This rating system helps to find the best drivers and monitors the performance of the drivers. Change ), You are commenting using your Twitter account. To gain a good understanding, I think it is important to see how the IRS defines what and independent contractor is. According to the reading, increased traffic congestion due to Uber (and probably other ride-shares) has slowed traffic in New York City by 8%. Uber also has its weaknesses. This is what i believe but I’m not 100% sure. Uber has had many investors who have invested over a billion dollars, and at one time, was seen as a company that was trending in the right direction. IRS Website Link: This is because, taxi had plenty of opportunities to change their business model, but they decide not to. As we have previously discussed in What is Innovation, the ideal definition for innovation is: It is an independent contracting business, and for the people who are the drivers, it works out great for them in the company’s business model. I don’t agree with The California State law requiring companies like Uber to treat their workforce like employees. Perhaps a buy-back option, and a redistribution of the medallions under different prices/requirements/circumstances. I also see this as a demand from society as they were not getting what they wanted from the taxi industry so they choose Uber instead. -The business model is providing a customer in needs of transportation to a certain location. Is it fair that taxi drivers and companies are losing business? 2) Do you agree with The California State Law which now requires companies like Uber and Lyft to treat their workforce like employees as opposed to independent contractors? While I think this is a very good point, I also believe it is important to note that some of their drivers want to be independent contractors as it is a side hustle and not their full-time job. In the second question you talked about how Uber is trying to receive all of the benefits of having their drivers as independent contractors without any of the responsibilities. What is the Uber business model? If the Uber driver is listed as and employee then I think Uber should have to take a more in-depth approach to vetting who can become a driver. Uber will appeal the decision, Transport of London, which is responsible for regulating taxi and private services, said Uber did not meet the “fit and proper” standard required to hold a taxi license, This highlights Uber’s overall struggle to enter European markets such as Germany, Spain, Italy, and Denmark because of stricter regulations, This is not the first time Uber has had their license revoked in London. That is exactly what happened with the taxi industry, people would rather not have to deal with cash and have the ability to get a ride right at their fingertips. One of Uber’s biggest strengths is its colossal and highly reputable brand name. I guess the best way to try and address that would be to try and have a system where gig workers can “opt in” or “opt out” of “employee” status. EU-China scientific cooperation is governed by the Science and Technology Cooperation Agreement signed in 1998. Yes, I do agree with this law because Uber drivers need to be held more accountable. Additionally, the medallion thing… I mean, you can’t just get rid of them, I guess, because of how much is invested in them, but that system needs a kind of overhaul. pension plan, insurance, vacation pay, etc.)? I do agree with the California State Law. Uber drivers are employees of Uber and thus, should be treated as such. Uber was built off the idea that drivers are their own boss. The reason Uber attracted people to start driving for them is because they got to pick their own schedules and do it as a side hustle or for extra cash if they needed it. Will the relationship continue and is the work performed a key aspect of the business?” All of these aspects are true when regarding Uber drivers. Some strengths are that it insures the payment of the passenger, another strength is that it allows Uber to make 20% of all fares. Freelance writers, for example, have spent the last few years decrying these laws, as they limit their ability to work whenever, wherever, and for whomever they wish. However, would it be a huge effect on their business? Uber drivers can make their own schedules and turn on their driving/availability on when and where they want. Uber’s business model utilizes the gig economy. Hi Mihali, Some strengths consist of the user-friendly Uber app with minimal glitches. When you need a ride, just pull out your smartphone and tap a button to order a car. I do believe that Uber saves a lot of money by issuing them as independent contractors and that asking for a law (in which they have) which allows them to classify drivers as independent contractors, is the way to go. There are many strengths to Uber. Banning Uber in the taxi or personal driving industry, would be banning Wendy’s and keeping McDonald’s. Adelina, If not, what range of responsibility should Uber, and other companies like Uber, have on their workforce? Uber Technologies, Inc. develops and operates proprietary technology applications primarily in the United States, Canada, Latin America, Europe, the Middle East, Africa, and the Asia Pacific. It a company like taxi is struggling then they need to do a better job to adapt to the new style of business for their specific industry. That isn’t right for Uber and Lyft avoiding having to pay their due diligence. ( Log Out /  This Is law is in direct contact with California’s new gig economy law known as Assembly Bill 5. This gives these new tech companies the opportunity to reduce expense on employees and gives workers supplementary income on a flexible schedule, Tech company critics