Global Manager s Challenge

Transcription

1 Global Manager s Challenge Prepared by Brittany Blevins, Justin Dues, Ashton Miller & Bryan Vaughn Under the supervisory of Professor Victor Z. Chen (zchen23@uncc.edu; Disclaimer: This presentation was done without inputs from Uber and Uber is not affiliated with the presentation or people preparing it.

2 Agenda Where has Uber been? Where is Uber now? Where is Uber going? How does Uber get there? Recommendations Strategic Timeline

3 Introduction to Uber

4 Uber s history Goal of bringing transportation as reliable as running water, everywhere for everyone. Provide a network of safe, reliable and convenient transportation in cities worldwide. Since inception in 2009, Uber has provided > 5 billion trips Looking into other services and modes of transportation: Helicopters and boats UberEats UberFreight UberHealth UberTour Autonomous vehicles (pilot in Pittsburgh with Volvo)

5 Where has Uber been? 40 million riders/mo cities 84 countries 15 million trips/day In fewer than seven years, Uber has managed to expand from North America to every populated continent Europe, Asia, South America, Africa, and Australia.

6 Domestic and global competitors Domestic: An on-demand transportation company A taxi-hailing app International: Established competitive transportation companies around the world.

7

8 Advantages Country-Specific Advantages (CSA) Established roadways Dense, urban areas Large population of drivers and vehicle owners 212 million licensed drivers and an estimated 269 million registered vehicles Estimated 224 million smartphone users who are comfortable using apps/paying online Bank/mobile app infrastructure in place Side hustle culture (part-time employment desires) Affordable price of gas ($2.85/gallon avg.) Cheapest in North America and cheaper than most of Asia and Europe Car-friendly regulations - lower taxes than other parts of the world Firm-Specific Advantages (FSA) First-mover advantage Size of network = 3 million drivers worldwide (1 million in United States). Lyft has around 700,000 drivers in US Brand equity and awareness Let s uber to Innovation UberEATS - $3 billion gross sales in 2017 Research and development into autonomous vehicles Reliability Registered as IT platform

9 Disadvantages Attractive market that is easy to enter - valuations of ride-hailing companies, Jan Goldman Sachs estimates ride-hailing industry will balloon to $285 billion by Competitors can easily enter the market Easy for drivers to switch companies since they are contract workers. Changes in regulation can inhibit business growth Some states and localities are starting to tax the ride-hailing services. Seat Occupancy Sensors, Driver Training, Protectionist Regulation Negative reputation about organizational culture in the news media, including drivers and the former CEO

10 Uber has experienced negative media coverage in recent years

11 What makes Uber successful? First-mover advantage Size of network Innovation Brand equity Reliability Registered as IT platform

12 Uber in FSA Matrix Geographic boundary Demographic boundary Cultural boundary Economic boundary Regulatory and political boundary First-mover advantage No competitor with similar business model Openness to new business model Minimum regulatory burdens Size of network Established road networks Licensed drivers and car owners Highly developed internet culture Disposable income Minimum tax laws on privately owned vehicles Innovation Openness to new transportation methods Free market Brand equity Favorable perception Reliability Densely populated urban areas Online payment Mobile apps/cyber network Price of gasoline Minimum tax laws on gasoline and automotive services Political stability Registered as IT platform Not regulated by taxi laws/unions

13 Where is Uber going?

14 Uber in Firm-Specific Advantage (FSA) Matrix First-mover advantage Geographic boundary Demographic boundary Cultural boundary Economic boundary Regulatory and political boundary Size of network Innovation Brand equity Reliability Registered as IT platform

15 Uber is going to Iceland Capital city: Reykjavik Population ~ 200,000 Annual tourism has nearly quadrupled since 2010 and contributes nearly 10% to GDP. There were nearly 2 million tourist visitors in Developed roads with a high level of car ownership per capita (1.5 inhabitants/car) Highly developed internet culture - 95% of individuals use the internet regularly GDP Per capita is nearly $60,000.

