While the development of “app-based peer-to-peer sharing technology” has led to significant economies of scale for Uber’s business, it still raises a number of ethical challenges (Ansari et al., 2015). Though the company’s selling point is its assertion that nearby drivers are notified when a client needs to get a ride, it is inherently an ethical issue in the company’s practices. Since drivers are notified about potential clients through mobile devices in their vehicles, it increases the probability for accidents (Schneider, 2017). Drivers are highly likely to be distracted as they constantly check messages on their mobile devices. Studies have identified the use of mobile devices when driving to be among the leading causes of car accidents. Though it is recommended to use hands-free devices, Uber drivers still need to read and respond to messages while driving and it may only take a moment for an accident to occur.
The company faces ethical challenges especially with respect to the protection of customers since there have been reported cases of sexual assault. The issue of drivers committing sexual assault against passengers raises significant ethical challenges for Uber. Evidently, the company does not perform comprehensive background checks to ensure that its employees meet expected moral and ethical standards; hence, they do not have a history of sexual misconduct.
Uber leadership has been associated with unethical practices especially the CEO Travis Kalanick who has been attempting to torpedo its rival Lyft’s funding initiatives (Ansari et al., 2015). In addition, the company has engaged in unethical practices such as sending alleged brand ambassadors to Lyft rides with the aim of sabotaging the rival’s operations by poaching their drivers. Evidently, Uber uses rides as a basis for approaching the competition’s drivers and takes numerous precautions to ensure that they are not detected. Such practices which seem to be undertaken on a national scale have resulted in numerous canceled Lyft rides which make it difficult for competing firms to operate in the market.
Disregard for customers’ privacy is among the ethical issues that Uber faces since it has been accused of tracking their location without consent using the “God-view” tool in their application. The company does not provide customers with full disclosure that by using Uber’s application; they can be tracked; hence compromising their privacy.
Uber’s ethical challenges depict an organization that had adopted a defiant culture that disregards prescribed standards of practice. the company’s attempts to sabotage its competitors demonstrates that it is motivated by unfettered greed since it wishes to remain the primary service provider in an industry that is subject to free market dynamics (Cavusgil, Ghauri, " Akcal, 2013). Essentially, businesses are free to enter and exit the market on their own volition and should not be influenced by underhanded methods such as those employed by Uber’s senior management.
The ethical issues that face Uber allude to a history of disregarding standards of practice in its businesses; therefore, it is unwilling to allow other companies to succeed through the use of unfair practices. The ethical issues that have been raised suggesting that the company does not live up to its ethical responsibilities towards ensuring that it fosters the development of a conducive work environment for its drivers and protect customers from harm while using the company’s services.
Since Uber Is Using A Disruptive Business Model And Marketing Strategy, What Are The Risks That The Company Will Have To Overcome To Be Successful?
Uber has developed a peer-to-peer business model that takes advantage of digital technology to connect people who need rides to those that provide the service. The Uber business model engages independent drivers and takes a percent of the fare as commission (Siedel, 2016). However, the company’s strategy of engaging independent drivers is subject to risks that the company must overcome. The company has designed a system for evaluating the quality of service among Uber drivers known as rideshare appraisals framework (Ansari et al., 2015). Since Uber has benchmarked its service on a five-star rating, drivers are expected to provide exceptional ratings in order to attract more customers and continue their partnership with the company. Low performing drivers are required to take classes aimed at improving their safe driving and customer relationships practices. The drivers who fail to improve their scores risk suspension or permanent deactivation from the service.
Uber faces increasing competition in the market from companies such as Sidecar, Lyft, and Curb. The market is also susceptible to new entrants who would carve Uber’s market share further. Further, the market already faces increasing rivalry from other operators such as taxi companies, car rental businesses, trains, city transport, and others. Competition in local and international markets from leading competitors such as DIDI and Lyft may require the company to invest heavily in marketing strategies, innovations in service delivery to attract new customers.
