Operations Management at Uber

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4th Apr 2019 Business Strategy Reference this

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Introduction:

Uber is a privately held company that was founded back in the year 2009, that is exactly 8 years before from present time and the company is headquartered in San Francisco which is in California located in US (Uber.com, 2018). There are more than 633 cities around the world that are served by the company and the main services that it provides to the customers are transportation services as well as the food delivery services. There are more than 12000 employees that work under the company and as of 2016 last quarter; there total revenue amounted to US$ 6.5 billion. There are different prices at which the customers of the company can take a ride in Uber and there are four kind of pricing strategies that have been adopted by Uber which goes in the name of pool rides, that is the lowest pricing when an individual hires a cab and the person who hires this ride has to share his cab with another 2-3 persons. The second one is premium rides which are the highest in the category while the economy pricing is not much high and also not as low as pool rides (Ahluwalia, 2017). There is another pricing strategy that is followed by Uber and that is accessibility ride which is for the disabled people and they can communicate with the driver using sign languages.

There are a variety of departments at Uber which helps the organization to reach its objective and fulfill the expectations of the customers. The customers always looks forward to get the lowest price in the market for the rides they take and with the help of following a variety of approaches, the operations department of the organization helps in achievement of the objective and tries to provide the lowest price to the customers. The operations department always strives to reduce the price of rides with the help of reducing the cost of the organization and me being an employee of the operations department, it is also my duty to contribute towards making the organization operate in a price effective way. Uber is one of the fastest growing companies in the world and it is the aim of the operations department of Uber to contribute towards the rapid growth of the organization with the help of the operational activities (Dudley et al., 2017). The logistics and the operations roles of Uber are interconnected and the most significant task that is performed by the operations department is ensuring the supply in the market for their service is constant so that the satisfaction of the customers can be gained and the most important function that is to be performed by the operations department is analytics which will help them to use the data about the drivers in order to understand the driver behaviors with the passengers and design strategy how the communication between the driver and the passengers can be improved. Moreover, the operations department also designs the incentive plans for the drivers and also develop as well as optimizes the process. There are several other functions that the operations managers of the company perform which will unfold itself with the progress of the assignment. 

Main Body:

Transportation is one of the oldest industries in the world and there are many changes that took place in this industry with the coming up of the technology (Centobelli et al., 2017). Due to the globalization of the businesses all around the world, the technology of the companies have developed and that have increased the demand among the customers. The transportation industry has viewed many ups and downs and Uber is nothing but just a company born out of technological development of the globalization.

Uber’s business model:

The business model of Uber is very simple and the passengers can simply request to hire a cab based of their choice by selecting the location of the place they are in and additionally, they can also select the type of cab that they are looking forward to hire (Cannon et al., 2014). There is also sharing of cab facility that has been kept available by Uber and this helps the customers to reduce the price of the booking as other passengers who will be going on in the same route also travels with the same cab. The drivers those who do not have booking are matched with the help of the system and then the drivers are then sent request to pick up the passengers with the help of the system but before that it is mandatory for the drivers also to accept the request. There is also satisfaction provided on the part of the customers with the help showing the customers the real time position of the drivers who are coming to pick them up. Moreover, the drivers also receive direction with the help of Google navigation the real location of the customers who are waiting for to get picked up. When the driver reaches the place of booking of the customers, the customers are sent notifications with the help of app and also messages that the diver has reached the location and thus the customer hires the cab and after the journey is completed the fare of the ride is calculated with the help of the app based on real time travel and the user is charged to pay money either through credit card, debit card or through cash in some countries (Bashir et al., 2016). Moreover, the customers are also able to review about the drivers whether their ride was great or they have suffered inappropriate behaviors from the drivers. This helps the operations team of the drivers to take actions against the drivers and do analytics of the driver behavior.

