Please answer all 6 questions on the fourth picture.

CHAPTERCASE 12 Uber: Most Ethically Challenged Tech Company? UBER'S VALUATION REACHED $70 billion in 2017 and UBER became the most valuable private startup ever. Yet in the process of achieving such success, Uber's unethical, if not illegal, activity generated controversy after controversy. Before we look more closely at those ethical issues, we need to understand the business success that could have tempted Uber to engage in ethical shortcuts. RECORD-BREAKING GROWTH Travis Kalanick, Liber's co founder and former CEO, came to be seen In comparison, Facebook took seven years to reach a valu- as too much of a liability for the comfort of major Uber investors and was pressured to resign the kooy post. The relentlessly ambitious and ation of $50 billion for a private, venture-capital-backed combative entrepreneur was well aware of his reputation, which he firm; Uber only five. If we compare Uber with car rental described during a speech celebrating Uber's fifth anniversary. "I real- giant Hertz-with some 150 locations, a fleet of 500,000 ize that I can come off as a somewhat fierce advocate for Uber. I also realize that some have used a different 'a word to describe me." cars, and about 30,000 employees-it's astounding to learn @Danish Siddiqui REUTERS that Hertz reaches only about 1 percent of Uber's valuation! Uber reached this astronomical valuation because it successfully expanded both in the United States and glob- industries. Uber's fares go up or down based on real- ally to some 500 cities in 70 countries. As a powerful plat- time supply and demand. During a snowstorm or on form business, Uber's popularity grows exponentially, as New Year's Eve, short Uber rides can cost hundreds of it already transports millions of riders daily and continues dollars! Kalanick argued that surge pricing efficiently to expand rapidly here and abroad. Although Uber is still matches supply and demand. But many Uber users rant losing money as it continues to subsidize customer fares, online against the practice and call it price gouging. its revenues race ahead, from $400 million in 2014 to Punking the competition. Lyft, the competing ride- more than $8 billion in 2017. share company, accused Uber of ordering over 5,000 rides from Lyft, and then canceling, so Lyft drivers lost ETHICALLY CHALLENGED? business from legitimate rides. Trailing Uber's meteoric rise are multiple lawsuits and Punking their own drivers. Reportedly Uber told its accusations, often tied directly to decisions and actions drivers in New York that they could not work for both by its co-founder and now former CEO, Travis Kalanick. Uber and Lyft because of city regulations. No such Consider just some of the incidents and issues in the com- regulations exist. pany's short history: Poaching drivers. As part of Uber's secret Operation Early disregard for laws, rules, and regulations. Within SLOG (Supplying Long-term Operations Growth), months of its San Francisco launch, the local Metro Transit accusers say Uber brand ambassadors actively target suc- Authority and the state Public Utilities Commission had to cessful drivers from Lyft and other competitors to defect. order Uber to cease and desist. They called out Uber as Poisoning competitor's well. Startups live or die an unlicensed and illegal taxi service. Similar injunctions based on access to capital. Kalanick reportedly poi- followed in major markets, including New York City, soned Lyft's efforts to raise venture capital, telling Los Angeles, Toronto, Paris, London, Berlin, and Delhi. investors, "Before you decide whether you want to Uber's response? The company ignored all such warnings. invest in [Lyft], just make sure you know that we are Dynamic pricing. Unlike the taxi industry, in which going to be fund-raising immediately after." pricing is fixed by regulation, Uber uses dynamic pric- Attacking critics. In 2014, Uber senior executive Emil ing, following the model of airlines, hotels, and other Michael suggested spending $1 million to hire private 419to self-driving cars and the companies that manage them. So allow Uber's investors to realize their gains in a big way. If an in this future, many of its compliance failures go away too. IPO is part of the board's plans, the company must develop Current Challenges. But Uber has to get through cur- a more mature, professional, and diverse cadre of managers. rent challenges to reach its future goals. Before Kalanick Otherwise, Uber's trail of unresolved ethical issues and law- resigned, the most visible efforts to deal with scandals and suits could derail an envisioned IPO, or at least of realizing controversies were to manage perception. In 2015 Uber hired full value in the market. David Plouffe as senior vice president of policy and strat- Hope for the Future. If Uber is able to mend its ways- egy, explicitly to improve public relations and to lobby politi- and much depends on how the full board responds to major cians. Previously, Plouffe had been the manager for the 2008 investors-Uber has a much better chance of realizing the Obama presidential campaign and then a senior adviser in future it hopes will unfold. the administration. At Uber he pitched the social benefit of Uber's contribution to the transportation ecosystem and its Questions ability to fix traffic congestion, cut down on drunk driving, Have you used a ride-hailing service such as Uber or and provide reliable and safe services to underserved city and Lyft? How was your experience? suburban areas-even helping to end poverty by providing greater access to reliable transportation. And he minimized 2. Would like to work for Uber? Why or why not? criticisms as misguided, 5 Explain Uber's business model and deduce its strategic intent. Exodus of Talent. Plouffe walked away in early 2017. He . Do you agree with Peter Thiel's assessment that Uber is the was followed by Rachel Whetstone, who headed policy and "most ethically challenged company in Silicon Valley"? communications globally, she was hired in 2015 and left in Why or why not? Explain. April 2017. In fact, a steady trail of senior executives and lead engineers has left Uber in the wake of the continuous 5. Some observers had argued that Uber's greatest prob- scandals that plague the brash startup. They include Uber's lem was not any of its scandals, but its CEO Travis head of autonomous car technology, head of online mapping. Kalanick. Now that Kalanick no longer serves that and an artificial-intelligence (AI) expert. Some cited issues role, how much better off is Uber really? Where do you with the company's values as the reason for their departure. come down? Do you think Kalanick's reduced profile When resigning after only six months on the job in spring will turn the tide for Uber? Or is Kalanick's drive and 2017, Uber President Jeff Jones stated, "The beliefs and competitiveness necessary to Uber's continued suc- approach to leadership that have guided my career are incon- cess, regardless of the title he holds? If you were on the sistent with what I saw and experienced at Uber." board, what would you recommend? And why? Keep in mind that Uber has not yet gone public, so most 6. Uber's new CEO, Dara Khosrowshahi, declared that he executives and engineers likely left millions of dollars on envisions Uber going public in early 2019, that is, within the table when they left. That is, they left behind promised 18 months of his appointment. What would he and Uber stock options due to their premature departure. Going public need to accomplish to make this a reality? List Uber's cur- is key to understanding Uber in the long run. Uber's board rent challenges in rank order, and provide recommenda- may have its own timetable for that step, but an IPO will tions to the new CEO of how to address them. Be specific. TAKE-AWAY CONCEPTS In this final chapter, we looked at stakeholder strategy, By focusing on financial performance, many corporate governance, business ethics, and strategic companies have defined value creation too narrowly. leadership, as summarized by the following learning Companies should instead focus on creating objectives and related take-away concepts. shared value, a concept that includes value creation for both shareholders and society. LO 12-1 / Describe the shared value creation The shared value creation framework seeks to iden- framework and its relationship to competitive tify connections between economic and social needs, advantage. and then leverage them into competitive advantage