Uber's Use of Information Systems - Essay Sample

Uber's early achievement depends on its superior consumer experience, facilitated by a smartphone application. Customers order a taxi and settle the charges smoothly through their smartphones (Shtal et al., 2018). The second novelty involves a grading system for taxi drivers. Consumers rate the services from the drivers in Uber's application, and car drivers with a rank below a specific level get removed from the system. While these improvements gave Uber a market advantage, competitors can imitate them and deny the company a competitive advantage (Shtal et al., 2018). Uber faces competition from other companies, such as Gett, Lyft, MyTaxi, and Didi Chuxing, to local firms like Didi Austin in Austin, Texas. From emerging companies like Singapore-based Grab in the industry, Uber faces a myriad of challenges in ensuring its business remains sustainable in the future.

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The firm has commenced investment in urban air transport and self-driving technology. The data get stored about every ride taken plus when the driver has n passenger. Also, this information received gets kept and weighted to envisage prices and supply and demand. Besides, the report helps the company analyze how transportation is managed in various cities. It makes the company regulate traffic jams and other primary challenges (Ojo, 2017). Also, the technology collects data on its drivers, their vehicles, and locations.

Porter's Five Forces Analysis on Uber

Industry Rivalry and the Threat of New Entrants

The business strategy for Lyft and Grab seems similar to Uber's regarding technology. Other competitors include Didi Chuxing, Curb, and Ola. Markets, such as the Middle East and Asia, Uber encounter direct and aggressive competition with Careem, which runs similar trade to Uber employing the same information system (Dawes, 2016). These challengers compete on varied factors, such as price, customer contentment, reliability, and comfort. The industry rivalry for Uber remains relatively high. The expenses, business model, and hurdles to entry remain relatively low for other entrants (Teo et al., 2018). The technology used by Uber can also get imitated easily, posing a high threat of new entrants into the taxi sector.

The threat of Substitutes, Bargaining Power of Suppliers, and Bargaining Power of Buyers

The substitutes for the firm involve other taxi companies offering different forms of technology, giving the company indirect competition (Teo et al., 2018). Different types of public transport employing the same or various technology remain a threat to the company's commercial deals and market share. Other domestic providers can get used by passengers and reduce Uber's revenues. Uber outsources its cabs and the services of drivers giving the suppliers an added advantage.

Also, Uber has to handle the suppliers that it outsources since, in case of unprecedented occurrences, it directly impacts the company's brand name and image. Consumers taking advantage of alternatives available within the sector have extra market power as they can choose from various available options (Teo et al., 2018). Regarding the information system, there exist several applications that buyers can choose from, making the Uber application to remain disadvantaged (Teo et al., 2018).

PESTLE Analysis of Uber

Political, Economic, and Social Aspects

Federal and state governments across the globe have no clear understanding of the Uber model, making it unable to regulate operations. The Transportation Network Companies (TNCs) regulations remain unclear and hence get flouted severally (Wyman, 2017). Besides, security breaches associated with government policies remain a challenge for Uber since the drivers remain non-employees of Uber, only having a contract with the company (Alemi et al., 2019). The rivalry between Uber, Lift, Grab, and other providers have attracted political heat in the transport industry.

Uber has a dynamic pricing model that remains economically sustainable as it has more advantages over the fixed price (Wyman, 2017). The new pricing model enables the drivers to offer flexible services to passengers in peak and unfavorable times, creating an immense competition to Lyft and Grab (Alemi et al., 2019). Uber provides multinational operations, a diverse workforce, economical pricing, and reliable services (Wyman, 2017). Besides, the company offers flexible services during a crisis and work ethics. However, the company has encountered several controversies linked to competition, human resources, laws, and background checks of its drivers.

Technology, Legal, and Environment Aspects

The advancement of internet technology penetration and growing smartphone users have enhanced the Uber business model. The introduction of consumer engagement through social media, self-driving vehicles, independent cars in the future will enhance Uber's trade (Wyman, 2017). Uber faced legal issues concerning minimum wages and human resource issues. In 2015, California state transport regulators ordered that Uber incorporate its drivers as staff and not contractors (Alemi et al., 2019). France also charged Uber with unlawful driving without proper licenses. Uber pool provides environmentally friendly programs in different countries across the globe. Sustainability issues have grown about ride-sharing provisions like Uber, Lyft, and Grab (Wyman, 2017). Uber initiated a pilot program named Uber Green, where passengers can order a green drive.

