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Impact of Uber on UK Mini Cabs

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Any opinions, findings, conclusions or recommendations expressed in this material are those of the authors and do not necessarily reflect the views of UK Essays.

Published: Tue, 12 Sep 2017

Introduction

The intense rivalry among competitors in the market is a critical driving force for each organisation. A healthy competition among competitors builds fuel for organisation long run, and while seeking progress firm practices influences other companies in the industry. The present research enables the researcher to find out such influences produced by Uber through their innovative practices. The research attempt shed lights on Uber Cab Company performance and the impact made by the organisation on other minicabs in the UK taxi industry. The researcher looks to utilise the journals of Wallsten (2015) and Edward, George and Sarkar (2010) for perceiving current issues efficiently. The investigation tries to perceive strategies and practices executed by Uber to advance in the UK taxi industry along with identifying the influence made on minicabs performance.

Literature review

The rise of Uber and the subsequent disruption in taxi industry has been a key research issue in recent years. For example, the study of Sundararajan (2014) revealed that the success of Uber was mainly due to the convenience offered by the service compared to existing cab services. This view has been upheld by other researchers such as Malhotra and Van Alstyne (2014) and Isaac (2014). All these studies point to the fact that Uber offer higher value to taxi customers in terms of lower charge, higher convenience and better safety offered by Uber. The theory of quality-value-loyalty chain was used by Wallsten (2015) to evaluate the success of Uber in Taxi industry.

Figure 1.1: Quality-value-loyalty chain

Source: Wallsten (2015)

As per Quality-value-loyalty chain, price, product quality and service quality develop the perceived value of a product or service which in turn contributes to customer loyalty towards the product or service. Among these elements, competitors are easily able to imitate product quality and price. But it is very difficult to imitate service quality (Edward, George and Sarkar, 2010). Due to this, service quality has an enhanced role in creating value and loyalty for the product or service. Wallsten (2015) notes that the superior service quality of Uber has helped the company in creating value for customers and in developing loyal customer base in taxi industry. From the review of existing literature available on Uber’s success in taxi industry, it can be understood that the ability of the company to offer better value, service quality and convenience was the main reasons for its success.

Research purpose

The study intends to identify the impacts that created by Uber Cab Company in the UK taxi industry and analyse influence that the company made on minicabs in the country.   

The research objectives of the current research are:

  • To evaluate the factors affecting satisfaction of cab customers
  • To assess the factors contributing to the competitive advantage of Uber in UK Taxi industry
  • To analyse the impact of Uber’s growth on mini cabs of UK
  • To provide suggestions to mini cabs of UK to remain competitive in UK Taxi industry

Rationale

Despite being a start-up in the UK taxi industry, Uber cab services had provided growth to the traditional taxi service in the country. The process made the country’s private taxi firm to stand tall where other numerous taxi companies had failed. According to Megaw (2016), 97% of the organisation that tried fit their name in the industry had fallen within the first four months where Uber showed resilience in making an impact which flew beyond the capital. The company had expanded beyond borders leaving a note on taxi industry to look for an urgent lift in which the mini cabs have experienced most of the damage. Uber was able to advance in each market that they have entered which led to protests and strikes in the UK. Uber Cab company flexibility had attracted few drivers who worked in mini cabs in London to join in the company. The low pricing strategy that the company presented has made controversies as competitors had alleged the practice unhealthy and artificial. Uber started its operation in the UK with four locations and increased the size to eighteen with 30,000 drivers in London (Torrance, 2016). Data analysis interprets that since Uber started its operation, the private hire operations in London has attained a decline of 11% assuming minimum ten private taxi business close in every month. The research seeks to identify major reasons for the customer to choose Uber cab over minicabs by comparing their service using service quality framework and looks to interpret recommendation for minicabs in order to survive the situation.

Scope and limitation of research

The Uber Cab Company intervention to the UK taxi industry has been questioned severely by the minicab operators as their low payment system and other operations has affected minicabs and provoked few operators to end their operations in London area. The investigation gathers ample evidence for interpreting the features that attracted customers to Uber service so that certain recommendations could be drawn to the minicab operators in the UK for improving their business in the location.

Research methodology

For constituting the study, the researcher has to acquire efficient information on operations of both Uber Cab and minicab services. For carrying out the research both primary and secondary data collection method is used by the researcher. The literature and journals on the topic are utilised to attain secondary data, and the primary information is collected through executing a survey on taxi customers. The survey is conducted on 55 customers who use taxi services in London in which 30 female and 25 male customers are targeted. The survey method enables researcher to understand consumer perspectives on services provided by Uber Cab and minicab companies improving study strength. The data achieved from books, journals, articles and websites belong to the secondary resources which are used by the researcher to analyse the issue further. The adequate information attained from these practices is used to provide significant interpretations for present research problems from which efficient recommendations are drawn for the minicab operators.

