Assignment based on Uber and Lyft
Lyft is a transportation company which is situated in San Francisco California. It is an on-demand transportation company. Logan Green and John Zimmer was its founder. And it was founded in June 2012 (Malin et al., 2017).
The mission statement of Lyft is to reconnect people through transportation and bring communities together.
Lyft strategy is to be the Android of the self-driving car business. The best strategy which is enabling Lyft is a self-driving car and ride sharing as Lyft believe that ride-sharing services can be a lot more affordable than taxis are today, and it will lead more flexibility in when, where and how they roll out self-driving technology (Forscher et al., 2018).
Lyft competitive advantage is that it has a technology or system which able to put in pick-up time and a car would show up plus or minus 5 minutes and would reach on time to help the customer so it makes the customer delighted (Malin et al., 2017). This system is not available with the other player like Uber and all.
How does Lyft make money?
Lyft generates profit and makes money through commission on total ride earning. Through Ride-share and guy blog they are making and generating enough money. Through mobile apps and providing transportation services, they are also generating money (Forscher et al., 2018).
Uber is a transportation network company which provides peer-to-peer ridesharing facility along with food delivery services to its customers. It was founded in March 2009, and its Headquarter is based in San Francisco, California, the United States of America (Malin et al., 2017). Uber provides its services all over the globe.
The mission statement of Uber is to make transportation reliable like running water for everyone at everywhere (Malin et al., 2017). The mission of the company is to provide transportation service to everyone at everywhere.
Uber follows the following strategy to be successful in the market and compete with the competitors (Forscher et al., 2018);
Early adopter advocacy: under this strategy, the word of mouth is playing a very important role for making Uber successful.
Referral: Uber initiated a program named referral in which the early adopters referred Uber to their family and friend to earn free ride or discount on the ride. Through this strategy, Uber capture the maximum market.
A loyalty program: Uber has started a loyalty program in which Uber identifies the customers who have taken more than 100 rides and provide them highly rated drivers to make them feel proud.
Competitive Advantage of Uber
The competitive advantage of Uber is two innovations. The first innovation of Uber is the superior experience of users which is enabled by an app of smartphones. The customers need not pay cash to the drivers (Forscher et al., 2018). They can pay through a mobile app. The second innovation that Uber started is a rating system for the drivers. The customer rates their experience through which Uber enhance its service to make the customers satisfied.
Making money by Uber
Uber makes money by charging its customer for a ride. Uber also generates revenue from an advertisement from the website of the company. But the major source of revenue generated by Uber is through charging its customer for the ride (Forscher et al., 2018).
Porter’s Five Forces Analysis
Porter’s five forces is a tool for analyzing the level of competition in the market of a company or industry. Porter’s five forces help in developing a strategy to gain a competitive advantage in the market and to be successful (Rao et al., 2017). Let's have a look at Porter's five forces of the taxi industry.
Competitive Rivalry (Tough competition): taxi industry is very competitive as there are numbers of players in the industry. There are domestic as well as international player operating in the industry. Globalization is making taxi industry very competitive. There is cut-throat competition in the taxi industry irrespective of the size and location of companies.
Threats of New Entrants (High): taxi industry is very attractive in terms of making a profit or generating revenue. So, there is a high threat of new entrant into the taxi industry. There is a high possibility of entrance of the new player into the market.
Supplier Power (Low): the bargaining power of the suppliers is quite low as there are large numbers of suppliers to the taxi providers. The taxi providers have several choices in terms of raw material of taxi.
Buyer Power (High): as there is very tough competition in the taxi industry, the customers have various options for taking service. The bargaining power of the customers is very high in the taxi industry.
Threats of Substitutes (High): there is tough competition in the taxi industry. High competition in the industry also creates threats of substitutes in the market. There are large numbers of service providers in the industry. Apart from the taxi industry, there are also some players who provide the same service to the customers.
Effect of Congestion Pricing Proposal on Uber and Lyft
The congestion pricing has affected positively Uber and Lyft. The congestion pricing has increased the fair of public transport to reduce the traffic. The increase in fair leads to low demand for public transport. The people will not prefer to travel by using public transport facilities due to high fair (Daganzo et al., 2015). Thus, the people will have other option of a private transportation facility. Uber and Lyft are private player and also provide cheaper transportation services to the customers. Therefore, due to the congestion pricing, the demand for Uber and Lyft would increase in the market.
Effect of Congestion Pricing over People
Under the congestion pricing, the people have to pay a surcharge of $3 to $5 if they are using car or bus. The main aim of the congestion pricing is to reduce the huge traffic. The traffic in Manhattan is increasing day by day. The effect of congestion pricing would be positive as well as negative (Daganzo et al., 2015). The positive effect would be the traveling time would reduce significantly due to the reduced traffic while the negative effect would be the high cost of riding the car as a surcharge of $3 to $5 would be charged.
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Malin, B. J., & Chandler, C. (2017). Free to work anxiously: Splintering precarity among drivers for Uber and Lyft. Communication, Culture & Critique, 10(2), 382-400.
Forscher, T., & Shaheen, S. (2018). Pooling Passengers and Services. ITS Berkeley Policy Briefs, 2018 (07).
Rao, D. M. S., & Alexander, C. M. (2017). PARADIGM SHIFT IN INDIAN TAXI INDUSTRY–A COMPETITIVE ANALYSIS ON TAXI AGGREGATION MODEL.
Daganzo, C. F., & Lehe, L. J. (2015). Distance-dependent congestion pricing for downtown zones. Transportation Research Part B: Methodological, 75, 89-99.