By Long S. 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 Invested in Mexico but Being Challenged by Didi.” In analyzing the scenario, identify the root causes that are challenging Uber’s business model in Mexico, connecting the critical causes to possible criteria for decision-making. Additionally, considering yourself a part of the Uber leadership team in Mexico, 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.
Read the case scenario of “Uber Invested in Mexico but Being Challenged by DiDi.” In analyzing the scenario, synthesize and articulate the inferences of the political, economic, socio-cultural, and technological (also known as PEST or PESTEL) factors that impact how Uber does business in Mexico, 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 Mexico, 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 Mexico, 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 PESTEL 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 Mexico. 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., India, Brazil, Saudi Arabia, Europe, China, or Japan) either within the course or on a written exam.
“Uber invested in Mexico but challenged by “Viaja con DiDi‘” BY LONG LE AND SHAWN VECELLIO
(CLICK ON THE LINKS AND IMAGES IN THE CASE STUDY TO SEE THE ORIGINAL SOURCE AND ITS CONTENT)
Starting in 2018, Uber has invested more than $500 million in Mexico since it launched there in 2013, underscoring the country’s importance to the ride-hailing firm as it faces new competition.
The figure includes contributions to government-run mobility funds, “social responsibility” projects and unspecified security spending. Moreover, Uber has invested smart air pollution sensor in which their drivers can document air quality levels inside and outside of their vehicles, given that Mexico City has at times banned private vehicles for one day a week to control high levels of ozone. As Uber lost $4.5 billion in consecutive years and confronts regulatory battles in Europe and heightened competition in Asia and the United States, Mexico represents an opportunity for the company to establish a secure foothold in a major market. Mexico is Uber’s fourth-biggest country by the number of rides, trailing the United States, Brazil, and India. The company operates in 21 of the country’s 32 states. But the remaining states have prohibited ride-sharing platforms. Notwithstanding, Uber dominates Mexico with a near-monopolistic market share of more than 75 percent.
However, one of the major and most consistent criticisms of Uber in Mexico is that they aren’t safe. A lack of licensing and a poor track record from senior management on tackling problems with its drivers means that the firm now has a reputation that it’s struggling to shake off. A Thomson Reuters Foundation poll found that among the global cities surveyed, Mexico City is perceived as the least safe for public transit.
Additionally, Uber is waging a long campaign for cash fares in Mexico, where roughly 60% of the population lacks a bank account. Although a cash ban in Mexico City is still in place, Uber decided to begin accepting the fares, since a recent Mexico’s top court found that a state ban on cash fares for ride-hailing firms was unconstitutional. The move has generated controversy, given that robberies and murders of Uber drivers occurred after the company began to accept cash in Brazil in 2017.
While Uber has had no real local competitors in Mexico, competition is starting to heat up very quickly with the arrival of the Chinese ride-hailing services giant DiDi Chuxing, which has launched operations in 13 of the 32 states. Additionally, in 2020, DiDi has figured out how to start its FDI in a number of states that prohibited car-hailing firms. In working within the law, DiDi has partnered with former taxi drivers and formed DiDi Taxi, which has gained the approval and support of state governments and key stakeholders.
DiDi, whose technology teams are based in California and Beijing, has reportedly signed up thousands of drivers in Mexico. According to news reports, many drivers, currently working for Uber, have signed up with DiDi, citing that DiDi pays 15 percent more than Uber. Gabriel Garcia, a 26-year-old Uber driver in Mexico City told Reuters, “Uber is too cheap. You can wait around for an hour without a fare and then you get almost nothing for the ride you do.” Moreover, DiDi is poaching Uber employees for its Mexico management team, offering to nearly double their salaries in some cases. Flush with cash and backed by several deep-pocketed investors — such as Baidu, Alibaba, and Apple — DiDi is entering Mexico to win rather than merely to compete with Uber.
Rather than compete solely on price, DiDi has introduced a real-time SOS system and dynamic safety monitoring, promoting safe drivers and fast response times; the company has built an algorithm to help it predict 15 minutes in advance where it should dispatch vehicles. But the biggest difference may come down to cash. To protect drivers, DiDi’s leadership has stated that it will not handle cash fares in Mexico; instead it will introduce cards that get the drivers paid within 15 minutes of completing a ride. Thus, some experts say that DiDi’s rise in Mexico should not be underestimated. For instance, in 2019, the number of trips people took with DiDi in Mexico increased by nearly 350% year-over-year.
By some accounts, Latin American consumers generally prefer U.S. brands to Chinese brands, and Chinese business culture can be off-putting to local employees. In response, DiDi has recently introduced “DiDi Woman,” a program that provides women incentives to be drivers and allow them to only select women riders; and women riders can select only women drivers as well. The program is promoted to safeguard safety, especially the growing violence against women in Mexico.
While experiencing its slowest growth rate in 2019 and losing ground to DiDi, Uber’s betting on its ability to improve existing services and provide new services. But is it enough to fend off DiDi’s assertive strategy in Mexico?
The Global Citizen 