Uber is an on-demand transportation service which has brought a revolution in the taxi industry across the world. Their business model emerged as a disruptive approach to the traditional business model, as it made it possible for people to simply tap their smartphones and have a car arrive at their location in the minimum possible time. It is a service that fits all ages and social groups. Their model is called sharing economy business model, it has recently emerged to create not only financial value but economic value as well. Also, the sharing economy industry is growing faster than Facebook, Google, and Yahoo combined; therefore, they managed to obtain significant financing from venture capitalists easily.

1. UBER CASE STUDY
Module: Strategy and Competition MT512A Group: D Lecturer: Dr. Malcolm Brady Year: 2020

2. Business Model
Comparison
Management
What is Uber’s business model? Is it sustainable?
How does it compare with the typical taxi model? Is it disruptive?
How does Uber manage the two sides of its market?
TABLE OF
CONTENTS
01
02
03
What do you think of Uber’s loose approach to regulation?
04 Approach to Regulation
What is your view on surge pricing?
05 Pricing
What issues do you see facing Uber in the long run?
06 Potential Issues

3. BUSINESS MODEL
What is Uber’s business model? Is
it sustainable?
01

4. Understanding the Business
● Disruptive business model with the sharing
economy approach.
● A click away from the nearest available car.
● Serves all age groups and background.

5. ● Provides financial and
economical Value.
● Attracts investors.
● Fast growing industry.
Sharing Economy Business
Model
(Muñoz and Cohen, 2018)

6. Does it apply to Uber?
Provides financial
value
Provides economic
value
Fast growing
industry
Attracts investors
Business: Net revenue of
$400 million in 2014.
Drivers: Earnings up to
$20 per hour for drivers.
Partnered with more than
170,000 UberX driver in
the USA alone in 2015.
Valued by investors at $51
billion. High-profile firms
like Menlo Ventures,
Google Ventures, Fidelity
and BlackRock invested.
14 million trips are
completed each day and
10 billion trips have been
completed worldwide.
(Mansoor Iqbal, 2020)

7. 7
Business
Model

8. 8
Business
Model
Passengers:
-Less waiting time
-Lower prices
-Ease of access and
money transaction
-Reliable and safe
Drivers:
-Additional income
-Flexible work
conditions
-Assistance in
getting passengers

9. 9
Business
Model
Passengers:
-Less waiting time
-Lower prices
-Ease of access and
money transaction
-Reliable and safe
Drivers:
-Additional income
-Flexible work
conditions
-Assistance in
getting passengers
-Build market
awareness
-Customer
(passenger and
driver) acquisition
-App development
-Customer support

10. 10
Business
Model
Passengers:
-Less waiting time
-Lower prices
-Ease of access and
money transaction
-Reliable and safe
Drivers:
-Additional income
-Flexible work
conditions
-Assistance in
getting passengers
-Build market
awareness
-Customer
(passenger and
driver) acquisition
-App development
-Customer support
-Drivers
-Application
-Technology team

11. 11
Business
Model
Passengers:
-Less waiting time
-Lower prices
-Ease of access and
money transaction
-Reliable and safe
Drivers:
-Additional income
-Flexible work
conditions
-Assistance in
getting passengers
-Build market
awareness
-Customer
(passenger and
driver) acquisition
-App development
-Customer support
-Drivers
-Application
-Technology team
-Drivers
-Payment
Processors
-Application
Programming
Interface (API)
providers
-Investors

12. 12
Business
Model
Passengers:
-Less waiting time
-Lower prices
-Ease of access and
money transaction
-Reliable and safe
Drivers:
-Additional income
-Flexible work
conditions
-Assistance in
getting passengers
-Build market
awareness
-Customer
(passenger and
driver) acquisition
-App development
-Customer support
-Drivers
-Application
-Technology team
-Drivers
-Payment
Processors
-Application
Programming
Interface (API)
providers
-Investors
- Employee salaries - Drivers commision
- Customer Acquisition Costs (CAC)
- Customer support - Technology infrastructure

13. 13
Business
Model
Passengers:
-Less waiting time
-Lower prices
-Ease of access and
money transaction
-Reliable and safe
Drivers:
-Additional income
-Flexible work
conditions
-Assistance in
getting passengers
-Build market
awareness
-Customer
(passenger and
driver) acquisition
-App development
-Customer support
-Drivers
-Application
-Technology team
-Drivers
-Payment
Processors
-Application
Programming
Interface (API)
providers
-Investors
- Employee salaries - Drivers commision
- Customer Acquisition Costs (CAC)
- Customer support - Technology infrastructure
Commissions: 20% to 30% per ride
Surge Pricing: 1.5x to 7x of normal price.
Premium rides: 40% to 100% higher than a comparable
cab ride.