claim that companies such as Uber, Lyft, and TaskRabbit have shifted their responsibilities of health care, sick time, paid time off, and workers’ compensation on the workers and general public, California created a new Law, known as the Gig-economy bill or AB5, which ruled that companies like Uber and Lyft must treat more of their workforce like employees, Uber, Lyft, Postmates, DoorDash, and Instacart responded by joining together to create a ballot initiative that would exempt them from the law claiming that classifying their workforce as employees would take away the flexibility and freedom the workers currently have, The creation of AB5 was inspired by the language of how The California Supreme Court defined an independent contractor. Uber ’s self-driving unit, Advanced Technologies Group (ATG), is being acquired by its start-up competitor Aurora Innovation, the companies announced Monday. 1. One the other hand, the risk is based on economic stability and keeping customers, but this comes with any public company which depends on other investments to stay alive. Their only chance to compete with Uber would be to develop a similar app, lower costs, and charge before the ride because it isn’t fair to the rider when traffic occurs and their total ends up being twice what it normally is. The driver knows where you want to go because you enter the address on your smartphone and the app has the credit card number for people to make the payment. A sharing economy is a way of purchasing goods and services that is different from the traditional business model of corporations hiring employees to produce products to sell to consumers. I agree with everything you have to say. https://www.irs.gov/businesses/small-businesses-self-employed/independent-contractor-self-employed-or-employee. I think that competition is not bad to have and it can help motivate taxi companies from creating new ideas that will set them apart from Uber and Lyft and revolutionize the way transportation services are done. Of course, the pickle there is that companies like Uber may make only a certain amount of “employee” jobs available, may not seek candidates who want to be “employees” – or, opposingly, only hire those willing to be “employees”. Statistics show that there is a growing number of people engaging in flexible and freelance work due to the sharing economy. China is a key partner country. This would allow for the drivers to maximize their earning and could open up a few different advantages for Uber itself. A gig economy is a free market system in which temporary positions are common and organizations hire independent workers for short term commitments. Are the business aspects of the worker’s job controlled by the payer? I really agree with that last part of your statement on how you talk about competition is competition and it is good for the economy. Since Uber drivers work on behalf of Uber, they should be treated as employees instead as independent contractors. The slow-growing profits come from 20% of every ride, but with proper planning and reinvesting (part of their operations) they are able to capitalize. Uber is a company just like every other transportation business and banning it just because they are negatively effecting other businesses like taxi would be unfair. I actually agree with your third response that life is not fair. It is like saying that Apple and Google are not allowed to use open source because it is better than Microsoft and it is putting Microsoft out of business in the mobile market. Yes, the sob stories and the loss of taxi services are going extinct is sad and not good for select individuals, but as said in the article where a price was given for Uber, there are subways and other transportation that was already downgrading and shutting the taxi business out of the market. The next step is to link the rider to a driver who is also put through a background check to make sure the ride would be safe. Some strengths with the Uber business model are that their ride service has pleased many people. People also used it as their main source of income, but again, they got to be flexible with how many hours they were working and which days they wanted to work. It can help the employees potentially make more money, but they are more at risk with their hours of service and also their independent ratings when they are on call. Business is business in a sense that there is always something new or innovative being developed and it’s unfortunate that the taxi industry is losing business, but simultaneously its not any one person or company’s fault. Uber business model is designed as a smartphone app, which is very convenient and loved by all the people. To make this even deeper three factors also defined by the IRS to state if they are an employee include “Does the company control or have the right to control what the worker does and how the worker does his or her job? The phone’s GPS knows exactly where you are. I also agree with you that Uber is obligated to do certain things for their employees and this will be costly on their end. Uber Technologies Inc. as the camouflage of disruptive innovation is so significant that in case its belligerent cost- cutting strategy and convenience offering … Uber Black users enjoy very high standard of service. This brings me to our strengths, being cashless in today’s world is now a norm for most businesses offering the convenience of not having to worry about having enough cash in your pocket for a ride. 1.What is the Uber business model? It’s the Taxi company’s fault for not updating their services. Lower prices and convenience are arguably the most important aspects of Uber. Thanks for your reply. Sharing the Liberal Utopia. I’m not too sure. To begin I