Introduction
One of the most scandalous world companies of recent years, which brought a revolution to the industry – Uber, is constantly in a state of struggle: authorities from different countries are trying to ban it and are being attacked by competitors. But despite all the difficulties, the company’s value exceeded the $ 50 billion mark, and the number of customers is constantly growing. And it seems that she is not going to stop at the chosen niche. Uber launched the mobile app for trucking in 2016. Almost at the same time, the international online trading platform Amazon announced the start of development of a similar service. The competitive advantage of the newly made logistics aggregators is also the elimination of intermediaries (forwarders), which account for an average of 15-20% of the actual cost of transportation. More recently, the emergence of the Uber online service for passenger taxis made a technological revolution, completely destroying the existing business of taxi fleets and depriving a whole army of dispatchers. One of the competitive advantages that Uber have over other companies is efficient value chain. It is the goal of the paper to explore how value chain makes Uber at par with conventional companies that does not rely on current technologies.
Part 1
Value chain analysis accesses the effectiveness of a business and how it operates to deliver value and product to the customer. The Uber product is the riding service that it offers to customers in more than 64 countries through an online application (Koc & Bozdag, 2017). The value chain involves five distinct process; marketing and sales, customer services, inbound logistics, operations and outbound logistics (Koc & Bozdag, 2017).
Value Chain from a Conventional Taxi Company That Does Not Use Mobile Application
Primary Activities
i).Company Inbound Logistics
The company, just like Uber, does not own fleet of vehicles. It rents the vehicles from either the public or drivers. The employees work on contract basis. The drivers does not need to own smartphones but any normal phone to ensure they are reachable from the office. However, the vehicle has a strong CCTV camera and a tracker, meaning the head office can track and monitor the operations of the taxi.
ii) Company Operations
The company operate close to 30 cities across the world. The vehicles are strategically places so that customers can easily request for ride. They can also get the drivers contact so that they can access the taxi any time they require the ride. The company uses pay and go service through the account number or paybill number.
iii) Company Marketing and Sales
The company uses mainly word of mouth and sometimes social media for advertising the service. It also relies heavily on public relations as one of the marketing strategies.
iv) Company Outbound Logistics
The company operates in more than 30 cities around the world. It does not rely on internet but other means of advertising and creating unique customer relations.
v)Company service
The company has a medium customer level service since it does not rely much on technology. The customers can leave any complain or comments through suggestion box. More so, the direct number for the office is availed so that they can contact the office in case they have any complain concerning the service.
Value Chain from Uber
Uber Primary Activities
Uber inbound logistics
Uber does not own any fleet of vehicles that it uses to serve customers. The Uber drivers own or rent the vehicles. Such employees as contractors and not employees (Ng, 2016). Drivers are required to own smartphones to use Uber App software. Customers are required to own smartphone as well.
Uber Operations
Uber operates in more than 760 cities around the world (Nucciarelli et al., 2017). Customers use mobile app to request for the ride. They can see the drivers contact and vehicle details from the app. The Uber uses ‘Pay and go’ strategy where one pays for the service before the ride.
Uber Outbound Logistics
Uber operates in over 760 cities using internet-based technology. In every city, Uber believes that speed of access to receiving the service and information about it determines the choice of the client. Many of us are already filtering out partners who do not call back to our request during the day, or even the next three hours. Efficiency is increasingly important in decision making.
Uber Marketing and Sales
Uber relies on word of mouth and social media marketing. It also utilizes print and media advertising, events, sales promotions, and public relations as it strategy for marketing. It also makes its service convenience. This is an example of the so-called on-demand economics – people want to receive services when they need it, and not spend time waiting for anything from a taxi to send from an online store. This service model is called “instant gratification” – the urgency of service is becoming the new quality standard in all markets.
Uber Service
Uber has a high level customer service. Riders can rate their driver in a scale of 1-5.The drivers with low ratings risks account deactivation by the company. Riders can comment or complain through the App as well.
Advantages and Disadvantages of Each Value Chain
Advantages of value chain without an app
One of the key advantage of value chain without app is that customer loyalty can easily be created as the drivers contact the customers directly and convince them to choose the ride. It can operate comfortably in remote places where internet connectivity is low or not available.
Disadvantages of Value Chain without an App
The first disadvantage is that it is not very convenient as the customer cannot monitor the taxi location and details. In addition, the service is convenient mainly to local customers since it is hard for a visitor to locate the taxi or the service easily. It becomes difficult to rate the service, meaning the customer can be misused by the driver.
