Reputational Challenges The Road

An analysis of Uber’s reputation 12 months ago and how it has prepared for an IPO

Opening a mobile phone to hail a taxi is perhaps the greatest technology that ever happened to the global transport industry. Uber, one of the largest technology taxi hailing companies has made tremendous developments since its inception nine years ago. However, in the past one year, Uber has been rocked by a series of scandals, technology law-suits, and claims of a negative organizational culture characterized by discrimination and sexual harassment, all which have contributed to a negative publicity of the company (Levin, 2017). For individuals who are interested in understanding the intricacies of such corporate dynamics along with the impact of technological advancements on the transportation sector, seeking business dissertation help can provide the most valuable insights.

In an interesting twist of events, according to Bhuiyan, (2018), the company recently announced plans to go public by floating an initial public offer (IPO) in a public stock exchange. In reaction to this news, scholars have gained interest in the company’s reputational position and how it may affect the success of the IPO. Equally, a critical analysis of the company’s reputation in the past one year and its current reputation reveals interesting insights worth noting. For instance, in February 2017, Uber was sued by Waymo for what it termed a ‘calculated theft’ of its technology of autonomous (i.e. self-driving) vehicle product idea. However, the strategy employed by Uber’s new CEO (Dara Khosrowshahi) to settle the matter out of court took many by surprise. According to Holley (2018), Mr Khosrowshashi personally engaged in a negotiation with Wymo and reached an out-of-courtroom settlement of the case in a drama-free and low-risk manner. This incidence relates to the corporate governance principle of responsibility, where a company acknowledges the rights of all stakeholders and interested parties as obliged by law and cooperates with such stakeholders or companies for purposes of their financial stability and development as espoused on Financial Reporting Council (FRC, 2018). By reaching an agreement and settling the issue with Wymo, Uber adhered to the corporate governance principle of responsibility to promote Wymo’s development.

On February 2017, the company was also faced by allegations of discrimination and sexual harassment when a former technology engineer, Susan Fowler published a blog highlighting how female staffs were discriminated against and sexually harassed (Levin, 2017). However, the company has made several efforts to improve its reputation in regards to sexual harassment and discrimination by introducing several changes in the company’s headquarters. For instance, according to Holley (2018), the company hired a chief diversity officer charged with the responsibility of reviewing employees’ salaries and ensuring everyone, including minorities and women, are paid fairly. This reflects the corporate governance principle of fairness where the company respects all the stakeholders’ rights and ensures that employees are treated equally and all the rights violations against them are redressed (FRC, 2018).

Indeed, as acknowledged by Liedtke (2018), the reforms implemented by Uber so far, under the leadership of its new CEO Dara Khosrowshashi, have resulted in better results as evidenced by the company’s 2018 first quarter financial results. It is reported that Uber recorded a 63% increase in net revenue up from $2.8billion one year ago (Liedtke 2018). Similar reports indicate that the company’s gross-bookings have increased by $12 Billion – a 41% increase from one year ago. Whereas the improvements may not be directly attributable to the reputational change efforts made by the company in the past one year, commentators indicate that the improvement trend is a key factor that will be considered by investors in 2019 when it floats its IPO (Erescovic, 2017). Moreover, Liedtke (2018) observe that Uber has been minimizing the damages from the scandals it has had in 2017, and to prune its losses in preparation for the IPO, an indication that the efforts to display by Uber to amend its reputation will certainly be perceived by investors as a positive development.

b Uberfreight Stakeholder Analysis

According to Kristen (2015), stakeholders are all the parties that play specific roles to ensure the progress or survival of the company. They include all the parties that are affected by the organization’s activities, policies and performance. In the case of UberFreight's, some of its stakeholders include its clients, partner drivers, regulatory agencies/government, and the company directors.

