Economic Indicators
Despite recent heated political debates on deflation, inflation indicators abound. Investors and consumers should be concerned about price inflation, mainly where Uber-like services do not flourish (Tasca, 2019). Everything is evolving because of technology, and economically, technology has facilitated the development of the “sharing economy.” This new economic paradigm has developed and expanded enormously in recent years, owing mainly to the dependable high-speed Internet and portable mobile devices (Jiang et al., 2018). As one of the fastest-growing firms globally, Uber has wreaked havoc on the transportation business, most notably taxicab firms and drivers (Wang et al., 2019). Its meteoric ascent has sparked major protests by taxi drivers for unfair competition.
The gig economy, powered by the Uber app, has kept wage inflation low by turning labor demand on and off like a light switch. For example, Uber employees are nominally self-employed, denying them the negotiating leverage of full-time employees (Jiang et al., 2018). Uber accelerated a deflationary dynamic that started with the acceleration of globalization, bringing much more low-cost manufacturing online and eroding organized labor’s strength in advanced nations (Plewnia & Guenther, 2018). However, while these trends are likely to continue for the time being, they are likely to encounter countervailing inflationary forces that have not yet reached a critical mass where labor market slack is shrinking each month (Jiang et al., 2018). Hence, increased industrial concentration gives some companies significantly greater pricing power, particularly in the technology sector.
Fueled by reasonable outrage over Uber’s inequalities, more politicians have embraced populism, promising more aggressive fiscal management and steps to balance capital’s influence in favor of workers. Simultaneously, political pressure is mounting on central banks to circumvent the asset channel and directly pump cash into the economy (Tasca, 2019). Additionally, Uber has exacerbated economic fears, which are fueling anti-globalization politics. These politics have resulted in the weaponization of monetary policy instruments such as tariffs and other trade measures, jeopardizing global economic and financial linkages, favoring higher prices, and driving businesses and consumers to engage in a more significant degree of more expensive self-insurance (Jiang et al., 2018). Simultaneously, as expectations for ongoing low inflation grow more established, an upward price shock might reveal vulnerabilities and increase the likelihood of policy errors and market accidents.
Uber’s rise has harmed the taxi industry by regulating taxis’ prices. Awarding these permits infrequently has increased in value as the urban population develops. However, Uber has significantly diminished the value of licenses since Uber drivers do not require charges to operate (Jiang et al., 2018). Requests no longer provide anti-competitive protection; thus, taxi drivers can no longer sell their permits as planned and are unprotected financially from such rapid devaluations. Similarly, the imbalance in regulatory criteria for entry into the firm creates an unfair competitive environment for the two. For instance, the number of licenses given influences solid taxi lobbies advocating for high entry barriers, such as those in Paris and Brussels (Jiang et al., 2018). Since Uber arrived in the market, demand for conventional taxis has progressively decreased, and the recorded number of complaints per taxi trip decreased. This change in the market indicates that taxis reacted by enhancing their services rather than being unable to reduce their regulated costs in response to Uber’s debut (Tasca, 2019). Finally, given data limitations, evaluating the size of Uber’s quality influence on taxi services is challenging (Tasca, 2019). However, taxi unions have responded in certain instances by updating their fleets and introducing web applications to cut passenger search expenses.
PESTEL Analysis
Political Factors
Uber has been embroiled in several scandals over a variety of concerns. At first, they lacked clear rules, such as clear insurance coverage, and as a result, it was challenging to ascertain who was responsible for an accident, whether the driver or the firm (Raval, 2020). They, too, have unique challenges in their nations. For example, they face fines in France for inefficient advertising, while in the Netherlands, they face a decision against drivers for operating without taxi permits (Raval, 2020). Additionally, they face many bans in several Asian nations, and the minimum wage issue has harmed the brand’s reputation internationally (De Sousa & Castañeda-Ayarza, 2022). These difficulties have hurt Uber, which is now battling commercial licensing in several countries.