Advantages of Value Chain with an App
The first advantage is that it is very convenient as the customer can trace the location of the nearest taxi using the app. In addition, technologies allow not only to attract employees, but also to control the quality of their work. If the passenger was not satisfied with the trip or the buyer received the goods late, using the mobile application he can instantly leave a negative rating and lower the rating of the contractor. Contractors with an average rating below a certain value are automatically disconnected from the order distribution system – the quality of service is maintained at a high level.
Disadvantages of value chain without an app
One of the disadvantages is that the services may not be offered in remote places with no internet connectivity as it requires internet for its operations. In addition, the driver-customer relations may remain low since there is no close contacts (Reji, 2013). Every service is automated, so the customer may not get interested to contact the driver, meaning the customer loyalty is minimal. It should also be noted that domestic players in the logistics market, as well as Western ones, although they foresee the rapid development of IT in freight logistics, but point to a large number of technological and legal obstacles to the “cleaning up” of freight transportation, as well as to the mentality of a domestic shipper who is not ready to trust his valuable cargo ” inanimate “electronic site.
Value Chain from a Conventional Taxi Company That Does Not Use Mobile Application
Value Chain for Uber Company
Part 2
Link between One Primary and Support Activities
Uber: Technology and Operations
There is a very strong link between the technology and operations of the Uber Company. In Uber, every operation is automated. The searching of the nearest taxi, requesting for ride, payment, rating, and verification process relies on the app (Nucciarelli et al., 2017). Also, the monitoring of the service by the company relies on the use of technology. The activation and deactivation of the Uber account is also automated as the driver with low rating can lose the contract instantly. Therefore, without the use of technology, Uber operations cannot run as there is no manual process at any point. Therefore a strong correlation exists between the technology and the services offered by the Uber Company.
Company without an App: Human Resource and Operations
The taxi company without an app relies heavily on human resource for operations. It advertises its services through mouth to mouth or contacting the customers through phone calls. Drivers also convince customers and create loyalty through enticements and offers (Reji, 2013). More so, the clients who refer other customers can get referral bonus as agreed with the driver. Drivers also request funds from customers depending on the distance travelled and status of the customer therefore, human resource plays critical roles in the operations of the company because they are involved in sales, advertisement, guidance, overall image of the company.
Distinct Activities
Company Operations
Uber utilizes mobile app in most of its operations. Uber is a technology-based company which relies heavily on internet because both customer and driver must possess a smartphone. Taxi selection, location, payments and ratings are done using the app (Hales & Mclarney, 2017). The technology is highly convenient because customer can easily trace the nearest taxi and get the driver’s contacts through the app. The app create unique awareness and advertisement strategy for the company because customers can trace the availability of the service without issues. However, the company that does not use the app has an advantage of operating in remote places where internet connection is poor. Even though the service is not as convenient as that of Uber Company, it can easily reach customers living in upcountry and other remote places. More so, it can serve people who may not afford owning the app. It should also be noted that Uber’ operations are very flexible. In times of crisis, traditional business cannot expand its staff to fulfill more orders. If, however, orders become fewer, some employees are idle. At the same time, services operating on the Uber model can easily increase the number of their employees during periods of increased activity and reduce it when the need arises (which, for example, is relevant for 3-PL operators during the holiday season and peak loads).
Company Marketing and Sales
Marketing is an important for any company as it creates awareness to both current and potential customers. It also promotes the services and convinces people to buy them. Uber Company utilizes the brand name, social media and mouth to mouth strategy for sales and marketing (Hales & Mclarney, 2017). It advertises their apps and the conveniences of the services and the nature of services they offer. Marketing and sales are very critical to Uber Company because they are the basic strategies to join and expand new and existing markets.
The company without the app relies mainly on mouth to mouth advertising and customer-driver loyalty. They create customer loyalty through convincing them on the quality of their and giving them offers and bonuses basing or referrals and recommendations. Those who recommend other customers gets offers in form of discounts. However, they sometimes use print and social medial platforms but most of the marketing relies heavily on mouth to mouth strategy.
Part 3
Point 1 activity in Uber Value chain and explain how and why this activity is related to ethical issues
Operations activity is associated with ethical issues. Uber labels its drivers as contractors, not as employees, which exempts it from paying a minimum wage or social security contributions, among other things. More than sixty thousand drivers have filed or plan to file an arbitration lawsuit to change that situation, which could cost Uber billions of dollars.
In addition, for several years, Uber was perhaps the greatest technological villain. It ignored the regulations, there was rampant discrimination in the workplace and it was accused of stealing intellectual property, among other things. It is still worrying that their cultural and leadership solutions may not solve their persistent public relations problems. In addition, technology development directly threatens traditional business. Sometimes competition takes on harsh forms – taxi drivers around the world are waging a real war against Uber. The situation in the delivery market is calmer, but new players are confidently taking over the territory.
