need help

BA 313 TH@6

May 29th, 2019

Orange and Black Case Analysis

Hello, Board of Directors! With the introduction and rise of automated vehicles (AVs) in the United States, we feel it is important that we work with you in ensuring Uber, the company we represent, is performing to the best of its ability. The growth of the automatic vehicles industry makes us realize that it is an industry with great development potential, and in the future, automatic driving will be likely to replace human driving. It is our job to monitor the status of the company and identify any challenges in which Uber is facing while also suggesting the most effective plan of action for each. We hope to make Uber a leader in the industry and create our own safe driving system. We have made some efforts on the development of the AV industry but we also met some issues which are waiting for us to solve. Therefore, we are coming to you to explain our three main concerns with the recent events resulting from the introduction of Automotive Vehicles because we feel as though there needs to be changed within the company, and we trust you will do what is best for Uber. Our three main concerns are Uber’s lack of proper approvals for testing, autopilot system failure, and pressure from investors. We appreciate you taking time out of your day to hear our concerns and the recommended solutions. We truly want what is best for Uber and are willing to help you in whatever way you need because we believe Uber has the resources and capability to push through these pressing issues we are presenting to you. We believe that by solving the three major problems in front of us, Uber's self-driving car project can enter a new stage and help us to expand the scope of business and enhance the visibility of the company.

Our first main concern is in regards to Uber’s lack of proper approvals for testing. According to the case, Uber stopped testing self-driving trucks and instead reassigned Otto engineers to focus on driverless cars. After buying 24,000 Volvo SUVs for $1.4 billion, Uber was accused by multiple cities for testing without proper approvals. As Uber's tests were not properly approved, they missed out on more opportunities. If qualifying can qualify for testing and carry out multiple tests, they will make better progress in improving the technology of automatic driving. At the same time, Uber can also leave good consumption experience for customers and attract consumers which is what we want to see. Besides, as the saying goes, practice makes perfect. Uber can make the system more stable, improve security performance, and find some easily ignored errors by step-by-step multi-party testings. As a result, we believe there should be many more regulations on how testing is done. A consequence that could result from being more intentional with safety is the amount of money that would be spent because testing can be expensive. These large amounts of expenses will directly lead to problems in the capital chain of our company and may cause unnecessary losses to investors. Therefore, the recommendations we have here is We should actively communicate with relevant departments to show them that our company is capable and qualified to obtain the test license. Then, after obtaining the approval for the test, we need to meet with our company’s investors and discuss with them whether they can invest more money to support the company's AV test. The purpose of the meeting was to let investors know the importance of self-testing and the potential benefits that the testing program could bring to us if we could get the self-testing license from the government and enough funding from investors. If the investors agree with our plan and willing to invest more money then everything will be easy. If the investors do not agree with our plan, then we have to find out other new investors to help us finish the test. The reason is self- test program is much more important which can help us find the problems that our product still have before the mass production. On the other hand, the benefit of this solution is owning cars that are safe and reliable to the public. There is too much money being invested in this AV industry for there to be any mistakes or lawsuits resulting from something as preventable as proper testing.

A second concern that we have for the success of our company stems from the unfortunate event that happened in Arizona in March of 2018. The pedestrian who was hit and killed should have been able to trust the autopilot system, especially since we put that automated vehicle on the road. According to the case, even though the self-driving car sensed the pedestrian, it misidentified the individual (6). This report raises a large concern for us because our cars need to be operating safely. Not only should safety for all riders and pedestrians be a top priority for Uber’s automated vehicles, but another perspective we need to focus on is our public perception and performance in this industry. The whole point of self-driving cars is to minimize human error, however, these cars are failing to match this need. If our automated vehicles are not performing to the best of their ability, our customers, employees, and investors might start second-guessing us. In addition, the main meaning of self-driving vehicles is that they can save people more time and reduce the number of traffic accidents, making people's driving safer. However, this traffic accident shows that our autopilot system is not as safe as we expected. This problem will lead to the distrust of the public, affect the reputation of our company, and finally have an adverse impact on our business. Therefore, we come up with some ideas to solve this issue.

In order to address this safety concern, we believe Uber needs to implement a solution that ensures our automated vehicles are tested to the best of our ability. After the pedestrian in Arizona was hit and killed, the operations of AVs in Arizona were shut down (6). However, in order to ensure our cars are trusted, we believe the best way to do this is by temporarily shutting down all AV operations in all cities, not just in Arizona until our testing methods are improved. This does not mean that human-driven cars would not be able to operate for this period of time, but only our automated cars. An unintended consequence that could result from implementing this solution is missing the opportunity to compete with other ride-sharing companies that use automated vehicles. As the AV industry is currently a very new and unique industry, it would be unfortunate if we were unable to participate in it from the beginning. We not only would miss out on additional revenue, but we would also miss the window of opportunity in capturing a larger audience. On the other hand, if we were to go forward with this solution, then Uber would greatly benefit from this because our attention to safety would help our public perception, and thus increase revenues. If consumers know that Uber takes safety seriously then they are more likely to request a ride from our company over our competitors. In order to bounce back from the death that happened in March 2018, we must ensure that our automated vehicles are fully tested. Even though shutting down the operation of AVs in all US cities for a certain period of time would decrease our chances of being successful in the AV industry, it would be detrimental to our company long-term if we do not implement better testing methods for our automated vehicles.

