Algorithmic Management Strategy Problem of Uber Technologies

With its headquarters in San Francisco, California, Uber Technologies Inc. is an American multinational. The business handles online tax dispatch in addition to running a mobile app that lets users request rides using their smartphones. The Uber drivers who utilize their vehicles to provide the service are then sent this request. The Transportation Network Company, a service available in more than 5 countries and 300 cities worldwide, oversees the company's activities. A fascinating trend known as "uberification" has emerged as a result of several other businesses stealing the company's business model. The company uses a competitor strategy in which it uses an algorithmic management to gain competitive advantage over its competitors, although it has created some problems with the drivers.
The company was founded in 2009 and named UberCab by Garrett Camp and Travis Kalanick although they released the app in June 2010. Uber has been expanding internationally since 2012 and it was ranked at position 48 most powerful company in America in 2014 by Klout. With an android iOS and Windows Phone app, riders can connect to drivers using the GPS capabilities. The parties can know each other's whereabouts and everything is charged in cashless mode. After the company cuts its charges that range from 5 to 20 percent, it remits the rest into the driver's account. There are different levels of service such as UberX that engages in running everyday cars such as the Toyota Prius. Uber Black runs high-end cars with professional drivers and are more expensive to hire. The others are Uber Suv, which involves larger vehicles while Uber Lux operates posh rides such as BMW 7 series and Porsche Panameras. The drivers must pass the DMV tests and other background checks in addition to owning their cars. These cars must also be insured and some of the driver's full-time employees of the company. Uber considers itself as a platform and not an employer and work with independent drivers but its algorithmic management strategy of controlling drivers and business through apps has led to several problems.
Analysis
Uber adopted a competitor strategy of using a unique algorithmic management of its drivers and business activities. The company has an automated algorithm to enable it control business activities such as increasing its prices due to the changes in demand and supply. The software that Uber uses requires a smatphone for pricing of the company's services, which resembles that of metered taxis although the drivers cannot handle any payments. The price is calculated depending on the distance travelled by the passenger and the cost is billed customer's credit card. In addition, its strategy involves differentiation of services offered to customers with different brands of vehicles to win the market.
During the times of high demand, the company attracts more drivers as it can pay them more than during the low season when customers are few. The reception for Uber's services has been very positive and it is collaborating with other tax and software companies. The company won the 2013 US Today tech company of the year. It is expanding to other services such as online food stores in California with a package called Uber Rush. Collaborating with the Dutch satellite navigation Company was a great thought to provide maps and traffic data for their app in 300 cities.
The company's strategy of using algorithmic management of its drivers is unique but brings the company problems such as several lawsuits. Through its app, Uber is able to control its drivers through notifications as its management tools. In this case, the company manages its workers towards specific behaviors by messages such as "You can agree to or reject this job, but you only have 15 seconds and half of the information you need to decide". The time is too short for a driver to figure out the destination of the customer and determine whether the amount to be paid can pay the ride costs or to unprofitable rides. The fact that everything is automated messages to communicate to drivers is quite controlling since they are left with no choice but accept rides even if they are not profitable to prevent automatic deactivation. Several lawsuits have emerged have been filed accusing the company and drivers issues such as denial of service. For instance, the national Federation of the Blind filed a lawsuit in California after 30 people were denied services because of their blind status. This was a violation of the 1990 Act protecting people with disabilities in America. The company claimed that their drivers were independent and monitoring them was not possible.
However, Uber can monitor its drivers using apps and blind passengers can explain to them the purpose of having guide animals with them. Some of the drivers may not understand why a passage may want to board a car with a dog. However, since the management does not meet the drivers for consultations and making decisions about their way of doing business issues involving poor service delivery are very common. At another incidence in Paris on January 13, 2014, cab drivers filed a suit against a car driver from Uber accusing the company of offering unfair competition in the taxi business. The company was also blamed for sabotage in 2014 when its drivers ordered rides from another and later cancelled them with an ill motive. They were also accused of offering drivers of some companies some incentives to ensure that they do not carry passengers. In this case, the customers will go for Uber's taxis increasing its daily sales. This problem was also facilitated by absence of technical management that can address drivers and ensure that they stick to the company's mission. The drivers are free to decide what they want to do with the customers since the algorithmic management through use of apps may not control the drivers' behavior. Again, Uber does not contract drivers as employees rather it calls them contractors. Through its app, it is able to evade tax, overtime benefits, and other requirements since it is treated differently by different political jurisdiction. Uber drivers complained in a case filed in a US court in august 2016 that they are employees who have been misclassified. They are classified as independent contractors and it is impossible for the company to help in the maintenance of their vehicles and their social welfare. The other controversy noted with Uber is its controversy with Journalists as it is accused of threatening them.
User privacy is also questionable since there are numerous questions regarding internal misuse of the company's data especially when tracking their customers' movements. Leaking of the drivers' private information is common especially during the interviews when one is allowed to access other peoples' information. Some people have also complained of safety issues after one of the drivers suffered epileptic attack and caused an accident. The fifteen seconds allowed to drivers to accept clients' request over the phone while driving may be distractive and lead the driver to cause an accident. The algorithmic management of the drivers by use of app causes many issues with the clients leading to lawsuits that damage the reputation of the company.
Recommendations
Uber should consider changing its management style to involve drivers more instead of issuing automatic commands, messages, and automatically deactivating its drivers who record low ratings or reject customers' requests. This will ensure that it does not lose of its reliable drivers to its competitors and incur losses. The company should consider collaboration with companies such as American airlines to facilitate easy movement of people to the airport through door-to-door services. Their customers can move from work to the airport and back with little delay. This can also provide the customers with a faster service and enable them navigate freely with minimal challenges. In addition, the service can enable both rider and mileage promotions for all the customers. This is likely to boost sales for both Uber and American Airlines Companies and offer quality services to their clients. Although the company is facing numerous challenges in its operations, it is growing at a very fast rate by incorporating the modern technology. As a differentiator, the company offers a variety of services enabling it remain relevant in the global market and should continue with the trend.
In the future, the company should form partnerships with more companies to facilitate movement of people in the whole world. Its expansion capability has enabled it to compete favorably with other transportation companies. The social media also plays an important role in advertising Uber's services to the public using Uber app and the company should ensure its maximum utilization. The consumers are given the chance to choose between using regulated taxicab companies and other types of transportation.