UberFreight’s clients are its stakeholders because they depend on and need the company’s services for delivering goods and consignments at a paid service fee. This means that the venture owes its customers quality services and value for their money. Secondly, the regulatory agencies are UberFreight’s stakeholders because they are responsible for ensuring that hauling companies like UberFreight abide by the safety and other regulatory rules within any particular jurisdiction. They act in the interest of the customers by regulating the company and ensuring that it operates within the stipulated laws. Lastly, the company directors are stakeholders of UberFreight because they are responsible for governing the company and ensuring that it runs smoothly. They have an interest in the company because it is their duty and responsibility to run it.

The Claim of UberFreight’s Stakeholders

The objectives of UberFreight are governed by its stakeholders. According to Kristen (2015), a matrix is a major tool that is used to conduct a stakeholder’s mapping in an effort to have a better understanding of the venture’s stakeholders, whether they have a high or low interests on the company’s affairs, and whether they have a high or low level of power of influencing decisions to achieve their interests. The following figure illustrates UberFreight’s stakeholder’s mapping:

UberFreight customers have a high level of power but a low level of interest in the company’s operations. The customers have a claim of the safety of their cargo while being transported with the venture, as well as a claim on convenience in regards to timely delivery of cargo. Hence, they are a ‘keep satisfied’ stakeholders and should be kept satisfied so that they do not move to the high-interest zone.

The regulatory bodies have a claim on the venture’s adherence to regulations, as well as the safety of the truck drivers, and the legality of the goods being transported. Hence, they are ‘keep informed’ stakeholders and have a high level of interest in the company’s strategies and operations, although they lack power to control decision-making (Raluca, 2015).

The directors have a claim on the company’s operations and represent the company in the face of other stakeholders (Adrian & Cristina, 2016). They are key player stakeholders because they hold a high level of interest and power in the organization – are major drivers of change.

Prioritising Stakeholder Claims

The customers' claims should be given the highest priority otherwise they will move into the high-interest high power zone. According to Raluca (2015), failure to satisfy customer claims may trigger customer unrest as exemplified in the case of ‘#deleteUber’ which saw the company lose 5% of its market share in 2017 (Levin, 2017). Whereas customers may not be interested in the company’s business model or how and by whom it is run, they have a high level of power in determining how the company is run because ideally, managers must run the company in a manner that satisfies the customers in order to achieve brand loyalty and increased sales revenue. Thus, UberFreight should give the highest priority to its customers by delivering quality services in a convenient manner.

The risk of engaging in a variety of services

In May 2018, Uber announced its ambitions to engage in a shipping business dibbed ‘UberEverything’, which is basically a technology-enabled shipping service where retailers connect with consumers to get goods delivered by just a push of a button (Swisher & Khosrowshahi, 2018). However, business commentators have gained an interest in the business model of UberEverything and identified certain risks that engaging in such as a broad variety of services my present, or the risk of diversification.

While Uber intends to use UberEverything as the basic tool to explore new markets, build new products and take new risks for purposes of maintaining stability, the road of business diversification taken by Uber through UberEverything is a slippery one. For instance, the requirements to meet the customer demands of UberEverything might strain the venture’s operational ability because it will need short-term finance to finance, while the team must also be ready to multi-task, thereby affecting their productivity (Jordan, 2017). Hence, engaging in a variety of services may lead to an increase in the Uber’s financial and operational risk exposure.

Similarly, according to Grabchack (2014), engaging in a variety of services might lead to a deterioration of other services’ brand message, and customers might soon forget that Uber is originally a taxi hailing company. Considering an example of KFC, the company has always resisted the sale of tacos, fish, and hamburgers based on the argument that it might damage the brand message that it is a global leader in fast food chicken (Ashe-Edmunds, 2018). The same scenario might apply to Uber when it operationalizes UberEverything. Thus, engaging in a greater variety of services will increase the overall risk exposure of Uber’s brand message.

The Risk of Engaging In Uber Flying Cars

In the past one year, Uber’s vision of engaging in the air taxi business has earned the scepticism of many business commentators; some terming it as a ‘lofty ambition’ due to the perceived risks related to the venture (Bhuiyan, 2018).

