Uber has rapidly expanded globally using a strategy of entering new markets without permission, then pressuring local governments to change regulations after establishing operations. This confrontational approach has worked in some cities but faced bans in others resistant to Uber's disruption of the taxi industry. While successful in the US, Uber's strategy has faced more challenges abroad as it is seen as disregarding local laws and customs. Rivals have also emerged, such as Didi Kuaidi in China, threatening Uber's dominance in new markets.
Uber has rapidly expanded globally using a strategy of entering new markets without permission, then pressuring local governments to change regulations after establishing operations. This confrontational approach has worked in some cities but faced bans in others resistant to Uber's disruption of the taxi industry. While successful in the US, Uber's strategy has faced more challenges abroad as it is seen as disregarding local laws and customs. Rivals have also emerged, such as Didi Kuaidi in China, threatening Uber's dominance in new markets.
Uber has rapidly expanded globally using a strategy of entering new markets without permission, then pressuring local governments to change regulations after establishing operations. This confrontational approach has worked in some cities but faced bans in others resistant to Uber's disruption of the taxi industry. While successful in the US, Uber's strategy has faced more challenges abroad as it is seen as disregarding local laws and customs. Rivals have also emerged, such as Didi Kuaidi in China, threatening Uber's dominance in new markets.
Uber has rapidly expanded globally using a strategy of entering new markets without permission, then pressuring local governments to change regulations after establishing operations. This confrontational approach has worked in some cities but faced bans in others resistant to Uber's disruption of the taxi industry. While successful in the US, Uber's strategy has faced more challenges abroad as it is seen as disregarding local laws and customs. Rivals have also emerged, such as Didi Kuaidi in China, threatening Uber's dominance in new markets.
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Uber: Going Global from Day One Uber’s strategy has been to break these regulations,
establishing its service first and then fighting attempts by
Uber, the controversial San Francisco–based ride- regulators to shut the service down. In pursuing this for-hire service, has made a virtue out of disrupting the strategy, Uber has often used social networks to enlist the established taxi business. From a standing start in 2009, the support of its riders, getting them to pressure local company has spread across the globe like wildfire. Uber’s governments to change their regulations and allow Uber to strategy has been to focus on major metropolitan areas continue offering its service. In many cities, the strategy has around the world. This strategy has so far taken Uber into worked, even in the face of protests from established taxi about 600 cities in more than 80 countries. The privately companies and their drivers. In London, for example, when held company is rumored to be generating annual revenues taxi drivers went on strike to pressure the government to of around $10 billion. At the core of Uber’s business is a restrict Uber, Uber reported a surge in downloads for its app smartphone app that allows customers to hail a ride from the and thousands of new riders. comfort of their own home, a restaurant, or a bar stool. The app shows cars in the area, notifies the rider when a car is However, this confrontational strategy has not always on the way, and tracks the progress of the car on screen using worked well. The government of Vancouver, Canada, GPS mapping technology. The rider pays via the app using reacted to the unauthorized entry of Uber by banning it a credit card, so no cash changes hands. The driver takes 80 outright. So did the local authorities in Brussels in Belgium, percent of the fee and Uber 20 percent. The price for the ride Delhi in India, and a host of other cities around the globe. In is determined by Uber using an algorithm that sets prices in Paris, the government has tried to limit Uber by imposing order to match the demand for rides with the supply of cars several restrictions that make it harder for Uber to do on the road. Thus, if demand exceeds supply, the price for a business there. To complicate matters, Uber drivers in Paris ride will rise, inducing drivers to get on the road. Uber does have unionized—something that they cannot do in the not own any cars. Its drivers are independent contractors United States due to their status as independent contractors. with their own vehicles. The company is, in effect, a twenty- They went on strike when Uber tried to lower fares. Similar first-century version of an old-style radio taxi dispatch protests by Uber drivers have occurred in other cities. company. Interestingly, Uber’s founders got their idea for Overall, there is a sense that Uber’s abrasive strategy has not the app-based service one snowy night in Paris when they always worked well, particularly outside of the United were unable to find a taxi. States where locals see Uber as a brash American startup that pays scant attention to local laws, customs, and culture. Historically, taxi markets around the globe have been tightly regulated by metropolitan authorities. The stated purpose of Uber is also witnessing the emergence of local rivals in these regulations has often included (1) limiting the supply some countries, such as India and China, where startups of taxis in order to boost demand for other forms of public using a smartphone app and a business model similar to transportation, (2) limiting the supply of taxis in order to Uber are gaining traction. In China, local rival Didi Kuaidi reduce traffic congestion, (3) ensuring the safety of riders by has raised $4 billion in venture capital and claims that soon only allowing licensed taxis to offer rides, (4) ensuring that it will be operating in more than 400 cities in China. Didi the prices charged are “fair,” and (5) guaranteeing a already has a 90 percent market share in Beijing, where the reasonable rate of return to the owners of taxi licenses. company fields more than 1 million daily ride requests. In practice, widespread restrictions on the supply of taxi Case Discussion Questions: licenses have created shortages in many cities, making it 1. Companies like Uber, Lyft (one of Uber’s main difficult to find a taxi, particularly at busy periods. In New competitors), and Airbnb (an online marketplace that York, the number of licenses barely increased from 11,787 enables people to lease or rent short-term lodging) are in 1945 to 13,587 in 2017, even though the population innovating in fields that traditionally have been very expanded significantly. In Paris, the number of licenses was complex and regulated. Can Uber’s business model be 14,000 in 1937 and had only increased to 17,137 by 2017, applied in other industries globally? even though both the population and the number of visitors to the city had surged. The number of taxis in Milan was 2. Are cities around the world doing a disservice to their frozen between 1974 and 2014, despite Milan having a ratio citizens or their visitors, or both, by banning Uber outright of taxis to inhabitants that was one of the lowest for any from operating in their community? major city. Whenever metropolitan authorities have tried to increase the number of taxis in a city, they have often been 3. Uber’s strategy has been to break these regulations, meet by strong resistance from established taxi companies. establishing its service first, and then fighting attempts by When the French tried to increase the number of taxis in regulators to shut the service down. This goes along with the Paris in 2007, a strike among transportation workers shut old saying that “do first, ask questions later.” Is this business down the city and forced the government to back off. Source: Hill, Charles W. International Business: Competing in the Global Marketplace (Page 36). McGraw-Hill Higher Education. Kindle Edition.
Summary and Analysis of The Upstarts: How Uber, Airbnb, and the Killer Companies of the New Silicon Valley are Changing the World: Based on the Book by Brad Stone