Uber in the City of Chicago
The "ride-sharing" company Uber has become remarkably polarizing over the last year. Venture capital firms still love Uber's prospects, as reflected in a recent $40 billion valuation. Yet the company seems determined to alienate just about everyone else. Taxi drivers have cast Uber as an unsafe and rapacious competitor, leading lawmakers to shut it out of various markets.3 Uber's claim that its average New York City driver earns over $90,000 a year was so hard to verify that a Slate writer entitled her article "In Search of Uber's Unicorn."
Uber is also extremely important for another reason that has received little attention: it is encouraging vertical and horizontal integration in the car-hire sector. As a Washington Post reporter explained in an excellent primer on the industry, the taxi system in many cities is highly fragmented along both dimensions. In Chicago, for example, medallion owners often lease their operating rights to management companies; management companies in turn purchase or lease cars and outfit them as required per local regulations; drivers then lease those cars from management companies on a weekly, daily, or even hourly basis. Other cities have different licensing systems, butany licensing system that does not mandate owner operation or direct employment of drivers will encourage similar verticalfragmentation. Taxi companies will rationally (and lawfully) lease cars to drivers rather than employ drivers in order to avoid the costs associated with employment, which include minimum wage laws, unemployment and workers' compensation taxes, and possible unionization.
Uber is a young company. It was founded in 2009 by the Americans, Travis Kalanick and Garrett Camp (About Uber, 2015). However, during the last five years, the company has survived a number of conflicts, discussions, and evaluations. The current business issues are based on the experience gained from 2009 till today. Being introduced as a private taxi company, Uber expanded its services from a city to a city. In 2012, Uber became an international company and offered its services for the citizens of Paris. Nowadays, Uber is available to people in 58 countries of different continents. The citizens of more than 300 cities worldwide are able to use the Uber’s services any time they need. The company is valued at about $50 billion (Higson, 2015). These indicators may tell a lot about the current situation of the company and make some predictions about its possible development. On the one hand, it is evident that customers are satisfied with the possibilities to have more convenient as the company’s founders can open new departments in different parts of the world.
Usually, Uber is the company with a complicated history. Still, its founders had made something that was impossible: they survived sabotages, strikes, and discontents of the governments of different countries around the whole world. The necessity to provide people with good services at affordable prices is urgent nowadays. Not all people are able to use the quality they want. Uber opens new perspectives and possibilities. However, its attempts to cooperate with big cities only are not enough to become one of the best. It is necessary to make more improvements and encourage changes. Drivers are eager to work at different places. Uber can provide drivers with jobs and citizens with transportation services.
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Higson, C. (2015). The value of Uber. Forbes. Web.
McAlone, N. (2015). Here’s how Uber got its start and grew to become the most valuable startup in the world. Business Insider. Web.
Shontell, A. (2015). Uber CEO explains his company’s highly ambitious goal to end car ownership in the world. Business Insider. Web.