Economic Factors
Uber operates in the sharing economy, a distinct economy sector where companies must pool resources to prosper. For example, they employ drivers to transport consumers to their specified locations (Raval, 2020). Uber’s primary selling point is its simple booking procedure, which is more affordable than taxis. Since its inception, Uber has expanded exponentially, yet several governments have outlawed it because of its inequitable animosity against taxis. Other governments are considering banning Uber’s services, but they cannot ignore its rapid expansion and growth. According to many, it offers work prospects for unemployed individuals compared to traditional taxis (De Sousa & Castañeda-Ayarza, 2022). Uber’s services are straightforward and convenient, as shown by the company’s enormous growth and economic potential.
Social Factors
Most customers like its ease of use and enjoyable ride. For instance, one may order a trip using the Uber mobile app from anywhere and anytime since it only takes a few clicks, which is intriguing for tech-savvy individuals (De Sousa & Castañeda-Ayarza, 2022). Additionally, its competitive cost entices buyers. For instance, Uber is operating at maximum capacity in North America and other parts of the globe. Customers may request trips and report their experiences on social media. This kind of social experience aided Uber’s marketing efforts by recruiting new users. Because of the firm’s enormous popularity, Uber trip pricing increased in certain cities (de Sousa & Castañeda-Ayarza, 2022). Finally, Uber’s simplicity of use has influenced its day-to-day operations, and as a result, people love to use Uber, periodically boosting its profitability and popularity.
Technological Factors
Uber’s rapid growth is a result of its social media marketing. Customers, for example, post and share their experiences on social media, which helps the company’s reputation. Uber also does an excellent job of attracting new customers by enabling them to access more affordable ways of transportation (De Sousa & Castañeda-Ayarza, 2022). Similarly, the Uber app may assist users in scheduling appointments since it forecasts travel costs depending on weather, traffic, and pickup location. Customers may pay instantly using the app, which is handy, and they can swiftly hail a car since Uber drivers are always available to transport clients. Uber must guarantee that its app functions well in all circumstances since the program is what drives the company’s operation (Raval, 2020). An internet outage might damage both Uber drivers and consumers.
Legal Factors
In this instance, legal issues are inextricably linked to political ones. For example, Uber has recently been subjected to widespread criticism, attempted prohibitions, and outright bans globally. Thus, for the firm to be successful, it must follow technological use regulations, labor laws, employee safety laws, and copyright laws.
Environmental Factors
Uber has a significant environmental effect since most people believe it increases fuel usage and traffic congestion. For example, Uber has had little impact on congestion, and many people choose Uber trips over public transit (De Sousa & Castañeda-Ayarza, 2022). Similarly, there is an active comparison of Uber’s fuel use to public transit, with the findings not unexpected. Although no such studies exist to substantiate this claim, Uber boosts traffic and carbon emissions, influencing how it does business daily.
Economic Drivers
The sharing economy has already altered established markets, altered the competitive landscape in various sectors, and promoted the entrance of new players. According to others, the consequences on specific industries are harmful and disruptive, most notably the transportation industry and short-term lodging (Mishel, 2018). At the same time, others argue that it might promote customer welfare by encouraging conventional service providers to improve their quality. Even though Uber is a relatively young firm, data indicate that its arrival had a disruptive impact on the taxi sector, including decreased income, profit margins, and working hours for taxi drivers.
There is no common belief or evidence that Uber would jeopardize public transportation networks. Nonetheless, it can be argued that Uber has had and will continue to influence the taxi sector and public transportation systems of all sizes (De Sousa & Castañeda-Ayarza, 2022). The underlying cause might be that people’s flexibility and reach improved due to Uber, which mainly profited from the restricted networks of minor transport agencies. On the other hand, the impact was just the contrary in the case of substantial transportation agencies. The remaining question is whether the negative consequences outweigh the beneficial complementary developments.
Collaborative consumption facilitated the rise of micro-entrepreneurship, in which people earn money by offering products and services via shared platforms. This benefits individuals and provides new options to find work and make money (De Sousa & Castañeda-Ayarza, 2022). The trend toward sharing may affect how economic success is assessed. For example, the GDP does not account for the payment paid to a non-professional supplier of space on a couch surfing site (Mishel, 2018). Additionally, the sharing economy may negatively influence GDP growth (Ter Huurne et al., 2017). The issue is that it discloses only transactions between customers and corporate entities, not between consumers.
