Case Studies

Case-Based Learning: Uber’s Battle for India

By Long Le and Shawn Vecellio

INTRODUCTORY REMARKS:

Case-based learning places students at the heart of real-life decision situations, wherein they grapple with uncertainty and move from particular case problems to general underlying principles such that decision criteria and viable solutions can be identified and developed.

In exploring a case-based pedagogy that could better frame the teaching and learning of international business, the Global Citizen utilizes Howard Gardner’s Five Minds for the Future – the synthesizing, disciplined, creating, respectful, and ethical minds. In brief, these five minds are prescribed as cognitive capabilities for students to effectively navigate and positively impact a world that is increasingly disrupted by digital devices and systems, overwhelmed by information, and disconnected by national differences. The five minds are employed as lenses for students to engage in the content taught as well as to cultivate deeper insights through linkages across disciplinary courses and between formal education and workplace contexts. Before starting, students are asked to become familiar with this introduction to the five minds by Howard Gardner.

INSTRUCTIONS:

Read the case scenario of “Uber’s Battle for India.” In analyzing the scenario, identify the root causes that are challenging Uber’s business model in India, connecting the critical causes to possible criteria for decision-making. Additionally, considering yourself a part of the Uber leadership team in India, recommend decisions based on your stated criteria through which specific actions should be taken toward mitigating the key challenges.

For those interested in doing the decision scenario utilizing Gardner’s Five Minds for the Future, apply the following instruction.                                                                                         

In analyzing the scenario, synthesize and articulate the inferences of the political, economic, socio-cultural, and technological (also known as PEST) factors that impact how Uber does business in India, specifically in a manner that would provide enough disciplinary knowledge for informed decision-making. Additionally, considering yourself as a part of the Uber leadership team in India, recommend decisions and proposed actions that creatively, respectfully, and/or ethically address the relevant PEST factors that could improve or re-strategize the business situation.

SUGGESTION:

The challenges of placing students in complex real-life decision scenarios include making a space for structured and protracted discussions. For students who are looking for the right answer(s) for Uber in India, it should be emphasized that international business is not (yet) a science. Rather, management and problem-solving in international business are more of a process and a practice. Thus, students should reflect deeply on whether their criteria have a logical sequence (i.e., based on the PEST factors) and/or their decisions contain competing objectives, and consider how to be agile when their proposed action plans are subjected to major contingencies (e.g., current conditions and potential events) related to Uber or in India. To keep this case study ongoing and help students develop critical reflective practice or deeper case-based experience, faculty could deploy additional case studies of Uber in a different country (e.g., Mexico, Brazil, Saudi Arabia) either within the course or on a written exam.

uberolaARTICLE: “Uber’s Battle for India” compiled from Quartz, CNN, and the New York Times by Long Le and Shawn Vecellio

March 2017: The Dream of Making Car Ownership a Thing of the Past 

Uber in India is fundamentally different from Uber in the West, and Uber CEO Travis Kalanick knows it. Thus, the San Francisco based company that has championed the “gig” or “sharing” economy in the US and the UK, has charted a different path in India’s huge market potential for hail-riding.

In the US and the UK, the majority of Uber drivers work part-time driving their private cars. In India, Uber drivers work full-time, and private vehicles can’t be used as Uber cabs unless they secure a transport vehicle permit.

Uber is famously known for its paradigm shifting ideas and, thus, believes that its long-term goal to leapfrog Western-style car-ownership culture and move directly to a society where people don’t buy cars – they hail Ubers – can be successful in India. “You can’t have every resident of Delhi driving a car — that just wouldn’t work,” Mr. Kalanick said. “They just don’t have the infrastructure to support it, so why build it out?”

However, Kalanick’s ultimate strategy of making car ownership a thing of the past may not materialize in Asia’s third-largest economy. First, because most drivers in India typically don’t own cars, they must buy one or drive someone else’s vehicle. And because buying a car implies substantial capital investment, Uber – following the practice of its well-funded and more established Indian rival Ola – has been tied with banks and auto-companies to finance those looking to buy cars to join their platforms. This means a considerable percentage of what the drivers make goes towards repaying car loans, and drivers then require additional help in managing their finances.

Therefore, to scale up and to catch up with local rival Ola, Uber has had to significantly localize a number of India-specific initiatives, increasing its operational cost and business risks, which it did not fully anticipate when it entered India in 2013.

One of the biggest country-specific initiatives is to accept cash, stemming from the Reserve Bank of India’s two-step authentication process required for online transactions. As a result, Uber found an alternative: cash payments. “As we look to expand operations in India, we have understood that cash payments will be a crucial factor in driving that growth,” an Uber spokesperson stated. Government regulations have also forced Uber to constantly manage it policies, persuading its Delhi National Capital Region drivers to switch to CNG fuel following a December 2015 supreme court directive; in addition, the company also had to control surge pricing during peak hours as per local laws.

On the operational side, Uber’s digital maps sometimes don’t match India’s ever-shifting road patterns. Thus, riders often have to provide directions to drivers. India’s cellular networks can be spotty and slow, while the reliability of banking and credit cards cannot be taken for granted either. Moreover, there are vast differences in education and wealth between drivers and riders that create social and gender problems that cannot be smoothed over by improving an app interface. In fact, drivers and riders often don’t speak the same language. And because many of Uber’s drivers are unfamiliar with smartphones and some are illiterate, further training is needed.

uberola2May 2018: Uber-Ola Battle May Shape Uber’s Future

For Uber, India is its last chance in Asia, selling off its business in eight countries across Southeast Asia to its top region rival Grab in March 2018. Uber previously sold off its operations in China in 2016 and exited out of Russia in 2017.

Rebuffing speculation that it might bail India, new Uber CEO Dara Khosrowshahi said that India is a “very important market, not only in terms of our business today but where our business is going to be five or ten years from now.”

Many experts believe that Khosrowshahi, who recently replaced Kalanick, may now double down on India. That is, the deal with Grab freed up resources for Uber to make India a global priority market, which is its second-largest after the US in terms of number of trips. Thus, India is considered key to Uber’s future, especially at a time when the firm is bleeding billions of dollars globally and growth in the US is tapering.

Notwithstanding, Uber faces an aggressive Indian rival, Ola Cabs, which operates in 100 cities and offers a wider range of services than Uber’s 31 cities focusing only on personal transport. Ola also has partners with very deep pockets – backed by SoftBank, a Japanese tech giant that has also invested in Grab and, more recently, Uber itself. Didi, which pushed Uber out of China, is also among Ola’s investors.

India’s ride-hailing market is very competitive and currently unprofitable, according to transport analysts.  “We are not profitable in any of the cities we’re in now,” said the president of Uber India. “We have a path to get there, and we are confident we will.”

 

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