do not think that it is fair. Sorry, preview is currently unavailable. Another emerging strength of Uber, lies within its global and continuously expanding international reach that expands to more than 50 countries and with a user market of over 80 million people. If Uber saw their employees as independents they wouldn’t be held liable in a number of circumstances and would likely cut their employees short of wage. To browse Academia.edu and the wider internet faster and more securely, please take a few seconds to upgrade your browser. Also, the dependency on the workforce. The only other option for taxi is to work with Uber to save their own company or don’t work with them and continue to lose business. Enter the email address you signed up with and we'll email you a reset link. I believe there may be some consequences such as Uber losing the flexible driving schedule if they become employees and that is why many Uber drivers want to remain independent contractors. For a city of, what, 15 million people, that’s an awful big difference. According to his HBR article, Uber doesn’t meet either of these criteria. All of this is a low-cost market where the driver gets a good cut (80%) and can still grow. From there the driver transports the rider to the destination and by then the payment is made and the driver and rider go their own way. Also, do you think there is/will be a consequence that will arise from The California State Law? Well done! Do you believe since they don’t classify as a taxi company they should have to receive a taxi license and follow those rules? In this case, the company Uber has control or say of what will be done and how. 3. I don’t think more cities should ban Uber just because Taxi companies are suffering. I personally think that Uber should be required to have it as an option for their drivers. Also, it is okay for people to create new products or services that differentiate themselves, that is exactly what happens in a competitive market. So, by simply acting as a liaison, and collecting their commission from the fares received, their revenue is minimally impacted by employee-related costs and liabilities. Taxis may do well during this pandemic, we’ll have to see. One major strength of Uber is its debit/credit card only payment method. Uber business model resembles that of a GPS tracker. 3. but, to have something like the california state law in effect for whatever cities permit uber to be allowed in. Fill in your details below or click an icon to log in: You are commenting using your WordPress.com account. The Case of Uber in France and the US. At Bacancy Technology, we firmly believe that great ideas must be repeated again and again, Just have a look at the mountain behind Uber Technology: A powerful opponent of Uber from an Estonian named Taxify raises $100K; Cabify, another opponent of Uber from Spain and Latin America takes in $8M; a Berlin-based setup, Talixo also raises millions to help cabs compete with Uber. By them doing this they can possible find themselves competing with Uber and Lyft. A lot of the Uber drivers I have had say that they Uber as a side job. Additionally, as noted in the reading, because they are not specifically a transportation company (like, say, Yellow Cab), they are not subjected to the same regulations as those businesses are. I believe companies like Uber and Lyft should treat drivers as employees rather than independent contractors because the driver works hard for the businesses operation and for themselves to operate as an algorithmic matchmaker to find them some customers. Reflections on Technology, Strategy and Society, DISRUPTIVE INNOVATION AND THE GIG ECONOMY THE UBER STORY, Definitions / The Business Model: – Cierra Higgins, http:/en.wikipedia.org/wiki/Sharing_economy, http://en.wikipedia.org/wiki/Disruptive_innovation, https://whatis.techtarget.com/definition/gig-economy, https://www.wired.com/insights/2013/09/the-gig-economy-the-force-that-could-save-the-american-worker/, http://www.forbes.com/sites/aswathdamodaran/2014/06/10/a-disruptive-cab-ride-to-riches-the-uber-payoff/, https://www.washingtonpost.com/news/the-switch/wp/2017/12/21/could-europes-uber-ruling-means-affect-the-future-of-the-gig-economy/?utm_term=.2fe8f8aac2f6, https://www.washingtonpost.com/business/2020/01/14/can-california-reign-techs-gig-platforms-primer-bold-state-law-that-will-try/?outputType=amp, https://www.nytimes.com/2019/11/25/business/uber-london.amp.html, https://www.nytimes.com/2018/02/06/nyregion/livery-driver-taxi-uber.html, https://www.theatlantic.com/business/archive/2015/11/uber-is-not-the-future-of-work/415905/, https://www.sfchronicle.com/business/article/Uber-Lyft-drivers-to-state-Enforce-AB5-get-us-15030205.php, https://www.forbes.com/sites/janetwburns/2020/02/21/ubers-latest-numbers-layoffs-and-rider-tool-suggest-more-trouble-ahead/amp/. It has been said that “Uber’s heavy dependence on its workforce and internet has not been advantageous for the company. Basically, the business model of Uber is designed as a smartphone app which provides on-demand service to users. Since conception, they have essentially became the household name of ride sharing, becoming the benchmark to similar companies like Lyft. Uber along with other companies in the gig economy are becoming more and more important for the United States and its economic future. You can download the paper by clicking the button above. Uber Technologies is an American app-based transportation platform headquartered in San Francisco, California. Also, drivers may get to set their own hours in the app based on what the companies say and can only take customers that they are assigned. Uber’s business model is not like the Taxi business. There have been instances where hackers have