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Critical Issues in Uber Australia

Question:

Discuss about the Innovation and Entrepreneurship UBER.

Innovation and entrepreneurship are two of the most debatable concept, which has created ample of issues to a varied range of experts. Different experts have different concepts for both the innovation and entrepreneurship. However, in more general, innovation can be defined as a process, which attracts different people towards its potentiality for making some remarkable organizational changes. The usage of advanced technology and concepts to enhance the profitability can be termed as innovation (Grenell, 2014). On other hand, entrepreneurship is a skill, which businesspersons have and they use it to enhance the profitability of the organization (Drucker, 2014).

This paper tries to provide some remedial measures to UBER, which is facing some critical issues. Moreover, the company is a good challenge for the traditional taxicabs in Australia; however, some critical issues are making its operation problematic. Some of the identified issues are government rules and regulation, requirements for the drivers, pricing and retention of clients.

The main purpose of the assignment is to put forward some solutions to the identified critical issues in UBER with the help of innovation and entrepreneurship.

Following are some of the critical issues in the UBER Australia:

Local government rules & regulation – The local government of Australia has strict actions towards the driving licenses. The local government has made this a compulsory for the taxi industry that they have proper driving license before they can operate their business. This is creating some sort of problems to the UBER Company less number of licensed drivers are available in the country. This has given birth to the scarcity of drivers, which is a problem for the highly incrementing cabs and the drivers. The company can never flourish if it does not have any solution for the rising demands of the drivers (Landes, Mokyr & Baumol, 2012).

Requirements for the drivers – To suffice the requirements of drivers have become very challenging for UBER as the local government rules and regulations have made things difficult for the company. The requirement of proper driving licenses has made things tougher for the company for availing the required number of driver. This is because of the fact that there is less number of drivers, which have proper driving licensees. Moreover, the availability of less number of drivers has rising the problem for the company for matching up the required number of drivers (Franke et al., 2013).

Pricing – Another big strain on the company is the payment of minimum wage, which is little higher than the company’s policies. This is contributing in the reduction of profitability margin of the company. The minimum wages for the drivers need to be in a balanced state for the betterment of both the company and the drivers; however, the local government of Australia is more in favour of the otherwise option. However, the local government policy of the country is favouring more to the drivers (Tidd & Bessant, 2014).

Retention of clients – It is also very challenging for the company that they could efficiently met up with the requirements all the clients. To some clients quality is the first requirement; however, to some pricing and affordability of cab is the prior requirement. The quality is hampered by many factors such as low quality drivers and the higher pricing of fares. Higher pricing of fares might be the scenarios with the cab fares as the local government policies are only going to provide less profit to the company with their existing policies to UBER. In addition to this, the clients have some other options also such as the traditional taxicabs. The concept of UBER can well attract some other competitors to the industry. This would provide ample of options to the clients to choose (Kelley, Singer & Herrington, 2012).

Probable Solutions Using Innovation and Entrepreneurship

The probable solutions for the critical issues, which UBER is facing in Australia, can be the usage of innovative ideas and the entrepreneurship skills, which motivates towards the innovation. The company is struggling with some government policies and some other issues such as fare pricing. However, it is very handy to go for some innovative ideas into the existing system, as this would help the business boost to a next level. Before applying any innovative ideas in the existing practices, it is important to understand the concept of innovation first (Andersson, 2012). Following are some of the types of innovation, which is important to understand for choosing the right set of innovative skills in the existing system of UBER:

  • Sustaining innovation is something, which encourages for adopting something new and better than the previous (Andersson, 2012)
  • Disruptive innovation is not related to the production of something better than the existing; it is rather focussed on producing something new that is less expensive and dissimilar but very productive in nature (Zhou, 2015)
  • Closed innovation is something, which encourages for something that is new to the industry or has never done before (Carayannis, 2013)
  • Open innovation is a process, which involves sharing of ideas from the inner and the outer world of the company (Del Giudice & Della Peruta, 2013)

Nevertheless, it is very much evident from the above innovation types that disruptive and closed types of innovation would be most advisable for the current issues in UBER. This is because of the fact that the company is in some real challenging situation, which is posed by the local government rules and policies majorly. The use of disruptive innovation would encourage UBER for incepting something new to the company, which could help the company in dominating the industry and retaining its clients. Moreover, it would also allow the company in having some remedial actions to the rising problem of pricing. Moreover, the recommended closed disruptive innovation would provide some fighting weapon to the company against the rising odds in Australia.

On a same note, the closed innovation would enable the company for bringing up something new, which could produce some attractive features in the existing offerings. Nevertheless, this is of utmost important for the company as the company is suffering of less profitability because of minimum wages restrictions by the local government of Australia (Hirsch-Kreinsen & Schwinge, 2014).

