Analyzing Uber's Impact on London Taxi Business

Learning Outcomes

Learning outcomes

This TMA is intended to assess the following:

your knowledge and understanding of key concepts and ideas covered in Block 3 of B207

your knowledge and understanding of the elements required to build long-term success in organisations

your ability to find and interpret additional information online

your ability to use academic and business and management language appropriately and effectively to communicate your ideas good academic practice in citing sources of information appropriately

your ability to select information from a case study, and develop arguments based on that selection

your ability to apply module ideas to a practical situation as presented in a case study.

Assignment task

Part A of this TMA will be marked out of 75 marks. Your answer to this question should be no more than 1500 words.

In your work on Block 3 you encountered Uber and London’s black cab industry, most notably in Session 13, Activity 13.6 . Listen again to the audio in that activity. It investigates threats to the traditional taxi business and asks whether black cabs can respond to competition enabled by new technologies or whether they’ll go the way of the red telephone box.

When you have listened to the audio return here and read the case study below, and then answer the following questions:

1. Using stakeholder analysis, analyse the power and level of interest of the relevant stakeholders involved in running and regulating the London taxi business. Uber are often accused of ignoring employee rights and employee welfare. How might Uber management address their employees’ concerns?

2. What are the potential sources for operational failure at Uber? What should Uber do to limit operational failure?

3. One of the ‘fundamental goals’ of relationship marketing is said to be ‘maximising the lifetime value of a customer’. How would you describe Uber’s relationship with its customers?

Uber is a technology company that offers a free programme, or app, available on a mobile device for those wishing to request a ride. At its core, Uber seeks to match passengers to drivers. The platform is able to track a user’s GPS coordinates, even if the user does not know where they are, and within minutes an Uber driver will arrive. The user is able to track how long until the ride will pick them up and receives a text message confirming when the Uber driver is arriving. The driver is able to hit a button on their own app that says ‘Arriving now’ which sends the text message. No cash is exchanged when using Uber since signing up for an account requires providing credit card information. After the ride, Uber charges the user electronically and immediately emails them a receipt. There is a rating system so that passengers can rate their driver and vice versa (Dong et al, 2014).

Assignment Task

According to Uber, the company ‘pushes the limits of the transportation industry to create a simple, more efficient, and more enjoyable car service experience. For drivers, Uber is a revenue stream, allowing professional drivers to make more money by turning downtime into profits.’ (Uber, 2016). Unlike the taxi industry, Uber does not employ or license its drivers, but rather views them as independent contractors. The unique experience provided by Uber has enabled rapid growth and international expansion centred on three main focal points: a commitment to on-demand service, an efficient supply of luxurious rides, and the easy accessibility of its smartphone application.

Uber’s growth over the past five years is an example of a major success in what is known as the ‘sharing economy’. The sharing economy is an economic system where assets or services are shared between private individuals either free or for a fee, typically by means of the internet. However, the success of this new business model is attracting criticism from government and civic leaders concerned that this new ‘collaborative economy’ is simply a means of sidestepping regulations, taxes and other legal obligations. These ‘gig economy’ apps have been criticised for failing to provide traditional employee rights such as paid holidays and in-work insurance.

The size of the UK taxi and private hire market is estimated at £9.4 billion. The industry is mature, with high levels of revenue volatility, technological changes, and high competition with low barriers to entry (Skok & Baker, 2019). In London, Uber’s growing popularity meant that their drivers completed some £115m of business within London (Quinn, 2016). However, Uber London (the taxi app’s UK holding company) recorded only a sales take of £23m and a profit before tax of £1.83m. The sales figure reflects only Uber’s share of fares for trips booked on its app. In addition, Uber London retain 20% of any fare to the driver. Despite this Uber London paid just the small sum of £411,000 in UK tax last year. Concerns have also been raised over driver working conditions, particularly regarding claims that some drivers are doing excessive and unsafe hours.

Some Uber drivers are working up to 21 hours a day to make ends meet as the company increases its cut of fares and fights a ruling giving them employment rights. Drivers in London interviewed by The Sunday Times told of regularly working hours that Uber itself describes as ‘unsafe’. The newspaper has seen official Uber documentation proving one of the men worked a 91-hour week. The disclosures come as new figures show a dramatic rise in casualties involving taxis and private hire vehicles in London.

1. Stakeholder Analysis

Part A

Question 1:

In Sessions 2 of Block 3 you encountered the concept of stakeholder analysis, as a key part of analysing the political context. In particular, Activity 2.1 and Reading 4 discussed some of the theory supporting stakeholder analysis and gave you the opportunity to undertake a practice exercise. The stakeholder analysis framework shown in Reading 4 Figure 1 may help with your answer.

The second part of Question 1 requires you to look at some of the employee relations issues that are taking place at Uber. Block 3, Session 4, introduced you to the idea of inclusive and participatory employment relations. In particular, Reading 6 discussed the importance of employee ‘voice’ and why voice matters in modern organisations. Block 3, Session 5, discusses the issues of flexible working and employee empowerment. Activity 5.1 looks at the importance of involving employees and suggests ways this might be achieved. Your answer should draw on appropriate concepts and theories from Block 3 together with suitable evidence from the case study to support your arguments.

Question 2:

This question asks you to consider the case study from an operations management perspective. In working through Block 3 Session 10 and the associated reading (Reading 15), you considered in detail the importance of operational risk and resilience. The session also introduced you to a range of useful concepts and theories that examine how risk might be managed and controlled. For example, Reading 15 introduced you to assessing operational risk in terms of identifying hazards, their impact, and likelihood, before finally discussing how these might be managed. In addition activity 10.4 introduced you to the risk assessment matrix. Risk mitigation is discussed in detail in activity 10.6 where you were given the opportunity to work through the examples from earlier in the session. You may find Ericsson’s risk mitigating strategies useful for this part of the question (outlined in Block 3, session 10, table 10.1 and figure 10.1). Your answer should draw on a sensible mix of these concepts and theories, together with case study evidence, to offer a viable explanation of the operational risks facing Uber.

Question 3:

This question asks you to consider the case study from a marketing perspective. You looked in detail at relationship marketing concepts in Block 3 Session 11. In particular, Reading 16, “Relationship Marketing”, introduced a variety of different conceptual approaches for making sense of customer and other stakeholder relationships. Reading 17, “Internal Marketing”, discussed how internal marketing plays a crucial role in delivering on brand promises and building relationships. As with Questions 1 and 2, your answer should make use of appropriate concepts, illustrated with evidence from the case study.

Part B

There is a lot of material you could cover in this mind map. You may like to start by thinking of the sub-themes from Block 3, as well as revisiting any mind maps you have produced during your studies.

Part C

There are no guidance notes for Part C.

Marking criteria

Your tutor will mark your assignment using the following criteria:

Your application of these concepts to the case study information your ability to communicate effectively: clarity and economy of writing, and clarity of structure good academic practice: citing and referencing of ideas taken from all sources other than your own thinking, including the case study and the B207 materials.