Task 1
Uber has employed many people as drivers, and many depend on it for income. Uber Technologies struck a deal with the taxi industry so that they could bring car vehicles such as traditional taxis into the application. This report is based on the sharing economy, the socioeconomic model that shares resources to produce, distribute, trade, and reach consumers from different fields. It focuses on finding out how its operations affect macroeconomic factors like inflation and Gross Domestic Product (GDP) in the United States of America.
Economic Indicators
Macroeconomic Indicators
Inflation is the general increase in the prices of goods and services in the economy progressively. It corresponds directly to a decrease in the ability of a currency to purchase. It is measured in terms of the inflation rate, which is calculated annually by finding the change in the percentage of the price index in general. The increase in prices makes Uber raise the cost of its services, thus making it expensive for consumers (Geissinger, Laurell, and Sandström, 2020). Another aspect of macroeconomics that affects the industry is interest rates. Changes in the rate of borrowing money impact the economy. A large number of firms that rely on loans to finance their operations are not capable of accessing the required amount of capital due to an increase in interest charges.
Microeconomic Indicators
In the transport industry, microeconomic factors affect the working of this company’s availability of Shareholders. Uber Company needs funds to grow and operate its business activities. Investors and shareholders give the company funding to expand the operations to better the reward. They offer the required financial support to boost the overall processes in the organization. In addition, the availability of skilled and qualified personnel who are motivated to work for an organization is essential to achieving success. Employees of an organization determine the output it produces since they are involved in the production process.
This industry has affected the annual (GDP) of the economy of the US. The spending of the drivers and their earnings play a key role in the general income of the country. The community spending on this firm and the transport of potential investors across the country add value to the country’s GDP. In 2017, for instance, the gross revenue generated by the drivers and their deliveries was reportedly higher than $12.9 billion (Kim, Baek, and Lee, 2018). Many drivers opt to join this company over other industries because of its flexibility and independence of work. Some drivers use this company to boost their sources of income, although others were previously unemployed before the organization came into existence. This innovation brought significant motivation to people’s lives and made them increase revenue generation. It is clear that Uber has contributed positively to the local and national economies.
External Analysis: PESTEL Analysis of Uber
This company is regarded as the leading in-app taxi-sharing organization. There are factors that influence its operation, which include Political, Economic, Social, Technological, Environmental, and Legal. These aspects have impacts on the operations of the industry in the economy in different ways. The analysis provides deep insight into how the factors determine the success of Uber Company in the sector. The framework allows the organization to evaluate external factors that contribute to its performance.
Political Factors
The transportation sector has been affected by policies aimed at minimum wages, and discussions have been carried out for drivers to abide by the taxi rules. Documentation should be provided as per the government requirement to have commercial licenses. There has been an endless controversy facing the industry at large in which the insurance policy would cover individuals or the company in case of an accident.
Economic Factors
There is a potential market, as indicated by Uber’s alarming rate of growth. It has created career opportunities such as taxi drivers and the technical team that operates the app. Since its initial launch, this organization has grown substantially, bringing in the issue of unfair competition against taxi companies. In some countries, it has been banned, while it has been a focal point in others. It is way cheaper than the other cars in the transport sector.
Social Factors
The platform Is easy to access and user-friendly to the consumers hence more markets. There is not much communication required but only pressing a few buttons, and the rider is available at the convenient place of the customer. The app can be accessed anywhere and anytime, provided that the internet is present and a smartphone. Feedback is shared on the same platform and therefore reduces the risks of poor customer service. It is preferred by many compared to public transportation or other regular taxis.
Technological Factors
People search for cheaper or affordable means of transport, and this has led the majority to the Uber app. It has spread on social media because clients share their riding experiences online, encouraging new users to download this app. The whole operation depends on the technology for the drivers to pick up their passengers and drop them at their destination. It has pushed many to use 4G networks to ensure the connectivity is reliable.
Environmental Factors
It is believed that the number of vehicles has increased hence causing road traffic congestion and also hiking the usage of fuel with high carbon content, which is harmful to the environment. In matters concerning the environment and a greener world, Uber has contributed less to its maintenance. The decision made by many people to use the industry over public means of transport has been developed as a pilot to sustain consideration. The application accepts the rider’s requests to take a green ride in many buttons. Traffic congestion is not increased since the introduction of this firm since people opt to use it over other modes of transport.
