Introduction
Today, Uber is operating in fifty-four countries. It is one of the quickest growths in the world. The rapid growth of the company is changing the industry as well as the taxi drivers. Not only does Uber fit in to today’s competitive marketplace, it is shaping tomorrow’s marketplace. There are several different ways a business can make money. Technological changes have a significant impact on this. Uber’s success has changed the way business think about the global marketplace. Uber was able to strive in a struggling economy. The idea behind of Uber is not like the traditional car service. Uber does not employee their drivers. Instead, their app simply connects drivers with passengers. The app can be utilized whenever someone is needing transportation. The passenger will get on the app to reserve a car. The request is then sent to all the drivers in the area. The closest driver will pick up the passenger and take them to their destinations. All payment is done through the app so there are no personal transactions between the driver and the passenger. The passenger can even tip the driver through the app. This paper addresses the idea of sharing economy, the pros and cons of Uber, the impact Uber has had on the transportation industry, and the stakeholders who have been effected by Uber and the idea of sharing economy.
Uber
Sharing economy
Uber is based off of sharing economy. “The benefit comes with reduction in service cost, emissions, and with split fares, hinting toward a wide passenger acceptance of such a shared service” (Santi, Resta & Szell 2014). Sharing economy has become increasingly popular over the past couple of years. It is especially popular in cities that struggle with population growth and intensely dense areas. New York City, for example, is a city where Uber has flourished. The main argument that relates to sharing economy is whether or not it is bringing more money making opportunities to more people or whether it’s displacing otherwise secure jobs. Uber drivers are freelancers. They are considered independent workers and can work whenever they want, where ever they want. There are no schedules when it comes to freelance works. This obviously is appealing to many people. Uber is also ran off of an app, which provides many advantages compared to the traditional taxi service. The app also gives consumer the advantage of having lower prices than taxi services as well (Cohen & Kietzmann 2014).
Surge pricing
Another aspect of Uber is that the company works off of surge pricing. Surge pricing is a fluctuating price scale. It is fluctuated based on accumulation, not usage or demand. For example, it is not uncommon for someone to spend two to three hundred dollars on major holidays like Halloween or New Year’s Eve. Whereas that same trip would have been between thirty and fifty dollars on a regular day (Cohen & Kietzmann 2014).
Another name for an Uber transaction is access-based consumption. This is defined as a transaction where there is a trade of services but there is no transfer of ownership. It is becoming increasingly popular. There are six different dimensions when it comes to access-based consumption: temporality, market mediation, anonymity, consumer involvement, political consumerism, and the type of accessed object. There are four different outcomes with these six different dimensions: 1) varying significance of use and sign value, lack of identification, deterrence of brand community and negative reciprocity resulting in a big brother model of governance (Bardhi & Eckhardt 2012, p. 882).
Economic, Social and Political Factors
Pros
There are several positive aspects to Uber. Uber allows drivers to work flexible hours, it allows customers to get transportation through an app, and every driver is considered a freelancer. Uber also changed the game when it came to payment. Uber makes the payment process painless. “The payment is processed automatically after the ride is over, and the company tells users they don’t need to pay a tip. The drivers are rated at the end of each trip, and those with consistently low scores are removed from the services” (Liss, 2015, p. 18). Users are allowed to choose the tier of vehicle they want.
Uber drivers are independent workers. With the recent rise in sharing economy, the percentage of independent workers throughout the country is expected to grow ten percent in the next four years. There are pros and cons to being an independent worker. Some individuals are working a second job or are parents who need flexible hours. However, independent workers are not provided with the benefits like full time jobs. Therefore, these individuals have to pay out of pocket for certain benefits that would otherwise be covered by an employer (Randchordas 2014). On the other hand, there are some individuals who do not like the fact that Uber’s drivers are independent workers. Recently, there was a class action lawsuit against Uber. The lawsuit included approximately fifteen thousand California Uber drivers. The lawsuit was about their employee status. The drivers did not want to be considered independent workers. Instead, they were fighting for employee status in order to receive benefits (Abigail 2015).
