Assignment Unit VIII
Assignment Unit VIII
Final Project
Huynh Dong Ha
1. Analyize the market before Uber’s Entry into Vietnam market. Describe
Vietnam has experienced the explosion of the 4.0 revolution, which has drastically
changed the mode and reshaped the market in many different business sectors, including
the transport sector. Technology driver, a breakthrough achievement in the 4.0 era is
increasingly influencing the existence and development of traditional taxi services. The
competition between the two types of services has revealed the shortcomings and
limitations of traditional taxis for a long time, forcing traditional taxi companies to
recognize and adjust their strategies to maintain their position and develop. .
Before the technology driver appeared, Taxi corporations dominated the market such as
Mai Linh Corp, Vinasun Corp., Vina Taxi. However the service is very similar.
Consumers pay Taxi fair according to taxi metters, we cannot know the amount when
using the service. Clearly about the cost, the distance from the start: Traditional cars have
the disadvantage that the driver can interfere with the distance or charge, creating
ambiguity. There are new corporations that want to join the Vietnamese market, but that
is very difficult because of collusion between taxi groups, increasing market prices.
Customers will call the center number to use the service, but most do not know when the
The popularity of technology taxi services combined with the subsidy strategy is causing
many traditional taxi companies to suffer, lose market share, and reduce revenue.
Although traditional taxis are facing difficulties, whether or not they completely give up
the playground to technology taxis is ahead. If you know how to be creative, find ways to
retain drivers, increase customer service quality, restructure to increase business
In Vietnam, technology taxis have changed the landscape of the aging traditional taxi
market. The introduction of Uber into Vietnam has exposed the longstanding limitations
of traditional taxis.
[ CITATION Joh17 \l 1033 ] Uber is a rapidly expanding firm with distinct features:
chauffeurs are not employees, the firm does not own the preponderance of the
protocol. Uber's escalate to unparalleled size depicts the gap between conventional
emissary between two distinctive markets: riders and drivers (owners) [ CITATION Eis06 \l
1033 ]. In Vietnam, Uber is the app which helps passengers connect with automobile
through its software. Only in the last few months of 2014, Uber has become a
Uber has brought about a drastic change in the private transport industry. But there are
Price is too high ”is a major annoyance for most customers. This is a valuation
Users have to wait a long time to be serviced if there is no taxi driver in close
Sometimes because a taxi isn't available or for any other reason, the driver cancels
Negative impact on driver's income. Drivers rely on rising fees to make up for
occasional trips and low fares. However, due to price competition and Uber's
frequent hiring of new drivers, this affects the average income and morale of the
Adverse impact on traditional taxis. Due to its cheapest service, Uber is in a fierce
confrontation with traditional car and taxi services in the form of losing customers
Due to the lack incentive for drivers to enhance service when enterprises use
Related to Uber's infamous culture of misbehavior: Uber can see all current driver
and people waiting. Correspondents who posted faultfinding stories about the firm
were showed [ CITATION Hil17 \l 1033 ]. In August 2017, Uber consented to a 20-
year audit to obstruct future clients privateness, which will be waged every two
2. Explain Uber’s surge pricing in the context of shift in supply and demand
Dynamic Pricing or Surge Pricing means the activity of building a selling price strategy,
continuously changing the selling price of a product or service based on market conditions.
Uber can use technology to count the orders and estimate the increase in price every
minute and find the location that drivers could meet the customers.
increased ride costs as more people in an area asked for Ubers at the same time.
During the Lunar New Year, Uber applies a booking surcharge and a sudden increase in
prices. This is to meet the very high travel demands of the people during this period of the
country and ensure income, as well as encourage the spirit of activities during the holidays
for the drivers. A spike in price is a price adjustment policy based on the connection between
supply and demand in the business, used by the algorithm that technology-driven
applications like Uber use when there is an imbalance. equals supply and demand. This
supply-demand imbalance occurs when there is a change in both ridership needs and driver
availability.
[ CITATION Jon16 \l 1033 ] Uber operates in a market with huge fluctuations in driver demand
and changing supply. Drivers are free to work whenever they want and should be encouraged
to provide services. Under these conditions, economic theory tells us that using prices to
signal to drivers that rides are scarce and that drivers abandon other activities narrow the gap
between supply and demand, leads to improved results for both the driver (in general) and the
driver.
