Case: Planning, strategic management, and decision making are central activities for business success. They should support an organizations purpose and what it wants to be become. Planning, the first of the four functions of management, enables managers to perform the other three functionsorganizing, leading, and controlling. Ubers growth and impact on the transport industry suggests that senior management has done its planning. Lets consider planning, strategic management, and decision making at Uber. Planning: First Key Component of Ubers Success What kind of brand do we want to be? That was the question Travis Kalanick asked at an early meeting in 2010, when the company consisted of four employees in a 10-foot-by-10-foot cubicle, according to Fast Company writer Max Chafkin. Should it be a high-end luxury transportation service that could include airplanes and helicopters, as one person urged? Or should it be low-cost accessible luxury, as Kalanick preferred? If Uber is lower-priced, then more people will want it, he argued. Good planning begins with a mission and vision statement. Ubers original statement was everyones private driver, which shows that the company was then restricting itself simply to transporting passengers from one place to another. The motto also conveyed luxury and exclusivity, not mass-market appeal, as Brad Stone points out in The Upstarts. Today the company has a much bigger vision: Transportation as reliable as running water, everywhere for everyone. Kalanick wants Uber to be so inexpensive that it becomes the cheap and efficient alternative to both owning a vehicle and taking public transportation. Accomplishing this vision requires the company to find new ways to deliver transportation at low prices. Uber clearly is pursuing a growth goal, and pricing is one way to get there. Pricing is partly related to the kind of service chosen by the customer. Uber X consists of personal cars driven by independent contractors; Uber Black consists of high-end sedans driven by licensed chauffers; Uber Taxi uses taxis that have an agreement with the ride-service company; Uber SUV offers vehicles seating up to six people; and Uber LUX, the most expensive option, uses high-end luxury cars under the control of Ubers top-rated drivers. In addition, Uber does indeed offer planes and helicopters as well as boats upon customer demand, as was suggested in that 2010 meeting. Uber has successfully adapted smartphone, GPS, the credit card, and database technology as part of its business model. To maximize revenue from its various vehicle services, the company relies on a surge pricing algorithm (computerized step by step procedures). The basic problem Uber had to address was to how to predict demand for car-hire servicesthat is, matching town cars or cabs with the prospective riders who need them, a classic supply and demand problem. Traditional cab drivers must make a living, so they tend to concentrate at high-demand places such as airports and hotels, making them less available to riders who want to hail them on the street. Ubers challenge was to devise a smartphone app that would predict when and where spikes in rider demand would occur and motivate drivers to show up in those places. With surge pricing, Uber establishes a price based on the number of available drivers and the number of requests made by people who want to travel. With this formula, drivers can earn two or three times their usual rates over the usual low rate when there are too many people wanting rides and too few drivers to serve them. Kalanicks ultimate goal is to dominate transportation by using self-driving cars, where he hopes to excel against many well-financed competitors, among them Google, Intel, Apple, Tesla, General Motors, and Ford. Currently, experimental Uber driverless cars are picking up passengers in Pittsburgh and Phoenix. Kalanick hopes autonomous vehicles will not only decrease costs but also lower carbon emissions and their effect on climate change by decreasing travel time and reducing land devoted to parking places. However, the long-term goal of replacing drivers with self-driving cars may conflict with Ubers short-term goal of trying to serve more passengers by hiring more drivers. And, of course, the whole idea of self-guiding cars angers todays Uber drivers as they consider what to do as actual vehicle autonomy approaches. Company Strategies: Simplicity and Convenience Simplicity and convenience are at the core of Ubers strategiessimplicity because you as a passenger need only an Internet connection, a credit card, a smartphone, and the companys mobile app; convenience because the app shows your exact geographical location and a driver will immediately inform you when you will be picked up. (You can follow the progress of your approaching ride on the screen of your smartphone.) To achieve its