The models of business now days require innovations than before, as basic rules regarding capturing and creating economic value that once existed with companies tried using same model of business in better way as compared to competitors. However recently the business models have been subject to disruption and displacement rapidly and in certain cases extreme are with outright destruction. Therefore, this essay tries to explain the business model along with the industry, company and the product/ service of Uber that disrupted for viable business model through innovation (Dru, 2009). The way the new entrants achieve the power disruptive that enables in the skirting of the constraints and the exploiting of the possibilities those unseen, that is the business model process of innovation.
The methods of generating the revenue and making the profit by a company from the operations of the company are termed as the business model that the company follows. However, analysts use gross metric profit for comparing the effectiveness and the efficiency with regards the business model of the company. The gross profit by subtracting from revenues the cost of sold goods happens to be calculated (Macdonald & Corsi, 2013). The disruptive innovation happens to be an innovation that creates new market and network value and disrupts eventually the market existing and network value thereby displacing the market established by the firms, the products and the all the alliances. However all innovations are not disruptive.
The Uber Technologies, the largest provider in the worlds of the personal transport has made it surely into top ten of the conservations of the water cooler. The Digital, the technology and the business model and disruption happen to be frequently used terms and buzzwords in the story of the Uber.
The company Uber in the year 2009 founded and is present currently in 60 countries and in cities more than 300. Despite the coverage of the media that is extensive enough regarding most countries trying to ban the services of Uber, the thing that makes Uber successful few people understand actually. Even most of the taxi drivers conventional fail to understand the reason how Uber as the company manages to offer the service with the help of drivers those do not have the licence of Taxi.
The reason that many believe is the innovative technology that digital that has allowed Uber in order to disrupt the industry of taxi (Schlachter & Hildebrant, 2012). But the fact it is not the case but since Uber utilises responsive website and app with the GPS location and the payment automatic through credit card. However, these technologies those have been standard and used since many years and are therefore hardly innovative.
Therefore, the question is that helps for success of Uber. That works for Uber is the peer-to-peer on the platform that is digital with Uber model business. That suggests that Uber business model is connecting people who are offering a service with the people who need the service.
Here taking a step back and looking at exactly what the model of business is. To the surprise, it found that there is no actual definition regarding the business model that universal.
To understand the Uber business model structure will have to understand how the Uber that offers to two types of the customers its service would answer these questions (Osiyevskyy & Dewald, 2013). Firstly the people who provide or offer and secondly to the people who require or want the ride. To become the driver the requirements are straightforward that requires a criminal record that is clean, a car that is newish and the phone mobile. Whereas to get a ride on Uber the customers require to simply download the app of Uber, then do the registration and provide the details of the credit card.
The value proposition with regard to the drivers or people offer service of Uber is to provide with increasingly flexible income source to the people who happen to own a car. The drivers themselves can determine the number of the hours they need to work (Frazer, 2007). The value proposition to people who require or the passengers is the cheap and the market rates those undercut, the network that are wide of the drivers, the information that is real time regarding where is their ride, and the payments automatic through the credit cards. Further Uber creates internally the value with them not having to indulge in the dealing with the maintenance and the servicing of the taxis fleet, the rent, and the agents of the call centre, the administration, the fees of parking, the training and recruiting and the issuance of the permits to the drivers. These all of the means suggest massive variable and the fixed cost savings.
This all means and it is clear that Uber does not happen to be taxi company but is an platform that is online that helps in connecting people which is either not new. This model of peer-to-peer is been used by most of the organisations that includes eBay, Airbnb, Trade Me, and most of the dating service essentially (Jordan, 2012).
The technology by itself happens to be seldom disruptive. If the industry that is going thus to be disrupted, then it is going to be the trivial technology that combined with the trivial, but the business model that is effective. Therefore it is most likely happens to be a start-up or the organisation from the industry that is different that is an outsider and are not by the current logic along with the thinking of the industry are constrained that are disrupting.