Not only are consumers choosing Uber over the traditional service, but drivers are also choosing to jump ship and become an independent driver for Uber. Because of this, taxi businesses and cab drivers have protested and taken legal action against Uber. Taxi and cab services have taken a hit since the introduction of Uber. Uber offers lower prices than the traditional taxi services. This is due to the fact Uber does not cost that much to operate. The drivers own their own cars which makes it very cheap for Uber to operate. However, Uber has created a hardship on the rest of the industry. This is causing several legal issues throughout the world. This has happened throughout several countries including France, Germany and Spain amongst many more. Some countries have even banned Uber (Salsberg 2015). Furthermore, some believe that sharing economy is responsible for unfair competition.
Cons
There are also negative aspects when it comes to Uber. One major problem is the lack of training for drivers. Another similar concern is the lack of licensing. This can pose harm to the rest of society. Any type of drive should be properly trained, including freelance workers. Furthermore, Uber customers and/or drivers are more likely to be victims of kidnappings and rapes (Chafkin, 2015, p. 111). There are concerns when it comes to health, public safety and liability with sharing economy. Regulars are concern with sharing economy because it is hard to how someone liable in certain situations (Randchordas 2014).
Another concern about Uber is its ability to take jobs off the job market. Uber works off of technology. Both the consumer and the driver use the app to seek either transportation or work. Technology has been known to close the gab when it comes to decisions made by consumers and whether or not they are satisfied with those choices. Speed is especially important in this decision making process. Unfortunately, machines are often faster and more accurate than humans. They are also more productive. On average, a machine produces more outputs than a human worker. Machines do not need lunch breaks or have to use the restroom. This makes it easier and a better business decision to use machines and technology over human workers. They produce more and cost less. Over the past two decades, technology has slowly taken the jobs of actual workers. Kiosks are used at movie theaters and food establishments instead of actual human workers. These corporations are somewhat “cutting out the middle man” when it comes to certain jobs. Human workers are being displaced by machines (Smith, 2016, p. 384).
Stakeholders
Competition
There are several stakeholder groups that are effected by Uber’s entry to the market. One stakeholder group is Uber’s competition. This is the taxi industry and cab services. These two industries have experiences a loss of profit due to Uber’s lesser costs. Uber services are also easier to obtain. Instead of hailing a cab, a person can get on their app to order car service. This makes the transportation process easier, especially on busier days when it is impossible to get a cab. The taxi and cab service industries have also taken a hit when it comes to employees. Some employees have decided to become an Uber driver instead of driving for a taxi or cab service. Since Uber drivers are freelances, they can work their own hours. This makes it very convenient for drivers. Because of this, Uber drivers can make a lot more money in less time. For example, one man switched from being a New York City taxi driver to an Uber driver. He liked the idea that he could work whenever he wanted, however ever much he wanted. He stated that at peak times, he can make more in a couple hours driving for Uber than he could on one full day as a taxi driver (Solomon & Mac 2015). Fewer hours and more money is a main reason why so many drivers are switching from professional driving services to Uber.
Uber drivers also make more money than taxi drivers. In New York, Uber drivers make twice of what taxis drivers make per hour. Uber drivers make almost twice as much as taxi drivers in San Francisco. In these two cities, it is easy to see why one person would decide to switch from being a taxi driver to Uber (Smith, 2016, p. 386).
Government and regulators
Another stakeholder group is the government and regulators. Due to the controversy of Uber, regulators have been closely watching the organization. Uber has also had several legal issues in several different countries. The government’s main job is to make sure the people are safe. Regulators are responsible to make sure there are adequate laws in place to protect individuals. Regulators started paying attention to Uber after it started getting publicity on the controversy surrounding the organization (Dessaint, 2015, p. 54). There are several things that could go wrong with sharing economy. In one Uber ride, for example, a person could be kidnapped, raped, and murdered. This is because the employees are independent workers and there is not job application, interview or training. Theoretically, anybody could work for Uber. This causes several concerns for regulators. First, there are several drivers on the road who are acting as taxi services but do not have adequate job training. Second, Uber does not employee these individuals. Uber is simply connecting drivers with passengers. Uber does know what passenger gets a ride from which driver, however, there are still security concerns. It is Uber’s responsibility to make sure all drivers and passengers are safe while using the Uber app (Chen & Ying, 2015, p. 31)
Community
The last stakeholder group is the community. The community has a huge role when it comes to Uber. Without their acceptance, Uber would not exist. When it comes to the community, safety is obviously an issue. With Uber, an individual doesn’t have the same sense of safety as they do with a taxi service. There are several individuals who do not trust Uber and will never use it. They feel a better sense of safety with an actual car service. The consumers are effected by Uber’s surge pricing. The idea or sure pricing revolves around targeting occasions and not people. With this idea, there are no flat rates that are the same on every occasion. Instead, surge pricing that matches demand when it comes to particular occasions. Most occasions will not have high pricing. However, there are high prices on huge occasions like New Year’s Eve (Smith, 2016, p. 286). Uber has a huge role in surge pricing. The corporation believes if someone wants transportation during peak times then they should be willing to pay peak prices.
