Essay: Foodora's Strategic Corporate Response In The Sharing Economy.

Overview of Foodora

Discuss About The Strategic Corporate Response The Food Chain.

Foodora started in 2014 and provide services to around 9000 restaurants. Company is basically deal in the delivery of food items to the restaurants. The on-demand delivery of food service connects high quality restaurants to foodora. Sharing economy makes the allocation of resources proper and tries to accelerate sustainable consumption patterns around the globe (Belk, 2014). Foodara is trying to develop the market around the world. Use of sharing economy can be use worldwide. Sharing economy increases the accessibility to self-employment and business opportunities (Hamari, Sjöklint, and Ukkonen, 2016). In sharing economy the access to capital is easier and simple. Foodara is also a part of sharing economy.

Technology is the main element of the sharing economy. It makes the economic activities simple and it makes them cheaper by reducing the transaction costs. Before the advent of sharing economy, transaction costs could be quite high because of involvement of direct as well as indirect costs (Schor, 2016). Interaction between customers and suppliers is not easy and was too costly to be feasible. The internet, smartphones and other new technologies overcome part of this problem.

Foodora use the app for its order receivables and use of app delivery services are touching the sky. Using app for delivery of food is convenient to both consumer as well as restaurants. These logistics chains are simply here to provide the delivery of goods from one place to another and providing employment to many people. The demand of these services is increasing day by day as the payment can also be done online or other ways, so it’s the choice of consumer. This e-commerce platform gives GPS tracker for delivery system and also order can be made through mobile along with the integrated payment system (Block and Hennessy, 2017).

Foodora aims to give a unique experience to its customer by providing food from their favourite restaurant. Foodora is become the global leading player in the 22 markets, having 26000 riders, covering more than 26 cities (Foodora, 2018). Company is trying to cover maximum of the areas of Australia, Canada, Europe, Asia, Berlin and other areas also. They offer a large variety of products and services every day for its customer to satisfy them the most. The supply of this food depends on the company customer’s purchasing power. The idea behind introducing this food delivery service is to increase the customer base for the restaurants.

The Role of Technology in Sharing Economy

Using foodora mobile app or website, customer can find restaurants near them and place their order and pay. Delivery of order is done through bicycle, car and bike in 30 minutes.  Foodora provides both B2C and B2B food delivery service. This delivery of food is done by foodora riders. Riders play a significant role in the success of foodora and they are the sole link between our brand and customer, hence they are entrusted with a great responsibility (Morgan and Kuch, 2015).

Foodora provides employment to many people. The employment provides to the riders are of more formal agreement and the riders are hired for a specific period of time. Because of this shared economy the company are liable to give more compensation to the workers as per the rules that are $100 more should be given to the team of drivers. As the company is earning a high amount of profits because of its rider so he also gives an extra amount to the riders from its profits. The riders are playing a significant role in the delivering the goods. They are the real stars of the company. In this cycle of business there is less chances of recession as a person never stop consuming the food.

The growth rate i.e. GDP of country increases because of this type of food chains operate in market. Earnings of the individual worker are increasing so ultimately it will increase the growth of the country It increases the per capita income of riders. As they are operating in the market where the marketers are playing online and dealing in goods and services through apps and fulfilling the demands of consumers. The supply of goods also depends on the needs and wants of the consumers. Because of emergence of this market many employment opportunities are come up in the market (Lee, Kane, Ramsey, Good  and Dick, 2016).

Markets in sharing economy arise from a platform based Sharing economy business that competes with other such businesses and traditional companies (Cusumano, 2015).    There is an intense competition in the online food delivery business as there are a large numbers of suppliers are present in the market and providing the same kind of services to the customers at large. The demand and supply factor are always applied in the economy as it is the fundamental concept.  Foodora provides discounts and unique services to its customers to have a competitive edge over its competitor. Competitors of Foodora are UberEats, Deliveroo etc.

Employment Opportunities and Resource Allocation in Shared Economy

There is an inverse relation between price and quantity as price increases quantity demanded will decrease and vice versa. These increase and decrease in quantity will depends on the ratings given to the company. Foodora also gets the rating from its customers. Online customer rating provides a good basis to the customer to select good restaurant. Consumer relies on ratings given to these online food delivery services. It makes foodora different from its competitors.