The demand of the customers:

The main demand of the customers of the company is providing them with the lowest price for the purpose of travelling from one place to other. Due to the increasing of rate of inflation in many countries across the world and the value of many currencies going down with the developing countries being more developed, the demand of the customers is to lower the fare for the rides they take with the company and thus in order to meet the customer demand, Uber focuses upon lowering the price of the rides (Rogers, 2015). Additionally, there are countries like India, Pakistan, and Nigeria, where the rate of unemployment is more and thus in order to serve those customers, lowering the price of the cab fare is mandatory as the customers’ demands more discount on their rides. There are also a variety of types of customers who always look for discount on their rides and some customers who prefers to travel alone. There are also some customers who look forward to travel in a luxurious manner and also use Wi-Fi facility during the journey. Thus there are four ways of travelling that has been introduced by Uber for the purpose of travel. There is Uber Pool service introduced for the people who like to travel in cab at the lowest fare and people travelling in the same route are made to share their rides with those passengers (Geradin, 2015). There is also economic pricing that has been introduced by the company which allows the travelers to travel alone or with their family but there are no benefits of Wi-Fi or spacious cars offered to the customers like in case of premium bookings.

Thus in order to meet the demand of the lowest fares of the customers, the operations team of Uber focuses upon lowering the cost of the operations of the organization with the help of lowering the driver fares per trip. At the time of the launch when there were very less drivers who adopted the Uber model and for satisfying the customer demand, more of Uber drivers or the owner of the cars were paid with higher fares, but nowadays, the scenario has changed and Uber has become a huge company with huge number of cars working under them and thus in order to provide more discounts to the customers and charge them less, they have made a price cut upon the salary provided to the drivers or the money provided per trip to the owners of the cars (Bernhardt, 2016).

Operations Objectives:

Thus the demand of the customers of Uber is met with the help of a few objectives of operations as mentioned below:

Firstly, the quality of the design and the quality of the services is focused upon by Uber and improved by them so that they are able to ensure more customers attracted towards the company.

Secondly, they also focus upon improvement of the flexibility of their operations which can help to improve the operations of the company by being flexible with the changing demand in the market (Wirtz et al., 2016).

Thirdly, customization of the services in some countries according to the demands of the customers also helps them to satisfy the demands of the customers in the market.

Fourthly, Uber also focuses upon the customers who are dependable upon them and increases the dependability of the services with the help of providing them with options to rate their trip and thus if the reviews are low and comments are negative, they focuses upon increasing those areas and improve the dependability of the customers.

Lastly, reduction of the cost or expenditure of the company can also help Uber to satisfy the demands of the customers by providing them with lower prices and also provide them with discounts.

Meeting the Operations Objectives:

There are a few ways that can be implemented which helps in meeting the objectives of the operations of the company. Some ways of meeting the operations objectives of the company are mentioned below:

Meeting quality of design:

There are some customers who demand luxurious services form the part of the company as well and in order to meet the demand of those customers, there are high models of cars used for the services (Caranza et al., 2016). For instance, Uber uses BMW, Audi, and Mercedes-Benz for the luxurious segment customers. The drivers that are also offered to the customers are private drivers and the inputs that Uber makes upon the services is of very high quality.

Meeting quality of services:

The quality of the service that is provided by Uber is another objective of the operations team and the design of Uber promises to provide reliable services to the customers. The demand of the customers is to get reliable services from the part of the organization and in order to increase the service reliability, Uber helps to view the customers with the real time location of the drivers and also texts the number of the drivers to the customer mobile numbers so that the customers can call the drivers and know the exact location of the drivers and communicate with the drivers regarding the trip (Wallsten, 2015).

Improving flexibility of operations:

As the number of population is continuously increasing in the world, the numbers of customers that are demanding the services of Uber are also increasing in many countries where the company serves. Thus, there is requirement for Uber to become flexible in the market and cater their service more in the countries of their operations. As Uber hires professional and licensed drivers, they are able to meet the customers’ demands with the help of that and also with the help of improvement made in the level of technology, Uber is able to focus more upon the changes that are taking place in the marketplace and technological developments are also helping them to increase their flexibility as well as their capacity in the marketplace.

Improving service customization:

There are also customers who look forward to customize their services and Uber being a technologically developed company, focuses upon the customization of the services. In some countries there are customization of the services under the brand names like Uber Taxi, UberX and Uber black which focuses more upon meeting the demands of the customers (Miller et al., 2017).

Improvement of customer dependability as well as accountability:

The customers also want the dependability of the services that is provided by Uber and for that reason, the customers are told to rate the services of the drivers and thus the dependability of the services is improved.