Ethical Conflict
The nature of the ethical conflict is whether or not Uber takes away secure jobs. With surge pricing, Uber makes it possible for one person to make a full day worth of money in just a couple of hours. Drivers can work whenever they want making it a nice job for parents. It also makes it easy for someone to supplement their income by driving for Uber. More and more drivers are switching to Uber which is making it harder for the taxi and cab services to compete.
There are several ethical issues for the people involved. First, drivers have the ethical decision as to whether or not to leave their current employment and switch to driving for Uber. It is estimated that the average New York City Uber driver makes approximately $90,000 a year (Liss, 2015, p. 18). The average New York City cab driver makes approximately half of that. This especially gives drivers in big cities like New York City incentive to switch from taxi services to Uber.
The government and regulators are also effected by ethical demands. It is their responsibility to make sure there are adequate laws in place to protect people from any harms that make come from sharing economy. Companies that run their operations like Uber bring social concerns with them. Is it safe to get into a complete strangers vehicle? Uber does not work like a taxi cab service where all the drivers are properly trained and licensed. With Uber, none of the drivers are trained and it is not a requirement to be licensed. This brings up several social concerns for regulators. They must create laws and adequately monitor them to make sure they are protecting the people from any harm or danger.
There are also ethical demands when it comes to the community. Since the community consists of both consumers and drivers for Uber, it is the community’s responsibility to obey norms when it comes to sharing economy. Drivers need to make sure they are providing safe and efficient transportation for consumers. It is also up to the community and local government on whether or not Uber can even run in their area. It is also up to the community, both the consumers and the drivers, to make sure that Uber stays a safe and reliable service. The community is also effected by surge pricing. However, sure pricing is not going to go away. If a consumer does not want to pay that much for transportation, then it is in their best interest to choose another mode of transportation.
Uber and the idea of sharing economy completely changes the management of business ethics. First, sharing economy increases the amount of independent workers. Independent workers differ slightly than regular workers. Independent workers must be self-managed. These are individuals who work on their own schedule and work under limited guidance. Companies like Uber completely change the traditional ideas of business management. Mainly because it is just completely different. There is not a management level when it comes to Uber. These drivers are working independently under their own guidance. How much they make and how much they work is completely up to the driver.
Conclusion
Uber is one of the fastest growing companies in the world. Uber is changing the way people are doing business. With the idea of sharing economy, Uber has managed to dominate the market. This is leaving taxi and cab services in the dark. More and more consumers are switching to the cheaper and easier service. Drivers are also switching to the freedom of Uber. Being a freelance drivers has several advantages over being a traditional driver. This is especially true for someone trying to supplement their income or parents who need flexible schedules. However, Uber has created several problems for taxi and cab services. Some believe that sharing economy has allowed unfair competition in the market place. Several individuals in the taxi industry believe that Uber is an unfair competitor in the industry. There are several individuals who are effected by the development of Uber. This is Uber’s competition, the government and the community. Each one is somehow effected by Uber. Uber’s competition is effected by the loss of consumers as well as the loss of their drivers. The government is effected by sharing economy and law building. Lastly, the community is effected because it consists of consumers and drivers. The community also has a say as to whether or not Uber enters the community. Overall, Uber is changing the traditional way in which companies conduct business. More companies are joining the idea of sharing economy.
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