Entrepreneurship And Growth Of Uber – A Case Study

A Brief History of Chosen Organisation

Discuss about the Entrepreneurship Cengage Learning.

The concept of entrepreneurship was initially introduced in the 1700s, and since then its meaning has evolved. In simple words, entrepreneurship is regarded as starting one’s own business. However, many economists believe that entrepreneurship is much more than this. Some of the economists consider an entrepreneur as the one who is willing to take risk of starting a new venture, if there is a prominent likelihood for profit (Noruzi, Westover and Rahimi, 2010). In contrast, others accentuate the role of entrepreneur as an innovator who makes profit from his or her innovation (Hyde, 2016).

As per economist Joseph Schumpeter, entrepreneurship is a force of “creative destruction” (Westhead and Wright, 2013). Presently, economists agree to the fact that entrepreneurship is an essential ingredient for enhancing economic growth and employment prospects in all economies (Hyde, 2016). Overall, it can be stated that entrepreneurship is the practice of initiating a new business for the purpose of capitalizing on new opportunities. The entrepreneurial organisation, which will be discussed in this report, is Uber.

The chosen organisation Uber is transportation Network Company started by entrepreneurs Travis Kalanick and Garrett Camp. The company is headquartered in California, United States. The company was started when both the partners faced trouble in hailing a cab in Paris, in the year 2008. Both the entrepreneurs at that time were brainstorming different ideas for a new start-up and also made money by selling their several start-ups initiated earlier. At that time, there were apps for almost everything, but not any to book a cab; thereby they invented an app to book a cab. The simple idea was to tap a button and get a convenient ride (Uber, 2017).

Garrett Camp has much experience in app designing, and thus, started prototyping for the app of Uber cab. The app was ready for testing in 2009 and the first beta test of Uber was done in New York, with just 3 cars, and people adored the service. Slowly, Uber Cab started growing, raising huge funds, expanding teams and soon “cab” word was dropped from its name and today it is renowned as “Uber”.

However, the road to growth was not easy for Uber as it received threats from angry taxi drivers across the world and now the company also faces competitive threat from new cab service businesses like Lyft and Taxi.EU. In Australia Uber was launched officially in 2012 and since then, the rise has been spectacular as its market share grew above 700%. The company faced issues in Australia, where it was criticised for surging pricing and affecting the taxi business. Nevertheless, Uber has overcome all the setbacks, it was started as an app and now it has completely transformed the logistical framework of Australia. Uber used technology to deliver whatever people want, be it a cab ride, a package or a sandwich. Uber now functions in 58 countries in 300 cities and has above 1 million drivers and it is of more than $40 billion value (Clifford, 2015).

Application of Entrepreneurial School(S) Of Thought to the Growth of the organisation

According to ‘Frederick, O’Connor and Kuratko (2013), there are macro and micro views of entrepreneurial thoughts; the macro ones include, The Environmental School of Thought, The Financial/ Capital School of Thought and The Displacement School of Thought. However, the micro ones include The Entrepreneurial Trait School of Thought, The Venture Opportunity School of Thought, The Strategic Formulation School of Thought. Amongst all of them, the Venture Opportunity School of Thought can be applied to the growth of Uber (Kuratko, 2008).

The main focus of this thought school is opportunity aspect of venture development and the focus areas is to develop the right idea at right time. It is notable that the idea of starting Uber came into the mind of two entrepreneurs when they face problems in getting a cab at a snowy night. Uber did not start with any big ambitions; rather the organisation began as the answer to that problem. The owners provided people a cheaper and a better option for the problem they used to face in hailing a cab anytime at their footstep and that too just with the push of a button (Clifford, 2015).

Uber has grown so immensely because it was launched at the right time in the right place as consumers at that time were becoming more techno savvy and had an app for everything. People get driven by the convenience and the price, which Uber offered to them. With respect to Australia also, it is notable that clear pricing, superior and clean cars, anecdotally lower prices and convenience has solved several issues of riders providing them a better service. Uber is the answer not just the problems of riders in Australia, but also for the problems of drivers as it became an expedient complement to their demanding life already crowded with compulsions and clutched with bills. Thus, the Venture Opportunity School of Thought can be applied to Uber’s growth because it emerged as a creative business concept that solved the problems of people in the most convenient and efficient way (Frederick, O’Connor and Kuratko, 2013). 

One of the emerging trends that will affect the online cab service industry is the entry of new entrants and intensifying market competition. Several other apps have already started that help customers to book cab on their smartphone, such as MyTaxi in Germany, Ingogo in Australia and Cabulous in San Francisco. Passengers and taxi drivers can now see each other on a map available on their phones. Also, drivers can roll into different services to get connect with customers through smartphones. The start of free apps that are able to affect on the taxi industry, and related and the high growth of the GPS enabled smartphones, will permit the extensive availability of free apps for ordering cabs and making direct contact with drivers. Thus, Uber needs to respond to increasing competition and have to look for new ways to remain competition in the industry (Rossi, 2014).

