Case Analysis of Uber

A Case Analysis of Uber
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A Case Analysis of Uber
Introduction
Uber is an American-based and the planet's largest ride-sharing corporation that traced back its roots in 2009. Most importantly, the company's main goal is to enhance the movement of travelers (its target audience) move from one point to the other. Moreover, Uber is a platform that allows customers to order food affordably from different food places and get them delivered to their doorsteps at any time required. The company's activities create an approach that allows the users to access an exceptional travel experience from place A to place B. Uber services are relatively affordable as it tries to remain sustainable in its services. Specifically, the firm's goal is to be an entirely zero-emission and electric platform within a decade, whereby it aims to use zero-emission vehicles to execute its services. The paper incorporates a critical analysis of Uber in various aspects related to the multinational company and its operations.
Market Analysis before its Entry
           The ride-sharing sector was not fully exploited before Uber came in as one of the sector's components to provide its services, hence meeting the needs of the specific target audience. The market had not taken shape appropriately, it was fragmented, and technological aspects and adoption were still lacking and not considerably exploited. Yellow cabs, conveniently located in New York City, were the leading players occurring within the ride-sharing sector (Dudley et al., 2017). The cabs were almost near the customer's location, or one would call the provided contacts to be picked up and dropped to the desired destination. Upon Uber entering the sector or market, the primary factor it had to exploit was technology to enhance travel services. Before the industry took a well-defined shape, whenever a person wanted to move from one point to the other, the individual would call the nearby cab or hopefully wait and hope that a tax became available for the service.
           However, when Uber was introduced in the market, it meant a swift and convenient solution for travelers or Uber users to coordinate with the readily available drivers. The other inefficiency that Uber tried to handle entailed prices for the services offered. For instance, before Uber's emergence, taxis received operation registration only operational within the designated city and had limited permits available. Prices for using the taxis went up such that not all individuals could comfortably afford them because the sector was reasonably lucrative. Luckily, Uber intruded into the market to straighten the situation due to the inefficiency. Specifically, there was price moderation, and users could easily afford to use the transport service. There were no costly permits and regulations to operate Uber.
Uber's Surge Pricing in the Context of Shifts in Supply and Demand
           According to Zha et al. (2017), surge pricing is a pricing strategy that some companies use to momentarily increase costs as a response mechanism to rising demand and considerable reduction in supply. Uber describes the strategy by claiming that when there is less car supply coupled with an increased demand for the ride service, the surge pricing concept applies, implying a rise in the cost applied. The Uber App notifies the company's drivers in case the demand for the Uber service rises using a map that, in turn, indicates the busiest regions and valuable information regarding surge prices to use. The drivers' influx should signify the availability of increased nearby rides for use. Users can observe a 'surge' sign automatically. When the user still looks forward to moving from one place to the other using Uber, the App indicates the surge multiplier showing pricing details. It inquires consent from the user regarding the price and whether to accept the service at the given price. The firm's surge pricing strategy leads to two significant impacts: some individuals opt to wait for the price drop before ordering a ride to their desired destination, and nearby drivers go to a distant neighboring region to get the increased fares from willing customers. Due to such a situation, persons looking for an Uber ride and the readily available drivers become closer, lowering the wait times.  
           Uber intends to achieve increased rides with its drivers serving the customer base. Despite the natural situation, they always intend to have more drivers, which is likely to interfere with traditional transport methods from fully meeting the customers' demands. Random price rise is never the firm's endgame. It utilizes its standardized model to react to the increasing demand at different times and places. The company's surge balances the supply and demand aspect by sending drivers to areas with a surge in experiencing high demand for the ride service. This allows the demand to decrease due to drivers' influx. Researchers have proved that the firm's pricing algorithm during surge times is always maintained private; they also tried reverse-engineering the concept and discovered that Uber's system responds such that there is always recalculation of the prices after 5 minutes. What is not known to the public is that the firm's supply-and-demand technique undoubtedly resembles the changing price model in the hotel sector during peak moments.
Uber's Surge Pricing in the Context of Price Discrimination
           Remarkably, Uber is altering the approach of how it estimates fare for the customers by embracing a system that levies fare based on the costs that customers can pay comfortably. The company also considers where the people live, whereby people from wealthy areas pay more. This typical practice carried out by the company to achieve increased profits is commonly referred to as price discrimination. Most importantly, the concept entails a company's determination to consider the variation involving the value that a specific consumer holds regarding a commodity and the amount they pay. Companies do such by charging prices by considering whatever different customers are willing to pay and utilizing the variations in people's willingness to pay. As the concept seems to affect consumers considerably, economic theory indicates that a larger society can gain if specific conditions are gotten. For instance, if the company's emergent pricing implies that it can intrude into new markets or decrease customer wait time, price discrimination might enhance society's general welfare (McKenzie, 2017).
           Uber can serve individuals with different income ranges by generating several service lines performing a similar function. For example, the company can use Uber LUX and UberX brands to price discriminate people successfully in Los Angeles. The discrimination aspect helps Uber generate more revenue from its customers and grow massively as a corporate. Apart from Uber, hotel rooms also provide distinct costs or expenses for disti...