A Case Analysis of Uber

The market before Uber’s entry was highly inefficient due to limited access to transportation services. People often had difficulty finding a taxi or reliable form of transport during peak hours or at remote locations. Further compounding the issue was that taxis typically had stringent rules governing rates and rides available outside city limits which made it difficult for customers to find the desired product. Uber identified this major inefficiency and exploited it by introducing a convenient means of booking both city and long distance rides through their app platform with dynamic fares based on supply and demand principles.

Uber’s surge pricing strategy works on basic principles of shifts in supply and demand wherein prices increase when there is higher demand than normal paired with decreased supply resulting from fewer drivers being available at that time period. This kindles healthy competition amongst riders who are willing to pay extra for faster pickup times while also incentivizing more drivers onto the road so as not to lose out on those high value customers looking for instant gratification. This price discrimination based approach ensures that those riders who need instantaneous services pay up whereas others wait until surge prices drop again allowing them to avail discounted rates when there is increased availability of rides due to higher driver presence on the roads at a given time period

Applying economic theories like economies of scale and scope further aids in understanding how uber’s business model has been successful over time. Economies of scale refer to cost advantages enjoyed by companies due to large volumes being serviced from one single platform leading lower costs per ride/transaction handled through bulk purchases & fixed costs being spread across larger revenues making operations cheaper overall thus providing savings which can then be passed down as discounts/incentives back onto end users leading towards increased satisfaction & more sales over time . Similarly , economiesof scope refer to cost advantages generated because multiple products (or features)are offered together from one central platform suchasubergiving access tobothcityandlongdistancesservicesononeplatformthereby reducing customer search costs&managementspendingresultingindevoidingneedtohavemultipleresourcesfor each activity thereby saving additional money per transaction processed .
This allowsubertoofferdiscountsandincentivestopassengerswhocanbeneftfromthelargervolumeofservicesavailableonasingleportalreducingcostsdealers& passengers alike while keeping overall profits steady within acceptable margins .

Game theory can also be applied here where competitive forces result into positive outcomes benefitting both parties involved instead of destructive zero sum patterns where only one party gains whilst other losses out entirely . Intuitively speaking , if we consider two competing companies A & B with similar offerings then conventional wisdom would suggest focus should go towards either lowering prices drastically (in order toprocuremorecustomers)orincreasingqualitysignicantly(incontrasttopricesbeingofferedbyrival). However , game theory proposesa different option altogether whereby both businesses agree ontostartprovidingbetterqualityproductsatlowerpriceswhichinturnresultsinincreaseddemandallowingbothcompaniesenjoy protable returns insteadofadversarialrelationshipwhereinonlyonecompanybenefitswhilstother loosesoutentirely . We can clearly see howthisallowsUbertotargethighvalueclientswithbetter offerswhilesimultaneouslyattractinglowervalueclientsbasedonsmallerdiscountedpackages.