Legal Factors
Uber Company encounters a number of restrictions from the various laws in the country that hinders its operations. The firm has experienced attempted bans to stop it from accessing crucial aspects of the economy. The government wants the organization to comply with several employment policies, labor acts, and the safety of workers. These factors make it challenging for the business organization to thrive effectively in the sharing economy.
Socioeconomic and Technological Factors
Socioeconomic and technological drivers contribute a lot to the success of an organization. There are three drivers of these factors that contribute to the success of an industry. The determinants are productivity, labor, and capital are the focus of all organizations to succeed. In the long run, production remains the key to a company’s prosperity. Employees become productive when they perform large tasks in a limited amount of time. When fewer hours are used to accomplish tasks, there is a reduction in the cost of operation. This translates to employee motivation and customer satisfaction, and a good brand image created for a firm (Xu et al., 2019). The same output is given with a low cost of production, making the process profitable.
Low productivity means reduced quality for the end-users due to a reduced work rate. This leads to dissatisfaction and the emergence of billing costs. Resources and time are significant factors that can reduce the profit if they do not work correctly (Özdeşer, 2020). When the production is high and meets the demand of the population, it ensures the most significant success of a business firm is achieved since it consistently generates an income.
Labour is a determinant of the success of a company or enterprise. It refers to the workforce working to attain a particular objective. It is greatly influenced by capital investment, the humans deployed for tasks, and the technology used to realize the achievements of an organization. A country’s economy depends on the total labor output per hour (Corral et al., 2021). For a government to increase its production of goods and services, the labor invested must be directly added to match the output required.
Capital is the assets or physical equipment, or tools used by an organization in its production to generate output. It is different from land and labor because it must be made by humans and for a specific purpose. An example is types of machinery like computers, tractors, or railroads. It is a driver of an enterprise’s success, and the output depends on the input invested. It caters to needs that cannot be addressed by other factors of production. A company cannot use the money to build good buildings but can buy the needed material to make a building.
The Uber Company needs to put into use these factors that could see it soar to the highest levels of success and gain more profit. The first strategy is to improve the cash flow and profitability of the organization. This enhancement can be achieved by increasing productivity, which is essential to enable the firm to succeed in its overall goal of profit-making. Risk mitigation strategies addressing the recent legal environment changes are also essential for Uber. In the US, demand for customer transportation is very high, and the industry needs to work efficiently within short periods to achieve success. Hence, Uber’s management should focus its efforts on the short-term profitability of this company. The number of vehicles used to pick up riders needs to be increased to allow the drivers to meet their objectives. These factors of production must be put into practice by the industry to remain competitive among its rivals.
Political Influence
The political agenda of labor groups in the US affect Uber and its operation across the country. Taxi cartels have lobbied municipal governments to limit Uber’s operations. The San Francisco’s Board of Supervisors has proposed a ride-sharing levy. New permits for on-demand automobiles have been capped in New York City. Seattle attempted to allow drivers to negotiate collectively but was unsuccessful in court. Moreover, unions want this company to categorize drivers as employees, requiring the company to fund workers’ benefits, such as health insurance, meals, overtime pay, and all vehicle expenditures.
Legal Factors
Under the anti-trust policies, Uber has a two-sided business model taking advantage of the indirect network effects that exist between drivers and passengers. Uber’s platform thrives not only because it improves effectiveness and eliminates underutilized vehicles and driving abilities but also because it enjoys a self-reinforcing effect. This is because a greater number of drivers attracts more passengers and vice versa. However, from an antitrust viewpoint, the existence of network effects does not warrant any interference because antitrust law accepts markets as they are and only interferes against certain commercial activities that undermine the competition. The Uber Company is under the law like its competitors to ensure smooth operation in its activities. Uber as an app formed a formidable partnership or shared economy between them and the taxi vehicles. This brought a significant development in the history of transportation as one can track movement easily using geological and technological features over the internet.
Reference List
Alemi, F. et al. (2018) ‘What influences travelers to use Uber? Exploring the factors affecting the adoption of on-demand ride services in California,’ Travel Behaviour and Society, 13, pp. 88-104.
Corral, P. et al. (2021) ‘Utilizing human capital’ in World Bank (ed.) The human capital index 2020 update: human capital in the time of COVID-19. Washington: World Bank, pp. 15-20.
