6-1 ERP Case Study: Can Uber Be the Uber of Everything?

Southern New Hampshire University

IT-657-Q1674 Enterprise Resource Planning 22TW1

October 1st, 2022

Uber using the competitive forces and value chain models

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 Uber is a considered a mobility services provider allowing users to hail a ride and the

closest driver picks them up to their destination. Since its inception the services have

grown to include food deliver (Uber Eats), package delivery, couriers and motorized

scooter rental. Uber main competitive advantage is technology, marketing and

convenience.

There is a strong supply for taxis since some drivers use the service as a second job.

Using its algorithms, Uber can make good predications when it comes to peak times

and hotspots. Due to being in the market longer, this has become one if its competitive

advantages. Uber’s use of technology enables it to keep costs low since the business

model is driven by software. Other useful features over the years are split fares and

multiple stops in one trip. Aggressive marketing on the its part has seen expansion

into new markets gaining a foothold before competitors.

Uber has a presence in 72 countries and 10,500 cities as of 2021 and this includes

developing countries as well. In Uber’s system, drivers and passengers are ranked by

reviews from either the driver or the passenger. Problematic passengers and drivers

are identified and ejected helping its reputation for safety for both drivers and

passengers. Convenience is one of Uber’s strengths. The interface is simple to use

where upon providing the destination, rates and approximate arrival time are

calculated. There are different tiers from for rides which includes luxury vehicles to

budget rides.

Uber drivers are independent contractors who managed their own fleet. Uber does not

own the cars and thus has no related maintenance expenses such as insurance and

licensing fees. Uber charges 40% less than normal taxis making it sustainable in

highly competitive space.

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 The relationship between information technology and Uber’s business model

“Write once, deploy everywhere” is the driving force behind Uber. There is no human

interactions to run the software which is algorithms tuned periodically. They can work

anywhere, any country, any network providing the same functions and maintaining

high levels of efficiency. Drivers manage their own fleet while Uber sells their rides

on the app. Technology like apps and ERM allow global expansion at low costs

maintaining competitiveness.

Uber has essentially provided a model for the commoditization of parts of the

transport industry that has been copied by other industries. This is how Airbnb works

as well. It does not own the rooms but simply makes them available to those that need

them. It now has its own term, uberization, which is defined as introducing a new

and different way of buying or using a product or service [ CITATION Pav17 \l

1033 ]. This integration framework can be implemented almost anywhere due to its

ease of integration with and ubiquitous technology. Uber essentially provides a

platform that integrates with other platforms like maps and payment gateways to

function and increase convenience.

Framework Purpose

Uber is essentially unregulated unlike local taxis. This reduces lower entry costs into

the markets as well the requirements for drivers. For drivers one needs a car and a

driver’s license. This is not vigorous enough when it comes to issues of public safety.

While hailing a ride has been made very easy and simple, how it has been achieved

leaves a lot to be desired in terms of quality. It creates a model for low paying

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 temporary work that is part-time which is not sustainable. Each unit is viewed as a

commodity and if it cannot be so, that presents a challenge.

Ethical and social issues raised by Uber and its business model?

Strengths and weaknesses

While driving innovation forward and providing convenience in various spaces

globally, the downside is viability in the long run. This also sees the drive in the

research in self driving cars which have safety concerns if not properly implemented.

There is less regulation due to its disruptive model that spans different countries. The

lack of a uniform framework as come to present its own set of challenges in each of

the different markets. A key advantage is the decentralization of managed resulting in

reduced costs.

Uber drivers are regarded as contractors and hence are not entitled to normal

employee benefits such as pension, healthcare, etc. This has raised concerns from

labor activists who are advocating for pension and minimum salary. Uber’s business

model may not allow it to be ethical. The company has never made a profit and its

growth has been driven by borrowing from banks [ CITATION Gou17 \l 1033 ]. Uber

operates in an unregulated space unlike traditional taxis and public transport. Other

issues are the ineffective background checks of its drivers. This can endanger the

public that Uber gets its business from. Different territories have different regulations

making it a somewhat mammoth task.

Uber has been hacked before in 2016 which saw 57 million records stolen by hackers.

Recently in September 2022 indications are that it has been hacked again [ CITATION

Roo22 \l 1033 ]. In 2016, Joe Sullivan was fired for his response for the hack to pay

off hackers $100,000 and failing to disclose the breach. To remain completive, Uber

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 has pushed drivers for which they received a backlash. This has seen better working

conditions such as awarding drivers breaks and paying them soon after rides.

Uber’s Ethical dilemma

Unlike Amazon, which is similar, Uber does have the same advantage of economies

of scale because the retail and transport industries are vastly different. Uber has not

been profitable since inception which has seen it forcing down the income of its

drivers. Adding drivers’ expenses to this will see it run out of funding soon as it

results in higher costs to passengers and lower driver salaries. Uber works best for

individuals that travel to different cities and not localized for locals.

Due to its reliance on technology, Uber is unable to reduce its fees because it would

lose its competitive advantage. Uber is not viable as it cannot meet its commitments

to its creditors. While Uber is innovative, it is not making a profit. This has seen a

shift in investing in self-driving cars which is still a bit afar off in the future. Other

companies are also challenging Uber with lower fixed rates as well as cooperatives

such as in Texas. Other taxi companies can use the same technology taking Uber’s

customers. Like most employees, drivers will gravitate towards better pay and

benefits.

References
Goulden, M. (2017). Uber can’t be ethical – its business model won’t allow it. Retrieved October 1,
2022, from The Conversation: https://theconversation.com/uber-cant-be-ethical-its-
business-model-wont-allow-it-85015

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 Pavie, X. (2017). “UBERIZATION” AND THE RISE OF THE SERVICE ECONOMY". Retrieved October 1,
2022, from ESSEC Business School: https://knowledge.essec.edu/en/innovation/video-
uberization-and-rise-service-economy.html

Roose, K., & Conger, K. (2022). Uber Investigating Breach of Its Computer System. Retrieved October
1, 2022, from The New York Times: https://www.nytimes.com/2022/09/15/technology/uber-
hacking-breach.html

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