Uber vs Didi Questions Group 5 PDF

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Uber vs Didi: Questions - Group 5 1. 2. 3. 4. 5. 6.

ANJALI MENON - A0206844A PAN YUEHAO - A0191541J TAMILARASAN s/o TEYGARAJAN - A0085984J XU WANYU - A0196572R SAMUDRA RAVIKUMAR - A0206671H SANGHO JU - A0209439X

1. What are the key drivers of UBER/ Didi’s success/failure of the ride-hailing (taxi) industry? 1) Key Drivers of Success: a. Manage supply of taxis and demand of the passengers in real-time more efficiently. b. Algorithm to match passenger and driver → reduce time of waiting, increase certainty of getting a ride. c. Increased trust and reliability factor - Rating system / Mobile application tracking. d. Cost advantage → don’t have cars, therefore asset-light and cost regulators like insurance need not be considered. e. Mobile application → ease of use for the consumer. f. More choices of car types - Instead of limited types of taxi provided by traditional taxi companies, Uber/DiDi provides more options like premium, car sharing, and etc., which enables customers' reach to different cars. This also opens the companies' ability to tackle different market sectors. g. Access to customer behavior data to improve service - Compared to traditional taxi companies, digital platforms for taxi hailing have access to customers/drivers behavior data easily. With the large amount of available data on hand, more insight ideas can be found and used to improve their business. h. Due to Lack of asset - Easier for start-ups to enter the market and create competition and bring down the price. i. Network effect - The value of platform for user increases with number of users on the platform, so the network effect can be direct as well as indirect. j. Operational Excellence - However in case of uber and didi, the platform is very well developed and maintained with good technology to support the user interfaces and helps in better optimizing of time and services. 2) Key Drivers of Failure: a. Surge price(Uber/Didi) VS Fixed price(Traditional taxi) b. Subsidies - to ward off competition discounts and promo codes were given. But once the subsidies were stopped, the demand decreased and Uber/Didi burnt their money. c. Data privacy of customers is a concern from a customer point of view. d. Lack of asset - low barrier of entry so easier for competition to enter the market. e. Late majority and laggards still prefer the traditional taxi and are yet to welcome the digital app (Uber, DIDI). 2. What are the sources of UBER’s competitive advantage relative to Didi? a. Data Analytics → Uber has more data collected due to its global reach and able to enhance its application compared to Didi. b. First mover advantage → Longer business in the global market, more technical talent and are aware of the possible technical issues that could be faced and are better equipped to face those challenges. c. Brand and reputation (name has become synonymous and uber’s culture / organization). d. Uber approached the premium market first - and then moved to the different markets - this shows that even though Uber was an outsider company, it was still able to perform the market analysis to penetrate into the China market. e. Uber got investment from Softbank, Saudi Arabia and invested that money in the china market. (Global market investment). 3. Why did UBER fail in China? a. Didi is funded by global investors and Uber’s competitors globally who form an alliance to compete Uber in each market. b. Uber: don’t have a Chinese leader and engineering team in China, because the CEO doesn’t believe the information safety in China -(1) long-distance management is not good for localization / lower reaction, (2) US managers and engineers were more expensive. (see book “Wild Ride: Inside Uber’s Quest for World Domination” by Adam Lashinsky). c. Uber only believed in on-demand services, but DIDI introduced other services like pre-booked rides, shared commuter buses. d. Didi is funded and is supported strongly by the chinese government.(for example: Uber China first launched the carpooling services in China, however, in 2014, the local government of Shanghai announced that sharing a car in the peak hour was illegal, which hit Uber’s business. e. DIDI / Kuaidi was the first mover in Chinese market, after the merger of them - market share: 80.2% / Uber 11.5% - (1) a positive signal-increase consumers’ confidence in DIDI, (2) the effect of winner-take-all, huge market share let DIDI become standard and “lock” consumers. U  ber is a late entrant in China and also competing on price can never be a way for foreign firms to win in China....