Previously the some resources are underutilised but after arrival of the concept of shared economy the resources are utilised with full efficiency and effectiveness. Sharing economy improve the resource allocation and meets consumer demand. As the company uses the society resources so it is the social responsibility of the foodora to provide a quality services (Heikkurinen and Forsman?Hugg, 2011). Allocation of resource is become simple in shared economy as there is less wastage of resources and workers try to utilise the resources to the best (Verghese, Lewis, Lockrey and Williams, 2015). Sharing economy reduces the entry barriers for the firms.

According the founder of the Foodora, the company can expand and make more money from the market. But in this type of market the resources (riders) are highly mobile. They can easily move from one place to another if they find higher pay from the other company so it will be a risk for a company.

Foodora working as a middleman for buyer and makers, so company apply charges on both the parties. Riders are doing the same work then also the wages they are getting are different. According to a research it is find that the riders are underpaid and are not getting the pay which they want from job (Minter, 2017).  Riders also file a law suit on the company for the same. There is a monopoly of foodora in which they work according to their convenience and profits and exploit the riders. These riders are not permanent employees and have a fear of fired when their boss wants.

According to rules and regulations, if labour is working more than 40 hours week overtime should be given to them (Cahuc, Carcillo and Zylberberg,  2014). Foodora also put a reward condition for this rider which is working as a saviour for them. In this online food deliverable business, the wage rate will vary from company to company. Like Deliveroo is paying $9 per delivery for a day to its drivers whereas Foodara is paying $20-$26 on an average night. Workers in Foodara can earn more than $30 on a busy day as there is a concept of flexible hours.

Competition in the Online Food Delivery Business

But in shared economy and in this market, the resources are mobile factors. Foodora provides a wide variety of services at many geographical locations.  It means that they can move from one place to another where they are getting the higher pay. In this type of market the elasticity of the wages to rider depends on the supplies done by them. There will be a direct relation between the riders’ suppliers and wage rate given to them. If the rider provides less deliveries its wage rate will also be low and vice versa.

From the above discussion, we can conclude that the Foodora is providing an online delivery of food from restaurant to the people. Company is providing a good quality service of delivery to the customer. The market is following the characteristics of perfect competition as all the online food delivery giving the same kind of services to its customers. Talking about its competitors, Foodora is becoming the leader in the global market as others like Deliveroo are striving for this position. Other online food delivery companies are planning to merge with the Foodora to remain in the market. Drivers have monopoly over the market they can shift from one place to another where they are getting an extra amount. These types of company increase the employment opportunities for the person who loves driving.

References

Belk, R. (2014) You are what you can access: Sharing and collaborative consumption online. Journal of Business Research, 67(8), pp.1595-1600.

Block, S. and Hennessy, T. (2017) " Sharing Economy" Or On-demand Service Economy?. Canadian Centre for Policy Alternatives.

Cahuc, P., Carcillo, S. and Zylberberg, A. (2014) Labor economics. Massachusetts: MIT press.

Cusumano, M.A. (2015) How traditional firms must compete in the sharing economy. Communications of the ACM, 58(1), pp.32-34.

Foodora. (2018) Good food for you every day [online]. Available at: https://www.foodora.com/ [Accessed on 10^th April 2018]

Hamari, J., Sjöklint, M. and Ukkonen, A. (2016) The sharing economy: Why people participate in collaborative consumption. Journal of the Association for Information Science and Technology, 67(9), pp.2047-2059.

Heikkurinen, P. and Forsman?Hugg, S. (2011) Strategic corporate responsibility in the food chain. Corporate Social Responsibility and Environmental Management, 18(5), pp.306-316.

Lee, A.J., Kane, S., Ramsey, R., Good, E. and Dick, M. (2016) Testing the price and affordability of healthy and current (unhealthy) diets and the potential impacts of policy change in Australia. BMC Public Health, 16(1), p.315.

Minter, K. (2017) Negotiating labour standards in the gig economy: Airtasker and Unions New South Wales. The Economic and Labour Relations Review, 28(3), pp.438-454.

Morgan, B. and Kuch, D. (2015) Radical transactionalism: legal consciousness, diverse economies, and the sharing economy. Journal of Law and Society, 42(4), pp.556-587.

Schor, J. (2016) DEBATING THE SHARING ECONOMY. Journal of Self-Governance & Management Economics, 4(3).

Verghese, K., Lewis, H., Lockrey, S. and Williams, H. (2015) Packaging's role in minimizing food loss and waste across the supply chain. Packaging Technology and Science, 28(7), pp.603-620.