Action plan     

Research objective

By when

Resources to be used (2.1)

when do you know this objective is achieved

which is after the “by when to ensure that you have actually achieve the objective “

How will you monitor this objective is being achieved? – method of monitoring

Topic selection

17th December to 22nd December 2017

Books, articles and online journals for study topic selection

21st December 2017

22nd December 2017

Reporting Regularly to supervisor

Aim and objective preparation

23rd to 24th December 2017

Adequate journals and books

23rd December 2017

24th December 2017

Reporting Regularly to supervisor

Literature review

25th December to 10th January 2017

Secondary resources like books and publications both online and offline for literature review preparation

8th January 2017

10th January 2017

Timely informing supervisor work status updates

Research methods

12th January to 16th April 2017

Journals and books for perceiving research methods

13th January 2017

15th April 2017

Updating report status to supervisor

Data collection

17th January to 16th February 2017

Survey on customers as primary resource and data from books, journals and company reports as secondary resource

15th February 2017

16th February 2017

Communicating status to supervisor

Interpretation of data

17th February 1st March 2017

Comparison of primary and secondary information and analysis descriptive methods

25th February 2017

1st March 2017

Updating work status to supervisor

Conclusion and recommendation

March 2nd 14th March 2017

On the basis of interpreted data and analysis

13th March

2017

14th March 2017

Timely report to supervisor

Final submission

15th March 2017

2.2 Undertake the proposed research investigation in accordance with the agreed specification and procedures.

Questionnaire design

This research was deliberated to mainly evaluate the effect of UBER Cab Company on mini cabs in the UK. For conducting the study, the research has opted UBER Cab Company to carry out the study. The research has mainly opted questionnaire method so as to gather data and information from the customers of UBER Cab Company to know more about taxi and the scope of them. For developing and evolving the questionnaire, the research has adopted Likert scale method, and to the customers of UBER Cab Company, the questionnaire was distributed with the aid of survey method. By opting the customers of UBER Cab Company for conducting the survey, the data gathered by the researcher was accurate and appropriate to the question of the research.

Data collection method

For the study, the research decided to opt primary data collection using survey method. The research was done with the aid of survey that was carried out on the customers of a minicab in London. The researcher decided to opt about 55 as the sample size for the study where 30 were women, and 25 were men. With the aid of survey method, the researcher could gain more knowledge and understanding about the company and the taxi services. All the research questions were related to the study and the questions prepared was simple and very easy to understand. This helped the researcher to get the opinions of customers.

Advantages of survey method:

  • With the aid of primary research, the research could gain relevant, apt and specific answers when compared to any other research methods.
  • With the aid of Likert scales, the researcher could understand more about the topic and do not spend more time on the data collection.
  • Survey method is cost effective and time-consuming.

Disadvantages of survey method:

  • The survey that is closed and structured might have less validity and reliability than other methods.
  • There can be favourable answers been marked by the researcher so as to support the subject.
  • The respondents will not be able to give their maximum as they will not be aware of the reason behind the survey.

Advantages and disadvantages of ANOVA method

The survey method was analysed with the aid of ANOVA method through which qualitative data collection was collected. Over more than two groups the data are examined and reviewed constancy for gaining the result in the case ANOVA method. The t-test is mainly compared to ANOVA methods as instead for ANOVA method t-test is used for the similar use.

The advantages of ANOVA are:

  • ANOVA method is mainly opted to relate groups of various samples sizes when compared to the t-test.
  • Without cumulating the probabilities of Type, I error, with the aid of ANOVA more than two grouped can be evaluated.

The disadvantages of ANOVA are:

  • Incorrect results can be gained from ANOVA if the samples are gathered from the average population.
  • ANOVA helps to makes sure if the samples are different from each other and also indicates the samples that are different from the similar ones.

D3: Justify the choice of data collection methods

To get accurate and reliable data and information the researcher adopted primary research for this study conducted on UBER Cab Company. The research has adopted survey method as the research strategy to gather data from the customers of UBER Cab Company London. The responses gathered from different customers were different and had different opinion and suggestions. The questions were closed and structured through Likert scales. Likert scales also aided the researcher in understanding the questionnaire. It was comparatively easy for the researcher to gather quantitative data with the help of survey methodology that made the research to be analysed easily with the aid of ANOVA method.

2.3 Record and collate relevant data where appropriate

The researcher has used ANOVA analysis for testing the data collected from taxi customers of London. The researcher collected data from 55 taxi customers (30 female and 25 male customers). The working hypothesis adopted by the researcher is that there is clear difference in taxi service preferences of male and female taxi customers of London. This working hypothesis is tested with the help of ANOVA analysis.

