Business Informatics Ubers Business Model

Question: Discuss about theBusiness Informaticsfor Ubers Business Model. Answer: Introduction Uber uses affiliated e-commerce model. The company provides information to both cab drivers and the passenger in need of transport services in a given area (Barnes-Vieyra Claycomb, 2001). Uber has a software application that allows users to order for taxi services and pay directly using their linked credit card. The company gets revenues from trip commissions, interests of keeping and listing fee that they charge drivers to start working with them. Customers using the Uber services are able to enjoy several advantages that were not there before it launch. The customers dont have to wait for long times for a cab as it was initially. They have short waiting time enabling convenience. Customers are able to book cab on their Smartphones and be shown where the nearest cab. Customers pay lower prices compared to the ones paid before. They Uber Smartphone application enables calculations of price per kilometer covered. Uber services enable customers track the ride using the Smartphone application. They are able to see the direction the cab is taking and be notified incase the drivers diverts from the map. And lastly, customers enjoy discounts and free rides occasionally. Customers use their smart phones application to see difference prices in changing hours and take advantage of price discounts and free rides when they are available. Using Uber services has disadvantages too. Customers using these services cannot be able to predict price with certainty. Prices keep on changing with changes in traffic. Customers experience surge prices in peak hours. These costs are in most cases higher than the other taxi prices. Customers using Uber services are required to have the Uber application. This limits the flexibility of using the service. It makes it hard for customers to pay for someone else for a ride. Uber uses review and recommendation social shopping model. This enables customers to rate drivers after every ride. Customers give review of the services they have been offered by the company and are seen by other potential customers (Kim, 2013). This helps new customers booking for a ride choose between the drivers based on their rating and reviews. Uber Services are not good to the environment. Uber services increase environmental pollution. Uber drivers dont stay in one point but rather keep on moving around to enhance convenience of customers. These cabs use fuels engines. This leads to release carbon (II) oxide to the environment. Therefore, increasing their movement around the cities means that they will use more fuel hence more emissions to the environment. They increases air pollution in the area they operate leading to degradation of the environment. This is contrary to the other taxi services where the cab stays in one place till it picked by a customer. Competitive Advantage The Uber business is in short distance transport industry. The industry has been dominated by taxi cabs before the launch of Uber in 2009. Uber offers cab services around the cities and its outskirts (Stone, 2015).Users have to choose between the Uber services, taxi and other short distance cheap means like bicycle or public transport. The following are porters five competitive forces facing Uber Company; The first force is Competition in Industry. The short distance industry of travelling around the towns and its outskirts is having a lot of competitors. There are several other forms offering the same transport services in the industry. This means that customer have a wide range to choose from .This indicates that the Uber Company has low power in relation to this force and has to work hard to maintain it service users and providers. The second force is power of suppliers. Suppliers of Uber services are cab drivers who provide services to potential customers. The company uses private drivers who sign in to work with it. There are many private drivers in every city and the company targets them to be recruited and start offering Uber services to customers. In this case, the company has high power because of the many numbers of suppliers who it can use provide Uber services to the customer. Third is the threat for new entrant to the industry. This refers to force as a result of new entrance of companies in the industry. This leads to lowering of the market share. Since the launch of Uber in 2009, there have been several other business launches that operate in the same business model as for Uber service. The cost of entering the industry is not above reach and this makes it possible for new companies to enter becoming effective competitor to Uber INC. Therefore, it can be said that Uber has low power in the industry has new companies can enter the market. Fourth is the power of customers. This refers to potential ability of the Uber service consumers to influence lowering of the prices. It also refers to the cost of a consumer shifting from Uber services to its competitor. It is easy for Uber customers to both drive prices down and shift between service providers. This indicates that Uber holds low power to its customers. Lastly are the threats of substitute products: This refers to other products in the market that can serve the customers the same need. The short distance transport industry has many other means of transports. For instance, customers can opt to use the public transports or ride a bicycle. This shows that Uber faces high treats from substitute products. Uber is executes cost leadership strategy to attain a competitive edge in the industry. Uber started offering the same taxi service to customers at a lower prices to travel the same distance (Porter, 1980) .This has been attractive current and potential customers of Uber services. This strategy helped it enter the market and grow its market share. I dont think Uber created a new market in the industry because the taxi industry has been in existence for years. What Uber did is they came up with a technology that has change the industry. Therefore, Uber can be referred to as disruptive technology and other companies in the industry should adopt the technology in order to remain in business. References Barnes-Vieyra, P. Claycomb, C. (2001). Business-to-business E-commerce: models and managerial decisions. Business Horizons, 44(3), 13-20. https://dx.doi.org/10.1016/s0007-6813(01)80030-6 Kim, D. (2013). Under what conditions will social commerce business models survive?. Electronic Commerce Research And Applications, 12(2), 69-77. https://dx.doi.org/10.1016/j.elerap.2012.12.002 Kobayashi, I.(2009) Private Contracting and Business Models of Electronic Commerce. SSRN Electronic Journal. https://dx.doi.org/10.2139/ssrn.479902 Porter, M. (1980). Competitive strategy. New York: Free Press. Stone, B. (2015). Heres How Ubers Co-Founder Is Going to Take on Amazon and eBay. Bloomberg.com. Retrieved 17 October 2016, from https://www.bloomberg.com/news/articles/2015-04-23/uber-s-co-founder-has-a-new-shopping-app-and-this-is-how-it-works