The disruptive and closed innovations would be used to produce something new and attractive to the existing offers of the company. The problem related to the driving licenses can have no solutions, as it is not feasible to dictate the path to the local government of Australia. The local government of Australia is ethical at its point. However, the issue related to the profitability would be boosted by giving some alternative solutions to the exiting offer line. It is also not feasible to reduce the fare pricing, as this is dangerous for the profitability of the business. However, some innovative ideas can be incepted to help company retain its customers and achieving a sustainable business (Judd & McNeil, 2012).

The best innovative ideas for the company would be to incept some discounted rides at some occasions and that should be on some conditional basis. The company can introduce an offer like as it is mentioned below (Drucker, 2014):

“Use five rides from UBER and avail discounted pricing in the next two rides. The discounted pricing would be up to 10% of the gross fare”. This is one such example, which is good for attracting some increased participation of customers forte rides on UBER. Nevertheless, 10% of the gross fares are a significant discount and that to for the next two rides. Another example for such offers can include such as follows:

“Avail five rides on your chosen cab in UBER and get 20% discounts on every ride if the rides are for more than 8 kilometres”. This would not only attract some potential customers but would also compel those who take long trip every day. Moreover, they would be able to redefine their strategies and attract new customers to enhance their existing customer base (Grenell, 2014).

The proposed solution would be helpful in attracting and having some control on the customers but it has no guarantee that the step would be highly effective in retaining the clients. This can well be understood by studying the factors, which actually satisfies customers. Customers are satisfied with lower fare pricing in major cases. They prefer high-class customer service and an affordable fare pricing. They also want a proper driver, which could well behave with the customers. Moreover, this is immensely important for a pleasant journey. The lesser wait time, which is why this kind of service are preferred over the traditional taxicabs. The evaluation of factors, which make customer happy, does very well illustrate the fact that UBER need some serious repair in its external environment. The external environment is governed by the political & legal rules, technology and economy (Tidd & Bessant, 2014).

  1. The first point of recommendation would be to have some kinds of training and development program such as etiquettes of driving for the existing drivers. This would help drivers aware of the driving etiquettes. Moreover, they would be able to learn on how to behave with the boarding customers.
  2. The second point of recommendation would be to take help of state run union of Australia, as this would make things easier to the company. The union body are recognized to the local government of Australia and hence, they would fight to the local government on behalf of the company. This would make the local government think on some alternative ways to support both the customers and the company. The similar example can well be driven by the one in India where taxi industry is significantly influenced by the state run union.
  3. The third point of recommendation would be for the technological advancement such as inception of new concepts like share taxis as numerous companies are thronging to the industry after observing the brighter prospect of this industry
  4. The fourth point of recommendation would be to have multi services offering, as customers are volatile in nature. They are in regular search for the most affordable pricing and the better customer service.
  5. The fifth point of recommendation would be for the competitiveness by incepting multi services and advanced technologies. This is because that competition is severe and the cost of switching to this industry is cheaper. Moreover, this would attract imitation by others.

Conclusion

UBER is struggling with some problem in Australia; however, the company should more concentrate on the possible competition in future. The highly volatile customer nature, their never dying demands and lower switching costs to this industry is a threat to UBER as more companies that are new can try their luck by simple imitating the existing concept. It is needed to raise the level of competition in UBER by raising the standards of its business strategies.

References

Andersson, M. (Ed.). (2012). Innovation and growth: from R&D strategies of innovating firms to economy-wide technological change. Oxford University Press.

Carayannis, E. G. (2013). Encyclopedia of Creativity, Invention, Innovation, and Entrepreneurship. Springer.

Del Giudice, M., & Della Peruta, M. R. (2013). Unpacking open innovation: Highlights from a co-evolutionary inquiry. Springer.

Drucker, P. (2014). Innovation and entrepreneurship. Routledge.

Franke, N., Harhoff, D., Henkel, J., & Häussler, C. (2013). Innovation und Entrepreneurship. Springer/Gabler.

Grenell, K. (2014). INNOVATION AND ENTREPRENEURSHIP.

Hirsch-Kreinsen, H., & Schwinge, I. (Eds.). (2014). Knowledge-intensive entrepreneurship in low-tech industries. Edward Elgar Publishing.

Judd, R., & McNeil, R. D. (2012). Large firms & small firms: Job quality, innovation and economic development. Journal of American Business Review, Cambridge, 1, 157-164.

Kelley, D. J., Singer, S., & Herrington, M. (2012). The global entrepreneurship monitor. 2011 Global Report, GEM 2011, 7.

Landes, D. S., Mokyr, J., & Baumol, W. J. (Eds.). (2012). The invention of enterprise: Entrepreneurship from ancient Mesopotamia to modern times. Princeton University Press.

Tidd, J., & Bessant, J. (2014). Strategic innovation management. John Wiley & Sons.

Zhou, J. (2015). The Oxford handbook of creativity, innovation, and entrepreneurship. Oxford University Press.

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