Illustrate basic economics by taking a prime example of an increase in action. On March 21,
2015, pop superstar Ariana Grande played a sold out concert at Madison Square Garden.
the number of regular app openings. As this demand increased compared to the number of
existing Uber vehicles in the region, it skyrocketed, ranging from 1 to 1.8 times in more than
Whereas some thought that surge pricing created Uber's representation become deteriorated
in the eyes of its clients and the media. Virtually nobody thinks surge pricing is a excellent
policy and most passengers think it is a unexpected devaluation. This is a problem that
makes Uber think a lot. Uber was born to help customers move more flexibly and
conveniently and needs surge pricing to ensure that customers always provide these benefits.
But actually these, the sudden increase in prices ensures that customers still receive the
service on demand without having to spend a lot of time waiting even in urgent or peak
circumstances. I am also one of the regular technology driver users. During peak times,
especially Tet, I am always willing to pay a higher price than usual for a ride. In times of
traffic congestion, drivers work harder and cost more fuel, so it is understandable to pay extra
fees. Especially on Tet holidays, only a car is needed because Tet, the road is crowded, that is
because the number of vehicles is not enough. Anyway, thanks to this policy, passengers who
are not willing to pay costly rates will find a substitute transportation choice. In addition, the
attractiveness of higher fares also makes drivers ready to go to crowded places with demand,
so they will serve up to those customers who really want to use the service.
The passerngers are awared about the whole amount they need to pay and make their own
conclusions when they get Uber service. Ergo, Uber is trading their service at the price
Uber's Price Discrimination, it's a sharp-witted scheme. They generate many services with
the identical function, Uber allows service a very colossal income range. Price difference
leads to higher revenue for the company. For example: Accommodations, plane tickets,
qualified services all put forward dissimilar prices for unalike character of buyers.
To cite an instance, when you are purchasing for a seat on a plane, the airline provides
distinct prices for disparate seats in disparate locations. Since some people are happy to pay
more, the airline exploits the client's surplus by charging them further and offering a
class or economy class seats, both of which give the same kind of service; move people from
With Uber Pool, Uber can provide even added concession. Uber links to Citi Bank. Clients
will be charged less than 10% when they pay by Citi Bank Card.
The system charges customers at a fixed price when they reserve an excursion, it also splits
the driver's wages from the amount the customer pays. The price Uber charges drivers is their
best guess of the cost of an outing. The amount it pays the rider is a rate calculated based
upon time and length. Annoyance is that Uber did not veritably tell the chauffeur (or really
anyone) that they were doing this, and they start to doubt. Quartz is constantly asking Uber
about the parameters it sets for upfront pricing [ CITATION Gri17 \l 1033 ] - and whether they
are using the difference between what drivers pay and drivers make to improve their profits -
[ CITATION MES17 \l 1033 ] Daniel Graf said that the firm applies apparatus learning to
approximate how many groups of passengers are willing to purchase for a ride. Passenger's
propensity to pay higher price for a specific route at a certain time of day. Pretend that,
someone traveling from one wealthy area to another may pay more than someone else to a
needy part of town, even when there is a need for congestion vehicles and the length is the
passenger pays precisely what they are able to pay for riding, passengers are normally no
better than they are in a world where Uber does not subsist, and Uber has been endeavoring
model
Economies of Scale is "the production cost of the product is reduced due to the increase in
the size of the production facility". Basically: The more you make the product, the less it
costs. It is important to realize that economies of scale are not tied to manufacturing of
manufactured products. Your business may not be involved in manufacturing but can still
administration. The size of a business has a huge impact when it comes to economies of scale
or the more a firm expands its production scale, the lower the unit cost. For economies of
scale, the more a company enlarges its production scale, the lower the unit cost. [ CITATION
Law18 \l 1033 ] There are about 833,000 Uber drivers involved in a year. That is a native
progression of Uber. Uber broadens its business scale by recruiting more chauffeur and rises
its platform capacity, creating lower cost per service by dwindling average fixed cost (AFC),
Economies of scope is an economic theory states that the average cost of production will
decline as a firm enlarges the range of goods and services it produces. The firm will typically
inflate production lines for concerned products, make use of the existing marketing and
due to diversification, then the effective scale economic efficiency increases due to an
increase in production volumes. Economic efficiency of scale is the reduction of the average
cost or cost per unit produced resulting from an increase in the production of a product.
