The advent of modern technology has led to development of many industries. Technology has changed the way things are done traditionally. New technology has simplified life for most of it users. The transportation industry is one such industry where new technology has revolutionized how get a ride to work or home. The rise of transportation Network Company simply referred as TNC has helped connect passengers and drivers. The technology allows the parties to use websites and mobile apps to connect to each other. Examples of this TNCs include Uber, Lyft, Wingz and Didi Kuadi. Transportation Network Company is defined as an organization that use internet enabled platform to connect drivers and passengers. This form of transportation has been termed as “ridesharing” by some but industry experts prefer using “ridesourcing”. This means that clients source the ride not sharing a ride to a similar destination.
The emergence of new forms of transportation has had adverse effects on the taxi business. Taxi and cab business are struggling to stay afloat in this age of transport network companies. The cabbies for example are seeking more stringent measures and regulations to enable them compete with the TNCs. The TNCs are squeezing taxis and cabs ever since the launch of on demand car services. In San Francisco alone taxi cabs have seen a 65% decline in trips in a period of two years only. In New York the taxi medallion price has declined in unprecedented levels since the introduction of the TNCs. The taxi medallion of New York in 2013 hit an all-time high of $1.3 million. Since then the taxi medallion has fallen to about $840,000. Majority of people own smartphones and would rather enjoy the convenience of requesting a car service from the comfort of their palms. Hailing a taxi or cab has become a thing of the past in most major cities around the world.
Uber is an online transportation network company. It has its headquarters in San Francisco, California. The American multinational company develops, operates and markets the Uber mobile application. Consumers with smartphones (be it Android, iOS, or Windows based phones) use the Uber app to submit trip requests using their phone’s GPS capabilities, and are then routed to Uber drivers who use their personal vehicles. In addition, all the modes of payments are processed by the company which charges the customer’s credit card, taking a 5% - 20% cut for itself and depositing the remaining amount of money directly to the driver’s account, a transaction that is totally cashless. Uber was founded in 2009 by Garrett Camp and Travis Kalanick as ‘UberCab’ and on the following June, the app was released. As from 2012, the growth of the company grew internationally and by the year 2015, its estimated worth was $62.5 billion. Although the company has had a tremendous growth, taxi drivers and governments have challenged its legality by alleging that it is unsafe and illegal as it uses unlicensed drivers to drive taxicabs. Uber drivers must have their own cars that must be insured. They are also required to pass a DMV and background check. Its service attracts a high number of people as a result of these minimal requirements.
Lyft is a transport network company having its headquarters in San Francisco, California. The privately held American company was established in June 2012 by John Zimmer and Logan Green as a Zimride service (which was a ridesharing company started in 2007). The focus of Zimride was on ridesharing for longer trips. Lyft was later founded with a focus of ridesharing for shorter trips. As of March 2015, Lyft’s worth was estimated to be more than $2.5 billion. The company’s smart phone app which operates on Android, iOS, and Windows based phones, facilitates instant ridesharing through the phones GPS capabilities by connecting passengers who require a ride to drivers who have a car. The company processes all modes of payment. Passengers just have to choose the mode of payment that they prefer such as by using a coupon, credit card or Lyft for work credits after the ride. These options are provided on the mobile phone app. Payment is later made to the driver’s account.
The two TNCs allow customers to hail a car service using a mobile phone or a website. The two TNCs have relatively similar price range. Uber is a larger and more dominant TNC and is also available in quite a lot of places. Lyft is more of a brand that is focused on communities and personal customer service to allow for interaction. Uber, on the other hand, is focused on the professionalism of service delivery to minimize interaction. If the two companies merged there would be less completion that only work to waste resources. These resources can be used to improve service delivery and even help improve employee compensation. The merger of the two companies would help in the development of innovative solutions rather constant conflicts and legal battles. Uber sitting on a valuation of approximately $62.5 billion is the irrefutable king of the ridesharing business. Uber has a loyal customer base and provides an excellent product. Lyft on the other hand is valued at approximately $ 2.5 billion therefore a merger between the two would help consolidate resources while increasing revenue. Revenue would definitely go up and Uber would control the ridesharing market and set the trends for TNCs in the future.
Merging Uber and Lyft would infuriate some of the royal customers of Lyft. Some customers loyal to Lyft brand have a deep hatred for Uber. Some of these customers would rather walk or use traditional taxis than use Uber. A merge between the two companies if realized by the public can led to the development of a new ridesharing service. This would only add competition to the already competitive market. Most of the customers who use Lyft are the conservative reservists. Unlike Uber which is used mostly by business travelers. Merging the two would create discomfort in Lyft customers who believe in the ideals of interaction and creating friendships. Uber is inclined towards formal professional minimal interaction. Therefore, the announcing to the public the merger of the two companies would not be in the best interest.
Uber has been very aggressive in its aim to penetrate more markets and cities, a merger with Lyft would be a welcome advantage. A merger would help Uber achieve greater markets and grow in capacity. A bigger Uber would be more appealing to the customers, and as such will gain considerable political clout. However, the merger may lead to higher prices due to elimination of a competitor. A merger would make Uber like a monopoly, and it would be able to control the market and the resources available. This is if the merger is done without public knowledge.
Uber and Lyft are the fiercest competitors in the ridesharing industry. They certainly hold the largest share of the ridesharing industry both having a considerable royal customer base. The merger between the two companies is plausible and one that would make uber the undisputed market leader in the TNC industry. The merger would eliminate the largest competitor for Uber. This will enable Uber to make more profits from the increased customer base. Uber would be able to control the market and will have to deal with smaller competitors like fasten.
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