14. 14
Business
Model
Passengers:
-Less waiting time
-Lower prices
-Ease of access and
money transaction
-Reliable and safe
Drivers:
-Additional income
-Flexible work
conditions
-Assistance in
getting passengers
-Build market
awareness
-Customer
(passenger and
driver) acquisition
-App development
-Customer support
-Drivers
-Application
-Technology team
-Drivers
-Payment
Processors
-Application
Programming
Interface (API)
providers
-Investors
- Employee salaries - Drivers commision
- Customer Acquisition Costs (CAC)
- Customer support - Technology infrastructure
Commissions: 20% to 30% per ride
Surge Pricing: 1.5x to 7x of normal price.
Premium rides: 40% to 100% higher than a comparable
cab ride.
Passengers:
-Who do not own a
car or a license
-Who seek
affordable/quick
way of
transportation
Drivers:
-Who want
additional income
-Who seek flexible
working hours

15. 15
Business
Model
Passengers:
-Less waiting time
-Lower prices
-Ease of access and
money transaction
-Reliable and safe
Drivers:
-Additional income
-Flexible work
conditions
-Assistance in
getting passengers
-Build market
awareness
-Customer
(passenger and
driver) acquisition
-App development
-Customer support
-Drivers
-Application
-Technology team
-Drivers
-Payment
Processors
-Application
Programming
Interface (API)
providers
-Investors
- Employee salaries - Drivers commision
- Customer Acquisition Costs (CAC)
- Customer support - Technology infrastructure
Commissions: 20% to 30% per ride
Surge Pricing: 1.5x to 7x of normal price.
Premium rides: 40% to 100% higher than a comparable
cab ride.
Passengers:
-Who do not own a
car or a license
-Who seek
affordable/quick
way of
transportation
Drivers:
-Who want
additional income
-Who seek flexible
working hours
-Rating and
Feedback system for
both drivers and
passengers.
-Support through
social media

16. 16
Business
Model
Passengers:
-Less waiting time
-Lower prices
-Ease of access and
money transaction
-Reliable and safe
Drivers:
-Additional income
-Flexible work
conditions
-Assistance in
getting passengers
-Build market
awareness
-Customer
(passenger and
driver) acquisition
-App development
-Customer support
-Drivers
-Application
-Technology team
-Drivers
-Payment
Processors
-Application
Programming
Interface (API)
providers
-Investors
- Employee salaries - Drivers commision
- Customer Acquisition Costs (CAC)
- Customer support - Technology infrastructure
Commissions: 20% to 30% per ride
Surge Pricing: 1.5x to 7x of normal price.
Premium rides: 40% to 100% higher than a comparable
cab ride.
Passengers:
-Who do not own a
car or a license
-Who seek
affordable/quick
way of
transportation
Drivers:
-Who want
additional income
-Who seek flexible
working hours
-Rating and
Feedback system for
both drivers and
passengers.
-Support through
social media
-Mobile Application
-Social media
accounts
-Phone number

17. How sustainable is it?
“If we can get you a car in five minutes, we can get
you anything in five minutes.”
-Kalanick

18. How sustainable is it?
Unfair
competition
Unprecedent-
ed valuations
and market
penetration
Fails to meet
quality and
safety
standards
(Muñoz and Cohen, 2018)

