Chinese Market Attractive to Uber-Free-Samples-Myassignmenthelp

Questions: 1.What made the Chinese market attractive to Uber? Do you believe that Uber can succeed in the Chinese Market?. 2.What market forces did Uber China fail to identify, underestimate or consider in relation to its market entry?. 3.What positioning and customer acquisition program the company could have pursued? Do you believe that Uber could have succeeded? Why? Answers: 1.China had almost 750 million urban commuters which made it the largest consumer market in the world, roughly 5 times that of the size of the 150 million US commuter market. At the same time, Chinese car ownership was extremely low; it had 69 cars for 1000 people. Moreover there was a short supply of taxi services in China and low fares were paid to the taxi drivers. Adding to the agony, the entire population relied heavily on buses, metro and other such means of transport for commuting. All these features made the market extremely attractive for Uber to foray in the Chinese market. As the market held limitless opportunity to gain riders and offer ride sharing and online Chauffeuring service to the commuters. Uber then finally launched in the year 2013 with Uber Black, the company did not achieve much success initially because people perceived that the fares were too high. Therefore when the company moved to other cities it went forward with Uber X, the low cost ride services. Uber also launched the service Uber people to penetrate in the market; it was not for profit ride hailing services with the fare being calculated according to the ownership and the operating cost of the vehicles. The company at the same time spent around $ 2 Billion towards the promotion and it benefited all the stakeholders (Uber, drivers riders). In the bid to dominate the market, company faced stiff competition from Didi Chuxing and Yideo, and by 2015 the company had a total market capitalization worth $ 8 billion. At last in the year 2016 Uber in a share swap deal sold its business and operation to Didi. The move was right as it was really difficult for Uber to keep on competing in a price sensitive market with deep pocket players. The company did everything to capture the market; however its positioning flaw led company to sell off its business. 2.Uber entered the Chinese market in the year 2013; a year after DIdi entered the market. The company went with the vision to apply the model which made it highly successful in the US market. However the company did not anticipate the challenges in doing so and hence had to sell off its business in the year 2016 to Didi. Company failed to perform at many front; the first one being the companys first offering to the Chinese market was Uber Black. Uber Black in itself was an expensive service and because of the model the fare exceeded the prevalent taxi fares (Rivas, 2017) Another factor which the company failed to comprehend was the market dominance of Didi and Yidao; these two players had a market capitalization of over 89 percent and also had created a strong brand identity for itself. At the time Uber reached a market valuation of $ 8 billion, Didi had already captured 10 million trips per days and boosted revenue of $ 36 Billion. Hence it can be said that Didi Chuxing had already created market dominance and being a Chinese company the government regulations were limited and the company could overlook them. Uber on the other hand was caught up in a lot of legal matters in China and paid huge sum in fines, further reducing its investment power. Yidao on the other hand was offering customized chauffeuring services and did not compete on price, hence its market and business model was entire different than that of Uber and Didi(Hook, 2016) Further Uber partnered with Baidu, the largest search company which helped Uber in the map services and the GPS system; on the other hand Didi took advantage of the other leading player in the market Tencent and used its services for Maps and paying bills. We Chat was the largest messaging service in China and company took full advantage of it and We Chat helped the company in mass penetration. Uber tried to pull off every trick possible out if its hat, but all the efforts of the company went into vain. Uber came up with a great promotion strategy, it offered subsidized ride fares to drivers riders, but the feature was taken for a ride in the way drivers and riders created fake accounts to take leverage of the promotional scheme. Uber further came with green hybrid cars to provide environmental friendly services to the Chinese market, but it also failed miserably. The company after spending $ 2 billion out of the $ 13 billion it had raised globally decided to shut down its business, it was a right call which the company made (Wirtz Tang, 2016) 3.Uber forayed in the Chinese market with much fanfare in the year 2013, a time which was right for Uber to enter the market because of the lack of taxi hiring service and no structure in the way taxi market operated. There was less intervention from the government and the company was under the assumption that it could replicate its earlier successful business model in China. However, it was just a dream which did not turned into a reality (Manjoo, 2014). A 5 why analysis will help us gain further insight into cutting quickly into the symptoms of the problem and help in dealing with them once for all. It can also be used for troubleshooting, quality improvement and problem solving. 5 Whys can help in getting the company to focus on one single track or very few tracks to effectively tackle a problem. The model provision a very simple 7 step process to define the 5 whys in the framework Assemble the team Define the problem Addressing the first why-Why the company is facing problem in the Chinese market- The company is facing problem in the Chinese market due to the fierce competition it is facing at the hands of Didi, also its inefficiency to combat the challenges posed by other players. Another reason for facing the problem is because of its credit card payment system. Asking Why four more times- Other reason why the company could not fare well in the Chinese market were: Not relying on the services of the local people and local authorities, the company completely went forward with its own model of working. This did not go down well with the local people of China, leading to strong resentment from the local authorities. Uber did not find local partners to help the company in establishing the business create a momentum and gain market dominance. The biggest mistake the company made was competing in the Chinese market on Price. Price wars in the past in China have never gone down well. Several of the failing international companies are; Amazon Google. The company was a little late in its entry in the Chinese market, and the biggest reason why the company failed was, not having a fair understanding of the Chinese market(Rogers, 2015) Step 5- Knowing when to stop asking the why- The reason being because after asking the same question 4 times earlier, the reasons are repeating and thus does not solve a purpose. Addressing the root cause- The root cause which I believe was the biggest roadblock in its way of success in the Chinese market can be unable to make a connect with the local people, in acceptance of local culture and not being in a position to create a formidable partnership with the local players. Monitor the measures-In this case, the measure cannot be monitored because the company sold its business to Didi in a share deal and also gained a significant share in Lyft, another ride service company of China. In my opinion, if Uber would have followed the below mentioned strategy the company could have succeeded: Competing on providing great customer service and exceed the expectation of the Chinese customers. Bring a disruption in the Chinese market by raising the envelope of its service offering would have put company in a great position. China had a culture of paying in cash; on the other hand Uber went ahead with paying through credit card services, another reason why the company could not succeed in the China market. Partnering with the local taxi providers and drivers, as this would help the drivers to not live in a fear of losing a job and they would have gained after coming under the Umbrella of the Uber brand. The company however did not give much heads to the needs of the local people, local culture and forgo the local partnership, needless to say if all this would have been done the fate of Uber could have swung in some other direction. References Hook, L., 2016. Ubers battle for China.Financial Times. https://ig. ft. com/sites/uber-in-china/(21.04. 2017). Manjoo, F., 2014. With Uber, less reason to own a car.New York Times, pp.1-4. Rivas, R., 2017. Is Co-Operation the Opposite of Competition?: Two Sides of the Same Coin. Rogers, B., 2015. The social costs of Uber.U. Chi. L. Rev. Dialogue,82, p.85. Wirtz, J. and Tang, C., 2016. Uber: Competing as market leader in the US versus being a distant second in China.SERVICES MARKETING: People Technology Strategy, pp.626-632