Risk of compliance or non-compliance

For instance, Bhuiyan, (2018) argue that the Uber’s ambition of launching the vertical landing and take-off vehicle in 5 years may not be possible due to regulatory issues surrounding this unique product. The company faces a challenge of complying with the aviation industry’s scrutiny and regulatory compliance, which sometimes may be too costly to bear.

Product Liability Risk

Another risk that the company is likely to face from this venture is the product liability risk. According to Newcomer (2018), it means that Uber may be liable for any harm caused by the use of the airlifts, even if the manufacturers were diligent with its production. In fact, some aviation experts have expressed concerns over the difficulties in producing the vehicles, claiming that as opposed to ground vehicles, airlifts are difficult to manufacture because if any software or hardware fails, then they stand a chance of plummeting (Bhuiyan, 2018).

Operational Risk

The product liability risk is closely related to the operational risk that Uber stands exposed to – by flying cars. According to De Villiers (2017), operational risks are elements of a firm’s operation that expose it to loss. For instance, in the case of Uber flying cars, the company may incur extremely high costs to ensure that the cars are certifiably able to operate autonomously without a human pilot.

Product Success Risk

In this regard, the company stands exposed to the risks associated with launching new products such as the risk of major delays for purposes of ensuring effective utilization of resources, the risk of launching the product too soon thereby diluting the resources because other on going projects may be halted (De Villiers, 2017).

Investment Risk

Ultimately, Uber might fail to achieve the expected future returns for the project as a result of a culmination of all the above-mentioned risks.

Krzakiewicz & Cyfert (2015) define the risk committee as a group of selected board members or an organization whose role is to exclusively participate in the formulation and oversight of the organization’s risk management policies and frameworks. They can help reduce the number of failures in an organization like Uber by participating in a periodic approval of Uber’s risk management policies and ensuring that the company’s operations comply with its risk profile, activities, and complexities by establishing the company’s global risk management procedures, governance and risk management infrastructure (Ioana et al, 2017). Moreover, according to Krzakiewicz & Cyfert (2015), they ensure that there are systems and processes for the implementation and monitoring of any emerging risk to ensure that the organization is rather proactive than reactive in mitigating the emerging risks.

The risk management committee also helps reduce the number of failures by establishing both employee and managerial responsibility for risk management, so that the CEO does not have to handle all the ‘failures’ presented to him (Ioana et al, 2017). Finally, according to Krzakiewicz & Cyfert (2015), the committee’s role is to the organization’s risk management initiatives are integrated with the organizational goals and its global structure of operation.

A Comparison of Uber’s Organizational Culture 12 Months Ago and Today

In 2017, Uber was accused by several governments and transport regulatory authorities for failure to comply with various regulations and conditions set by the respective authorities. For instance, in 2017, the company got into legal battles with various cities for using a technology (Greyball) to bypass and violate local laws (Levin, 2017). These scandals reveal the culture of impunity against the law that the company had developed especially during the tenure of its previous CEO Travis Kalanick. However, since the entry of a new CEO, Dara Khosrowshahi, there are no major new court cases that have emerged, an indication that the company has changed its culture and perception of law abidance (Holley, 2018).

Equally, in the past one year, Uber had been highlighted as a company with a culture that entertains discrimination and sexual harassment, especially against female employees. For instance, in 2017, a former Uber engineer, Susan Fowler made allegations of discrimination and sexual harassment in what became one of the most shocking revelations of the company’s negative organization culture (Levin, 2017). However ever since the company hired a chief diversity officer and conducted a review of its salaries compensation policies, no major similar allegations or scandals have emerged. This speaks to the company’s successful efforts to improve its organizational culture in the past one year.

The technological aggressiveness of Uber has sparked many disagreements on whether the company is good or bad for the society. However, from an ethical standpoint, some scholars have produced valid reasons to prove that Uber is good, while others have presented evidence to prove that Uber is bad for the society – leading to a conclusion that Uber is good or bad depending on what one is measuring. For instance, on a positive perspective, the company has been able to contribute to a more efficient market of taxi services by eliminating uncertainty because drivers cannot abandon their assignments or poach fares as used to be before the arrival of uber and similar technology companies (Hiltzik, 2015). This idea can be related to the utilitarianism theory of ethics where a person or an organization performs an act to benefit a society or an individual regardless of societal constraints such as law, or without minding the personal feelings of other people (Hiltzik, 2015). This theory helps in the understanding of the idea that despite being engaged in various corporate governance scandals, Uber has done well to the society by delivering its services to eliminate uncertainty in the taxi industry.

