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St.Co ECO www.fortune.com Fortune www.nytimes.com The New York Times The Wall Street Journa Com WW.WS www.bloomberg.com Bloomberg Financial Times (London) www.ft.com CNN Money WWW.Cnnmoney. Com Discussion Case: Insuring Uber’s App-On Gap At around 8 p.m. on the evening on December 31, 2013, a mother and her two young chil- dren were walking home in San Francisco. At a busy intersection, the family waited for the “walk” signal and then started across the street. Just then, an SUV made a right turn striking all three members of the family in the crosswalk. The mother and her 5-year-old son were seriously injured. Her 6-year-old daughter was killed. The man behind the wheel of the SUV identified himself as a driver for the ride-hailing service Uber. Uber immediately distanced itself from the tragedy, saying that the driver was “not providing services on the Uber system at the time of the accident.” The family’s attorney contested this, saying that the driver was logged onto the Uber application, appeared on the system as available to accept a rider, and was interacting with his device when he struck the mother and children In other words, the tragic incident had apparently occurred during the app -on gap the driver was on the road with his Uber application activated, but had not yet connected with or picked up a rider. So, who was responsible, the driver or the ride-hailing service? Uber was, in the words of a New York Times columnist, “the hottest, most valuable tech- nology startup on the planet.” The company was founded in 2009 as “everyone’s private driver,” providing a premium town car service that could be summoned online. In 2012, it rolled out Uberx, a service that enabled nonprofessional drivers to use their own vehicles to transport riders. Customers could use the Uber app to hail a car, connect with a willing driver, watch the vehicle approach on a map, pay their fare, and receive a receipt, all on their smartphone. Uber provided the technology and took a commission on each transaction ber’s disruptive business model caught on rapidly. By mid-2014, Uber’s ride-sharing service had spread to more than 120 cities in 36 countries. In the United States, the ser- could reach 137 million people with an average pickup time of less than 10 minutes Demand was growing so fast that Uber was scrambling to recruit 20,000 new drivers
Expert Answer
1)
Market Stakeholders – Those stakeholders who involve in economic transactions with the firm. For Uber, in the context of this case, the market stakeholders are:
- The customers
- The “transportation entrepreneurs”
- The insurance companies
- The Governments
Non-market Stakeholders – Those stakeholders who do not involve in a direct economic transaction with the firm but have nonetheless affected by or affect the firm and its strategy. For Uber, in the context of this case, the non-market stakeholders are:
- The traditional taxicab companies
- The lawmakers and the judicial system
- The pedestrians and other commuters on road
- The media
2)
| Stakeholders | Whether they support Uber extending the insurance forapp-on gap | Reason |
| The customers | No | The increased cost will be transferred to the customers. |
| The “transportation entrepreneurs” | Yes | In the app-on gap scenario, now they are protected with their personal insurance for which settling the claim can be an issue. |
| The insurance companies | Yes | This will improve the control of the company on the drivers and hence the rate of the accident will reduce. |
| The Government | Yes | This will improve the control of the company on the drivers and hence the rate of the accident will reduce. |
| The traditional taxicab companies | Yes | The competition will be equalized from this dimension |
| The lawmakers and judicial system | Yes | This will improve the control of the company on the drivers and hence the rate of the accident will reduce. |
| The pedestrians and other commuters on the road | Yes | They will get an adequate amount of third party insurance in case of any fatality. Coupled to this, they will find the driving of Uber drivers safer due to increased control and ownership of the company |
| The media | – | – |
3)
| Stakeholders | Source of power |
| The customers | Economic Power |
| The “transportation entrepreneurs” | Economic Power |
| The insurance companies | Economic Power |
| The Government | Political Power |
| The traditional taxicab companies | Political Power |
| The lawmakers and judicial system | Legal Power |
| The pedestrians and other commuters on road | Political Power |
| The media | Political Power |
