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A Power Struggle in the Taxi Industry

A Challenge for Uber and Lyft regarding their Service Clauses

 

STUDENT PAPER

By Anne Jacquet

SKEMA Business School

Paris, France

 



ABSTRACT

The term « Uberization » is generally used to describe the phenomenon by which a startup or a new model linked to digital economy can threaten an old model of the “traditional” economy[1]. Uber is the company behind this recent term and is bringing about a revolution on the sharing economy. However recent companies start occupying more and more importance in the taxi industry, such as Lyft in America, or Didi Chuxing in Asia, putting shadow on both traditional taxi companies and the current leader in the industry, namely Uber. In this paper, we will focus on main attributes of each company to analyze if one would be able to dethrone the American taxi platform.

Key Words: Taxi industry, pricing war, service clause, vehicle types, mobile app, customer support.

INTRODUCTION

It is 3 in the morning; no more subways, or bus available to take you home. Going home by foot? No conceivable, it is more than 5 kilometers far. You are thinking of your colleague, 2 days ago, who talked about two “great mobile phone applications” which enable you to hire a private driver to pick you up and take you to the destination you want. One is called “Uber”, the other “Lyft”.

Launched in San Francisco in 2009, Uber has become “the most recognized alternative to traditional taxi cabs”[2]. The company is valued at $62.5 billion, and the number of rides “raised by 150% from 2015 to 2016”[3], ranking the company as the leader of the alternatives to taxi cabs. These new economic actors claim sharing and solidarity values, and the creation of social link between citizens. Nevertheless, these companies based their service on a platform, so do not need to pay for any shop. They are often accused of unfair competition with traditional taxi companies.

Recent scandals tarnished the Uber’s image, in particular the price of the rides and the payment of the drivers. In opposition, its main recent American competitor “Lyft” created in 2012 -proposing similarly the same service- starts gaining ground on the market share with its $5.5 billion valuation. We can also discover that “Lyft is now doing over 1 million rides per day”[4], and has 325,000 drivers in the United States.

At first sight, both companies have the same goal: putting riders in contact with private drivers via a mobile phone application. Those without smartphones -a percentage of the population that shrinks each year- will prefer calling for cabs. For the rest, the decision to choose one company from the other looks to be subjective or may be based on unfounded arguments. Nevertheless, recent data and surveys show us that Lyft starts being chosen by more users after the evaluation of different criteria detailed in their Service clauses. These clauses “comprise mobile applications and related services, which enable users to arrange and schedule transportation, logistics and/or delivery services and/or to purchase certain goods”[5].

This paper is going to look at the position of the two American companies -Uber and Lyft- and the possible newcomers that could disrupt the leader position of Uber, Lyft and the traditional services proposed in the taxi industry. Then an analysis of the rank of these characteristics will be realized in order to know which one is the most important for users.

More…

To read entire paper, click here

 

Editor’s note: Student papers are authored by graduate or undergraduate students based on coursework at accredited universities or training programs.  This paper was prepared as a deliverable for the course “International Contract Management” facilitated by Dr Paul D. Giammalvo of PT Mitratata Citragraha, Jakarta, Indonesia as an Adjunct Professor under contract to SKEMA Business School for the program Master of Science in Project and Programme Management and Business Development.  http://www.skema.edu/programmes/masters-of-science. For more information on this global program (Lille and Paris in France; Belo Horizonte in Brazil), contact Dr Paul Gardiner, Global Programme Director [email protected].



About the Author


Anne Jacquet

Paris, France

 

 


Anne Jacquet
 is a French student in Paris, specializing in a MSc Project and Programme Management and Business Development at Skema Business School. After getting her A-level, Economic option, passed with honors, she studied two years in Preparatory classes for competitive entry to business schools with also an Economic Specialization. Her first year License spent in Lille at Skema Business School enabled her to enter the Norwegian School of Economics for one year.

She is now doing her second year Master’s degree in Paris. To further pursue and improve his knowledge on the project management topic, she trained and successfully passed 2 professional Certifications: Prince2 Foundations and AgilePM Foundations. She began a first experience in January 2018 as an assistant project manager during a 6-month-internship at Webhelp in Paris, a company leader in business process outsourcing.

Anne can be contacted at [email protected]

 

[1]  Bathelot, B. 2016, “Uberisation”, Definitions Marketing, < https://www.definitions-marketing.com/definition/uberisation/ >

[2] Gil, P. 2017, “How Uber Works and The Pros and Cons”, Lifewire <https://www.lifewire.com/how-does-uber-work-3862752>

[3] “Uber : le chiffre d’affaire bondit’’, 2017, Le Figaro <http://www.lefigaro.fr/flash-eco/2017/08/23/97002-20170823FILWWW00329-uber-a-encore-perdu-645m-au-t2-mais-les-reservations-augmentent.php >

[4] Welch, C. 2017, “Lyft is now doing 1 million rides per day”, The Verge <https://www.theverge.com/2017/7/5/15923610/lyft-1-million-daily-rides-announced>

[5] UBER, CGU, “U.S Terms of Use”, 2017, <https://www.uber.com/fr/legal/terms/us/>