19. COMPARISON
How does it compare with the
typical taxi model? Is it disruptive?
02

20. 20
Type of
Services
from Uber
UBER BLACK
Luxury service.
Commercially registered
and insured. A high-end
black luxury sedan.
UBER SUV UBERX
UBER XL UBER SELECT UBER POOL
Luxury service.
Commercially registered
and insured. A high-end
black luxury SUV.
Low price service. A 2000
model or 2005. Specific
car brands. Clean driver
record.
Slightly higher price than
UBERX. Fits 6 passengers
and more. Same
requirement of UBERX.
Available in some cities.
Mid-luxury service.
Priced lower than Uber
Black, but higher than
UBERX
Available in some cities.
Passengers share rides
with others and split the
cost. Cheaper than
UBERX

21. 21
Uber Taxi
How Passengers
meet Drivers
Customer orders a car using the
App.
● Customer hails taxi.
● Customer contacts taxi firm in
advance and they send driver.
Driver Options Own car- No licence needed. ● Own car - Own taxi licence.
● Own car - Leases licence.
● Pays monthly fee to dispatch
service for bookings.
● Leases car and licence.
Uber vs. Regular Taxi

22. Financially
Interested Parties
UBER
● Uber
● Drivers
● Investors
Regular Taxi
● Licencing
Authority
● Taxi companies
● Drivers
● Taxi licence
holders

23. 23
TaxiBusiness
Model
Passengers:
Transportation
service on the go
Drivers:
-Flexible hours
-Passengers from
dispatcher
-Licence Holders;
-Leasing out
licences
-Licencing authority;
-License sales
-Annual licence fees
-Acquiring drivers
-Acquiring
passengers
-Acquiring licences
-Licences
-Cars
-Drivers
-Dispatchers
-Accounts
-Licencing authority
-Drivers
-Taxi companies.
-Licence holders.
-Passengers.
-Marketing costs. -Car maintenance costs;
-Car purchase costs; -Licence fee costs;
-Dispatcher costs; -Office and garage costs;
-For taxi companies;
-Leasing of cars; -For drivers;
-Leasing of licences -Passenger fares
Passengers;
People without their
own transport;
People in need of
quick transportation:
Account holders.
-Usually just for one
journey time.
-Some regular
account passengers
-Pick and ride
-Phone
-Email

24. Effect of Uber Model on the Typical
Taxi Industry and its Key Partners
● Passengers get more reliability and convenience
● Drivers get higher income by moving to Uber
● Taxi companies lose income
● Licences drop in value
● Licencing authority loses sales income as licence
values drop.

25. 25
● Uber is technologically disruptive and moving fast
● Responds to desire quickly and seamlessly
● Taxi industry floundering as a result
● Taxi industry can respond competitively
They need to:
● Calculate the cost of winning a war
● Find ways to leverage their capabilities
● Collaborate within the taxi industry
Disruption
( Siggelkow & Terwiesch, 2019), (King and Baatartogtokh, 2015)

26. MANAGEMENT
How does Uber manage the two
sides of its market?
03

27. 27
"Two groups of agents who interact via 'platforms,' where
one group’s benefit from joining a platform depends on the
size of the other group that joins the platform."
- Armstrong, M. (2006)
Two-Sided
Market

28. 28
Customers
Easy service for
customers to use.
Create an account and
input their credit card
info.
App would show driver
availability nearby.
Track drivers progress

29. 29
Drivers
The Uber system
works in reverse.
Driver able to respond
and refuse to pick
customer up.
Extra features like
‘Heat Maps’
They are independent
contractors rather than
employees.

30. APPROACH TO REGULATION
What do you think of Uber’s loose
approach to regulation?
04

31. 31
- Uber’s business model had some unique
characteristics which made it difficult to classify
the company within a specific industry.
- Technology is at the core of its network
which presented and unprecedented
disruptive model.
- Uber faced a lot of criticism and backlash from taxi
cartels but received praise and support from its
customers.

32. 32
- By exploiting its position as a disruptive innovator,
they placed themselves in a position of public
influence.
- In 2014, Uber hired David Plouffe to head the
company public policy and communications
division.
-

33. PRICING
What is your view on surge
pricing?
05

34. 34
How it
works
Dynamic Pricing Model of Uber - ‘Surge Price’
(Den Boer, 2015)

35. 35

36. 36
Meeting the high demand of
clients which motivates
drivers.
Benefits
Creation of artificial surge in
price by driver partners. By
turning their Uber apps off
and on, the driver partners
are able to trigger the surge
price.
(Hall et al. , 2015)
Drawbacks

37. POTENTIAL ISSUES
What issues do you see facing
Uber in the long run?
06

38. 38
Regulation and
Backlash
Dissatisfaction of
drivers.
More unicorns or
competition
Vulnerability of
Multi-Homing
Potential
Issues

39. Maram Aldawood - 14110911
Chris Clancy - 19210091
Kavish Gakkhar - 19211797
Maleeha Ahsan - 19215569
Rebecca Pereira - 19210826
THANKS!