Emerging Trends that are Likely to have an Impact on the Organisation’s Industry

Another emerging trend that will affect the industry is related to employer-employee relationship. Uber is already facing complaints from different governments that it evades their tax liabilities on its drivers and drivers often not pay their taxes. Further, tax legislations for the industry will worsen the problem for Uber and will also imply either a hike in ride fares or the termination of Uber operations in a partcuualr city or state (Petropoulos, 2016).

One of the emerging trends in Australia that will affect the organisation’s industry is the growing ride sharing business in the country. People in Australia are now using ride-sharing, rather than driving their personal cars. Also, individuals who formerly used public transport and individuals who would not earlier have travelled at all; now prefer the service. People are not just fascinated by the cheap fares, but the bigger benefit to consumers comes from non-price factors, like declined waiting times, cashless payments, higher availability and the user-friendly operating structure (Gilchrist and Denniss, 2015).

The below mentioned are the recommendations that Uber should consider for increasing its market share in future:

Uber should work on deregulating its fares; the company can regulate street-hailed rides still be regulated; however individual taxi brokerages should be permitted to establish their own rates if there is pre-booked ride. Uber functions under a contentious surge-pricing model, where regular rates can increase to double or triple the standard rates during high demand and low supply of cars. With deregulation of fares, taxi companies will get chance compete effectively (Smallbone, Leig and North,  1995).

Another strategy for the company is to make its licensing rules more stringent to avoid any legal issues. Drivers should be screened thoroughly with background checks and vehicles must be investigated before taking them on road. This will help the company to function in a safer way (Lu, 2016). 

Uber should launch loyalty program so that customers can get stick to its services only. In this manner, a recurrent rider program can be initiated that either saves customers’ money or forces them to take one or two extra ride in a month to get the status of a loyal customer, similar to the loyalty program of an airline. Loyalty program would help in engaging riders who keep on switching between the manifold services (Kubal, 2015).

Further, Uber should work on customizing the experience of users. Although, Uber presently did the Spotify partnership, but it demands a paid Spotify account, which restricted it for many people. Although, customizing a service is tough for a business where people press a button and get a car for ride, but few steps can be taken. Level of interaction is perhaps the easiest customization, but even other things can be done like playing favourite music of the rider (Kraus and Joseph, 2009).

Conclusion

To conclude, it can be stated that the current report is focussed on the entrepreneurial organisation Uber, which has not just offered people a convenient cab service, but has also provided people a novel way to earn. The company has progressed transportation access and has made transportation highly reliable by providing a cab ride to customers merely at a button press. The report has discussed that The Venture Opportunity School of Thought can be applied to Uber’s growth because of the business idea innovation and its creative implementation at the right time. Moreover, the trends that are likely to affect the organisation’s industry in future has been discussed and relevant strategies have been suggested to Uber for growth.

References

Clifford, C. 2015. 5 Entrepreneurial Lessons From Uber on Its 5-Year Anniversary. [Online]. Available https://www.entrepreneur.com/article/247014 [Accessed on: 23 March 2017].        

Frederick, H.H., O’Connor, A. and Kuratko, D.F. 2013. Entrepreneurship. Cengage Learning.

Hyde, N. 2016. What Is Entrepreneurship?. Crabtree pub.

Kubal, C. 2015. Five Ways to Improve Uber or Lyft. [Online]. Available https://medium.com/@wtwht/five-ways-to-improve-uber-lyft-or-any-other-transportation-network-company-674c2871c22#.uvg8mo51a [Accessed on: 23 March 2017].        

Kuratko, D.F. 2008. Entrepreneurship: Theory, Process, and Practice. Cengage Learning.

Lu, V. 2016. 5 recommendations for Uber and other car-sharing services. [Online]. Available https://www.thestar.com/business/2016/03/31/5-recommendations-for-uber-and-other-car-sharing-services.html [Accessed on: 23 March 2017].      

Noruzi, M.R., Westover, J.H. and Rahimi, G.R. 2010. An Exploration of Social Entrepreneurship in the Entrepreneurship Era. Asian Social Science, 6 (6), pp. 3-10.

Petropoulos, G. 2016. Uber and the economic impact of sharing economy platforms. [Online]. Available at: https://bruegel.org/2016/02/uber-and-the-economic-impact-of-sharing-economy-platforms/ [Accessed on: 23 March 2017].    

Rossi, B. 2014. The future of the UK taxi industry: is it all about the app? [Online]. Available at: https://www.information-age.com/future-uk-taxi-industry-it-all-about-app-123457912/ [Accessed on: 23 March 2017].   

Uber. 2017. Finding the way. [Online]. Available at: https://www.uber.com/en-IN/our-story/ [Accessed on: 23 March 2017].     

Westhead, P. and Wright, M. 2013. Entrepreneurship: A Very Short Introduction. OUP Oxford.

Gilchrist, D and Denniss, R. 2015. Policy Brief The role of ridesharing in addressing Canberra’s transport challenges. The Australian Institute.

Kraus, S and Josef, F 2009. Strategic  management and entrepreneurship: Friends or foes?, Int. Journal of Business Science and Applied Management, 4 (1), pp. 38-50.

Smallbone, D., Leig, R. and North, D. 1995. The characteristics and strategies of high growth SMEs. International Journal of Entrepreneurial Behavior & Research, 1 (3), pp.44 – 62.