[ CITATION Pau19 \l 1033 ] The company has grown out of its core ride-hailing service and
reuse its food delivery technology, with modern Uber Eats representing an important part of
Uber's business globally. The company is getting into bike sharing, Uber has integrated bike
sharing in San Francisco and Washington, D.C. And they have plans for further expansion
[ CITATION Dai18 \l 1033 ]. Uber also will share more of its data with cities. Uber announced it
will join Shared Street, an effort by the National Association of City Transport Officials to
give cities a better understanding of how their streets and curbs are being used by taxis,
carpooling and transportation companies [ CITATION Gra19 \l 1033 ]. You will be able to use
Uber to rent your car or hire someone else. Uber is also lending its technology in trucking
Uber is dissimilar since it is not a transport organization but a platform where drivers and
clients interact, excluding the price set by Uber. Uber is an unprecedented suje, entering a
taxis market by itself and seemingly compelling taxi drivers out of business. Uber touches
user satisfaction and responds to the human needs of transportation. It abolished the
outmoded and inefficacious taxis monopoly and replaced the matching service with a highly
efficacious one.
Uber uses the concepts of Game Theory to plan their business models mine. Uber's pricing
scheme, and Uber's policies for individualistic taxi owners, are what sets the company apart
from customary taxis. For consumers, Uber mainly relies on 'Network Effect' - X joined Uber
But Uber lost the battle against Grab in Vietnam. Why? For driver and for passenger. Here is
For Driver: Everyday you’ll get incentives or should I say bonus and warranty, everyday!
When you get order, you’ll get very clear information about the order (price, pick-up
location, destination, promo / not, cash / grabpay). The minimum fare / rate for short trip is
route, flood, stop on minimarket, etc. the price would not be changing. So many discounts
and promos, even when you use grabpay, usually you’ll get more discount. Get you to the
nearest driver, when you make order. (Because sometimes uber does not).
6. Assess Uber’s potential for international expansion and potential trade policy issues
Uber can choose one or various modes of diversification for its worldwide business in
particular: export, import, direct capital investment, direct non-capital investment, portfolio
As Uber expands internationally, the app UX must be tailored to meet the needs of the people
of that country, while maintaining brand awareness. But it also had to allow variations that
would make the brand feel local and make the app easy to use. Uber is the first of many ride-
sharing apps, and it must compete both at home and abroad. When entering foreign markets,
competitiveness should be considered. Uber entered the Egypt market by buying Careem, a
competitor in that country. On the flip side, the enterprise makes to join forces with Yandex,
As an international company, the competition is increasingly fierce. After the risks in the
market, they realized the need to grow rapidly and strongly domestically and internationally.
When Uber offered services using the approach of foreign direct financing to global
establishment. Offshore investment is given priority. Uber can establish its Uber taxi
platform on the internet, mobile phones, recruit local foreign drivers, and run its service
business in other countries. Conversely, Uber's buildup has met with both exhilaration and
major setbacks due to lawsuits, technology limitation and government canons [ CITATION
Hyd14 \l 1033 ]. In less than 8 years, Uber has successfully expanded to more than 450
markets around the world. Market expansion has led to a series of changes with the app
technology driver on mobile and the business model to match cultures in other countries.
Uber has been forced to accommodate different language, currency, and distance measures.
Uber is effective in the US for the first time. Notwithstanding, they were one of the
enterprises that learned the hard way, realizing that what may have worked in the U.S. Uber
made a mistake in expanding globalization, thinking that the US business model and market
approach could not be applied to other countries. It is a challenge when operating in each
country with different environments and cultures, economics and politics are also
different[ CITATION Suh17 \l 1033 ]. Furthermore, Uber wants to have greater international
success, they should be careful in considering whether their policies and practices are
relevant to other countries, in particular China, India, and Europe. It is a show of respect for
the rules and organizations of those countries. Uber should invest time in building strong
Potential Trade policy issues: When doing enterprise abroad, Uber may face prospective
safeguarding policies of the host countries. The California require Uber to treat workers as
employees. It becomes nearly a rule, but Uber said that they would not treat their drivers as
employees under the new law [ CITATION Rob19 \l 1033 ] . Function of the technology drive is
to connect drivers and clients. Of course, without relationship between employers and
employees, Uber will not be obligated to pay Social Security taxes and unemployment
insurance or workers indemnifications (1). Uber must face to various government complaint
that they always dodge tax liabilities onto its drivers. More tax law could expand the issues,
leading to escalate ride fares or the end of Uber company in that city or state (2).
7. Explain incentive pay model Uber sues and how it affects the principal – agent
problem.