References

• Ashe-Edmunds, S. (2018). Benefits and Risks of Diversification. Retorved from:
• Adrian Doru, B., & Cristina Elena, D. (2016). The rights of shareholders – basic principle of corporate governance by means of case-specific jurisprudence. Audit Financiar, Vol 14, Iss 136, Pp 401-412 (2016), (136), 401. doi:10.20869/AUDITF/2016/136/401
• Bhuiyan, J. (2018). Uber wants to sell a flying car service in five years — but we don’t know if the tech (or the law) will happen by then. May 11, 2018, 3:26pm EDT, recode.
• De Villiers Getz, L. (2017). Resolving the disconnect between risk appetites, tolerances, exposures and monitoring measurements. Journal Of Securities Operations & Custody, 9(4), 374-390.
• Erescovic, A. (2017). Uber will IPO by 2019 and let Softbank buy a huge stake, following a big board meeting. Business Insider, 04.10.2017.
• Grabchak, M. (2014). Does value-at-risk encourage diversification when losses follow tempered stable or more general Lévy processes?. Annals Of Finance, 10(4), 553-568. doi:10.1007/s10436-014-0249-6.
• Hiltzik M. (2015). Is Uber good or bad for society? The debate continues. Los Angeles Times, 13th Nov 2015.
• Holley, P (2018). Uber is working to win you back. (But it also needs you to pay more.). The Washington Post, 19th April 2018.
• IOANA, J., IONELA, F. E., & CĂTĂLIN, C. M. (2017). PERFORMANCE IN INTERNAL CONTROL AND RISK MANAGEMENT. Annals Of 'Constantin Brancusi' University Of Targu-Jiu. Economy Series, (3), 203.
• Jordan, J. (2017). Challenges to large-scale digital organization: the case of Uber. Journal Of Organization Design, 6(1), 1-12. doi:10.1186/s41469-017-0021-2.
• Kristen, J. (2015). STAKEHOLDERS THEORY- HOW THEY INFLUENCE THE BUSINESS POLICY. Scholedge International Journal Of Business Policy & Governance, 2(4), 14-17.
• Kim, E., & Ham, S. (2016). Restaurants’ disclosure of nutritional information as a corporate social responsibility initiative: Customers’ attitudinal and behavioral responses. International Journal Of Hospitality Management, 5596-106. doi:10.1016/j.ijhm.2016.02.002
• Krzakiewicz, K., & Cyfert, S. (2015). Organizational reputation risk management as a component of the dynamic capabilities management process1. Management, Vol 19, Iss 1, Pp 6-18 (2015), (1), 6. doi:10.1515/manment-2015-000.
• Levin, S. (2017). Uber’s scandals, blunders and PR disasters; the full list. The Guardian, Wednesday 28th June 2017.
• Michael L. (2018). Uber narrows 2Q loss as company works on reputation, The Associated Press, Published Wednesday, August 15, 2018 4:10PM EDT.
• Newcomer, E (2018) A Look at Uber’s Flying Car Dream. Bloomberg 08.05.2018. Available at
• Raluca, I. (2015). An Internal Audit Perspective on Differences between European Corporate Governance Codes and OECD Principles. Academic Journal Of Economic Studies, Vol 1, Iss 4, Pp 80-90 (2015), (4), 80.
• Video: Swisher, C. and Khosrowshahi, D., (2018) Uber CEO Dara Khosrowshahi Full Interview Code 2018. Recode 30.05.2018. Available at [accessed on 18th Aug. 2018]

Take a deeper dive into Proposal for Partnership and Business Expansion with Alico with our additional resources.