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    Case Study Report-5

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    zeb
    This case study report examines Uber's entry and challenges in the Chinese market. Uber expanded aggressively worldwide but faced significant hurdles in China, including strong local competitors Didi and Kuaidi that already dominated the market. Despite investing heavily, Uber was losing over $1 billion annually in China due to issues like regulatory struggles, cultural differences from its global strategies, and an unfair rivalry with Didi. While Uber's flexible approach worked well globally, it did not consider China's changing regulations regarding labor and safety. The report evaluates whether Uber's resilient expansion approach in China was appropriate given the large losses incurred.

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    Case Study Report-5

    Uploaded by

    zeb
    106 views7 pages
    This case study report examines Uber's entry and challenges in the Chinese market. Uber expanded aggressively worldwide but faced significant hurdles in China, including strong local competitors Didi and Kuaidi that already dominated the market. Despite investing heavily, Uber was losing over $1 billion annually in China due to issues like regulatory struggles, cultural differences from its global strategies, and an unfair rivalry with Didi. While Uber's flexible approach worked well globally, it did not consider China's changing regulations regarding labor and safety. The report evaluates whether Uber's resilient expansion approach in China was appropriate given the large losses incurred.

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    This case study report examines Uber's entry and challenges in the Chinese market. Uber expanded aggressively worldwide but faced significant hurdles in China, including strong local competitors Didi and Kuaidi that already dominated the market. Despite investing heavily, Uber was losing over $1 billion annually in China due to issues like regulatory struggles, cultural differences from its global strategies, and an unfair rivalry with Didi. While Uber's flexible approach worked well globally, it did not consider China's changing regulations regarding labor and safety. The report evaluates whether Uber's resilient expansion approach in China was appropriate given the large losses incurred.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    106 views7 pages

    Case Study Report-5

    Uploaded by

    zeb
    This case study report examines Uber's entry and challenges in the Chinese market. Uber expanded aggressively worldwide but faced significant hurdles in China, including strong local competitors Didi and Kuaidi that already dominated the market. Despite investing heavily, Uber was losing over $1 billion annually in China due to issues like regulatory struggles, cultural differences from its global strategies, and an unfair rivalry with Didi. While Uber's flexible approach worked well globally, it did not consider China's changing regulations regarding labor and safety. The report evaluates whether Uber's resilient expansion approach in China was appropriate given the large losses incurred.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 7

    ​CASE STUDY REPORT-5

    Uber In China

    BUSINESS STRUCTURE AND PROCESS


    (MBA-G502)

    SUBMITTED TO: ​Dr.


    NEETU YADAV
    Department of
    Management BITS
    Pilani, Pilani Campus

    SUBMITTED BY: Group 8

    ESHITA SHUKLA 2019H1490813P

    NAYAN CHOURASIA 2019H1490806P

    SAI KIRAN VADDI 2019H1490842P

    SHASHANK BINDAL 2019H1490866P

    SWAR SHARMA 2019H1490857P

    DATE – 22nd
    Nov.2019
    Executive Summary

    Uber, the most valuable start up in the world ventured into China in 2014.
    Despite being commendably successful in 378 cities in 68 countries, its
    situation in China seemed very bleak. Uber wanted to exploit the rapidly
    growing Chinese market so its CEO Travis Kalanick opted for an
    aggressive strategy to expand the company in China.

    Uber went all out in every market space they entered by introducing the
    concept of variable fares based on the demand and supply for taxis in the
    industry and also enhanced flexible employee regulation system where the
    number of taxi drivers also varied in accordance with the demand for them.
    But such a successful company ended up downhill in China due to the ever
    shifting regulatory landscape which included challenges regarding public
    safety and labor regulation. Uber was constantly in a battle with the local
    competitors to gain supremacy in the Chinese market. To achieve that,
    Uber relied on product localization, providing higher subsidies to drivers
    and a shell-game strategy where they invested heavily in other ventures
    and formed strategic alliances with firms of other industries.
    In 2016 February, Uber’s CEO admitted that they were facing annual
    losses over $1 billion in the process for gaining market share in China. This
    report deals with whether such a resilient stand of expanding in China was
    appropriate or it was not considering the money spent in this bargain.
    Introduction

    Uber ,an Internet transportation network company (iTNC) founded in 2010


    has expanded its horizon throughout the world .As of 2015 ,Uber operates
    across 374 cities in 68 countries . Travis Kalanick, CEO and Founder of
    Uber Technologies,has expressed his clear intentions to expand the
    business of Uber in China in 2016 .Uber has already established itself in
    other developed and developing countries despite having legal gray areas.
    Uber legal position is not clear in many countries . Governments face
    challenges regarding public safety ,labour regulation and the classification
    of stakeholders and the company .Uber claims that it cannot be identified
    as a transportation company because it does not own the vehicles
    .Therefore ,the government should not imposed transportation sector
    regulations on the company .
    Despite following a strategy of aggressive expansion in China, Uber is
    suffering a loss of $1 billion annually in China .Uber had encountered many
    challenges in China which includes cut-throat competition from domestic
    rivals, incongruity with local market demands, fraud, and dubious regulatory
    struggles. Uber did not have the advantage of first movers in the Chinese
    market .By the time they entered in China ,there were already well
    established cab services .Didi and Kuaidi has well established themselves
    in the market and were declared unquestionable leaders in Chinese
    taxi-hailing internet app business in 2014 .
    This report discuss that what can Uber do in order to overcome these
    obstacles and thrive in the China market.
    Case Analysis

    Q1. What challenges does Uber face globally?