The third concern we have for Uber is the fact that it faces a lot of pressure from various aspects, including investors, consumers, users, and public opinion pressure. Because our company's business scope covers many places around the U.S. and has certain visibility and influence, especially in the aspect of automated driving, we spend a lot of workforce and material resources in order to get ahead of the automated vehicles (AVs). Therefore, many people have already put their eyes and attention to our company. Our competitors such as Waymo Inc, Alphabet Inc and Tesla Inc want to see the progress of our autonomous driving industry and adjust their strategic plans to deal with the pressures on our company. For example, since Uber acquired Anthony Levandowski’s Otto Inc, our company has been targeted by the company of Waymo. Anthony Levandowski is a former Google employee, and Waymo Inc is a subsidiary of Google used to develop self-driving technology (Wakabayashi,2017). Waymo Inc took our company to court because they insisted that our company copied their lidar technology and applied it to our self-driving cars. At the same time, journalists are reporting this incident, which directly affects the image of the company and indirectly leads to many potential customers have negative opinions on our company, thus increasing the pressure on our company. At this time, what we should do is to eliminate the negative news of the company and reduce the pressure of public opinion faced by the company to reduce unnecessary losses. Therefore, the recommendations we have under this situation are first the company should find out journalists who have reported this new and talk to them to see if they can get rid of these negative news as soon as possible. If they are willing to delete these reports, then what kind of price our company needs to pay such as money or similar news from other companies as exchange. If they are not willing to delete this news, then our company need to immediately hold a press conference to release some new information about our products to divert people's attention and make them forget about this news. Some unintended consequences the company might face is if the company loses the lawsuit, which will cause considerable losses to our company, no matter in aspects of economic, potential consumers or technology of AV. Moreover, losing the lawsuit will seriously affect the company's image and bring long-term losses to the company.

The second pressure is that the company's investors continue to pay attention to our autonomous driving technology development process and results to ensure that their money is used in the right place by our company and make sure our final products can let them get more profits. However, the failure of the company’s several investments led to the loss of investors, which directly affected their perception of us, and investors even asked the company to close or sell AV projects to other companies. According to the report shows until August 2018, Uber had spent an estimated $125 million to $200 million per quarter on AV development over the past 18 months, with its autonomous driving division reportedly accounting for 15% to 30% of Uber's quarterly losses and the company has spent approximately $2 billion since the implementation of the AV program (Krok, 2018). It is not difficult to see from these data that our AV project has not seen any profitability so far, which leads to the pressure from investors. Thus, the recommendations we have under this situation are first we need to convene these investors to come to our company to have a meeting. The purpose of the meeting is to introduce investors to our company's position in the AV market so that investors know that our technology of AV is currently ahead of the market. Also, we will show investors the investment and experimental plans for our next few quarters to ensure that investors know that we will spend their money on developing and developing products. Second, we will introduce investors to our latest samples including their potential performance and future market advantages. We will let investors personally experience the performance and service of the test products so that they can have a more intuitive understanding of future products. We think that if investors can see our clear business plan and by allowing them to experience the performance of the product personally, they can believe that the future market of the product is excellent despite the massive investment required in the upfront stage.

Uber is an extremely capable company, and looking at it under the scope of a VRIO analysis, we can further explain how the company can successfully comply with our concerns. For starters, Uber has over 399 million users, operating in 75 countries worldwide, creating immense value for the company. This directly ties into our first concern, as Uber is used by a large number of consumers. This being said, we need to make it a priority to abide by all proper protocol for testing, and set an example for other companies following in our footsteps.

As well as being valuable, Uber also has a rare company culture, and hard to imitate market value. They are a well established titan of the ride hailing industry, with a unique brand model that causes a large barrier of entry for competitors. For example, Uber has a market segment called UberEats ™, that is a food delivery concept operating at the same capacity Uber does. Due to the immense capital volume resulting from Uber’s brand and market share, they should easily have the necessary funding needed to do proper testing and ensure their automated vehicles are fully prepared to be on the road. Given proper allocation of funding, we could put to bed our second concern if sufficient testing was done to ensure our cars would put no one in danger.

Finally, we can look at Uber’s organizational structure and how that will address our third concern. Uber operates on an annual revenue of $11.8 billion, with a company culture that focuses on reliability as well as customer and employee satisfaction. With that much working capital, as well as an established multinational brand, Uber is structured to capitalize on resources and capabilities that result in a sustained competitive advantage. If explained properly to investors, it should put to bed their concerns regarding allocation of their funds into the AV technological segment of the company. As this is a new and growing field, it is Uber’s job as a company to ensure them that an investment in this market would be worthwhile. We have established that Uber has a history of creating a sustained advantage, and this new field should be no different.

Generally speaking, there is still much room for improvement in the development of AV. But at present, it seems that we need to pay serious attention to the three main problems which we faced now. Let our autopilot be tested in more aspects, and draw more accurate data to adjust subsequent development steps. Also, by temporarily closing the nationwide AV business, we will strive for more time to enhance our automatic driving system, make it more secure and ensure that we will gain the upper hand in the AV industry in the future. Certainly, we also pay attention to our stakeholders. We will have detailed business development plans to make investors know the potential benefits in the AV industry. The solution to these problems enables our company to have more energy to develop automated vehicles and make innovations to create a better Uber.

Work Cited

Krok, Andrew. “Investors Tell Uber to Ditch Self-Driving Car Program, Report Says.” Roadshow, CNET, 15 Aug. 2018, www.cnet.com/roadshow/news/investors-uber-self-driving-car-program/ .

Wakabayashi, Daisuke, and Mike Isaac. “Uber Denies It Is Using Stolen Waymo Technology.” The New York Times, The New York Times, 7 Apr. 2017, www.nytimes.com/2017/04/07/business/uber-waymo-self-driving-car-technology.html .