The application of these two models by Uber that is the following of the peer to peer models and the digitalization models has helped the company Uber with the disruptions in the recent times. The first it help the Uber in connecting with drivers through network that has enabled them to do the business in the industry for providing the taxi services. This is without the need to deal with the management of the maintenance and servicing of the fleet of taxis, and the other is they need not bother about the licences or permits those are the responsibility of the drivers. The drivers with the possession of the smart mobile phones get the messages regarding the passenger who is looking for such a service. Secondly, Uber with the digitalisation and the app that the customers can download and register helps the customer with the identification of the taxi and the service regarding their destination required by them to reach (Telesca, Stanoevska-Slabeva, & Rakocevic, 2010). These services and the business models through the disruption provide the innovation in the business model thus helping to bridge the divide in the transport industry connecting the people who are interested in providing the service and the people who are on the lookout for such services.
Thus the two business model that is the peer to peer and the digitalization helps the company like the Uber in providing the services and through the disruption they have enabled with the innovation in the business models helps them to connect with people those require the services like transport and the drivers who are interested in offering those services. They have enable through the disruption in the business model in bridging this divide and bringing the two sets of the people closer and at the same time without the much effort and the cost constraint (Rhodes, 2016). This pure innovation of the business model helped through disruption in changing the transport industry with the help of business model that supports the disruption.
This analysis regarding the findings on the future of the models of business requires to be innovating in the areas of the activities by being efficient to intelligent. The big companies are improving the efficiencies to increase the profits in most ways reliable (Averyt & Ramagopal, 2009). This especially provided the market requirements only gradually change only providing companies time plenty to minimise cost of production related products existing. Today the constant improvements in efficiency for bottom line healthy are prerequisite.
However, these necessary but are not sufficient. The rapid market changes today make most products obsolete before they are leaned out hence less time received towards production processes optimisation (Sarkis, Cordeiro, & Vazquez Brust, 2010). Therefore, companies are building embedded intelligence and flexibility directly into process of production that help quickly adapt to the needs changing. Consider global hotel that is web based uses feedback cycles quick to reframe and disrupt the business model focus from efficiency to satisfaction of user.
The big companies in order to innovate their business models traditionally have struggled even as the technology that digital has brought the model for business innovation to the corporate agenda forefront. However, big companies can also be disruptive provided they identify and thus overcome the orthodoxies common but limiting regarding the ways to do the business. Thus, the business model and the disruption can bring about the innovation in the business for a company.
Averyt, W. & Ramagopal, K. (2009). Strategic disruption and transaction cost economics.International Business Review, 11(2), 39-53. https://dx.doi.org/10.1016/s0969-5931(98)00037-7
Dru, J. (2009). Beyond disruption. New York: Wiley.
Frazer, L. (2007). Causes of disruption to franchise operations. Journal Of Business Research, 66(5), 227-234. https://dx.doi.org/10.1016/s0148-2963(00)00118-1
Jordan, J. (2012). Information, Technology, and Innovation. Hoboken: Wiley.
Macdonald, J. & Corsi, T. (2013). Supply Chain Disruption Management: Severe Events, Recovery, and Performance. J Bus Logist, 34(4), 270-288. https://dx.doi.org/10.1111/jbl.12026
Osiyevskyy, O. & Dewald, J. (2013). Explorative/Exploitative Business Model Change: The Antecedents of Responses to Ongoing Disruption. Academy Of Management Proceedings, 2013(1), 13358-13358. https://dx.doi.org/10.5465/ambpp.2013.13358abstract
Rhodes, C. (2016). Democratic Business Ethics: Volkswagens emissions scandal and the disruption of corporate sovereignty. Organization Studies. https://dx.doi.org/10.1177/0170840616641984
Sarkis, J., Cordeiro, J., & Vazquez Brust, D. (2010). Facilitating sustainable innovation through collaboration. Dordrecht: Springer.
Schlachter, C. & Hildebrant, T. (2012). Leading business change for dummies. Hoboken: John Wiley & Sons.
Telesca, L., Stanoevska-Slabeva, K., & Rakocevic, V. (2010). Digital business. Berlin: Springer.
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