    As a global ride-sharing company, Uber grew extremely fast with Uber ride
    hailing services and a number of delivery services, like Uber Eats. With
    various fares, Uber provides multiple levels of ride services that include
    economy (UberX), premium (UberBLACK)accessibility, and carpool.
    However, Uber is facing a lot of challenges globally and also fighting for the
    legalization of operating licenses. Uber had to cooperate with legislators
    and policymakers to form a new regulatory framework for operations. but
    the process of legalization is not easy, unless Uber makes revolutionary
    changes. The regulations appeal to enforce norms and game rules in terms
    of fare calculations, vehicle safety management, driver professionalism,
    licensing and insurance requirements in the ride sharing economy. It is true
    that Uber has challenged the established line of workforce regulations and
    taxi hiring standards but due to blurred lines Uber is facing heat quite often
    which even has led to ban on them number of times
    Furthermore, Uber has been facing continuous challenges and rebellions
    Controversial debates about the lack of public security happen quite often.
    Compared to taxi drivers, Uber drivers have less training, management and
    license tests. In other words, Uber’s globalization strategy presents a lack
    of corporate responsibility. To ensure the safety, Uber claims that it is
    transparent to check the driver’s information and find real-time location on
    the map at any time Yet, Uber’s fast growth has given rise to a number of
    serious accusations involving murders and sexual assaults.
    Also the legal battles on fairness between traditional transportation and
    new technological modes was undeterred. Local institutes and
    governments put great pressure on innovative tech internet company -
    Uber. One concern is whether Uber should follow the local workplace
    regulations. It is inevitable that ride-sharing innovation, allowing
    self-employed drivers to provide rides to users, has resulted in the
    imbalance of local workplace. With the emergence of sharing economy,
    research appeals local and state governments to adopt mixed strategies
    and regulations instead of preventing Uber. Since Uber is expanding to
    transportation, food other industries, the unstoppable trend has pressured a
    number of locals to update laws for both consumers and workers
    Q2. What are the challenges faced by Uber in China??

    ● Already established market- Uber always had the advantage of being


    the 1st one in the market hence it was easy for them to gain
    popularity. Its competitors Didi and Kuaidi were local brands and had
    penetrated the market before Uber came in China

    ● The merger of its two top competitors into what is now Didi-Kuaidi
    created a big issue because the total market share of the new
    company was 80%, and the number of bookings they were getting
    was seven times more than what uber was getting. In order to
    penetrate into this market, uber had to move toward businesses that
    were not profitable but only helped in building its name in China.

    ● The unfair rivalry also became an alarming issue when all Uber
    related accounts were blocked by WeChat (which happens to be the
    investor for Didi), which is the most widely used messaging app in
    China, because of which Uber was cut off from this major customer
    support tool.

    ● Uber was operating in grey areas in term of legalization and


    operation process and strikes by taxi union compelled the
    government to come with new policies specific to regulate apps like
    uber, one of which mentions to clearly mention fare which took a toll
    on its “flexi fares” that was one of its core strategies in order to
    provide competitive pricing.
    ● Moreover “price advantage”, like subsidies could not be given by the
    service provider to regulate market prices.
    ● One of the key reasons why Uber was hit in America was integrating
    credit cards with the app, such that one doesn’t have to open one’s
    wallet to commute but credit card use in China was limited to a
    minority of the urban elite
    ● One major reason for loss was “fake rides”, that the drivers have
    exploited and there was a market for “nurses” available online, it
    exploited because Uber was giving subsidies of 130% of customer’s
    fare.

    Q3. ​Do you agree with Travis Kalanick's strategy for Uber, both
    globally and in China

    As far as global strategies are concerned Travis Kalanick has proven


    himself even though it had to go through some hurdles but when it comes
    to China he saw an untapped market but failed to judge the local market
    and its quirks, which made its global strategies unsuitable for use and
    jumped into the market too quickly. Like unable to realize that google map
    is of no effective use or the number of user for credit cards in the nation.

    Uber had a unique flexible regulation of labor based on the demand of


    drivers in the industry. But it didn’t work out with China due to its changing
    regulatory frameworks regarding public safety and labor regulations.
    Hence, Uber was on a path dominated by challenges. After being on a
    backfoot for a consolidated time, it is not wise to expand more considering
    the amount spend to gain a higher market share.
    On the other hand, its competitors were wise enough and went for taxi
    drivers which helped them in gaining confidence of the government and
    unions, instead of hiring private car owners. Had he seen merits that came
    with it and moved towards a similar strategy instead of playing in gray
    areas of the legal system, he could have followed the trend.
    Instead of using aggressive strategies to gain a higher market share, when
    facing a 1$billion loss annually, it should occur to him not to invest any
    further and increase his losses.
    Conclusion

    This case helped us in getting better understanding of how a company can


    use their strength in order to expand in global markets

    We learned the importance of consumer oriented product development and


    marketing approach.

    This case also helped us to understand the legal gray areas and various
    limitation of app based taxi rental services

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