strategies, Uber has used a host of tactics, including the following: Eliminating or reducing transaction costs. There are no charges to you for using the mobile app. There are reduced costs for drivers because they dont need to comply with local taxi or limousine regulations. Increasing use of drivers assets, increasing their income. Private cars tend to stay parked more than driven, but of course they still incur maintenance and depreciation costs. With Uber, drivers can put their idle assets, their personal cars, into use and do full- or part-time work to generate income. Exploiting key technology. People love their smartphones and apps, and Uber exploits this enthusiasm to garner customers, expanding to cities everywhere around the world. Employing variable pricing. Because Uber is not covered by taxi regulations, which require cabbies to adhere to pre-approved prices or fare rates, it can raise or lower a ride price based on the demand for the service at a specific point in time. In addition, Uber customers are made aware of the estimated fare prior to engaging the service, which is not always possible with taxis. Allowing easy payment. Because you must provide your credit card number when signing up for an Uber account, the fare for a ride is automatically charged to your credit card and paid to the driver. No worries about having the right amount of money or being ripped off by a dishonest driver. Maintaining quality control. Uber ensures quality by checking drivers backgrounds for criminal history and requiring them to show proof of insurance. In addition, the company seeks feedback by allowing customers to rate drivers on a 1- to 5-star scale, and drivers are expected to maintain a prescribed level of service quality. Similarly, drivers may also rate their riders, who can be blackballed from using the service if they rack up too many low ratings. Playing hardball. Kalanick loves a fight, writes business journalist Thomas Lee, which is how Uber faced down hostile regulators and a host of competitors around the world. Indeed, controversy has followed Uber almost since the beginning, as the company has often sought to enter markets without getting necessary permission, leading to litigation (70 federal lawsuits in 2016). Such aggression and fearlessness has helped it expand its service to cities all around the world. Uber has outlived some competitors (Seamless Wheels, Taxi Magic, Cabulous, Couchsurfing, Zimride, and most notably Sidecar) but still faces others, both in the United States and overseas. Its principal U.S. ride-hailing rival, which uses a smartphone app and offers multiple levels of service, is Lyft, founded in 2012 and now in 300 American cities; smaller competitors are Juno, Via, Gett, Fasten, and RideAustin. Curb, started in 2014 and now in 65 American cities, is appbased but connects customers with safe and reliable services by partnering with professional, insured, and licensed taxi and other for-hire drivers. Overseas Uber is challenged by Lyft (in Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam), Gett (London, Moscow, Tel Aviv); Grab in Southeast Asia, Ola in India, andits toughest global rivalDidi Chuxing in China. An analysis of Ubers strengths and weaknesses reveals the following: Strengths. The company has an unlimited number of drivers and vehicles. Its drivers are classified as contractors, not employees, which lowers labor costs. Its prices are lower compared to those for taxis. It offers convenience in service and pricing. It maintains a high standard of service. Weaknesses. Ubers drivers earn less than those of competitors. The firm has a limited knowledge of local markets (a disadvantage in its struggles with Didi in China). Critics have faulted its privacy policy, such as allowing employees access to customer data. The company has a hyper-competitive organizational culture (though Kalanick considers this a strength). The leaders were, at least until recently, considered exceptionally arrogant (Kalanick looked like an irrepressible jerk to many outside the company, said writer Chafkin). The head-banging style generates extra legal and lawsuit-settlement costs. Uber faces a wealth of opportunities, offset by a multitude of threats, that may affect the firms strategies: Opportunities. Customers are unhappy with conventional transportation services. Countries lacking good taxi services represent wide-open markets. There is an ample supply of drivers in most countries. Ubers growing valuation (an estimated $70 billion in 2017) allows for continued investments. New transportation technologies, such as electric vehicles and driverless cars and trucks, represent new possibilities for exploitation. Threats. Many drivers (Uber calls them partners) are unhappy with what they call a baitand-switch, in which the company lures drivers with attractive fares only to