16 Uber in FSA Matrix: Iceland Geographic boundary Demographic boundary Cultural boundary Economic boundary Regulatory and political boundary First-mover advantage No competitor with similar business model Openness to new business model Requirement for ride-sharing services to have taxi permit Size of network Established road networks Licensed drivers and car owners Highly developed internet culture Disposable income Minimum tax laws on privately owned vehicles Innovation Openness to new transportation methods Free market Brand equity Favorable perception Reliability Densely populated urban areas Online payment Mobile apps/cyber network Price of gasoline Tax laws on gasoline and automotive services Political stability Registered as IT platform Large labor unions

17 Iceland s market failures Over-regulation Icelandic law is strict when it comes to ride sharing services and there is a requirement for taxi permits. There are currently 560 taxi permits (drivers) in the Reykjavik area - the number hasn t increased since Inhabitants have increased by 30,000 and tourists have grown from 320,000 to nearly 2 million. Minister of transport has recently decided to increase the number of taxi permits. Large labor unions 85% of employees in Iceland belong to labor unions compared to 10% of employees in the United States.

18 Overcoming market failures Register as an IT company Could internalize heavy taxi regulations by circumventing the need for a taxi permit Could internalize the high taxi union membership by providing IT platform to other taxi companies Two out of the four main taxi companies in Reykjavik have a mobile app but capabilities are limited.

19 Two out of four existing taxi companies in Iceland use mobile apps Hreyfill developed its own app to call taxi drivers. Main functionality is to choose car size. BBS is using third party PickmeApp by Taxi Startup with limited capabilities

20 Uber vs. PickmeApp vs. Hreyfill Uber PickmeApp Hreyfill First-mover advantage Existing partnership with BBS Developed by Hreyfill Taxi Size of network 3 million drivers worldwide Unknown Unknown Innovation Continuous R&D Late majority Laggard Brand equity Let s uber to Minimal to non-existent Synonymous with existing Hreyfill company Reliability Uber is always on Unreliable Crashes when you open Registered as IT platform

21 How does Uber get there?

22 Chance events: Autonomous vehicle tech Factor conditions: 91% labor force has advanced education 3,000 computer science graduates since 1997 Uber s Recipe for Success Supporting industries & institutions: 95% with Internet access 87% have smartphones Tourism has 4x since ,000 miles of infrastructure Demand conditions: 2 mil. tourists annually 960k rented cars Approximately 237,000 licensed drivers 560 taxi licenses 4 taxi companies Structure of firms & rivalry: Existing companies have a labor force that is highly unionized Competition of alternative products Minimal to non-existent Government: IT regulations (potential)

23 Institutional environments Iceland United States Business freedom (%) Labor freedom (%) Financial/ economic Investment freedom (%) Mobile cellular subscriptions (per 100 people) Labor force with advanced education (% of total) Unemployment rate (% of total workforce) Political stability (percentile rank) Legal/political Intellectual property rights (rank) Regulatory quality (percentile rank) Sociocultural Individualism (scale of low to high) Masculinity (scale of low to high) 10 62

24 Financial and economic institutional differences NPV Opportunity gain/loss Doing business in United States Inflation Risk in Iceland Risk Premium in Iceland Inflation Risk and Risk Premium in Iceland Tax Incentives in Iceland

25 Political risks Legal/governmental Non-legal/extra-governmental Macro Newly-elected government Hedge by supporting the campaign of a candidate who supports Uber Micro Increased strength of labor unions Inherently hedging this risk by entering as an IT company Reputation of technology Hedge this risk by implementing a public relations campaign prior to and while entering the market Partner with a university s computer science/engineering program