Geissinger, A., Laurell, C. and Sandström, C. (2020) ‘Digital disruption beyond Uber and Airbnb—tracking the long tail of the sharing economy,’ Technological Forecasting and Social Change, 155, p. 119323.
Kim, K., Baek, C. and Lee, J.D. (2018) ‘Creative destruction of the sharing economy in action: The case of Uber,’ Transportation Research Part A: Policy and Practice, 110, pp. 118-127.
Özdeşer, H. (2020) ‘Analysis of the economic impacts of the euro, the efficiency of the euro in the optimum currency area, and the place of the euro in global economics,’ European Review, 28(2), pp. 258-275.
Schwieterman, J.P. (2019) ‘Uber economics: evaluating the monetary and travel time trade-offs of transportation network companies and transit service in Chicago, Illinois,’ Transportation Research Record, 2673(4), pp. 295-304.
Xu, W. et al. (2019) ‘Spatiotemporal variation and socioeconomic drivers of air pollution in China during 2005–2016,’ Journal of Environmental Management, 245, pp. 66-75.
Task 2: Reflective Report
Curiosity
The course introduced the concept of employment and labor law that protects the rights of workers. It includes aspects of unions’ management and equal opportunities; however, taking a deep look into the economy, there are limited practices of the guideline because a number of employees are facing continuous exploitation. There is harassment from their colleagues and managers while they are assumed to be protected by the laws. My query was to determine and evaluate what immunity these Acts provide to the vulnerable workers in the companies. Additionally, I wanted to know if there is a guarantee that most organization applies and adheres to such laws to enhance the welfare of staff members. When there are answers to seek, learning becomes interesting since it creates the urge to establish and configure the reasons. Curiosity adds taste to education, and it prompts a learner to aspire to obtain more relevant knowledge, which is essential for the purpose of learning. Furthermore, it makes students access other significant information that enriches their understanding in the process of trying to satisfy the inquisitiveness. I acquired more ideas from fellow students, and I comprehend how the laws operate.
Description
The most fundamental concept I learned is the idea of sharing economy. The philosophy is interesting in the essence of how it operates around the human objective. The aspect of co-production of products and utilizing them together is fascinating. Generally, the economy is always more planned or free, but with sharing setting, it makes the whole model looks different. The system allows individuals to produce openly without restriction. This concept is essential because it makes people understand the value of having each other active in the industry. I will apply the concept to comprehend and relate how projects can be properly managed when individuals are brought together to cooperate. Furthermore, it will enable me to maximize the use of idle resources within the environment. For instance, when I have assets such as rooms that are not occupied, I will lease them in order to benefit the users.
Self-Realization
The topic of monetary and fiscal policy made me understand how the government and central bank operations ensure the economy remains stable. Before taking the course, I used to wonder why the government could not just print more money to increase its supply to the economy. However, going through the unit, I realized several factors in play hindered that act. The concept of monetary policy prompted me to understand how the central bank enacts its measures to curb the impact of inflation and the rising rate of unemployment in the economy. Similarly, the fiscal policy made me research how the government authorities use taxes to control some critical aspects of development. The two concepts play a significant role because they explicitly elaborate on necessary drivers and determinants of economic growth. After understanding the whole concept, I become passionate about the topic of fiscal policy. The concept talks more about how government raises its revue through taxation to develop other aspects of the economy. It gives more details on how taxes influence the aggregate demand and supply of products and the way they impact the prices of goods and services. The topic covered crucial aspects of the government operations, such as taxation and expenditure, which made it different from other sections that dealt with the general economy.
Extension
I would wish to have an extension of the concept of consumer protection laws. The topic has more weight, and I have been eager to learn more about it. Generally, the end-users and critical drivers of the economy are consumers. Through their purchasing power, manufacturers are able to continue producing a large number of products. However, in recent days there has been a developing trend of exploitation whereby some organizations provide falls details of commodities or even charge high prices for their own benefit. By learning the laws, I would be able to detect and understand possible ways producers and sellers can manipulate other buyers, and I create awareness to protect other customers. In addition, deep insight into the practice will grant me an opportunity to secure a job opportunity in the same line. Consumer protection is a priority that is partially neglected by governments and other agencies fighting for the rights of customers. Therefore, my aim for having the extension is to advance my knowledge about the related laws for professional development.