Research On Uber Ability To Regain The Hundreds Of Thousands Of Customers Lost After The #Deleteuber Campaign
Uber Technologies Incorporated more commonly known as Uber was founded in 2009 in order to make it easier to get a ride, through the touch of a button on mobile devices. Uber was initially supposed to be an affordable black car service which later transformed into a ride hailing platform. It is a service that is trying to replace the traditional taxi service and make public transport easier. They have an app called Uber that can be downloaded on both apple and android devices. Through Uber, both men and women have a new and easier way to earn money by using their own cars to drive customers. Uber is trying to change the transportation industry by: making transport safer through self-driving cars, making it more quicker and more affordable to order food through Uber eats, and to decrease congestion in cities to have less people have a need to own cars.
From the day that Uber Technologies Inc. started they have continuously made huge losses. As a result of this Uber’s newly appointed CEO, Dara Khosrowshahi, as of August 2017 has decided to take the company public in 2019. According to Khosrowshahi “We have all of the disadvantages of being a public company, as far as the spotlight on us, without any of the advantages”. “So Travis [Kalanick] and the whole board now agree we should just go public. The numbers support it”. “While Uber is unprofitable, Khosrowshahi said, the "math is working" in certain geographies, and the company is simply subsidizing other investments”. Although in the USA, Uber may continue to be unprofitable for about half a year depending on how their competitor lyft does.
Besides the appointment of a new CEO in August of 2017, Uber has also inducted a new COO, Barney Harford, as of December of 2017. Harford will be Uber’s first COO and will be working closely together with the newly appointed CEO, Khosrowshahi in order to break Uber out of their financial loses, and turn it into a profit making company. Both Khosrowshahi and Harford will have to change Uber’s “troubled culture” which developed under the guidance of co-founder and disgraced former CEO of Uber, Travis Kalanick. This “troubled culture” came about from Uber’s consistent challenges as it relates to dismissive treatment of sexism claims and covering up hacks on their customer’s personal information. Recently, Uber has started to tackle a new problem with the public transport sector which is getting people to and from their doctor’s appointments. As a result Uber entered a new market, the health sector. Uber launched a new business line called Uber Health on March 8, 2018. This new service is supposed to be a “ride-hailing platform” available specifically for health care providers so that they can make sure their patients do not cancel their appointments as much. Through the introduction of Uber health Uber may be able to gain new consumers resulting in them increasing their customer base after losing hundreds of thousands of customers because of the #deleteuber campaign. Through this research paper it will be examined whether Uber will be able to regain the hundreds of thousands of customers that they lost because of #deleteuber campaign. I will be using Ansoff Matrix, SWOT and fishbone diagram to analyse Uber and Uber Health.
Methodology
Throughout this extended essay secondary data will be used from Uber’s website as well as many articles about Uber. SWOT analysis and the fishbone diagram will be used to analyse the secondary data collected on Uber.
Body
Evaluating the challenges faced by uber Uber has a “troubled culture” meaning that they have a bad corporate culture. This bad corporate culture is as a result of, Uber’s workplace environment as it is related to the allegations of discrimination, harassment, and retaliation in Ms. Fowler’s (an American writer and software engineer known for her role in influencing institutional changes in how Uber and Silicon Valley companies treat sexual harassment) post, and not having a diverse and inclusive workplace. Resulting from all of this the former CEO Travis Kalanick disclosed he would be searching for someone to fill his position admist the allegations that he had fostered a culture of sexism and achievement at any cost. At the same meeting that Kalanick announced that he was going on temporary leave at the time a different board member made a sexist comment which resulted in his own resignation soon after. “Uber has demonstrated that its problem is not only about a single figure — a reputational cancer that could have been cut away — but that the cancer has infected the rest of the body, ” says Audra Diers-Lawson, a professor of public relations strategy at Leeds Beckett University. “Because the bad behaviors have extended beyond just the CEO, a new negative expectation is probably being formed and this is fundamentally damaging to the company”. As a result of this, Uber retained the law firm Covington & Burling to conduct an external investigation into Uber’s “troubled culture” and management during the time that Kalanick was CEO. This external investigation was prompted after Susan Fowler made a public account of Uber having an environment fraught with sexism and sexual harassment. After the investigation was conducted it was suggested that Uber make many changes to their management which would have been time consuming and costed a lot of capital. This is because although majority of Uber’s challenges had partially originated from Kalanick, it also went beyond him.
