POMAssignment#1

Production and Operations Mngt – Student Handout #1
Name: ____________________ Class: ____
READING: UBER TECHNOLOGIES, INC.

Directions: Read the article and answer the questions at the end of the article. Assignment is worth 100 points.
e $41 billion dollar firm Uber Technology, Inc.,

is unsettling
the traditional taxi business. In over 40
countries and 240 mar-
kets around the world, Uber and similar
companies are chal-
lenging the existing taxi business model. Uber
and its growing
list of competitors, Lyft, Sidecar, and Flywheel
in America, and
fledging rivals in Europe, Asia, and India,
think their smart
phone apps can provide a new and improved
way to call a taxi.
This disruptive business model uses an app to
arrange rides
between riders and cars, theoretically a nearby
car, which is
1
Name: ____________________ Class: ____
tracked by the app. The Uber system also

provides a history of
rides, routes, and fees as well as automatic
billing. In addition,
driver and rider are also allowed to evaluate
each other. The
services are increasingly popular, worrying
established taxi ser-
vices in cities from New York to Berlin, and
from Rio de Janeiro
to Bangkok. In many markets, Uber has proven
to be the best,
fastest, and most reliable way to find a ride.
Consumers world-
wide are endorsing the system as a
replacement for the usual
taxi ride. As the most established competitor in
the field, Uber
is putting more cars on the road, meaning faster
pickup times,
2
Name: ____________________ Class: ____
which should attract even more riders, which

in turn attracts
even more drivers, and so on. This growth cycle
may speed the
demise of the existing taxi businesses as well
as provide sub-
stantial competition for firms with a technology-
oriented model
similar to Uber’s.
The Uber business model initially attempts
to bypass a
number of regulations and at the same time
offer better service
and lower fees than traditional taxis. However,
the traditional
taxi industry is fighting back, and regulations
are mounting.
The regulations vary by country and city, but
increasingly spe-
cial licensing, testing, and inspections are
being imposed. Part
3
Name: ____________________ Class: ____
of the fee charged to riders does not go to the

driver, but to
Uber, as there are real overhead costs. Uber’s
costs, depending
on the locale, may include insurance,
background checks for
drivers, vetting of vehicles, software
development and mainte-
nance, and centralized billing. How these
overhead costs com-
pare to traditional taxi costs is yet to be
determined. Therefore,
improved efficiency may not be immediately
obvious, and
contract provisions are significant (see
www.uber.com/legal/
usa/terms
).
In addition to growing regulations, a
complicating factor in
4
Name: ____________________ Class: ____
the model is finding volunteer drivers at

inopportune times. A
sober driver and a clean car at 1:00 a.m. New
Year’s Eve does
cost more. Consequently, Uber has introduced
“surge” pricing.
Surge pricing means a higher price, sometimes
much higher, than
normal. Surge pricing has proven necessary to
ensure that cars
and drivers are available at unusual times.
These higher surge
prices can be a shock to riders, making the “surge
price” a conten-
tious issue.
Discussion Questions
1. The market has decided that Uber and its
immediate competi-
tors are adding efficiency to our society. How is
Uber providing
that added efficiency?
5
Name: ____________________ Class: ____
2. Do you think the Uber model will work in

the trucking
industry?
3. In what other areas/industries might the Uber
model be used?
Sources: Wall Street Journal (January 2, 2015), B3, and
(Dec. 18, 2014), D1;
and www.bloombergview.com/articles/2014-12-11/can-
uber-rule-the-world .
The $41billion dollar firm Uber Technology, Inc., is unsettling the traditional taxi business. In over 40 countries
and 240 markets around the world, Uber and similar companies are challenging the existing taxi business
model. Uber and its growing list of competitors, Lyft, Sidecar, and Flywheel in America, and fledging rivals in
Europe, Asia, and India, think their smart phone apps can provide a new and improved way to call a taxi. This
disruptive business model uses an app to arrange rides between riders and cars, theoretically a nearby car, which
is tracked by the app. The Uber system also provides a history of rides, routes, and fees as well as automatic
billing. In addition, driver and rider are also allowed to evaluate each other. The services are increasingly
popular, worrying established taxi ser-vices in cities from New York to Berlin, and from Rio de Janeiro to
Bangkok. In many markets, Uber has proven to be the best, fastest, and most reliable way to find a ride.
Consumers world-wide are endorsing the system as a replacement for the usual taxi ride. As the most
established competitor in the field, Uber is putting more cars on the road, meaning faster pickup times, which
should attract even more riders, which in turn attracts even more drivers, and so on. This growth cycle may
speed the demise of the existing taxi businesses as well as provide substantial competition for firms with a
technology-oriented model similar to Uber’s.
The Uber business model initially attempts to bypass a number of regulations and at the same time offer better
service and lower fees than traditional taxis. However, the traditional taxi industry is fighting back, and
regulations are mounting. The regulations vary by country and city, but increasingly special licensing, testing,
and inspections are being imposed. Part of the fee charged to riders does not go to the driver, but to Uber, as
there are real overhead costs. Uber’s costs, depending on the locale, may include insurance, background checks
for drivers, vetting of vehicles, software development and maintenance, and centralized billing. How these
overhead costs com-pare to traditional taxi costs is yet to be determined. Therefore, improved efficiency may
not be immediately obvious, and contract provisions are significant (see www.uber.com/legal/usa/terms). In
addition to growing regulations, a complicating factor in the model is finding volunteer drivers at inopportune
6
Name: ____________________ Class: ____
times. A sober driver and a clean car at 1:00 a.m. New Year’s Eve does cost more. Consequently, Uber has
introduced “surge” pricing. Surge pricing means a higher price, sometimes much higher, than normal. Surge
pricing has proven necessary to ensure that cars and drivers are available at unusual times. These higher surge
prices can be a shock to riders, making the “surge price” a contentious issue.
______________________________
Sources: Wall Street Journal (January 2, 2015), B3, and (Dec. 18, 2014), D1; and
www.bloombergview.com/articles/2014-12-11/can-uber-rule-the-world .
7
Name: ____________________ Class: ____
Discussion Questions
1. The market has decided that Uber and its immediate competitors are adding efficiency to our society.
How is Uber providing that added efficiency?
2. What other value-added services is UBER providing to their customers?
3. Do you think the Uber model will work in the trucking industry?
4. In what other areas/industries might the Uber model be used?

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Production and Operations Mngt – Student Handout #1

Name: ________________ Class:

READING: UBER TECHNOLOGIES, INC.

e $41 billion dollar firm Uber Technology, Inc.,

tracked by the app. The Uber system also

which should attract even more riders, which

of the fee charged to riders does not go to the

the model is finding volunteer drivers at

2. Do you think the Uber model will work in

2. What other value-added services is UBER providing to their customers?

4. In what other areas/industries might the Uber model be used?

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