SS

df

MS

F

P

Price

388.9286

1

388.9286

9.24

0.028759

Accessibility

388.9286

1

388.9286

5.08

0.073916

Convenience

388.9286

1

388.9286

3.56

0.117844

Driver behaviour

388.9286

1

388.9286

6.69

0.049044

Quality of car

388.9286

1

388.9286

10.89

0.021476

Safety

388.9286

1

388.9286

14.9

0.011879

2.1 ANOVA analysis of customer needs from taxi service

From the above ANOVA analysis it can be understood that the opinions of male and female taxi customers significantly diverge in terms of their needs and expectations from taxi services available in UK. The analysis shows that female customers gave greater importance of safety, quality of car and driver behaviour when compared to male customers. On the other hand, male customers gave higher importance to convenience aspect while choosing taxi services.

SS

Df

MS

F

P

Reliability

388.9286

1

388.9286

6.65

0.049507

Assurance

388.9286

1

388.9286

14.25

0.012957

Tangibility

388.9286

1

388.9286

4.12

0.098139

Empathy

388.9286

1

388.9286

11.68

0.018887

Responsiveness

388.9286

1

388.9286

2.83

0.153344

2.2 ANOVA analysis of customer rating of service quality of Uber

From the ANOVA analysis of the customer rating of service quality of Uber it is clear that both male and female customers have diverging opinions regarding the different dimensions of service quality of Uber. For example, it is evident that reliability, empathy and assurance elements of service quality of were given higher rating by female customers while male customers gave higher importance to responsiveness of the service of Uber.

SS

df

MS

F

P

Reliability

388.9286

1

388.9286

8.36

0.034132

Assurance

388.9286

1

388.9286

5.71

0.062422

Tangibility

388.9286

1

388.9286

21.02

0.005922

Empathy

388.9286

1

388.9286

3.28

0.129892

Responsiveness

388.9286

1

388.9286

11.02

0.021017

Methodology

I used simple random sample because it is the simplest way to select participants from a population. According to Saunders, et al., using these methods means that each individual in the population has the same chance of being selected for the sample (2012)

The survey questionnaire was developed on free online source distributed to employees via email, and social media messaging. Printed sheets of questionnaire were also provided for data collection. The expected sample size is set to 100 participants from the target population and the sampling is undertaken based on simple random sampling method.

2.3 ANOVA analysis of customer rating of service quality of UK minicab

The above analysis of customer rating of service quality of UK minicabs reveal that female customers hold very different view regarding the service of minicabs when compared to female customers. It is evident from the analysis that female customers opinion regarding the reliability, assurance, tangibility and responsiveness of minicabs diverge from that of their male counterparts.

SS

Df

MS

F

P

Uber

388.9286

1

388.9286

2.43

0.179774

Minicab

388.9286

1

388.9286

14.25

0.012957

2.4 ANOVA analysis of customer likelihood of using of Uber and Minicab

The above ANOVA analysis shows that female customers are much more likely to not use minicabs than male customers. On the other both male and female customers are equally likely to use Uber as taxi service in London.

3.1 Use appropriate research evaluation techniques

Effectiveness of Project planning was developed by the researcher for implementing the current research project. The plan entailed the main steps of the project alongside milestones, objectives, review dates and resource allocation. This research plan was highly efficient in enabling the implementation of the research within the allocated time frame. One area where the research faced difficulty was in using ANOVA analysis method in data collation stage. The lack of knowledge and experience of the researcher in using ANOVA analysis method was a key obstacle in the smooth implementation of the research.

Achievement of research objectives:

Objective 1: To evaluate the factors affecting satisfaction of cab customers

The primary objective of the current research was to evaluate the factors affecting satisfaction of cab customers. From the survey of taxi customers in London, the researcher was able to understand that convenience and accessibility were the most important factors that customers considered while selecting taxi service. From this it was inferred that convenience and accessibility of the cab service were the most important factors affecting satisfaction of UK cab customers.

Objective 2: To assess the factors contributing to the competitive advantage of Uber in UK Taxi industry

One of the other objectives of the research project was to assess the factors contributing to the competitive advantage of Uber in UK Taxi industry. With the help of the customer survey, the researcher evaluated the service quality dimensions of Uber. From this analysis it was understood that reliability, responsiveness and tangibility of service of Uber was rated highly by customers. From this it can be understood that Uber gains competitive advantage in UK taxi sector by offering reliable, responsive and tangible service.

Objective 3: To analyse the impact of Uber’s growth on mini cabs of UK

The other objective of the research to analyse the impact of Uber’s growth on mini cabs of UK. This was achieved by comparing the service quality of minicabs with that of Uber. From this comparison it was revealed that that reliability, responsiveness and tangibility of service of minicabs were inferior to that of Uber. This gap in service quality dimensions can be adjudged as the reason for the success of Uber in UK taxi market at the expense of minicabs.