Political Influence
Uber’s audacious entry into urban areas upended a highly regulated ride-hailing industry that exhibited the typical rent-seeking characteristics indicated in the Stigler model of regulatory capture. Before Uber, private taxi interests were protected from competition by anti-competitive entrance obstacles and pricing regulations (Curtis & Lehner, 2019). However, the taxi regulatory framework featured rules protecting the public interest in the form of consumer and labor safeguards, safety, and, on occasion, public goods (Tzur, 2019). Its disruption in the aftermath of Uber’s debut prompted officials to consider whether and how to regulate Uber.
Uber has been a proponent of regulation solutions conducive to its economic model. Uber had structural and instrumental authority and the financial resources to pursue many insiders and outer initiatives (Collier et al., 2018). Its political influence has given it a disproportionate impact in the legislative arena. It has succeeded in restricting consumer and safety laws in city councils and state legislatures to those that support its business development strategy, supply and pricing flexibility, and low-cost service offering (Collier et al., 2018). Drivers’ concerns have been treated as legal matters in court forums but have not resulted in widespread regulatory reform.
The Uber model of disrupted regulation is a politics of elite control of challengers. The primary regulatory models described do not suit this model well (Collier et al., 2018). Most are binary—private vs. public, or, more precisely, producer vs. consumer. In the Uber scenario, interest alignment is more complicated. Personal interests are often split, and private and public interests are not always in opposition. Intra-producer conflict occurs along an incumbent-challenger cleavage, most often expressed in legislative forums. A labor-capital breakup is most frequently expressed in judicial forums. Atomized consumers and drivers lack autonomy. Uber benefitted from its alliance with private interests and engaged in regulatory politics primarily via the mobilization of elite actors (Collier et al., 2018). During the first disruption or deregulatory stage consumers and drivers are aligned with and mobilized by Uber on concerns of entrance and pricing regulations, ensuring Uber’s sustained market presence as a supplier of a service and employment (Collier et al., 2018). Consumers and taxis are unified on several leveling problems in the second TNC regulatory stage, which has resulted in legislation addressing consumer protection and safety (Collier et al., 2018). Drivers are not aligned with concentrated legislative interests. Due to this political disadvantage, labor concerns are generally handled in court forums via surrogates, although without success yet.
Disrupted regulation has resulted in a fragmented regulatory system throughout the nation for ride-hailing services. Rather than adopting or executing deregulatory measures, Uber’s debut harmed the taxi regulatory environment. The law partitioned the ride-hailing industry by exempting Uber from taxi restrictions as a “TNC” (Collier et al., 2018). While the regulatory structure for taxi drivers remains, it no longer benefits them. Indeed, it disadvantages taxis compared to the laws governing TNCs (or lack thereof) (Tzur, 2019). As a result, challengers have seized control of the politics of limiting new entry.
Legal Impact
The extent to which the sharing economy influences, whether in each sector or not, will be determined by the regulation imposed on these enterprises. Current legal frameworks are insufficient and inapplicable to new sharing actors, mainly due to online and offline marketplaces (Collier et al., 2018). These elements include the platform’s speed and scope of development, their difficult classification, static and inflexible legislative systems that move slowly, and often the interests of significant players in a nation. Additionally, it is argued that sharing economy platforms should be regulated similarly to established sectors; however, this might result in the dissolution of these businesses (Thelen, 2018). Around half of the respondents in the ride-sharing section express little concern about Uber drivers’ unprofessionalism (lack of certificates or licenses); since neither agrees that the same regulation should apply to regular taxis and Uber.
The sharing economy will introduce new rules that safeguard the public’s interests and advantages. Public interest and safety should be protected by adequate sharing economy participation regulation (Spicer et al., 2019). A partial answer might be given by discriminating between professional and unprofessional service providers. As a privately-owned firm, Uber is not required to provide information about its drivers to determine whether they offer a service of sufficient intensity to be classified as professional or unprofessional (Collier et al., 2018). The Uber scenario is a case of what is known as a regulatory gap, in which established players (taxis) are severely regulated while novel models (sharing services) are relatively minimally regulated (Spicer et al., 2019). This situation is troublesome not just for regulatory agencies but also for the general population.
