matherne 2017 tcj uber aggressive management.pdf

Prices varied by type of service exhibit 1 each

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Prices varied by type of service (Exhibit 1). Each offering required drivers to meet vehicle specifications for the particular type of service being offered. UberPool reduced fares even more because it allowed riders to share a single car. Uber s competition The ride-sharing market has few barriers to entry. There were no financial costs involved in switching between the services or in switching to public transportation or car ownership, making customer retention and loyalty an area of focus for competitors (Pan, 2014). Uber s competition included taxicabs and similar app-dispatched ride services like Lyft, Sidecar, Hailo, Wingz, Gett, and ZimRide, but Uber benefited from its first-mover advantage. Lyft, Uber s biggest rival, launched three years after Uber, and while both companies were growing at approximately the same rate, Uber gained about 5,000 more customers than Lyft each month. As such, the two companies constantly competed for customers as well as drivers (Metz, 2014). Uber took an aggressive approach to address its competition under Kalanick s strategic leadership. In 2014, Uber offered a promotion to attract passengers away from its competition that paid $250 in Uber credit for switching to Uber. The promotion also directly targeted its VOL. 13 NO. 4 2017 j THE CASE JOURNAL j PAGE 563 Downloaded by Doctor Jay O'Toole At 06:20 15 September 2017 (PT)
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competitors drivers, offering a $500 bonus to drivers after driving only one Uber passenger. Uber extended this promotion to its current drivers and matched the $500 bonus if current drivers recruited a competitor s driver to Uber (Dickey, 2014). Uber even asked its drivers to take rides with Lyft to persuade their drivers to work for Uber (Vara, 2014). Uber also attempted to sabotage its competition by booking fake rides and making phantom calls. In 2014, reportedly over a 170 Uber employees ordered and canceled over 5,500 rides with Uber s primary competitor, Lyft, and Uber drivers made more than 100 fake orders with its New York City competitor, Gett (Li, 2014). Uber s stakeholders Investors When Uber was launched, it quickly gained considerable attention from influential users and the press (Swisher, 2014). Under Kalanick s leadership, Uber raised $11 million of Series A funding in February of 2011 and another $37 million of Series B funding in December 2011. In August 2013, Kalanick raised another $258 million in Series C funding, another $1.2 billion in Series D funding four months later, and yet another $1.8 billion in Series E funding in December 2014. Despite the US taxi and limousine market recording only $11 billion in annual revenue, Uber began 2015 with a valuation of more than $40 billion (Wessel, 2014). Investors were, for the most part, happy with Uber under Kalanick s strategic leadership. Fred Wilson a partner at Union Square ventures, one of Uber s investors summed up Kalanick s aggressive approach to Uber s strategic leadership when he said: When I think about Uber as a company, I think about an incredible, almost ruthless execution combined with a swagger that is almost unlike anything I ve seen. Early on, they took the approach to
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