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Ge Healthymagination Case Study

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UIN: 669496966


Strengths of Uber’s business model

Weaknesses of Uber’s business model

• Heat mapping algorithm developed by Uber is a cornerstone of their business model that helps them to efficiently identify areas where demand is high so that more drivers could be deployed to that area – this plays a major role in improving their business

• The major overhead of most companies –inventory cost is eliminated in Uber’s business model since it just provides a platform connecting passengers and cab drivers

• Uber has designed its offerings UberX, UberBlack, UberPool etc. based on efficient segmentation of target customers– Based on analyzing spending power of various target segments in each city of operation they decide the proportion of all these offerings that would yield maximum business

• Uber’s compliance to legal regulations has been raised as a cause of concern several times and the company has not taken sufficient measures to establish their standard of legal compliance

• Uber is facing flak for its surge pricing technique used to increase the prices as high as 7x when the customer demand is high and the supply of drivers in the area is low

• The business model of Uber is easy to mimic and therefore Uber would be forced to face a multitude of competition within its marketspace

Advantages of Uber for customers

Disadvantages of Uber for customers

• Ease of use – Uber app is very user friendly; Provides hassle-free payment options; Instant responsiveness to cab booking

• Pricing is reliable – Uber app offers fixed rates per mile and therefore the price of cab rides is much more standardized than traditional cabs

• Potential Security threat for customers since there are some serious concerns raised over Uber’s driver background checks

• Uber’s surge pricing algorithm can drive up the pricing of a cab ride several times higher than that of a normal cab ride

Advantages of Uber for drivers

Disadvantages of Uber for customers

• While becoming a taxi driver was complicated due to many legal constraints, enrolling as a driver under Uber was a lesser stringent alternative

• Flexibility in working hours - As indicated by Exhibit 10, more than 50% of drivers in 2012-13 worked for less than 15 hours per week, which means this was a part-time alternative source of income for most Uber drivers

• Drivers would have to solely bear the wear and tear expenses of their cab and would receive no support from Uber.

• Drivers could be unreasonably given a poor rating by the rash customers because of which they could suffer termination – less job security

2. Uber’s operating model – Strongholds and weak links:

The customer-centric approach adopted by Uber helps it garner a lot of positive feedback from its customers. Through Uber, customers have access to better quality taxi service at a lower cost when compared with the regular taxi operators. Also, Uber efficiently addresses the customer’s concern of long waiting times frequently associated with hiring a regular taxi by providing instant booking and passenger pickup. Although Uber has capitalized on this critical ingredient for a robust operational model, Uber also suffers from the following weak links which make it vulnerable



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