Critical Issues in Business Management: Uber's Innovation and Strategy

This report provides a comprehensive analysis of Uber's innovation within the context of critical issues in business management. It begins by examining the nature of innovation brought by Uber to the private vehicle industry, focusing on its mobile application and technological advancements. The report then identifies the key drivers that encouraged Uber to innovate, including financial pressures, increased competition, and shifting customer expectations. Furthermore, it critically evaluates the factors that enabled Uber's innovation, such as employee empowerment, environmental scanning, and customer surveys. The report also assesses the extent to which Uber is a disruptive innovation, highlighting its impact on the taxi industry and its unique business model. Through this analysis, the report offers insights into Uber's strategies, challenges, and its overall influence on the transportation sector, providing a detailed overview of its operations and innovative approaches.

CRITICAL ISSUES
IN
BUSINESS MANAGEMENT
1

Table of Contents
INTRODUCTION................................................................................................................................3
1. Analysing and discussing the nature of innovation brought by Uber in private vehicle industry.
.........................................................................................................................................................3
2.) Identify and analyse main driver encouraged Uber to innovate in the industry.........................4
3.) Critically evaluate the factors that enabled Uber to innovate in the industry............................5
4) Evaluate the extent to which Uber is a disruptive innovation in the industry.............................7
CONCLUSION....................................................................................................................................7
REFERENCES.....................................................................................................................................9
2

INTRODUCTION
Business management is method of designing the strategies, plans, polices and procedure
that provide direction to company on routine and long term basis. It further includes coordinating,
employees, finance, technical and other material resources to attain overall goals of company. There
are large numbers of issues that can be faced by company during business management. In this
report,various aspects of critical issues in business management will be studied in the context of
Uber. It is an American global online transportation network company founded in 2009 and
headquartered in San Francisco. The entity is known for providing taxicab, vehicle for hire to its
customers. The organization is known for its innovation which means introducing new ideas, fine
solutions or methods that meet new and emerging needs of market. In this report, discussion will be
provided about nature of innovation brought by Uber in taxi and private hire vehicle industry.
Thereafter, the key drivers that encourage Uber to innovate in this industry will be identified.
1. Analysing and discussing the nature of innovation brought by Uber in private vehicle industry.
The Uber has revolutionized the taxi cab business by developing mobile application which
permit the users with Smartphone to proposing a trip request, which is programmed by software and
that request is automatically send to the driver of company located nearly to customer and
informing it about the location of consumer. The mobile application also help in calculating the fare
and transfer the payment to the driver.
1. Focus of innovation: The core competency of Uber lies in its efficiency to innovate and
infuse new ideas into business. The main consideration of company is on technology push.
With this aspect, company makes investment n research and development areas so that new
technology can be evolved which further become base of development of new products
(Aplin and et.al., 2015.). However, Uber in future consider market pull strategy where
market competition or changing needs of customers forces entity to develop new product.
2. Levels of innovation: There are various phases of innovation that can be focussed by Uber
to stay ahead of its rivals. Such as, entity can consider incremental innovation which enables
entity in building upon present knowledge and resources (Billig and Waterman, eds., 2014).
The present technology is exploited as it involve less cost. The radical innovation means
input new knowledge and resources in business. However, it may result into loss of value of
present competency. Also, the risk of uncertainty is more in radical innovation as compared
to incremental one. The sustaining technology means encouraging enhance product
performance. While, disruptive technology is aspect that leads to development of new
market and value network leading to discontinuance of present market.
3

3. Type of innovation: The innovation can be in different areas which are discussed as follows:
 Product: In this aspect, new and features can be incorporated into product which further
lead to its improved functionality. Uber modified its product so that customer not face any
type of problem at the time of travelling.
 Service: The innovation in service areas help in supporting and enhancing the value of
product (Coccia, 2016). Like, Uber locate the driver located nearest to customer so as to
reduce waiting time of consumer.
 Process: This aspect enable company to use trademarks or superior ways to perform various
functions. Uber can provided all its services to customer in systematic process so that its
customer not face any type of issues. Further. It focus on fulfilling the needs and demand of
its customer on time so that it can increase the satisfaction level of its customer.
 Strategy: It refers to tactics that are used by entity to develop uniqueness in its offerings.
Their are some disruptive strategy of innovation that is as follows;
Elimination of various transaction costs:
In the taxi industry the car rentals and car hires have monopoly on the transport industry.
This help organization in setting their own fair rates and charges. Uber has made some changes so
that transaction cost no longer exist. If any car is reserves by customer through mobile app then
customer not need to pay any extra charges.
 Doblin group of framework: It is important aspect that states that the innovation can be
classified into ten types that further help organization in bringing creativity and new
concepts into their business (Edison, Bin Ali and Torkar, 2013). The ten types framework is
sthree color-coded categories,configuration, offering and experience. It is represented as
follows:
4