Accountability is another aspect of the service that is provided by Uber and in order to improve the experience of the drivers and passengers, the real time feedback has been implemented and this helps the company to respond quickly if there are any problems or issues that are being faced by the passengers as well as the customers (Moon, 2015).

Cost or expenditure reduction by Uber:

The organization also focuses upon reduction of the cost with the help of implementation of minimum regulation to become a driver with Uber. As the regulations that is implemented by the company is of minimum amount, any person who is above the age of 21 years can become a driver and also any person having the driving license can driver for the company. Also having a car with four doors is enough to drive with Uber and the person should have a minimum amount of personal insurance to become a driver. But it is mandatory that the person should not have any criminal background and the record of accidents should be clear. Thus, the minimizations of the cost of Uber are supported by the company with the help of employing the drivers with minimum requirements (Gabel, 2016).

Hindrances in achievement of operations objectives:

There can be hindrances that can be faced by Uber in meeting the above mentioned objectives due to some of the external and internal factors of the organization (Schneider, 2015). The external and the internal environment of Uber are full of threats and these threats can hinder Uber to meet the objectives of the company. Some threats that can cause hindrances are mentioned below:

Firstly, the prices in some of the economies where Uber operates are rising and this can cause the petrol prices to rise and thus the drivers and the car owners who are provided with low return per trip with Uber will not be able to work with the company which can cause Uber falling short to meet the demands of the customers.

Secondly, there are complaints faced by Uber that drivers force up the surge pricing of the rides and this causes the customers to pay more which is a negative side of the business and if this continues, Uber will soon lose their markets.

Thirdly, there are rivals of Uber in some countries and those organizations sometimes in order to increase competition with Uber offer much lower prices to the customers in the form of promotion, which shifts the demand of the customers form Uber towards other companies which provides similar service in much lower price (Ng, 2016).

Fourthly, there are sometimes very rude behavior complaints that are faced by Uber against the drivers of a few trips. The customer launches complaints and posts those in social networking sites which are viewed by other followers of their page and thus they lose the market as the customers do not get enough confidence to ride again with them.

Lastly, model of Uber is easy for other rivals to copy and thus in the countries where Uber is not present and is thinking of entering the market, the model of the company can be copied by other organization which can make the company suffer in their expansion plans.

Conclusion and Recommendations:

Thus, from the discussion above, it can be stated that though the operations department of Uber tries to provide better services to the customers with the help of improvement of the company operations, there are still some threats that the company is required to fight against so that they are able to satisfy the customers of the organization (Colangelo et al., 2017). The customer satisfaction is the main motive of any kind of business that exists in the real world and Uber is also not an exception. Thus in order to satisfy the customers of the organization, they are required to overcome the organization threats with the help of improving their efficiency of the services that they provide to the customers. Sometimes when the customers provide negative reviews about the drivers, Uber is reluctant about it and this causes the drivers to do the same mistake over again. So, Uber should take strict actions against the drivers who have been provided with negative reviews and should leave them with warning for the first and time and if the driver again receives same kind of review for same mistake, Uber should not be hesitant to fire that driver. Additionally, Uber should also work against the drivers who are forcing up surge pricing and should work accordingly to reduce this. The Uber drivers keep their apps off for a long period of time; making the customer and the company believe that they are not available for duty and thus they force up the surge pricing (The Telegraph, 2018). So, company should implement tracking devices in the cars and make sure where the drivers are located so that they can reduce surge pricing that is forced up by the Uber drivers. Moreover, there are various competitors of Uber in some of the countries and those competitors eats up the market share of the company by following the model that have been implemented by Uber as it is very easy to copy. So, in order to reduce this, Uber should follow a more complex model so that they are able to reduce their model being copied by other rivals and eat up their market share in return. Also, as there are some economies where the fuel prices are rising high and it is causing the company to increase the pay of the drivers and per trip, Uber can make it mandatory for their clients to drive electric operated cars and this will help them to reduce the cost of the business as well as at the same time meet the demands of customer by providing them with low fares (Nistal et al., 2016). Thus, implementation of the above mentioned strategies can help Uber to be successful in the marketplace and also help them to meet the demand of the customers.

References:

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