Uber Case Study

Introduction

As the maturity of the market and the rational consumption of the customer, the focus of competition shifted to the enterprise product cost, efficiency and user satisfaction, information technology has become a necessary way to win competitive advantages in various fields. Without the support of information technology, it is impossible for the enterprise to have good products and services, so that Information technology is the core strength of enterprises development. Uber is the first company to utilize idle car resources and bring the revolution into the taxi industry by applying IT technologies. This is because it precisely awares of the importance of IT since the establishment of company, so it constantly utilized IT to improve its products and services. Thus, we chose Uber as our organization. In this paper, we mainly analyze how Uber use IT to sharpen the competitive edge in term of specific IT utilizing, value created, and future development.

The analysis of the organization and industry

Industry Analysis

We will utilize the Porter’s Five Forces to analyze the industry of Uber in order to identify the network transportation industry’s attractiveness and growth potential. According to the research from Documents.mx (2015), the Porter’s Five Forces analysis of Uber industry is below:

Threat of Potential Entrants

Even though Uber recently has applied for patents to protect their system and processes, it is difficult to get protection until the patents are approved and the time of patents’ approval is uncertain. Therefore, Uber does not have any protection form new entrants because it has no patent right to preserve company’s benefit and to stop the new entrants getting into the market. For the capital cost, it can be expect that there is relatively low requirement for new entrants to enter into this market as Uber only spent $200,000 seed capital in fully (Wikipedia, 2016). Thus, Uber confronts low production to oppose the new entrants. Moreover, due to Uber dose not establish membership system for its potential customers but providing free app, so the switch cost can be ignore. Therefore. Sine the lack of the protection of property right, low initial capital investment, and low switch cost, Uber confronts high treats from new entrants. These factors may have adverse impact on Uber’s profitability.

Supplier Power

Actually, Uber does not have its own vehicles, labors or any assets as it outsources all of these assets to Limousine companies and individuals who are interested in this app. Moreover, Uber currently has no substitute for individual drivers although Uber have the long-term plan for manufacturing driverless cars. It still needs time to prepare this big project, so it will not increase substitute for individual drivers until Uber has driverless cars. In addition, potential drivers have their own options for choosing Uber, Sidecar, or traditional taxi as their job. Therefore, Uber spent more money on its expense as suppliers have power to negotiate for higher price. Also drivers do not need to pay for any switch cost since they possess everything entirely even the free app, so it lets divers have huge bargaining power. However, Uber also has its huge power for establishing regulations and interests. This is because there are so many qualifying drivers in the market. Taking all the things into consideration, suppliers have moderate power in the industry.

Buyer Power

There are a significant number of competitors and substitutes in the industry, so Uber’s consumers have considerable options to choose their transportation when they want to go out. Moreover, the service of Uber is not a necessity that people have to utilize every day only if in some specific situations. In term of switch cost, Uber’s costumers only need to register in the app instead of paying anything, so the switch cost is very low for the users. To consider all these factors, consumers will more likely pay much attention on price or be price sensitive when they have a lot of options with low switch cost. Therefore, buyers have considerable power to decrease Uber’s potential profits by thinking all of these factors.

Threat of Substitutes

For the transportation industry, this is a highly competitive industry with a considerable number of competitors and substitutes. The most similar substitute of Uber is traditional taxi service, which still takes the significant market share in transportation industry. This is because people are accustomed to use taxi instead of other similar transportations even taxi service has higher price, so it still limits Uber to improve its price. The biggest substitute of Uber will be public