Question

1. How Lyft differs from Uber in terms of price rates and entertainment like CD Player and wifi in the car? Give examples to justify your answer.

2. Identify the key issue that Uber is currently facing in the economy.

Answer 1

1. Lyft and Uber are both transportation services companies. Uber has operations in many countries while Lyft has it is the United States and Canada only. Uber started off as an exclusive company catering to the needs of the corporate world. But since executives were preferring higher class vehicles, they understood the potential of the business and diversified their taxi line up to accommodate cheaper services also. It was founded in 2009. Later, Lyft was incorporated in 2012 and it positioned itself as a joyful ride company. The have successfully placed it as an informal brand with entertainment facilities so that they can rival Uber. This has brought in customers and Lyft was able to position itself against Uber, which was an established and bigger company. Both companies are offering the same facilities and services now. Lyft has also upgraded themselves to be a more professional company to compete with Uber. Their pricing is dynamic according to timing and rush in the market. Uber’s pricing is high while Lyft offers more tipping service to its drivers. Uber has also introduced tipping service to drivers recently. Both the companies tell the price in advance and their app and payments are made online. From a rider’s perspective, currently Uber and Lyft are offering the same services with competitive prices.

2. The economical issues Uber is facing are related to taxes, international expansion risks. Uber’s business is surrounded their application and the drivers remaining as independent contractors. As per Uber, they are a “Technology Company”. But this stance is challenged by many governments across the globe and they want drivers to be Uber’s employees. If such revision comes, Uber will have a heavy burden of different kinds of taxes attributable to employees. Currently Uber is a technology company and the tax system devised for such businesses are in effect for the company. But as it is happening in many countries now, if Uber is ruled as not a technology company, and as a transportation services provider, then Uber will be taxed based on the taxation of transportation. This will also add to the financial burden. Many countries have banned shared taxi services due to issues happened like sexual harassment from the side of drivers. Uber has remained that they are not responsible as drivers are independent contractors. Along with this, a lot of companies like Lyft are in the market which Uber needs to compete with also. These are the economic challenges Uber is facing now.