Technological risks arising from concerns that the company’s application is vulnerable to attacks and may be hacked have a direct impact on operations. People are more concerned with safeguarding their private and financial information which could be compromised if Uber’s application does not integrate adequate security protocols. In addition, issues related to safety for passengers must be addressed accordingly. There are concerns that some Uber drivers may not be qualified while others abuse and sexually harass their passengers. These issues can be resolved by performing a comprehensive background check on all drivers and the creation of a platform where customers can register their complaints, and appropriate action is taken immediately.
Because Uber Is So Popular And The Business Model Is Being Expanded To Other Industries, Should There Be Regulation To Develop Compliance With Standards To Protect Competitors And Consumers?
Uber’s success is attributable to its innovative strategy to link people who need a ride, to drivers who provide the service. When the company started its services, it was the sole provider of the mobile app taxi-hailing service (Ansari et al., 2015); however, after gaining growth, competitors flooded the market after recognizing the profitability potential of the market. The company’s business model enhanced customer satisfaction leading to progressive expansion across the world. Though Uber does not present itself as a luxury car service, it is considered as among the most reliable and effective services. Hence, the company created a blue ocean strategy by differentiating itself from traditional taxi companies through the development of a low-cost business that has succeeded in generating profits for the company and drivers. The strategy was effective since it met the expectations of its stockholders.
However, as the company continued to grow, it faced numerous challenges from various fronts including other taxi operators and drivers. Issues such as unfair competition, unethical business practices, and fraud have emerged causing the company’s legitimacy to be questioned. The treatment of Uber’s drivers as independent contractors has been described as a move aimed at defrauding them of their benefits such as gratuity (Ansari et al., 2015). Meanwhile, riders have raised issues regarding unscrupulous practices of Uber drivers including incidents of abuse, assault, and infringement of rights of people with disabilities. In addition, the company has been prosecuted by various local governments for infringement of taxi ordinances that regulate their business operations. Conversely, some local governments have allowed the company to operate provided they do not violate current ordinances. The differing views on Uber’s business practices have resulted in a legal and regulatory conundrum since it is uncertain on how to effectively regulate Uber.
The industry should be subjected to comprehensive regulation to ensure that fair business practices and ethical standards of practice are applicable to all operators without exceptions. The development of a regulatory framework would ensure that competitors are not subjected to unfair practices that give an unfair advantage to the dominant business while stifling the weaker or emerging businesses (Ansari et al., 2015). Industry regulation emphasizes the protection of consumers and a business environment that encourages fair participation. The regulatory framework should also adapt to new technological developments that have revolutionalized economies across the world. Essentially, industry regulation should focus more on encouraging business models that emphasize enhancing consumer experiences such as the ride-sharing services offered by Uber. The traditional regulations for taxi operators should be revised accordingly to accommodate the emerging consumer-centric businesses.
The development of a regulatory framework should encourage innovation and development of a competitive business environment (Levy, 2015). The ride-sharing service exemplifies a model that takes into consideration prevalent economic dynamics that may inhibit individual consumers from accessing service; however, when the cost sharing factor is introduced, it creates a win-win scenario for both the service provider and consumer. However, in order to prevent potential abuse and misuse of such services, industry regulation is needed to ensure that the customer’s safety is guaranteed and service providers are fairly compensated. Though Uber developed a successful business model, its corporate governance strategies focused only on generating profits while reducing operating costs. Therefore, a significant number of stakeholders such as customers, drivers, and other industry players were left unsatisfied by the company’s approach to doing business.
References
Ansari, N. L., Weber, L., Hood, S., Otto, C " Sawayda, J. (2015). Uber Technologies Inc.: managing Opportunities and Challenges. Case Study.
Cavusgil, S.T., Ghauri, P.N. " Akcal, A.A. (2013). Doing Business in Emerging Markets. 2nd edition. New York, NY: Sage
Levy, J. (2015). UX Strategy: How to devise innovative digital products that people want. Boston, MA: O’Reilly Books.
Siedel, G. J. (2016). The three pillar model for business decisions: Strategy, law, and ethics. Michigan: Van Rye Publishing, LLC.
Schneider, H. (2017). Uber Innovation in Society. Basingstoke, UK: Palgrave Macmillan.
