Planning: First Key Component of Uber's 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. Uber's original statement was "everyone's 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 Uber's 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. Uber's 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. Kalanick's 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 Uber's short-term goal of trying to serve more passengers by hiring more drivers. And, of course, the whole idea of self-guiding cars angers today's Uber drivers as they consider what to do as actual vehicle autonomy approaches.

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 don't 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.

1. Kalanick's ultimate goal is to dominate transportation by using self-driving cars. Draft a SMART goal that will represent his wishes and make sure to explain each element of the goal.
2. Are Uber's long and short-term goals in conflict? How?
3. Are Uber's strategies consistent with the results of their SWOT analysis? Explain.