2.) Identify and analyse main driver encouraged Uber to innovate in the industry
The main drivers that encouraged Uber to innovate in the industry are as following
 Financial pressure to decrease costs, increase efficiency do: Uber demand is increasing
among the people because it provide a services in low price at all over the world. Every day
more then 2 500 cities all over the world (Sultan, 2013). It is providing a best service at fair
prices which is encourage people to take service form uber.
 Increase competition: With the increasing competition Uber is trying to provide a various
kind of services which is different form its competitor. It always try to provide a safe,
reliable rides to its customer with low price.
 Shorter product life cycle: Uber is trying to provide a best type of services as compared to
others (Brynjolfsson and McAfee, 2012). New technology and competitor is forcing them to
develop a product faster. It always produce a shorter life cycle products so that, after some
time they can innovate new product
 Value migration: Uber is using a marketing strategy in which it is focusing on the needs of
customer and develop the new product for meeting the needs of the customer. It is a process
in which organization is migrating to a new way for operating its business and for knowing
what is happing in market.
5

 Rising Customer expectation regarding services and quality: Uber is innovating a new
service so that it can fulfil the Customer expectation. It provide safe and secure driving to its
Customer (Cuerva, Triguero-Cano and Córcoles, 2014.). People demand strong security
because they travel long distance. Uber use technical and legal means to secure its customer.
 Shifting demands of customers: The trends and developments in technology have led
consumers to shift their preferences from one company to another. As scientific
developments are introduced in the current functioning of the organisation, customer
acquisition is strengthened. People are attracted towards new features and smart technology.
Hence, this becomes one of the key drivers of innovation.
3.) Critically evaluate the factors that enabled Uber to innovate in the industry
There are various factor that enable and hindered Uber to innovate within the industry:
Individual: Employee empowerment and engagement trust: The trust of Customer enables Uber to
innovate new products and services. Employee of uber is bringing their own level of
empowerment and confidence in their abilities. st of the Customer by innovating new
services.
 Training: employees are provided training facility, so that they can provide best services to
its customer. In training facility they learned how to behave with customer and way of
treating them in well mannered. (Davila, Epstein and Shelton, 2012.) If employee not
behaves well with customer then it effects the Uber. It cannot innovate new services because
its impression can fall in front of other
Project: A diverse team of mix of project team members, conversation : Working in a team enable to
suggest new ideas an views won a particular project enables to bring innovative services (He
and Tian, 2013). While some time conflict occur at the time working in a team which
became a hinder for Uber to innovate. Team members are with different nature sometime not
respect each other ideas and view which effects the Uber. Rules and management; There are various rules which is necessary to follow by the
employees which can create a barrier in their innovation. If there is no strict rule and
working arrangement is flexibw services for its Customer.
 New ideas withholding of criticism to a later point in the process: There are many new ideas
which can become a criticism for the organization to innovate new services (Bock, and
et.al., 2012). If there are no experienced workers then it become tough to fulfil he demand of
6

the Customers.
Organization: Environmental scanning: Environmental scanning means utilization of information about
occasion, patterns, trends etc (Billig and Waterman, eds., 2014). in the organization internal
and external environment. With he changes in external environment it becomes more
competitive for Uber to to innovate new products and services. Surveying customer needs :uber can survey the needs of customer and innovate products and
services according to their needs and demand. Through survey it become easy for the Uber
to provide a services (Mahr and Lievens, 20rome difficult to fulfil the needs of the customer
because of less experienced workers
 Encouraging new ideas; a new ideas can be taken from the employees it helps in innovating
a new products. By conducting a brainstorming session all workers idea came to know by
the organization and it can make new innovative products and services.
Environmental Geographical co location; Uber can select best geographical area that enable them to
provide a service to its Customer on time. If its business locate far for the public area that
many problems can be created and much time consume of the customer.
 The level of competition and extent of customer options: the level of competition is
increasing which is becoming a barrier in the success of Uber. It is required to provide a
services which is unique form its competitor (Aplin and et.al., 2015). They need focus on
innovating new services and try to build a relation with customer. If there are too many
options available to the customer than they will chose which will be of high quality and
reasonable for them.
Apart from all these factors, the major idea that enabled Uber to develop in the online taxi
renting industry is need of innovation and curbing the monopoly of other competitors. This urge to
acquire more customer share and develop a strategic position in the market has forced the company
to take up particular measures in building innovation.
4) Evaluate the extent to which Uber is a disruptive innovation in the industry.
Disruptive innovation is an innovation strategy which is adopted by numerous organizations
to create new market and value network in order to disrupts the existing market. Referring the case
study of Uber, it had taken various disruptive innovation actions and strategies to achieve their
targets. One of the main disruptive innovations that Uber took in taxi industry is safer experience.
Moreover, Uber’s unique network business model also can be considers as disruptive act which
7