Curiosity
Studying socioeconomic and legal environments provides the study and analysis of economic, social, political, and legal settings that influence the business environment, such as market structures, unemployment, inflation, economic growth, and legal laws that govern corporate performance. The socioeconomic and legal background contains several fundamental and intermediate tools and instruments necessary for conducting a thorough business environment analysis (Thomson, 2018). Although the module was challenging, it was very enlightening. For instance, I was most curious about the topic of sharing economy. Sharing economy has increased my understanding of how various organizations like Uber, Lyft, and Airbnb operate. The lecturer kept us more engaged and curious through the assignments and coursework, which improved my understanding of various concepts in the module. It is no secret that curiosity makes learning more effective and enjoyable. It made me develop many questions by actively seeking answers by reading various articles and posts on the internet.
Through curiosity, I became more curious about the various subjects in class. For instance, I learned a lot about sharing economy even past what was considered necessary in the course. I learned that sharing economy is a socioeconomic system based on resource sharing in capitalist economies (Ricardo et al., 2021). The purchase of commodities and services incompatible with the traditional business model of firms paying people to manufacture goods for sale to consumers is a common feature of the process (Ricardo et al., 2021). As a result, by seeking answers and researching, I could answer several class-related queries about how Individuals and corporations may benefit from unused resources, for example, via sharing economies (Wang et al., 2019). Similarly, I was curious about how sharing economy allows for the rental of assets that are not being utilized, such as parked cars and spare bedrooms. As a result, I learned that tangible items are exchanged for intangible services (Curtis & Lehner, 2019). In this way, I realized, via a series of queries, investigations, and replies, that learning piques one’s interest and assists in retaining information that might otherwise be lost in translation. Additionally, it has the potential to improve the learning experience.
Description
The socioeconomic and Legal Environment equipped me with the knowledge and understanding necessary to comprehend the effects of mass production today. For example, the sharing economy is an economic model in which individuals and organizations cooperate to share goods and resources, so changing physical assets into services is the most crucial concept to grasp (Plewnia & Guenther, 2018). Increased use of big data and online platforms has assisted the rise of the sharing economy, one of the fastest-growing market phenomena in recent history. Examples include that sharing economies enable people and communities to benefit from unused resources, which is an advantage of sharing economies (Wang et al., 2019). A similar scenario exists where underutilized assets such as parked autos and spare guest rooms may be leased out in the sharing economy when they are not used and traded as fixed physical assets in service (Curtis & Lehner, 2019). The primary argument for believing this is the most crucial concept is that the sharing economy has caused significant disruption in traditional business sectors, where sharing-based firms operate more effectively due to the lack of inventory and expenses (Wang et al., 2019). By boosting their efficiency, these firms may be able to provide value to their supply chain partners and their customers.
Self-realization
Economics, macroeconomics, and microeconomics drew out the best in me. Economics is a social science with ramifications for various other fields, including political science, geography, mathematics, sociology, psychology, engineering, law, medicine, and business (Goodwin et al., 2018). Economic theory’s fundamental goal is to determine the most reasonable and efficient allocation of resources to accomplish personal and social goals (Mankiw, 2020). Economic issues include production and employment, investment and savings, health, money and the banking system, fiscal and monetary policies, international trade, industrial organization and regulation, urbanization, environmental issues, and legal issues such as design and enforcement of property rights.
The exciting component I learned brought about the best in me is economics, macroeconomics, and microeconomics. Microeconomics is the study of the effects of individual human behavior and is crucial to an individual’s financial well-being (Torriti, 2020). Appropriate resource allocation is vital, and understanding resource allocation concerns improves an individual’s ability to make daily and life-long decisions. Microeconomics compelled me to examine my everyday activities and transactions as well. It sparked some tough questions about living a good, better life and how the economy and human choices affect how we live our lives. The links between taxes and inflation, interest rates and wealth, inequality and emerging markets, and energy and the environment are discussed in this section (Mitchell et al., 2019). Economics, microeconomics, and macroeconomics piqued my interest because it is a vast field of study that answers various health, social, and political issues impacting families and more significant populations.
Extension
I would want to understand economics, microeconomics, and macroeconomics better. The reason is that regardless of one’s educational background or employment choice, a grasp of economics is critical for making daily choices. Similarly, I want to study economics because I am often interested in questions about loans, interest rates, mortgages, and the market. When I begin investing in my future, I must have a firm grasp of the subject and a strong knowledge foundation to respond effectively to these concepts. Finally, I believe that studying economics would enable me to grow further in my work and pursue management chances in the financial business.