The results of Fowler’s accounts about Uber’s sexist work environment resulted in the company losing market share to lyft, a competing ride-hailing business. Before Fowler’s public post about Uber’s sexist work environment, Uber controlled 78. 8% of the market. Between Fowlers mid-February post in 2017 and the first week of June in 2017 Uber’s market share dropped by 3 points to 75. 3%, according to the data compiled for USA TODAY by TXN Solutions, a company that creates sales estimates based on credit card receipts. Uber’s rival, Lyft, market share rose from 21. 1% to 24. 7% during this time when an “unrelenting stream of revelations about the company's business practices and workplace culture, from its use of a fake version of its app to dupe municipal regulators to more recently, a senior executive's sharing of medical records of an Uber driver's rape victim”. “26% of Uber’s customers claim they are actively exploring alternatives and will use Uber less frequently, but only 4% have actually made the decision to switch services as a result of the negative news, ” the cg42 report says. Before the scandal, “the reports stated that 13% of prospective Uber users were very or extremely unlikely to consider doing business with the ride-hailing service (but) post-news, 32% say they would not do business with Uber”. From Morning Consult Brand Intelligence Survey, it showed that only 40% of US adults have a favourable impression about Uber. This was the lowest statistical point on the public’s impression of Uber since Morning Consult Brand Intelligence Survey started tracking Uber’s public image in October 2016. This was caused because of the release of claims about Uber’s sexist work environment, causing the public to have a bad image about the company. This resulted in Uber losing customers to Lyft therefore decreasing their market share as well as decreasing their profit.
Strategies Implemented by Uber to Increase Sales
After the loss of market share from the decrease in customers the higher ups of Uber forced Kalanick out of the CEO position in order to allow Uber to go through positive changes. This was definitely a bold step in the right direction for Uber, as “salvaging Uber will require constant investment and training for initiatives that will constantly reinforce the company’s new values, accepted behaviors, and expectations. ” They’ll need to hire people who align with the new values, and create new roles, such as the one Frances Frei, the new senior vice president of leadership and strategy, inhabits. They’ll also need to expand their budgets to help the people in those new roles build teams and implement big changes that can influence the culture”.
After searching for a new CEO to replace Kalanick, Dara Khosrowshahi accepted the position of Uber CEO after he was selected by the company's board. Before being chosen to be Uber’s new CEO Khosrowshahi had been the CEO of Expedia for 12 years. During the time that he was CEO of Expedia he turned it into the biggest online travel agency in the US. Since Khosrowshahi has become CEO of Uber he has implemented many new ideas to increase Uber’s sales. Khosrowshahi is improving the Uber experience by listening to both the riders, customers, and drivers and evolving both the rider and driver apps. He is doing this to improve what matters most, in order to make it more comfortable for riders and drivers to use. He is also changing Uber as a company in terms of their culture and their employees. This is being done by hiring new and experienced leaders and incorporating a new set of company norms to guide them by putting people first which is completely different from their work culture while under the influence of Kalanick. Uber will be supporting the cities and communities by being “committed to being true partners to cities for the long term, and we’re proudly partnering with organizations that make a difference in our communities”. Through all of these ideas that Khosrowshahi wants to implement Uber should be able to increase their customer base therefore increasing their sales revenue, which will in turn increase their profit. In order to increase the Uber experience, Uber employees had months of conversations and interviews with drivers. This resulted in Uber launching a Beta version of the driver app around the world. The engineers at Uber also created a program to gather as much feedback as possible through “ride-alongs with members of our team and lunch meetups with other drivers and communication directly with drivers on a one-to-one basis over text”. Four months after the launch of the Beta version, “over 100, 000 trips, thousands of conversations, and many bugs reported (and fixed!)”, Uber launched a new app built for drivers in collaboration with drivers, which was designed to meet the needs of every driver during every moment of their journey. Uber will also be hiring a chief operating officer who was the former Orbitz CEO, Barney Harford. This will be a change for Uber as it will be the first time since they were founded that they will have a COO. According to the company, Harford will be responsible for “global operations, marketing and customer support for both the ridesharing business as well as Uber Eats”. That’s one important executive that Khosrowshahi will need in order to increase Uber’s sales. Khosrowshahi has obtained both a COO to help him with increasing Uber’s sales revenue, and a chief financial officer, Nelson J. Chai, to help reduce their losses and make the company profitable enough for a potential initial public offering (IPO) in 2019.