Why ethical issues were not detected when you analyzed Uber in previous parts?
This is because some of technological activities carried out cannot be detected easily by the common person. Uber uses the data to make marketing decisions. In addition, many people, unaware of how their information will be used by third parties, they pour on their personal profiles, applications and platforms, can be taken out of context, commercially exploited and even sold without their consent (Rothaermel, 2017)..
What type of management ethics can be associated with Uber?
The management ethics associated with Uber is technological ethics. The technological ethics involves many strategic decisions such as investment in human resources, modernization, development and product services.. The usefulness that employees give to technological resources versus the controls implemented are the catalyst of technological ethics. An example of this is the usefulness of PCs, in personal matters during working hours. Also, that copies of company software be made for personal use. Even offer for sale to other company’s customer information among other practices. These are some of the types of decisions associated with technological ethics that are made in organizations. But they also have a controversial ethical dimension. According to the role of those operating the technology within the organization, they must adhere to technological ethics. Through which security policies, standards and procedures are established. Also, the Management of human talent in its induction process must carefully contemplate the participation of the unit responsible for information security (Nucciarelli, et al 2017). The new human talent must adhere to security policies and subscribe to all those instruments designed and implemented. As these are part of the regulatory body in terms of information security and ethical responsibility. Finally, Ethics and Technology go hand in hand, ethics is above all. By virtue of guiding all sciences and technology in their service capacity. The important advances in all the fields, so that they are really beneficial they must take care of the ethical thing.
Part 4
The article by Hamilton & Eckard (2008) demonstrate the issue of corruption in poorly managed value chain. It specifically focuses on Siemen’s case. The Siemens example illustrates how high the price of corruption in the value chain can be. Such experiences include bribing contracts for the supply of energy equipment in Italy, telecommunications infrastructure in Nigeria, and obtaining national identity cards in Argentina. Serious problems in the control and management of the value chain (financial, legal and organizational management) undermined the company’s reputation, which affected its market value. In general, corporate culture was characterized by weakness and limited control, as a result of which vicious practice arose. This jeopardized the very existence of a company with an international name and well-deserved authority. The Siemens example also shows how a company can transform itself through strong corporate governance, restructuring of departments, functional subordination and clear guidance from management with a special emphasis on transparency and trust. Today, Siemens is a corporation known for its desire for transparency and leadership in the fight against corruption, and not only within the framework of internal relations and the supply chain, but also at the level of support for programs and collective actions on an international scale .
As suggested by Kumar, Kwong and Misra (2009) reputation is another non-economic issue attributable to offshoring. Reputation is what runs the thread through all aspects of ethics, management and the risks of the entire extended value chain, and therefore organizations must pay great attention to this very connecting characteristic. Today, reputation should never be the single and mandatory component of a risk management system. There is a great need for transparency as the leading motivating factor that underlies these changes; followed by a “reputation failure” of a leading organization or competitor. Both factors are probably related, since it is precisely the flaws of the companies that significantly affected the credibility of the business and led to the need for transparency as well as tighter regulation (which will be discussed in the next section). Another key factor is the rapid growth in the popularity of social networks and the enthusiasm of customers, employees, suppliers, advisory groups and the general public with whom they rushed into cyberspace to share their feedback – both positive and negative. Imagine a story with McDonald’s, which has a less happy ending, and think about how it would look in social networks (New, 2015). In fact, the organization’s reputation is “lending” to interested parties, which can either be loaned again or at any time to demand repayment of the loan amount. This is especially important when you consider that 80% of the value of modern organizations is represented by intangible assets (which includes brand value), which can be seriously affected by a blow to reputation. That is why organizations need to pay close attention to the risks of third parties — both in the supply chain and in key relationships. Thus, reputation and an extended value chain are inextricably linked. For example, a study by Baker & McKenzie, in which more than a hundred international companies took part, showed that when choosing partners and suppliers for companies, reputation risk is more important – especially if it is associated with corruption – than the offer price
References
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Kumar, S., Kwong, A. and Misra, C. (2009). Risk mitigation in offshoring of business operations. Journal of Manufacturing Technology Management, 20 (4): 442-459. https://doi.org/10.1108/17410380910953711
New, S. (2015). McDonald’s and the Challenges of a Modern Supply Chain. Harvard Business Review.
Ng, S. (2016). Uber Technologies Inc. as a Disruptive Innovation.
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