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The purpose of this essay is to analyze the competitive advantage of Uber and the viability of its business model. During the last decade, Uber gained a major share of the taxi industry. However, the benefits of using its business model are controversial, at least. Despite the fact that Uber seems hopeful to win a fight with its rivals in a market, the business still remains unprofitable.
The main competitive advantage of Uber is its low price. Due to the fact that the company does not hire employers but uses drivers as “contractors,” it is able to decrease the cost of many operations. For example, the company does not have to worry about drivers’ fuel, insurance, or working compensation (Horan, 2019). Most of Uber’s inbound logistics and after-sales service depends on the app. The intensity level of industry rivalry is high, as Uber has many competitors. For now, the company manages to handle the competition as it offers the customers the service they value for a low price.
Uber’s business model relies on information technology heavily. It suggests using computer algorithms for the majority of decisions without human participation. Future ideas of Uber development imply even more dependence on technologies (Horan, 2019). For example, the company invested in using computer-driven cars, planning to implement them ubiquitously. This dependence has a negative side as it is able to cause disruptive consequences as self-driven cars are less reliable. There was an accident in a vehicle that belonged to Uber that led to a woman’s death. It is obvious that Uber’s chase for low-cost labor is likely to turn out to be a high risk for passengers’ life.
Uber is a viable business from a short-term perspective as it allows one to gain profit due to low cost and automatic operational procedures. However, its further development is questionable as it has many competitors both in the USA and abroad. They are waging price wars, causing Uber severe financial losses. Uber was not able to make any substantial profit, and most of it came from exploiting drivers and reducing their pay (Horan, 2019). It proves the company’s business model is not beneficial in the long-term perspective.
The problem of the second case study is the necessity to create the company’s new infrastructure from a clean slate. The most important factor that contributed to the problem was time, as Versum needed to start its own systems no later than 24 months (Beltz, n.d.). The other factors that contributed to this problem were management and technology. The company could not afford a long training process for workers unfamiliar with the new software. At the same time, needed the new software to be implemented quickly as the parent company software was not suitable for Versum requirements anymore.
The SAP S/4 HANA SaaS solution was good for Versum for several reasons. It stopped the company from capital investment in the new system. It made the firm keep the system simple, and that prevented the creation of new problems during its implementation. Versum faced such challenges as complications with data conversion from the previous system, as it had a different structure and hierarchy. The new system changed the way Versum runs its business making such processes as operations optimization and cost management easier (Pratiwi & Tamtana, 2021). It allowed the firm to gain benefits from real-time analytics. The system let Versum become a functioning standalone company.
In conclusion, Uber works due to low prices, automatic logistics, and driver payment reductions. Still, despite the attempts to gain profit at all costs, the company loses billions of dollars every year. Uber builds its plans for future expenditures based on using information technology. However, these ideas do not seem to be safe or reliable options for Uber customers as they involve too much risk.
References
Beltz, D. (n.d.). Versum materials: implementing SAP S/4 HANA for business transformation [PDF document]. Web.
Horan, H. (2019). Uber’s path of destruction [PDF document]. American Affairs 3(2), 108-133. Web.
Pratiwi, F. D., & Tamtana, J.S. (2021). The Effect of SAP S/4 HANA Implementation on the Supply Chain Management Process to Company Benefits in Construction Service Companies. [PDF document]. IEOM Society International, 45(7), 3464-3479. Web.
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