entered the app posing as a driver in order to abduct the passenger. With the workforce, employers are now seeking people who balance work and play, and who work at what they are passionate about, are often more focused and productive. Cleaner cars, cleaner services, putting everything in front of you on a phone, rather than a dash meter. Competition drives businesses to push harder for more employees and Uber has the most simple way of doing everything, especially when some taxi drivers are not loyal to their customers by taking up the clock unnecessarily. Its a win as well, because with bars and other businesses reopening, it really helps the business fire back into action again. Yes, I do agree with The California State Law. What are it’s strengths and weaknesses? I mentioned how since Uber is obligated to do certain things for their employees this will, of course, be costly on their end which in turn Uber will raise charges. Competition is competition regardless, and that’s good for business and the economy of each city. And, it is expected that loyalty between Uber and its drivers is quite low. It is also worth mentioning that unlike traditional taxis, Uber is cashless as the app is connected to a credit or debit card. The European Court of Justice ruled that Uber will be viewed as a transportation service and not just a middleman for the passenger and driver, This ruling gives European cities the ability to impose stricter regulations on Uber, and in turn, Uber will have to discontinue the Uberpop service, Critics who oppose the ruling claim that Uber and other smaller tech companies will be forced to deal with new government-imposed hurdles that may limit growth, and also, claim that the ruling is dated because European regulators have not adapted to the new type of tech business model, This new tech business model relies on the use of cellphones and allows consumers to pick from a variety of services such as food delivery, home repair, car ride, and local transportation. Also, because employees can set their own schedules, there may not be enough cars or any at all around an area of a person who just requested a car, so the customer is stuck waiting for a while or they have to find another way to get the service that they need. Huber representatives. Essentially, its like a taxi that you can call at any time. People nowadays live in a very fast paced life and need things to happen rapidly. On the other hand, I’ve read that these laws have had an adverse effect on some of the other “gig” jobs. According to Christensen’s theory, a “disruptive” business has to either originate in a low-end market and move upstream to higher value markets, or it has to create a “new market foothold,” meaning it creates a new market where none existed.“A disruptive innovation, by definition, starts from one of those two footholds,” Christensen says. The following factors will determine the market share between Uber and the Taxi industry, The efficiency of the status quo or producers/consumers. In my experience Ubers have been more expensive than taxi’s so while the taxi industry may have seen a decline within recent years, I believe taxis are an affordable option for people who do not want to pay Uber prices. So, in some ways, having wage protections, health insurance, employment protections… these are all good things for all workers (which is why businesses must provide them to employees). This combined with other variables cannot reassure investors. With all of the challenges that Uber faces the future and direction of the company is unclear. Uber has made a rating system that assist customers to rate their riding experience as well as the motorist. Some of their strengths are it has a high standard of service, verified drivers and cars. I like the business model they have with independent contracting, as my job is very similar. Convenience is a major advantage that Uber has. I think Uber should be able to run in cities because as much as the taxi companies are suffering from this, it is natural for their to be competition in all product/service markets. 1) What is the Uber business model? Overall, Uber services reduces customers journey steps and makes everything easier and faster. Uber and Lyft would have to increase their charges since they have to pay more for their employees, this could really be detrimental to the company. The implementation of the Agreement is overseen by a Joint Steering Committee. Visit us. 3. Regular Taxi service regulations are not applicable for Uber. The IRS defines an independent contractor by stating “an individual is an independent contractor if the payer has the right to control or direct only the result of the work and not what will be done and how it will be done”. For example, Uber allows its drivers to work their own hours and operate whenever it is most convenient for them. Does something like this constitute shutting down and banning the service, or does the fact that their model is not the same as a taxi model enough grounds to disagree? The fact of worker protection and treating their workers like employees makes it feel more worthwhile to be an uber driver; however, i do feel the issue of not being an independent contractor, and losing that flexibility. Uber claims to be doubling its size every six months. This has forced states like California to try and ratify laws to force Uber to consider their worker’s employees rather than independent contractors. It creates competition and even though taxi companies are suffering from it, competition sparks motivation and new innovations to improve the transportation industry. You provided a lot of detail, and I was very happy to be able to read and write on it. 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