Principal - Agent Problem (also known as trustee and trustee problem is a typical example of
moral hazard. A manager (also known as an agent) is a person who only owns a small portion
of the equity capital of a company, whereas the owners own the majority of the equity. The
separation between ownership and management has created a problem that managers are
more likely to act in their own interests than those of the owner.
Incentive pays to drivers- it is all about crest a demand and make a brand. It's service
business, uber is technology company, so for them the important part is client base. The
higher the client base, higher the Profit. Demand is already there; they are just supplying for
that they have to reach to each and every customer. It takes some time to accept the new
technology, so initially they have to attract a supplier (uber driver) and demand(customer).
For that they need promotions, incentive for drivers and offers for customers. So, once they
will reach to high volume, they need to deduct very small amount to make big money. The
In this situation, the agent (employer) and agent (worker) have slightly different interests,
and the agent has to come up with a way for the agent to act in good faith. most of them.
While both the employer and the employee care about the overall success of the facility, each
employee wants to fulfill his or her assignment with minimal effort. Incentive pays an
ingenious solution to the principal - agent problem. That is the motivation for drivers when
they get an incentive pay amount to "read" customers and deliver the best service possible.
The customer becomes the driver's quality supervisor and helps the manager to handle other
tasks. This situation is the vehicle to drive the level of service that Uber wants [ CITATION
ANT17 \l 1033 ].
If the "recharge" for a driver is no longer applied, the driver will have less incentive to work.
Especially when the weather is bad or there is traffic congestion, which is when the price of
the service goes up, which is what the driver wants, of course, the driver who provides good
service under such special conditions then the high price is a reasonable thing. Although
Uber uses a "price increase" model for such cases, it is not publicly available; Tipping norms
for accomplishing a similar task are "raise prices," but give customers more autonomy. If
Uber wants to avoid the negative publicity of "price increases", but still encourages drivers to
take difficult routes and times, yield to their drivers' wishes and allow tipping is ideal to solve
Uber member drivers can negotiate with their passengers without realizing that Uber will
deal with the following: At destination A, the passenger wants to go further to point B. and
collect more money without need to look at the heart of the Uber team. Passenger booked a
trip from point A to destination B using an Uber call center. However, passengers want to
return to point A by colluding with the Uber driver without recognizing the Uber Call Center.
Uber taxi drivers use a group of vehicles without even paying attention to the Uber Call
Center.
Flexible employment is Uber's promise to its employees [ CITATION OBr15 \l 1033 ], which
Uber announced that one of the reasons driving Uber's driving jobs was flexibility was a
major motivator - cited in a 2015 survey [ CITATION Hal15 \l 1033 ] . Uber advertises that the
driver has the right to decide when to work, the self-driver will set a separate schedule, but
this equivalence belies the fact that these jobs lack benefits or worker protections. Uber's
digital platform mediates drivers' activities. The digital platform provides owners with the
ability to "mediate" or, in other words, observe users to perfect what behavioral scientists call
"choice architectures," elements that influence user behavior through. how decisions are
presented. Uber experimented with its drivers to determine the most effective strategies to
keep them on the road for as long as possible. These strategies include playing cognitive
biases like loss aversion and overestimating low-probability events, even when the driver
barely makes enough money to make it worthy. it deserves her. The final drivers are like
Uber's surveillance is done through their app and company policy. This creates the
asymmetric information issues between the company and the individual drivers. The
manufacture makes what many sensible eyewitnesses would define as a managed human
resource. Drivers have the freedom to log in or log out of work at will, but when they are
online, their activities on the platform are closely monitored. The platform redistributes
consumers. Uber can access and control vast amounts of driver experience information. Each
rider's metrics can thus be as against riders in accumulation and ranked accordingly, Uber
thus produces remind that direct drivers where, when, and how to work. However, it
contradicts what Uber has stated earlier, promoting entrepreneurship and the freedom to
allow employers, the public, and regulators to imagine that employees "work under the
criminal matters like assault claims[ CITATION LaF15 \l 1033 ] . But the driver believes that Uber
always supports customers because customers are their revenue source. A fare is
"guaranteed" via the customer's bank credit card in the file, but Uber will withdraw the
driver's income if they make a mistake. There are many reasons for creating a "mistake" from
a customer to a driver, such as a customer who would complain about the route being too
long, however that could be an invisible obstacle to the navigation system. or the customer
arbitrarily indicates the route to the driver, causing the driver to deviate from the route
suggested by GPS or ask for multiple drop-off points for a group of passengers.
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