Aside from economics’ role in my career activities, it also significantly impacts how I conduct my business. For example, suppose you are budgeting and planning, it is vital to be analytical by nature and frequently do a cost-benefit analysis of practically all essential household purchases, including bill consolidation. In addition, by studying, I will be able to one day acquire a house by studying supply and demand through the evaluation of the real estate market for the most advantageous time to sell or buy a new home. Even while going on adventures or planning vacations, I feel it is essential to examine the opportunity cost of one pursuit over another, thus saving money on both ends of the spectrum of life.
In conclusion, I must learn more about economics because the nature and principles of economics constantly surround us. Economics has a more significant influence on our daily lives than most are aware of. For instance, every one of us is a consumer. Every time we purchase a commodity or service, we indirectly impact the supply and demand for that thing or benefit in the marketplace. Due to these reasons, I feel that studying economics, or at the very least having a basic grasp of economics, is essential in many aspects of my life.
References
Collier, R., Dubal, V., & Carter, C. (2018). Disrupting regulation, regulating disruption: The Politics of Uber in the United States.Perspectives on Politics, 16(4), 919-937. Web.
Curtis, S.K. and Lehner, M., 2019. Defining the sharing economy for sustainability. Sustainability, 11(3), p.567. Web.
De Sousa, G.C. and Castañeda-Ayarza, J.A., 2022. PESTEL analysis and the macro-environmental factors that influence the development of the electric and hybrid vehicles industry in Brazil.Case Studies on Transport Policy, 10(1), pp.686-699. Web.
Goodwin, N., Harris, J.M., Nelson, J.A., Rajkarnikar, P.J., Roach, B. and Torras, M., 2018. Macroeconomics in context. Routledge.
Jiang, S., Chen, L., Mislove, A. and Wilson, C., 2018. On ridesharing competition and accessibility: Evidence from uber, lyft, and taxi. In Proceedings of the 2018 World Wide Web Conference (pp. 863-872). Web.
Mankiw, N.G., 2020. Principles of macroeconomics. Cengage learning.
Mishel, L., 2018. Uber and the labor market: Uber drivers’ compensation, wages, and the scale of Uber and the gig economy. Web.
Mitchell, W., Wray, L.R. and Watts, M., 2019. Macroeconomics. Macmillan International Higher Education.
Plewnia, F. and Guenther, E., 2018. Mapping the sharing economy for sustainability research.Management Decision. Web.
Raval, M., 2020. Analyse PESTEL-Uber. Publications Études & Analyses.
Ricardo, J.E., Rosado, Z.M.M., Pataron, E.K.C. and Vargas, V.Y.V., 2021. Measuring legal and socioeconomic effect of the declared debtors’ usign the ahp technique in a neutrosophic framework. Neutrosophic Sets and Systems, 44, pp.357-366. Web.
Spicer, Z., Eidelman, G. and Zwick, A., 2019. Patterns of local policy disruption: Regulatory responses to Uber in ten North American cities. Review of Policy Research, 36(2), pp.146-167. Web.
Tasca, P. (2019). Token-based business models. In Disrupting finance (pp. 135-148). Palgrave Pivot, Cham. Web.
Ter Huurne, M., Ronteltap, A., Corten, R., & Buskens, V. (2017). Antecedents of trust in the sharing economy: A systematic review. Journal of Consumer Behaviour, 16(6), 485-498. Web.
Thelen, K., 2018. Regulating Uber: The politics of the platform economy in Europe and the United States. Perspectives on Politics, 16(4), pp.938-953. Web.
Thomson, S. (2018). Achievement at school and socioeconomic background—an educational perspective. Npj Science of Learning, 3(1). Web.
Torriti, J., 2020. Appraising the economics of smart meters: costs and benefits. Routledge.
Tzur, A., 2019. Uber Über regulation? Regulatory change following the emergence of new technologies in the taxi market.Regulation & Governance, 13(3), pp.340-361. Web.
Wang, Y., Xiang, D., Yang, Z. and Ma, S.S., 2019. Unraveling customer sustainable consumption behaviors in sharing economy: A socio-economic approach based on social exchange theory. Journal of cleaner production, 208, pp.869-879. Web.