Comparison between Uber, Grab, Lyft, and Local Taxis

Ride-sharing applications like Uber, Lyft, and Grab enhance the rider's experience than local taxis because they continue to remain easy to use, offer upfront pricing, and gives a detailed GPS direction. Moreover, they provide trust and safety of travel, includes accessibility alternatives, and remain highly reliable than local taxis (Wyman, 2017). The ride-sharing applications like Uber, Lyft, and Grab remain cheaper for passengers traveling to the airport, longer trips, and fares over $35, and regional services out of city centers. Also, UberPool and UberX remain considerably cheaper than the prices of GrabBike, LyftLine, and local taxis. UberPool and LiftLine help riders split the cost of driving from their carpooling options when traveling to airports. UberX helps consumers evade high pricing on luxury or gigantic cars.

From the analysis models used in this paper, Porter's Five Forces gave a precise modern competitive posture of Uber. It highlighted various aspects that make the company successful and sustainable in using its business model (Wyman, 2017). The PESTLE analysis may have provided insights into the political, economic, social, technology, legal, and environmental position of the company compared to other competitors within the sector; it fell short of giving the firm a competitive advantage.

Current Competitive Posture of Uber

Uber continues to lead the expansion of the sharing economy within the transport industry. It has proved successful for both drivers and passengers. Its business model, founded on an easy-to-use ride hiring application, has remained productive for the company (Yun et al., 2020). The acceptance of Uber and its profligate growth continues to rely on an advanced IT system, traveler convenience, and marketing strategy. It leads the taxi sector and has attained an advantage over its competitors like Lyft, Grab, and local taxis.

Conclusion

Uber has developed fast as a ride-sharing firm. Its progress depends upon a compelling marketing idea and enhanced technology that has demonstrated suitability for millions across the globe. The company has linked over 75 million riders, with approximately three million drivers. Uber's business model remains viable, attractive, and profitable. The networking approach has enabled the company to increase its drivers and increase the number of users. It has reduced its costs of operation, kept prices cheap, and increased its customer service.

References

Alemi, F., Circella, G., Mokhtarian, P., & Handy, S. (2019). What drives the use of ride-hailing in California? Ordered probity models of the usage frequency of Uber and Lyft. Transportation Research Part C: Emerging Technologies, 102, 233-248. www.sciencedirect.com/science/article/pii/S0968090X18318849

Dawes, M. (2016). Perspectives on the ride-sourcing revolution: Surveying individual attitudes toward Uber and Lyft to inform urban transportation policymaking (Doctoral dissertation, Massachusetts Institute of Technology). www.dspace.mit.edu/handle/1721.1/104994

Ojo, S. (2017). The Uber case: The future of an innovative and disruptive start-up firm. SAGE Publications: SAGE Business Cases Originals. www.sk.sagepub.com/cases/the-uber-case-future-of-an-innovative-and-disruptive-start-up-firm

Shtal, T. V., Buriak, M. M., Amirbekuly, Y., Ukubassova, G. S., Kaskin, T. T., & Toiboldinova, Z. G. (2018). Methods of analysis of the external environment of business activities. Revista ESPACIOS, 39(12). www.revistaespacios.com/a18v39n12/18391222.html

Teo, B. C., Mustaffa, M. A., & Rozi, A. I. M. (2018). To grab or not to grab? Passenger ride intention towards e-hailing services. Malaysian Journal of Consumer and Family Economics, 21. www.majcafe.com/wp-content/uploads/2019/06/Paper-10-Vol-21-2019.pdf

Wyman, K. M. (2017). Taxi regulation in the age of Uber. NYUJ Legis. & Pub. Pol'y, 20, 1. www.heinonline.org/hol-cgi-bin/get_pdf.cgi?handle=hein.journals/nyulpp20&section=4

Yun, J. J., Zhao, X., Wu, J., Yi, J. C., Park, K., & Jung, W. (2020). Business model, open innovation, and sustainability in car sharing industry—comparing three economies. Sustainability, 12(5), 1883. www.mdpi.com/2071-1050/12/5/1883