As Uber moves forward towards going public in 2019 they do not have support from all of their major investors. Although Uber does not have full support from all of their major investors, they do have support from their biggest investor, SoftBank Vision Fund. According to SoftBank Vision Fund, “Uber has significant growth opportunities in the future, even in more developed markets” (Kharpal). Aside from moving forward to go public in 2019 Uber and improving the Uber experience, Uber is also expanding into different markets. Uber bought JUMP a bike-sharing startup, provider of dockless electric bikes, which has now made it possible for Uber customers to rent an “easy-to-use electric assist bike” through the Uber app which is now available in 10 cities in North America. Uber has also launched a pilot rental car network in partnership with Getaround in San Francisco. Getaround lets users find and instantly book vehicles from private car owners, all through a mobile app. Uber in partnership with Getaround has now made it possible to rent cars through Getaround for Uber customers. Uber customers will be able to find and unlock available cars through the Getaround network from their phones on the Uber app. Uber has also partnered with the London based, Masabi, a mobile ticketing company, which will make it easier for Uber customers to book and use public transit tickets within the Uber app. As a result of expanding into all of these different markets Uber will be able to expand their customer base because they will gain the existing customers for these companies and markets. This will allow Uber to increase their sales revenue therefore increasing profit in order to be profitable enough for the potential IPO in 2019.
Analysis
Uber has many strengths although they also have many weaknesses from the time of their former CEO Kalanick. Uber’s main strength is their new CEO Khosrowshahi, who was also the former CEO of expedia where he was able to turn expedit into the biggest online travel agency in the US. As Khosrowshahi was already successful in making Expedia the biggest travel agency in the US, it means that he may be able to make Uber the biggest ride-hailing company in the US which would mean that their sales revenue will increase. Khosrowshahi has entered Uber with new and different ideas, which will be able to help Uber increase sales revenue. He is changing Uber’s culture for the better, hiring new employees, changing the executive body, and working to with Uber drivers to make a better Uber experience for both drivers and riders. All of these will be able to change the public's image about Uber for the better which will make people more likely to use Uber. This will cause Uber to increase their sales revenue therefore increasing their profit possibly putting them in a better position for the potential IPO in 2019. Uber has many weaknesses from the time Kalanick was CEO. Uber’s main weakness is their “troubled culture”, a work environment full of discrimination, sexism and harassment, which stemmed from Kalanick and was embedded into every part of Uber. It was not only the higher ups on the board who made sexist comments but it was also the employees. This meant the Uber’s “troubled culture” was already well rooted within the company when Khosrowshahi became CEO. This would have made his job even more difficult if what caused their downfall became a threat again. Khosrowshahi also claims that besides this work environment that was created under Kalanick; Uber also has “all of the disadvantages of being a public company, as far as the spotlight on us, without any of the advantages”. The fact that Uber is constantly in the spotlight means that they are more prone to scrutiny and need to be more careful with how they present themselves to the public and their decision making. This could hinder their efforts to increase sales revenue if they are constantly being scrutinized for their decision. Also because of how the public perceived Uber while it was under Kalanick could cause the customers that they lost to never want to use Uber’s services again.
Although they have many weaknesses that could hinder Khosrowshahi efforts to increase sales revenue he has created many opportunities. Khosrowshahi is improving the Uber experience, changing the company culture, and supporting the cities and communities that Uber operates in. Through this it will rewrite the negative image that the public has of Uber into a positive one. Khosrowshahi has also hired a new chief operating officer as well as a chief financial officer who will be able to help him increase the sales revenue and cut losses. The new COO Barney Harford will come with his own ideas to increase sales which would help relieve some of the work from Khosrowshahi and allow him to focus on other things that may need to be changed within the company. One of Uber’s greatest opportunities is the potential IPO they are going to do in 2019 as Khosrowshahi wants to go public by then. If Uber does end up going public in 2019, I believe that they would become much more profitable as they are already like a public in terms of being in the spotlight, but do not have any of the advantages that a public company has. Uber will also be able to gain more capital and investors through the selling of shares when they become a public company. Although not all of Uber’s investors are supporting them going public in 2019 they do have backing form their biggest investor SoftBank, which could allow Uber to go public easier. Uber entering many different markets at the same time allows will increase their sales revenue at a rapid pace. This is because they will obtain all of the customers that are already in those markets as well as the customers loyal to the companies that they are partnering with. This also makes Uber more diverse which allows them to have more freedom to try new things in the different markets.
Uber may have many strengths and opportunities which will help them increase their sales revenue but there are also threats that could derail their efforts. Uber’s biggest threat is also their competitor Lyft whom they have lost market share to since Fowler’s public post about Uber’s work environment. Also many of Uber’s customers have switched to using Lyft because of their disgust with Uber’s work environment, how they have treated their workers, as well as Kalanick’s mindset of profit above everything. Uber is constantly in the spotlight and every time something controversial is said about them it could have negative impacts for the company. One of the negative impacts is that the people who have already stopped using Uber may decide to never use it again, and it could cause the public to view Uber in a more negative way. These two threats will make it much more difficult for Uber to increase their sales revenue especially if people continue to use Lyft over Uber.