26 Uber in FSA Matrix: Iceland Geographic boundary Demographic boundary Cultural boundary Economic boundary Regulatory and political boundary First-mover advantage No competitor with similar business model Openness to new business model Requirement for ride-sharing services to have taxi permit Size of network Established road networks Licensed drivers and car owners Highly developed internet culture Disposable income Minimum tax laws on privately owned vehicles Innovation Openness to new transportation methods Free market Brand equity Reliability Registered as IT platform Densely populated urban areas Online payment Mobile apps/cyber network Favorable perception Reputational risk Price of gasoline Tax laws on gasoline and automotive services Political stability Gov t risk Large labor unions Legal risk

27 Our team culture Members Power distance index Individualism Masculinity Uncertainty Avoidance ISL (Iceland) ARG (Argentina) ARG (Argentina) DEU (Germany) NOR (Norway) Average Standard deviation

28 Most likely consequences occur in masculinity vs. femininity Work-related behaviors Efforts (16%) Communication behaviors Self-promotion (20%) Conflict behaviors Compromising (58%) Work-related attitudes and perceptions Ethics (-25%) Group-related attitudes and perceptions Social avoidance (55%) Conflict management/negotiation Perceived justice and reward allocation roles Equity (-13%) Leadership style preference Paternalism (21%) It is moderately easy for us to cooperate in a group if we all converge to the team average.

29 Emerging disruptions or substitutes Uber is considered the emerging substitute. Competitor could be Lyft, but right now the offerings aren t significantly different. Lyft is also focused more on developing in the US. Google s self driving technology and partnership with Lyft could be the disruptor. Mission: "A self-driving tech company with a mission to make it safe and easy for people and things to move around". Next step will be to let people trial fully self-driving cars to do everyday things like run errands or commute to work. New regulations or legislation around ride-sharing technology could be a disruptor.

30 Revisiting country-specific advantages (USA) Established roadways Dense, urban areas Large population of drivers and vehicle owners 212 million licensed drivers and an estimated 269 million registered vehicles Estimated 224 million smartphone users who are comfortable using apps/paying online Bank/mobile app infrastructure in place Side hustle culture (part-time employment desires) Affordable price of gas ($2.85/gallon avg.) Cheapest in North America and cheaper than most of Asia and Europe Car-friendly regulations - lower taxes than other parts of the world Based on the previously mentioned substitutes and disruptors, our CSA context boundaries do not change and remain only focused on the United States.

31 95% of Iceland s population lives in urban areas The population is fragmented, with the remaining percentage of residents living in rural Iceland, a number that is expected to only decrease in years to come. Most people living in and around Reykjavik (60 percent or ~200,000 people) The next largest city is Kopavogur with ~30,000 people.

32 Chance events: Autonomous vehicle tech Factor conditions: 91% labor force has advanced education 3,000 computer science graduates since 1997 Uber s Recipe for Success Supporting industries & institutions: 95% with Internet access 87% have smartphones Tourism has 4x since ,000 miles of infrastructure Demand conditions: 2 mil. tourists annually 960k rented cars Approximately 237,000 licensed drivers 560 taxi licenses 4 taxi companies Structure of firms & rivalry: Existing companies have a labor force that is highly unionized Competition of alternative products Minimal to non-existent Government: IT regulations (potential)

33 Iceland Market Entrance Recommendations 1. Sell the ride-sharing IT platform to established taxi companies. a. Service contract 2. Partner with rental car companies to offer self-guided tour of Iceland - UberTOUR on the rider platform. a. Tourist attractions to advertise on platform 3. Target app as a GPS service to individual drivers a. Advertising revenue

34 Strategic Timeline

35 Detailed action plan Build relationships with: existing taxi companies and begin talking about IT platform tourist attractions to advertise on the rider app rental car companies to introduce IT platform taxi unions Build reputation in Iceland by establishing a public relations campaign Partner with local legislators to increase number of taxi licenses, including sponsoring a political campaign of a candidate who supports Uber (hedge political risk) Partner with university in Iceland to sponsor software engineering/computer science program by offering internships/co-op Rollout services full-time in Iceland Kick-off integrated marketing campaign