extract everlarger commissions or lower fares. (In one highly publicized incident, Kalanick was captured on video heatedly arguing with a driver, Fawzi Kamel, about lowering prices on fares. Kamel: People are not trusting you anymore. . . . I lost $97,000 because of you.) It has had to deal with expensive lawsuits, including paying $20 million to settle claims it misled drivers about the amount of money they could ear and $100 million regarding employment classification of drivers. It has been found to be trying to deceive authorities in markets where its service was being resisted (using a worldwide program called Greyball). It received a whirlwind of bad press after a former female engineer, Susan Fowler, said in an early 2017 blog post that she had been sexually harassed by her direct supervisor, which sparked other revelations alleging the company was deeply hostile to women. It (and Lyft) was found to show racial discrimination against male riders with black-sounding names. And through it all there are the threats of competitors, conflicts with local officials, and the progress of rivals toward building a self-driving car. Decision Making: Paths to Growth As stated at the top of this section, an early decision was to determine what kind of brand UberCab was to bewhat kind of customer service and pricing it should offer. In the initial conception, the company allowed customers to hail black luxury cars, driven by licensed chauffeurs and taxi drivers, at a price that was 1.5 times higher than a taxi. After feuding with various governments and taxi companies over licensing, in 2012 Uber decided to start Uber X following another business model. As Brad Stone writes, what if you opened the service to anyone with a car and allowed [him or her] to pick up passengers looking for a ride via a smartphone app? The price for this service was 10% less than a standard taxi. Another decision was to change the company name from UberCab to Uber so as avoid having to meet the licensing requirements of a taxi firm and to project an image of being different from a regular taxi service. Over its brief history, the company has made several decisions creating new product lines aimed at growing revenue, such as establishing UberEats, Uber Fresh, and UberTASTE for food delivery; UberRUSH for package delivery; and UberCARGOand UberVAN for moving goods. As journalist Kara Swisher writes, Kalanick sees in Uber the potential for a smoothly functioning instant-gratification economy. . . . If we can get you a car in five minutes, we can get you anything in five minutes, he says. Uber also initiated UberPOOL as a carpooling service in which one driver picks up multiple passengers traveling in the same direction. This strategy is effectively working in San Francisco, New York, and Paris as people here tend to travel the same route to and from work. Traditional taxis require background checks on their drivers, but Uber and other ride-hailing companies have decided to push back against these laws. For instance, Kalanick made a decision to fight the fingerprinting of potential drivers, believing the process is too slow and unreliable, and instead the company uses a company called Chekr, which uses other methods. As a result, Uber was forced to stop operating in Austin, Texas, in 2016 because it was unable to circumvent the law on fingerprinting for background checks; alternative ride-hailing companies RideAustin and Fasten have now filled the void. When Uber enters into a new market, according to whosdrivingyou.org, it begins operations with complete disregard for local laws. They allow their hired drivers to begin work illegallyoften providing free rides to entice new customers and avoid local for-hire livery rules. As you might expect, this highly aggressive approach has led to strong resistance from government officials, which has forced the company to spend a good deal of money on legal fees and legal settlements (more than $600,000 in Seattle, $684,000 in California, and $314,00 in Washington D.C.). In 2011, Kalanick made the decision to break in to overseas markets, starting with Paris, over the objections of Uber engineers who, according to Brad Stone, felt that it was too difficult to accept foreign credit cards, convert euros to dollars, and translate the Uber app into French. Never ask the question Can it be done? Kalanick is quoted as saying. Only question how it can be done. A major decision, as mentioned earlier, was for Uber to get into Chinaand then to get out after spending about millions battling rival Didi, which after a long battle agreed to merge with Uber China. The action was in part based on the realization that Uber resources could be better used elsewhere, such as India.

1.Utilize Porters model for industry analysis to assess Ubers competitiveness?

2.What is Kalanicks decision-making style? Explain.