aimed at increasing optimum utilization of advanced technological platform to meet their targets. In
such respect, less margin cost per ride enable Uber to generate better turnover and profitability by
attractive more and more customers (Disruptive innovations in Uber, 2016). In addition to this,
Uber also assured customers safety and insurance. This step has been taken by the company when
one of the taxi driver caused a serious injuries to a girl, Sophia Liu. As a result, she claimed against
the driver so as to get compensation. In order to eliminate these issues in future period, Uber
introduced insurance policy and accept liability towards any kind of injuries and loss to the
customers.
Apart from this, Uber also delivered convenience facilities to their audiences at lower prices
enabling business to accomplish targets easily. In such respect, high affordability as compare to the
local taxis across globe makes company able to charge lower prices in return for the taxi facilities
offered. Besides this, Uber’s taxi reservation facilitations in advance for a specified time also assist
consumers to go other places and destinations. In addition to the low cost value proposition, Uber
also introduced innovative service that is UberPOOL to ensure maximum utilization of its
technology platform and thereby maximize total profitability as well (Clayton and et.al., 2015). This
disruptive innovation also gives assistance to Uber to charge dynamic surge pricing.
Despite this, it also launched UberX after UberBlack at such places where there is a less
population density. Uber black car services was also proven as a disruptive actions that boosted
company’s reputation and declined its marketing cost so as to attract more and more consumers and
drive high turnover and profitability. Furthermore, company’s innovative business model presented
that Uber use advanced technology based on GPS of mobile phones to facilitate all the drivers.
Moreover, it also assists Uber to eliminate the middleman in the taxi industry.
Disruptive innvoation: The use of technology for developing a market with help of destructive
innovation. Companies abolish one particular market and develop an entirely new market with same
target customers but through new products and services.
Use of cutting edge technology: the mobile app strategy is one of the best strategy which Uber used
for grabbing the attention of customers.
CONCLUSION
From the above report it can be concluded that Uber focus on innovation and its main
consideration is on advance technology. It provides best services as compare form its competitor at
reasonable price. They more focus on the safety and security of the customer, Uber provide a safe
driving to its customer. Further it can be concluded that there are various factor that enable and
hinder innovate of Uber such as employee empowerment, geographical co location etc. there are
8

main drivers of innovation for Uber that is increased competition and value migration.
9

REFERENCES
Books and Journals
Aplin, L. M. and et.al., 2015. Experimentally induced innovations lead to persistent culture via
conformity in wild birds. Nature. 518(7540). pp.538-541.
Billig, S. H. and Waterman, A. S. eds., 2014. Studying service-learning: Innovations in education
research methodology. Routledge.
Coccia, M., 2016. The source and nature of general purpose technologies for supporting next K-
waves: Global leadership and the case study of the US Navy's Mobile User Objective
System. Technological Forecasting and Social Change.
Edison, H., Bin Ali, N. and Torkar, R., 2013. Towards innovation measurement in the software
industry. Journal of Systems and Software. 86(5). pp.1390-1407.
Sultan, N., 2013. Knowledge management in the age of cloud computing and Web 2.0:
Experiencing the power of disruptive innovations. International Journal of Information
Management. 33(1). pp.160-165.
Brynjolfsson, E. and McAfee, A., 2012. Race against the machine: How the digital revolution is
accelerating innovation, driving productivity, and irreversibly transforming employment and
the economy. Brynjolfsson and McAfee.
Cuerva, M. C., Triguero-Cano, Á. and Córcoles, D., 2014. Drivers of green and non-green
innovation: empirical evidence in Low-Tech SMEs. Journal of Cleaner Production. 68.
pp.104-113.
Davila, T., Epstein, M. and Shelton, R., 2012. Making innovation work: How to manage it, measure
it, and profit from it. FT press.
He, J. J. and Tian, X., 2013. The dark side of analyst coverage: The case of innovation. Journal of
Financial Economics. 109(3). pp.856-878.
Bock, A. J. and et.al., 2012. The effects of culture and structure on strategic flexibility during
business model innovation.Journal of Management Studies. 49(2). pp.279-305.
Mahr, D. and Lievens, A., 2012. Virtual lead user communities: Drivers of knowledge creation for
innovation. Research policy. 41(1). pp.167-177.
Hock, M. and Clauß, T., 2016, June. Knowledge Management and the Ability to Innovate the
Business Model. In ISPIM Innovation Symposium (p. 1). The International Society for
Professional Innovation Management (ISPIM).
Online
10

Clayton, M and et.al., 2015. Uber’s Distruptive Innovations. [Online]. Available through: <
https://hbr.org/2015/12/what-is-disruptive-innovation>. [Accessed on 5th November 2016].
Disruptive innovations in Uber, 2016. [Online]. Available through: <
http://www.christenseninstitute.org/blog/uber-disruptive-innovation-and-regulated-markets/>.
[Accessed on 5th November 2016].
11