Business Studies Case Study on Uber’s Business Model

Uber’s Business Model

Today’s digital era has witnessed an unprecedented increase in the number of new and advanced technologies. The advent of new technologies has concurrently led to a myriad of developments in different scopes of human lives. People’s living standards continue to improve due to the significant discoveries made by utilizing the different yet remarkable technologies. One of the most renowned innovations of all time that stemmed from integrating different technologies is the Uber service. The name ‘Uber’ originates from a German word called uber which means, ‘above,’ ‘topmost’ or ‘super.’ Uber was first founded in 2009 by Garrett Camp and Travis Kalanick under the name Uber Cab (Cohen & Kietzmann, 2014). The idea of creating a cab industry was stirred up after Garret Camp spent over $800 hiring a private car that transported him and his friends to a short distance. Camp was propelled to develop a more comfortable and affordable transport cabs after that expensive trip. Kalanick later joined Camp in his journey of creating Uber. He not only financed but also guided Camp to make his idea a reality. In 2011, Uber technologies Inc. was officially launched in San Francisco, California (Smith, 2015). The company has grown at an exponential rate in diverse parts of the world.

Uber Technologies Inc. today operates in 633 cities worldwide through its popular mobile app that allows customers to access a range of services, such as food delivery and Uber car transportation. Today, the corporation is viewed as a cutting-edge technology company that serves to revolutionize the transportation industry. It was established to offer affordable and quality transportation services to customers from all walks of life. For one to access Uber services, he/she needs to download an Uber software app on a smartphone first. Unlike the common public transportation whereby one pays a fixed amount of fare to a given destination, Uber uses a taximeter to calculate fare based on the time and distance of the ride (Clark et al., 2012). At the end of a journey, the passenger has a range of payment options to use. Depending on the passenger’s payment preferences, he/she may pay using credit cards, cash, or via google wallet. In some areas, the passenger may be offered the privilege of rating the driver (Clark et al., 2012). It allows the company to assess its drivers’ performance and driving capabilities.

Roles and Responsibilities of an Uber Driver

Uber drivers play an important role in the Uber Technologies Inc. as they use their own vehicles to transport passengers from one destination to another. They rely on orders made through the Uber software app (Smith, 2016). They also utilize the information put in by their clients as they placed their orders. After the placement of an order, an Uber driver is responsible for picking up the passengers and transporting him or her to the specified destinations. Additionally, the drivers are obligated to keep their cars in good condition.

Business Model Canvas with Post-it

Figure 1.0: An illustration of Uber’s Business model canvas with post it

Source: https://www.slideshare.net/raahulshaha/uber-marketing-presentationrahulshaha-63967059

Building Blocks for Uber’s Business Model Canvas

Uber’s business model canvas entails nine integral business blocks namely;

  • Customer segments –Uber has two types of customers: the drivers and the passengers.
  • Value proposition –the company offers a value proposition to both the driver and the passengers. It may be viewed in the form of reduced transaction and search costs that would otherwise be incurred by the driver and passenger (Smith, 2016).
  • Customer relations
  • Channels – Uber utilizes different channels for daily transactions between the drivers and the passengers. Mobile software app is the most sought-after channel of transaction whereas marketing may be done through media coverage, email, and word of mouth.
  • Revenue – the corporation gains revenue by charging the passengers using a taximeter, which calculates the sum of fare based on the distance covered by the driver (Osterwalder et al., 2016).
  • Key resources – the enterprise has three primary resources, namely the platform, pricing algorithm, and routine algorithm (Osterwalder et al., 2016).
  • Key activities – The key activities are important as they assist the company to provide quality services thus allowing it to cut an edge over its competitors
  • Key partners – Uber has three key partners; the drivers, technology partners, and the investors. The drivers provide the transport services to the clients whereas the technology partners create and maintain the Uber software app, which acts as an avenue for clients to place their transport orders. On the contrary, the investors serve to provide capital and ideas for improving the Uber services (Osterwalder et al., 2016).
  • Cost structures

Creating a Memo

MEMORANDUM

TO: Customers

FROM:  Uber Technologies Inc

DATE: March 10, 2018

SUBJECT: Importance of Uber’s Business Model Canvas

Business model canvas is an important aspect as it determines the success of any organization. A business model canvas describes the main elements of the operations of an enterprise. It defines how an entity creates and delivers value to its customers, drivers, and itself as a whole. The Uber management utilizes its business value model to discuss issues that need to be tackled or altered to catalyze the organization’s process of producing value from its operations. Uber business canvass provides critical information on the processes, enterprise, locations, suppliers, and management system. Therefore, it serves as a strategic tool that provides guidelines for operation to the drivers, customers, investors, shareholders, and the public at large. The tool also governs the organization to ensure that it offers value to its customers. The clients gain from the quality services that the entity provides.

 

References

Osterwalder, A., Pigneur, Y., Bernarda, G., & Smith, A. (2014). Value proposition design: How to create products and services customers want: get started with. https://books.google.co.ke/books?id=jQ5yBgAAQBAJ&printsec=frontcover&dq=BUSINESS+MODEL+CANVAS&hl=en&sa=X&ved=0ahUKEwi66KOvveHZAhUNWsAKHcBkAEQQ6AEIQzAF#v=onepage&q=BUSINESS%20MODEL%20CANVAS&f=false

Clark, T., Osterwalder, A., & Pigneur, Y. (2012). Business Model You: A One-Page Method for Reinventing Your Career. New York: Wiley. https://books.google.co.ke/books?id=h8fws1cmxO4C&printsec=frontcover&dq=BUSINESS+MODEL+CANVAS&hl=en&sa=X&ved=0ahUKEwi66KOvveHZAhUNWsAKHcBkAEQQ6AEINjAD#v=onepage&q=BUSINESS%20MODEL%20CANVAS&f=false

Cohen, B., & Kietzmann, J. (2014). Ride on! Mobility business models for the sharing economy. Organization & Environment, 27(3), 279-296.

Smith, J. W. (2016). The uber-all economy of the future. The Independent Review, 20(3), 383-390.