Analyzing Uber's Ethical Issues: A Stakeholder-Focused Case Study

This case study delves into the ethical issues surrounding Uber Technologies Inc., particularly focusing on the conflict between CEO Travis Kalanick and Uber drivers, which stemmed from the company's strategy of prioritizing low prices for customers at the expense of driver earnings. The incident, captured in a viral video, exposed Kalanick's unprofessional behavior and raised concerns about the company's ethical values and its impact on key stakeholders, including drivers and investors. The case study further explores the steps taken by Kalanick to address the situation, including apologies and financial compensation, and ultimately his removal from the CEO position due to mounting pressure and allegations. It concludes that business ethics and social responsibility are crucial for maintaining a company's reputation and avoiding serious consequences, regardless of its financial success. Desklib provides a platform for students to access similar case studies and solved assignments for academic assistance.

ACCOUNTING IN SOCIETY

INTRODUCTION
Uber Technologies Inc. (Uber), headquartered in San Francisco, California, is a fast
transportation services provider just through a click on the mobile device. Being one of the
leading companies in the taxi industry, it has advanced in its scale of operations such as bicycle
sharing, food delivery, hiring services, ride sharing service services, etc. Currently, Uber has its
operations in 785 areas, majorly in metropolitan places throughout the world. Its platform is
totally based on e-commerce business, as it id accessible through websites and mobile
applications (Atkinson, 2012).
Being one of the world's leading private companies, Uber is in a period of increasing revenues
and expanding its operations into new markets. It is working towards bringing an IPO very soon
in the year 2019 and thus, is focusing on reducing its losses by disconnecting markets showing
under performance and therefore, improving its operating statistics. According to Pitchbook, the
company, for the year 2017, being one of the most valuable startup of US, has a valuation of
around $68 billion which is around $37 billion more than the second most valuable startup, that
is, Airbnb at $31 billion (Berry, 2009).

CASE STUDY
As already stated above about the high valuable reputation that Uber enjoys, it’s a company
known for providing the best to its customers. However, in operating this business, the
stakeholder that Uber is largely dependent on but it still ignores is Uber Drivers. Uber followed a
strategy of offering rides to its customers at a low price which adversely resulted in lower
margins for drivers with no special benefits or tipping policy which eventually brought drivers
under a pressure to escape their jobs (Girard, 2014). The issue wasn't so much in limelight until
and unless a video got leaked on social platform that involved a fight between the Uber's CEO,
Travis Kalanick and an Uber driver.
Kalanick always preferred riding in black uber cars which was introduced in 2010. Seated on the
backside of the car and having a pleasant conversation with two of his female friends, the
conversation later on changed into a heated argument when his uber driver, Fawzi Kamel, talked
about sufferings that the uber drivers are facing because of Kalanick's strategy. Kamel claimed of
losing $97,000 and turning into a bankrupt because of Kalanick's strategy of dropping prices and
changing it frequently enough on a daily basis as in from $20 to $2.75. The video brought the
Kalanick's image as a ruthless and short tempered man who literally insulted the uber driver with
his statements. His statements like “Some people don't like to take responsibility for their own
shit. They blame everything in their life on somebody else. Good luck!” got so viral that it
clearly held a question on his image and on the reputation of the company as a whole (McLaney
& Adril, 2016).

STAKEHOLDERS AFFECTED
Considering social platform to be strong enough to fame or defame a person or a company, it is
better to behave professionally because within seconds, poor actions could go viral on YouTube
and other sites (Parrino, 2013). An unprofessional behavior from the CEO brought a lot of
questions in the minds of all those stakeholders who were impacted by such an ethical issue. This
can discussed point wise in the following manner:
 Drivers: It is matter of serious concern that drivers saw their respect in the eyes of the
company they are working in. They were hurt with the fact that the CEO has plans for
cutting down the competition, providing cheaper services to their customers but didn't set
his ideas and plans from the driver's point of view. The drivers, being one of the most
important part of Uber operations, were left with no other option but escaping their job
and switching to something better.
 Investors : Being such a valuable company at around $70 billion, investors who have
invested around $14 billion are highly affected by Uber's operations, reputation and
image in the market. The video brought a lot of criticism from the driver’s community,
customers and questions on the ethical values of the company (Seal, 2012). Followed by
a number of other allegations on Kalanick, investors doubted his professional image and
thereby, a pressure was being made on Kalanick to drop from his CEO position.

STEPS TAKEN & RESULT
The CEO, Travis Kalanick, apologized Kamel and all its stakeholders using a public platform
where he clearly admitted that he needs leadership help and he needs to grow up as a leader. He
statement "To say that I am ashamed is an extreme understatement" clearly proves the level of
criticism the company suffered because of his unprofessional behavior with the driver who
works for his own company (Siciliano, 2015).
After the video became viral, the initial decision Kalanick took was apologizing this one time
driver privately. However, the matter wasn't so insignificant instead the meeting that took place
after this incident ended Kalanick to decide to give stock to the driver. However, his idea was
considered irrelevant as per the situation because Uber cannot compensate through giving its
own shares to that every driver who felt mistreated. The final decision was executed, that is,
Kalanick at the end paid $200,000 to Kamel out of his own packet.
The business has been already impacted adversely by the video that the decision didn't put so
much impact. Followed by a number of other allegations, the CEO was finally removed from his
position in the later period. It was majorly out of pressure from the investors who believed that
the company needs to be in the hands of someone who is responsible and not associated with so
many allegations as it keeps on hurting the reputation of the company (Taillard, 2013).

CONCLUSION
Business ethics are more like social responsibility of a corporate to follow its practices, to have a
defined set of moral principles and ethical values so as to meet up with the ethical dilemmas that
might arise during normal period of a business. Business ethics are more like the behavior of a
business. It involves an individual's actions towards its people depending directly or indirectly on
the company.
Considering the perception with the above case study, no matter what so ever the decision is
being made, an allegation on the image cannot be easily removed. The CEO's unprofessional
behavior summed up with all other allegations forced him to drop out from his post. No matter
what reputation a company enjoys or the money it is making, when it comes to ethics, any kind
of unprofessionalism will drag the entire company into serious consequences.

Bibliography
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Berry, L. E. (2009). Management accounting demystified. New York: McGraw-Hill.
Girard, S. L. (2014). Business finance basics. Pompton Plains, NJ: Career Press.
McLaney, E., & Adril, D. P. (2016). Accounting and Finance: An Introduction. United
Kingdom: Pearson.
Parrino, R. (2013). Fundamentals of Corporate Finance, 2nd Edition. Milton: John Wiley &
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Seal, W. (2012). Management accounting. Maidenhead: McGraw-Hill Higher Education.
Siciliano, G. (2015). Finance for Nonfinancial Managers. New York: McGraw-Hill.
Taillard, M. (2013). Corporate finance for dummies. Hoboken, N.J.: Wiley.