Uber is a ridesharing service headquartered in San Francisco, connecting passengers with taxi drivers through a smartphone app, operating in over 200 cities worldwide. The company employs a blue ocean strategy by eliminating traditional taxi hassles and has seen significant growth, generating $750 million in revenue in 2013 and aiming for over $1 billion in 2014, despite facing competition and regulatory challenges. Uber differentiates itself by offering reliable, affordable service, appealing to a broad customer base, including the introduction of services like UberX in India, which are priced lower than traditional cabs.

1. Analysis & Outlook
Blue Ocean Strategy – Uber (Ridesharing Service) - Disruptive Cab Booking Service
Uber is a ridesharing service that connect passengers with taxi drivers through its own
smartphone application and Uber App also allows customers not only to request or book rides
but also track their reserved vehicle's location. Uber is headquartered in San Francisco,
California, United States and its services are available in 42 countries and more than 200 cities
worldwide. Uber's business model and innovative pricing looks pretty much similar to metered
taxis, but unlike the regular cab companies all hiring and payment is handled exclusively by
Uber through its website or smartphone App and if it is individual drivers they also receive the
booking and payments from Uber nothing from customers not even tips are needed. Innovative
Billing where in the customers are charged on distance basis only if the Uber car is travelling at a
speed greater than 11 mph (18 km/h) or else the price is calculated on a time basis and the
customers are charged to their credit card a complete fare that includes distance basis and time
basis at the end of a ride. Uber has said its high prices are the premium that the customers pay for
a cab service that is not only reliable, but also punctual and comfortable.
Uber’s Blue Ocean Strategy can be analyzed using the ERRC Grid where in the company
eliminated the hassles of booking taxi, paying the driver exactly or change problems, tipping
issues, arguments & denial of services, reduced the problems of drivers too along with customers
by matching the rides and Uber just takes 20% or less from total fare and rest goes to drivers,
drastically raised the customer service levels and comfort levels and created a new market by
using the latest technologies and devices . Even though the services are premium customers were
so satisfied and happy the company clocked revenues of US$ 750 million in 2013 and expected
to cross $1 billion in revenues in 2014. Uber created a new market which in initial stages was
uncontested market space but in the growth stage competitors flooded the market but most of the
competitors are irrelevant to Uber as the company is not only dominating the market but also fast
expanding across the globe. In India the company has expanded into 10 cities with its flagship
line Uber Blacks, premium cab service and priced 25-40% lower than Uber Blacks, UberX
claims to be cheaper than even a radio cab with a base fare of Rs 50 and per km charges in the Rs
14-15 range. UberX is already present in Bangalore, Delhi and Hyderabad with future launch in
Chennai, Mumbai and Pune.
Ryan Graves, head of global operations at Uber, in an interview with Times of India said that
UberX was growing "incredibly faster" compared to the more expensive Black service across
cities where both options were present. "UberX is accessible to a much larger population because
it's affordable," he said. Graves said when Uber makes a price cut, that means drivers are making
more money as more trips are done. "It helps the health of the market as riders are happier, there
are more drivers on the system and we become a dependable alternative versus being used on
special occasions. Uber is classical Blue Ocean Strategy example where in the company tried to
differentiate itself from the regular cab companies and in turn developed low cost business model
that generates good revenues for drivers and company. Founded in 2009 in San Francisco by
Travis Kalanick and Garrett Camp with a seed capital of $200,000 and company received
Rajesh Prabhakar Analyst Bio @ http://analysiscasestudy.blogspot.com/

2. Analysis & Outlook
funding of US$258 million from Google Ventures in 2013 and US$ 50 million in funding from
other small investors.
Uber does not project itself as luxury car service but as reliable car service and the company is
facing not only facing tough competition from its competitors like Lyft, Hailo, etc. globally and
even in India also from local App based cab booking services like Ola Cabs, Taxi For Sure, etc.
but also facing many regulatory hurdles in different countries and complaints from the local cab
service and taxi players. In India it is facing problems in terms of RBI regulations related to
payment mechanisms like in India there has to be payment verification process which is a multi-step
process. Uber payment process is credit card based and single click without verification
process. Despite all these the company is valued at close to US$ 3.5 billion dollars and is
expected to continue its growth globally. Uber is one of the best recent Blue Ocean Strategy
examples I have found.
Source: Contributed by Aswath Damodaran, Professor Stern School of Business, New York
University to Forbes.com
Rajesh Prabhakar Analyst Bio @ http://analysiscasestudy.blogspot.com/