Uber's Case Assignment

Uber’s Case Assignment

1. Leading & Lagging indicators for potential Market Failures

Leading part

Uber is aimed to compete and obtain global market share to achieve greater operation scale and improved profitability. Price and service are decisive factors for Uber’s competitiveness and Uber has to conduct sufficient research about the consumer spending power, preferences and the economic conditions of different markets in order to adjust quickly in response to the market dynamics. Uber should also have close communication with customers to gather their feedback about Uber’s current service or opinions for future suggestions.

Customer complaints and customer satisfaction scores as key leading indicators can help Uber to know about the level of customer satisfaction with Uber’s delivery of service and how Uber should improve to reduce the frequency of types of complaints. For example, if the frequency of complaints regarding charges of fee is high, Uber can make corresponding changes like offering coupons to users at appropriate opportunities. If an Uber driver receives frequent low score ratings, the driver should be prompted to improve their service with penalties and training. The source of the data can be gathered from the feedback system of Uber’s digital platform or the social media comments. 

Lagging Part:

Connector Assumptions:

2. Leading & Lagging indicators for potential operational failures/vulnerabilities

Leading part

Uber heavily relies on information technology systems across operations like its mobile and online platforms, mobile payment systems and other administrative functions. Some of the information technology systems rely on third-party business partners and service providers. Breaches in system security, issues with upgrading new systems/platforms, inadequate ineffective redundancy or external cyber attacks could lead to system disruption and negatively impact the availability of Uber’s service to platform users, which may further cause reputation damage and poor competitiveness. Therefore, it is essential for Uber to ensure its ability in detecting and monitoring the defects and errors in its technological system to ensure the business operation. 

The number of information system interruptions and platform breakdowns is a leading indicator for Uber to know about the current level of IT risk controls. It serves as a warning signal for Uber to test the reliability of the systems and digital platform and make corresponding mitigation measures such as upgrading of the system security, penetration testing and vulnerability scanning. The source of the data could be the errors and disruptions of systems monitored by the  IT department.

Lagging Part:

Connector Assumptions:

3. Leading & Lagging indicators-Potential Financial Failures/Vulnerabilities

Leading part

In order to maintain its competitive advantages in different sectors and even earn more market share, Uber relied heavily on incentives to attract customers or drivers. However, incentives or other marketing promotion activities may negatively impact its balance between profitability and market share. Uber may need to maintain high incentives to gain market share, which results in long-term low profitability. 

We would like to build up a ratio(monthly number of orders/incentives) as the leading indicator. This indicator can help Uber keep the balance between incentives and the number of orders. Because it measures the effectiveness of incentives, and for example, if further incentives don’t bring the growth of orders, Uber should decrease the money they spend on incentives to increase profitability.

Lagging Part:( You have to use Profitability as the lagging indicators in here，profit margin=net profit/revenue）

Connector Assumptions: By recording and tracking the number of orders/incentives ratio data monthly, Uber can avoid spending useless marketing or promotion expenses. Besides, it can maintain its growth of orders and incentive level at the same level. In this case, the marketing expense/revenues ratio is likely to maintain at a stable level so will the profitability. Therefore, Uber will not suffer from the dilemma between  profitability and number or orders.