
initiative of the brand is highly effective and has proven results across various countries of
the world.
Safety
Uber’s safety policy has been in question since a long time now. There are several safety
measures which have already been taken by the brand. However, increasing efforts need to be
put in order to ensure further safety of customers as well as drivers. The primary need is to do
a complete background check and a police verification of all the drivers that are associated
with Uber. This would ensure that people with any form of criminal background will not take
up this job thus ensuring the safety of customer.
Secondly, all the customers are also requested to rate the driver after their trip ends. A lot of
incentives and bonuses of drivers largely depend on their overall ratings. Customers are asked
to give these ratings on the basis of driver behaviour and mannerisms. Such efforts also
ensure that the driver behaves well with their customers and ensures that customers have a
positive travelling experience with Uber.
6 Jagan Jacob and Ricky Roet-Green, ‘Ride Solo Or Pool: The Impact Of Sharing On Optimal
Pricing Of Ride-Sharing Services’ (2017) 21(1) SSRN Electronic Journal.

Despite such efforts, Uber’s safety has been questioned several times. Drivers have been
accused of rapes and other forms of misconduct. Customers have even complained about
feeling unsafe with the prospect of taking pool services. Therefore, Uber must introduce a lot
more stringent strategies in order to ensure safety of the customers.
Employment through Uber
A major advantage of Uber is the level of employment the brand has generated across the
globe. Uber drivers are paid higher than other taxi drivers from different parts of the world.
Uber completes approximately 15 million rides per day which suggests that the brand has
recruited over 2 million drivers that are associated with Uber right now. There are several
incentives and bonuses that drivers can make while their association with Uber above and
beyond their salaries. This provides a lucrative alternative for drivers towards working with
Uber.
Even despite these efforts, the disadvantage faced by the organization is a very high rate of
attrition. Rate of attrition refers to the number of employees that leave an organization for any
particular reason in a given year. Uber unfortunately does not offer a long term job security to
its drivers. All the drivers associated with Uber are freelancers. They have flexible working
hours and get paid per ride that they take. This is a risky proposition for the driver in terms of
employment. Therefore drivers are not willing to work with Uber for longer durations.
The contribution of Uber in any economy by providing high level of employment cannot be
undermined. There are millions of drivers associated with the brand. Retaining employees is
an important aspect of effective human resource management of any organization. Uber must
introduce unique strategies for improved levels of employee retention in order to ensure long
term and sustainable relationships with employees throughout the globe.
Ease of payment
Uber has adopted a dynamic pricing strategy. This strategy ensures that the price of a product
or a service is not fixed and fluctuates on the basis of demand and supply7. Uber technologies
Inc. is focussed on bridging the gap between drivers and travellers. Therefore Uber has also
adopted this dynamic pricing strategy wherein the price of the ride fluctuates on the basis of
7 Liteng Zha, Yafeng Yin and Yuchuan Du, ‘Surge Pricing And Labor Supply In The Ride-
Sourcing Market’ (2017) 2 Transportation Research Part B: Methodological.

demand from customer end and supply for driver end. This strategy is unique to the business
model.
The advantage of this unique pricing strategy is that drivers can earn more during a peak
season while customers can get to travel at a lesser price during lean season. A major benefit
of travelling by Uber is that the mobile application depicts the exact fare to the customer in
advance. After getting a clear idea about the price, the customer can decide if they wish to
avail the service or not. Customers can also decide to pay online or by cash.
Uber has ensured an ease of payment to the customers. Taxis run by meter in most countries.
However, there are certain countries where the governments have not fixed any meter or cost
per kilometre. In those cases, Uber is sign of increased awareness because customers can now
know the amount they are going to pay beforehand.
Profitable business structure
When Uber was first launched, the taxis already existed in the market. So it is not that Uber
created a new market. However, Uber as a firm used technology and innovation in order to
introduce a better business process for the same service. Uber has bridged the gap between
travellers and drivers. The business structure on the whole is highly profitable and has created
a lot of convenience for customers as well as drivers. Drivers can rest assured that they will
get a fixed pay while customers can avail taxi service from the convenience of their homes
through a single click on their mobile phones. Even payment structures are highly flexible
and very expedient. Customers continue to pay lesser for their travel while drivers are earning
more per ride. The current growth rate and reach of Uber has also made it a trusted platform.
Hence drivers also feel safe while associating with a brand as strong as Uber. The entire
business process is enabled ease in the process of booking cabs. Similarly, the whole process
is a lot more efficient and better managed. Drivers are provided with mobile phones with
active GPS systems so that they can reach the desired destination in a hassle free manner.
Their salaries as well as incentives are credited into their accounts on time. Lastly, drivers
and customers are both rated on a scale of one to five by the other party. This helps in
ensuring safety for both.

Recommendations and conclusion
There are certain aspects of the business that are not working well for the firm specifically
with regards to safety and legal issues faced by the firm. In order to address the same in an
effective manner, Uber must introduce stringent policies for customer safety. Employees at
Uber and driver’s interests must also be safeguarded and efforts must be put in order to retain
drivers and bring down their levels of driver attrition. The growth in technology must be
adopted by the business in order to continue delivering value to customers as well as drivers.
Efficient stakeholder engagement and effective marketing strategies are essential in ensuring
long term growth and sustainability of the firm.

Bibliography
Cramer, Judd and Alan BK, ‘Disruptive Change In The Taxi Business: The Case Of Uber’
(2016) 106(5) American Economic Review
Frierk, T, Disruptive Innovation (GRIN Verlag GmbH, 2012)
Jacob, Jagan and Ricky RG, ‘Ride Solo Or Pool: The Impact Of Sharing On Optimal Pricing
Of Ride-Sharing Services’ (2017) 21(1) SSRN Electronic Journal
Revell, Timothy, ‘Black Cabs Beat Uber On Speed In Taxi Races’ (2017) 233(3109) New
Scientist
Sara AB, Curt D and Drew G, ‘CNN Investigation: 103 Uber Drivers Accused Of Sexual
Assault Or Abuse (2018) CNNMoney’ https://money.cnn.com/2018/04/30/technology/uber-
driver-sexual-assault/index.html.
‘These Are All The Places In The World That Have Banned Uber’ (2018) The Independent
https://www.independent.co.uk/travel/news-and-advice/uber-ban-countries-where-world-taxi-
app-europe-taxi-us-states-china-asia-legal-a7707436.html.
Zha, Liteng, Yafeng Y and Yuchuan D, ‘Surge Pricing And Labor Supply In The Ride-
Sourcing Market’ (2017) 2 Transportation Research Part B: Methodological