Resource or capability challenges Uber and Lyft faced because of their fast company growth

Uber has been hailed as one of the fastest growth start ups in America and it has enjoyed massive profits over the years. The fast growth however, has caused the business to make some key mistakes as they have not properly planned and tried to cut corners.

One of the reasons for their rapid growth is that they have not had to follow usual laws and regulations surrounding employee wages.  This has allowed them to offer ride services at a discounted rate and to undercut the contracted employee with a lower than minimum wage.  The lack of proper planning from a legal regard has also hurt them in the court room, as there have been several cases that they have lost.  Since their drivers are all independent contractors, there is also a lack of knowledge or control over the employee where they can actually quit a working at any time.

The impact of the Covid-19 pandemic is still being understood, however for ride sharing business there was a 35% cut to business profit.  With a growing hesitancy to get into cars with strangers, both business also will have challenges ahead. With the onset of Covid19 both business have struggled to keep up, as the macro environment which was unpredictable, has seriously affected the desire for people to get into a car with a stranger.

Uber has worked internally to develop its own software technology, by recently appointing a new COO from Amazon to help facilitate things.  Where Lyft, has been working with Google to create software that enables self driving capability.  While both business are struggling to get public approval on self driving cars, I suspect this is not the last we will hear of these projects.  In a truly digital age, with environmental friendly options on most business minds it would be prudent that they continue to explore these avenues.

PESTEL factors which are contributing to the popularity of ride-sharing services

As Uber and Lyft seek to expand on a global basis, they are encountering numerous political and social constraints as openness to somewhat unregulated ride sharing received opposition.  Each individual jurisdiction even within the USA, has unique laws and regulations that can impact their business – never mind looking abroad.

“France filed charges based on advertising, the Netherlands ruled against Uber for their drivers not having Taxi licenses, cease and desist orders from Portland, with additional ban considerations in Asian countries.” (Pestle, 2022)  Countries control the law and regulations surrounding business operations from many standpoints including political, economic, legal…. And environmental.  With an increasing need for economically affordable rides they are poised to grow, however the impact of affordable green energy cars may impact their business.  Furthermore, the social climate surrounding operating a vehicle is slowly changing and it may be more likely that mass transit will flourish, instead of individual ride operators.  This is why the analysis of the Macro Environment is so important, it helps to anticipate change and mitigate risk.

Industry challenges (think Porter’s Five Forces) with the use of self-driving cars address

The Porter Five Forces model, identifies five forces that shape every market and industry across the world.

• Competition within the industry, whereby both Uber and Lyft are the big names at the moment, it does not account for other business models that may surface in the future. Without clear regulation it is open market for competitors.
• Potential of new entrants into the industry, Without clear regulation it is open market for competitors.
• Power of suppliers, this one is easy with Putin cutting gas to Europe, the affect of less gas supply can and is being felt around the globe. Uber and Lyft currently rely on domestic cars to run their business, at a time where everyones pocketbook is being tightened.
• Power of customers – customers can drive a price up or down depending on their demand. With many smaller locations, Uber and Lyft may do okay in this department, however the fact remains there are many other external factors that are unpredictable that can also affect their business sustainability.
• Threat of substitute products – this is likely a great threat to their business model, as new entrants like Elon Musk’s $5000 Tesla enter the marketplace business must think quickly to respond.

References

Bright, D.S., Cortes, A.H., Gardner, D.G., Hartmann, E., Lambert, J., Leduc, L.M., Leopold, J., Muldoon, J., O’Rourke, J.S., Parboteeah, K.P., Pierce, J.L., Reece, M., Shah, A., Terjesen, S., Weiss, J., & White, M.A. (2019). Principles of management. Rice University. https://openstax.org/details/books/principles-management

Admin, Minton, D., Omullo, P., & Haga, S. R. (2022, April 24). Take a look at this $5000 Tesla Model revealed by Elon Musk. Complexob7. Retrieved May 5, 2022, from https://complexob7.com/take-a-look-at-this-5000-tesla-model-revealed-by-elon-musk/