Clear, consistent, and predictable business regulations are essential for encouraging and promoting investments in a country. Accordingly, most governments aim at streamlining their policies so that entrepreneurs can be able to anticipate regulation changes. Although having such predictable rules is always the goal of most states, some countries such as China have inconsistent and unpredictable policies that are mainly aimed at protecting local businesses (Chen). With the current emergence of protectionist regimes, it is important now more than ever before for international enterprises such as Uber to research about the impact of policies risks on their operations.
In 2016, Beijing and Shanghai, two of Chinese largest metropolises suddenly established policies that permitted only local residents to drive for car-hiring apps. These unexpected policies had catastrophic effects on Didi, a mobile phone application-based car-hire business because most of its drivers did not meet this standard. This sudden regulation was coupled by the company’s $1 billion acquisition of Uber, which had reduced its cash flow (Chen). Although China is the only country that has implemented such a law, Uber should remain alive to the fact that other countries can implement similar laws, especially those aiming to protect their local enterprises.
Method of Approach to the Question
The most appropriate way of evaluating the impact of policies risks on Uber is through the use of questionnaires. Through this method, the company can arrive at realistic and clear strategies since they can avoid statistical bias when carrying out the research. In questionnaires, a researcher usually writes detailed and well-structured questions that require specific responses such as a yes or no, which enables them to clearly assess the interviewee (Guttentag 1199). In addition, he/she can ensure that interviewees do not enter their personal details in the questionnaire and the forms are randomly distributed. The random distribution of unmarked forms ensures there is no bias in the analysis of the questionnaires.
The questionnaires will be issued to Uber’s passengers and car drivers and will have questions that will enable the company to form tactics on market penetration, market development, product development, and diversification (Jo 329). Market penetration simply refers to the ability of an enterprise to sell its products in a specific industry. It is measured as the volume of sales made by a company compared to the total target market. Therefore, it enables the business to compare the market share it serves compared to that covered by competitors (Gabel 531). Research questions that assess on Uber’s market penetration would enable the company to identify appropriate tactics of increasing its market share. Possible tactics may include the use price adjustments, the increase of the company’s distribution channels, improvements of its transport service, and the use of more promotions.
Market development is a tactic that enables the company to redefine its target customers (Shukla et al. 74). For example, Uber may decide to increase its target market from individuals who want taxis to those that require water transport service. Using this method, the company may be able to increase the overall demand for its services. Product development entails the modification of the existing product or creation of new ones so that they may provide additional services to the market (Witt et al. 181). Importantly, this method would enable Uber to identify the industry’s market gap. Finally, diversification occurs when a company decides to venture into a totally new industry (Shukla et al. 76). For example, Uber may decide to diversify its business from its current passenger transport service by adding parcel delivery. Accordingly, it enables the business to spread its risk by reducing its over-reliance on one market. In the case of Uber, it would protect the company from the impact of adverse policies that may be established on one of its industries.
Chen, Lulu. Uber Might Have the Last Laugh Over China. Bloomberg Technology. (2016). Available from www.bloomberg.com/news/articles/2016-11-14/uber-s-kalanick-might-have-last-laugh-amid-new-chinese-rules.
Gabel, David. “Uber and the Persistence of Market Power.” Journal of Economic Issues, vol. 50, no. 2, 2016, pp. 527-534.
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Jo, Tae-Hee. “What if There are no Conventional Price Mechanisms.” Journal of Economic Issues, vol. 50, no. 2, 2016, pp. 317-344.
Shukla Ruchi, et al. “Ola vs Uber: The Battle of Dominance.” IOSR Journal of Business and Management (IOSR-JBM), vol. 2278-487X, no. 2319-7668, 2017, pp. 73-78.
Witt Alice, et al. “Regulating Ride-Sharing in the Peer Economy.” Communication Research and Practice, vol. 1, no. 2, 2015, pp. 174-190.