40. 40
References
References
● Armstrong, M. (2006) “Competition in Two-Sided Markets” RAND Journal of Economics, 37: 668-691.
● Business of Apps. 2020. Uber Revenue And Usage Statistics (2020). [online] Available at:
<https://www.businessofapps.com/data/uber-statistics/>
● Chen, M. K. and Sheldon, M. (2015) ‘Dynamic pricing in a labor market: Surge pricing and flexible work on the
Uber platform’, UCLA Anderson. URL: https://www. anderson. ucla. edu.
● Cristea, I., Cahan, E. and Ioannidis, J., 2019. Stealth research: Lack of peer‐reviewed evidence from healthcare
unicorns. European Journal of Clinical Investigation, 49(4), p.e13072.
● Den Boer, A. V. (2015) ‘Dynamic pricing and learning: Historical origins, current research, and new directions’,
Surveys in Operations Research and Management Science, 20. doi: 10.1016/j.sorms.2015.03.001.
● Forbes (2015) Would Uber Be Better Without Surge Pricing?, Forbes. Available at:
https://www.forbes.com/sites/harrycampbell/2015/08/05/would-uber-be-better-without-surge-pricing/
(Accessed: 31 March 2020).
● Hall, J., Kendrick, C. and Nosko, C. (2015) ‘The effects of Uber’s surge pricing: A case study’, The University of
Chicago Booth School of Business, p. 8.
● Hamilton, I. A. (2019) Uber drivers are reportedly colluding to trigger ‘surge’ prices because they say the
company is not paying them enough, Business Insider. Available at:
https://www.businessinsider.com/uber-drivers-artificially-triggering-surge-prices-reports-abc7-2019-6
(Accessed: 31 March 2020).
● King A. and Baatartogtokh, B. 2015. How useful is the theory of disruptive innovation. MIT Sloan Management
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41. 41
References
References
● McBride, S., 2019. Uber's Nightmare Has Just Begun. [online] Forbes. Available at:
<https://www.forbes.com/sites/stephenmcbride1/2019/09/04/ubers-nightmare-has-just-started/>
● SAGE Journals. 2020. A Compass For Navigating Sharing Economy Business Models - Pablo Muñoz, Boyd
Cohen, 2018. [online] Available at: <https://journals.sagepub.com/doi/10.1177/0008125618795490>
● Scott, A., 2019. NPR Choice Page. [online] Npr.org. Available at:
<https://www.npr.org/2019/08/12/736643714/with-so-many-startups-growing-into-unicorns-can-they-still-b
e-magical?t=1585942174436>
● Siggelkow, N. and Terwiesch, C. (2019) ‘The Age of Continuous Connection. (cover story)’, Harvard Business
Review. Harvard Business School Publication Corp., 97(3), pp. 64–73. Available at:
http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=135981984&site=ehost-live.
● Uber. 2020. Tracking Your Earnings | Driver App | Uber. [online] Available at:
<https://www.uber.com/gh/en/drive/basics/tracking-your-earnings/>
● Uber. 2020. Uber. [online] Available at: <https://www.uber.com/us/en/drive/driver-app/how-surge-works/>
● Wohlsen, Marcus. What Will Uber Do With All That Money From Google. Wired. Jan 3, 2014.
● Wong, J., 2019. Disgruntled Drivers And 'Cultural Challenges': Uber Admits To Its Biggest Risk Factors. [online]
the Guardian. Available at: <https://www.theguardian.com/technology/2019/apr/11/uber-ipo-risk-factors>
● Zhu, F. & Iansiti, M. (2019). Why some platforms thrive and others don’t. Harvard Business Review, Jan-Feb,
pp.119-125.