Objective 4: To provide suggestions to mini cabs of UK to remain competitive in UK Taxi industry The last objective of the research project was to provide suggestions to mini cabs of UK to remain competitive in UK Taxi industry. Form the research project it was understood that reliability, responsiveness and tangibility of service of minicabs were inferior to that of Uber. Hence it is recommended that minicabs seek improvement in reliability, responsiveness and tangibility elements of their service.

Effectiveness of research methods:

In the current research, survey method was used for collecting data from taxi customers in London. This data collection method was highly effective as it helped the researcher in collecting data from large number of customers with relative ease. As the data was collected from London this improves the validity of the research findings as London has a very diverse population. However, the research findings cannot be extrapolated across UK as the scope of the study was limited to London city.

The research study is using both primary and secondary data. Primary data is obtained from the online survey and appropriate case study examples to interpret the results and Analysis. Secondary data has been used in Literature review .This section starts off by introducing you to four commonly used qualitative data collection methods. These collection methods and many others are also described and explained how to use them in evaluation. It then explains how you may go about involving participants: This is also known as sampling. The section ends with a discussion of a couple of approaches to qualitative data analysis. I will have to use some of these methods as part of your routine project monitoring activities, in a needs assessment or baseline or as part of an evaluation exercise.

Quantitative and Qualitative data collection methods

There are two ways of analysing qualitative data. One approach is to examine your findings with a pre-defined framework, which reflects your aims, objectives and interests. This approach is relatively easy and is closely aligned with policy and programmatic research which has pre-determined interests. This approach allows you to focus on particular answers and abandon the rest. I refer to this approach as ‘framework analysis’ (Pope et al, 2000).

The second approach takes a more exploratory perspective, encouraging me to consider and code all your data, allowing for new impressions to shape my interpretation in different and unexpected directions. I refer to this approach as thematic network analysis (Attride, 2001).

Benefits of research results:

The main benefit of the research results is that they outline the scope of competition between Uber and minicabs in UK taxi sector. This would help minicab service providers in understanding the areas where there is scope for improvement in their service.

Difficulties faced in the research:

One of the main difficulties faced in the current research was related to collecting data from taxi customers in London. The researcher faced difficulty in collecting data as the researcher lacked previous experience in collecting primary data through survey.

3.2 Interpretation and analysis of data

1. Gender

Pie chart 1: Gender of the survey respondents

Source: Created by the author

Gender of the survey respondents is represented by the above pie diagram. From the above diagram, it is observed that relatively increased number of females (54.55%) constituted the participants of this survey program.

2. Rate the following factor in terms of their significance in your selecting a particular taxi serve (Scale of 1-5 where 1= Very high and 5= Very low)

Bar chart 1: Ranking of factors that customers considers in selecting a taxi serve

Source: Created by the author

Analysing the significance of the various factors that a customer considers while adopting a taxi service, it is observed that convenience and accessibility were the mostly rated elements. The importance of safety element and pricing strategy were also identified from the customer responses. Thus it could be interpreted from this survey result that service efficiency, product attribute and pricing constitutes the main elements that influence the decision-making the process of the customers. This is in line with the literature study of Wallsten (2015) that explains the concept of Quality-value-loyalty chain.

3. Rate the following elements of service quality of Uber on a scale of 1-5 where 1 = Very good and 5= Very bad?

Bar chart 2: Customer rating for the service attributes of Uber

Source: Created by the author

Responsiveness, tangibility and reliability were the highly rated characteristic features of Uber services. This is in line with the findings of Sundararajan (2014) and Isaac (2014) who identified that service excellence was the key element that provided an improved competitive advantage for Uber. However, it is also observed from the above pie diagram that Uber has received a negative customer response regarding its assurance.

4. Rate the following elements of service quality of minicabs of UK on a scale of 1-5 where 1 = Very good and 5= Very bad?

Bar chart 3: Rating for the service quality of minicabs of UK

Source: Created by the author

A multitude of opinions was gathered from the customers regarding their rating for the service quality of minicabs. However analysing the above bar diagram it is apparent that majority of the customers has given comparatively a higher rating for the empathy element in the service quality of UK minicabs.

5. Rate the likelihood of you using the following services when you use taxi service next time on a scale of 1-5 (1= Very high and 5=Very low)

Bar chart 4: Probability of selecting Uber and minicab services

Source: Created by the author

Analysing the probability of customers in selecting a taxi service, it is observed that majority of the participants opined that they prefer to opt Uber services. This signifies that Uber has achieved an improved recognition and competitive advantage compared to other minicab services of UK, which is in line with the reports of Isaac (2014) and Wallsten


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