final project international business case uber withdrew from the vietnamese market

By October 2012, Uber was available in 20 differentlocations around the world, according to the company''''s website.2013: Accelerating: Uber launched in over 40 new locations worldwide,inc

UEH UNIVERSITY

SCHOOL OF INTERNATIONAL BUSINESS - MARKETING

FINAL PROJECTINTERNATIONAL BUSINESS

Case: Uber withdrew from the Vietnamese market

Lecturer: Dr Bich Ngoc Do Class: IBC06 - Wednesday Afternoon Group: 3

Code course: 23C1BUS50319804

Ho Chi Minh city, 20th November 2023

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TABLE OF CONTENTS

1 Introduction: Briefly state the importance of studying the international business

2 About the case: Uber and its fairlure 1

2.1 Company Introduction and Situation to Analyze Case: Uber Exits the Vietnamese Market 1

2.1.1 About Uber before 2014 1

2.2 Explain the reason for choosing this case, which is related to International Business 6

3 Analyze the case 7

3.1 Vietnam Market 7

3.1.1 Overview of the Vietnamese market 7

3.1.2 Market size of Vietnamese ride-hailing in 2013-2014 9

3.1.3 Vietnamese laws on business types 9

3.3 Evaluating the approaches of Grab and Uber in the Vietnamese market 11

4.1.2 Culture of traveling by motorbike 20

4.1.3 Legal issues in Vietnam 20

4.1.4 Cooperate with competitors 21

4.2 Recommend for technology car companies and investors in the field of hailing vehicles that are entering and about to enter the Vietnamese market 21

ride-1 Introduction: Briefly state the importance of studying the international business environment

In today's digital world and globalized context, business activities have beenconnected on a global scale In order to maintain competitive advantage andsustainable development, businesses must constantly innovate, be creative andflexibly respond to market fluctuations For that reason, the study of the internationalbusiness environment is extremely important for all companies of all sizes andsectors globally.

The international business environment is a complex, multidimensional networkof relationships of forces such as economic, political, legal, social and cultural In thecurrent trend of integration and globalization, the interconnected relationship betweencountries and the world economy is increasing In international business activities,the first barrier that businesses encounter is national differences For a country, thecultural, social, economic, political, and legal environment all create certaininfluences on the business activities of enterprises Therefore, studying theinternational environment is very necessary for the country's economy as well asbusinesses themselves It includes external and internal factors that change the macrofactors that impact the success or failure of the company in different markets.

In addition, market research helps businesses increase their ability to predictpotential risks and unpredictable changes in the domestic and foreign markets andeconomies This can help them carefully prepare better product/service developmentoptions and make wise strategies and decisions suitable to each country's culture Byresearching and expanding into different markets, international businesses can accessmore new customer streams, increase profits, diversify financial risks, etc.

2 About the case: Uber and its fairlure

2.1 Company Introduction and Situation to Analyze Case: Uber Exits the Vietnamese Market

2.1.1 About Uber before 2014

a A History of Uber Organizing in the UK

Uber (Uber service) was founded in about March 2009 by Travis Kalanick andGarrett Camp Uber started its business in 2009, and its services were first launchedin 2010 to solve existing taxi ordering problems (Gomes et al.,2019).

In 2010, Uber had operations in more than 600 cities worldwide, with varioussmaller clones frequently modifying their business models to meet local regulationsand demand patterns

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Uber began to enter the Asian market in 2013-2014 By December 16, 2014,Uber was available in 53 countries and over 200 cities worldwide, and the companywas valued at over $40 billion.

b Products/Services

In 2014, Uber offered a ride-hailing service through a mobile app Customerswho needed a ride would use the Uber app to request a trip Uber's system wouldautomatically connect them with the nearest driver Immediately, customers wouldreceive complete information about the cost and other basic information about the carthat was coming to pick them up, such as the make of the car, amenities, and driver.

Revenue: Uber's revenue came from commissions, through connecting carowners with people who needed to travel Uber's revenue came from commissionsthrough connecting car owners with people who needed to travel.

c Success in the US and other countries

In 2010, the company received its first major funding, a $1.3 million round ledby First Round Capital In early 2011, it raised another $11 million in a Series Afunding round led by Benchmark It then went on to expand to New York, Seattle,Boston, Chicago, and Washington, D.C., as well as abroad in Paris, where the ideafor it first took root.

In December, at the 2011 LeWeb conference, Kalanick announced that Uber hadraised $37 million in Series B financing from Menlo Ventures, Jeff Bezos, andGoldman Sachs In 2012, the company broadened its offerings by launching UberX,which provided a less expensive hybrid car as an alternative to black car service.

2012: London and Amsterdam: Uber's first ride in London took place in June2012 Next, Uber launched in Amsterdam This later became the headquarters for thecompany's European operations By October 2012, Uber was available in 20 differentlocations around the world, according to the company's website.

2013: Accelerating: Uber launched in over 40 new locations worldwide,including Italy, Germany, China, India, Russia, and several African countries.

Since its founding (in 2009) to 2014, Uber claimed to have more than 64% ofAmericans using their service, in just 5 years, the company became the dominantplayer in the U.S ride-hailing market.

d Vision/Strategy

Since its founding in 2009, Uber has implemented the convenience of its hailing service with flexible solutions to optimize the cost of ride-hailing servicesfrom point A to point B for consumers.

ride-With the successes achieved in 5 years of operation (raising capital andexpanding markets), Uber's goal for 2014 onwards when penetrating the Asianmarket in general and Southeast Asia in particular is clearly to take over the entireglobal ride-hailing market, expand brand awareness in the strongest way possiblewith the brand goal of “turning Uber into a service that is faster, more convenient andcheaper than owning a car.”

2014 marked a glorious year for Uber around the world During this period,Uber almost dominated, while crushing the traditional taxi industry.

e Brand positioning and customer segmentation

At first, when it was founded, UberBlack was Uber's first service When usingthis service, Uber will send a high-class 4-seater sedan to pick up customers.Therefore, it can be said that Uber's initial brand positioning when it was just foundedwas to provide high-end rides for customers, serving high-end customers who arewilling to pay high fees for each trip.

However, over time, Uber has expanded its customer base with theestablishment of Uber X, Uber Taxi, a choice for cheap rides, suitable for customerswho want to pay lower fees.

f Competitors

Rising up as a “startup giant” in the field of technology-based ride-hailing basedon the sharing economy, Uber has reaped countless successes from the home marketof the US to countless national markets large and small around the world such as:China, France, India, However, the company has to face fierce competition fromthis lucrative market with many heavyweight rivals:

USA: At the home of Uber, the main rival of the company is Lyft This is a hailing app launched in 2012 With a way of operation similar to Uber, Lyft still has asignificant number of regular customers and provides more than tens of millions ofrides each month mainly in this market.

ride-China: Expanding the market in the country of one billion people - China is theambition of many multinational companies in the world, with the success from theprevious markets before Uber joined in 2013 and quickly took over the ride-hailing

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market in China at the time thanks to its available resources But in China, Uber has aformidable competitor, the Didi Chuxing ride-hailing company Didi was founded in2012 by Cheng Wei, a former Alibaba employee Since 2012, Didi Chuxing hasraised a total of 19.2 billion USD through multiple rounds of funding and is expectedto raise 4 billion USD on the New York Stock Exchange.

India: Similar to China, Uber is facing strong competition from a local app, OlaCabs This is a company founded in 2010, with a similar operating model to Uber.When Uber Technologies began operating in India in 2013, Aggarwal urgedemployees to try to surpass Uber, while prioritizing access to officials, publicrelations, and driver support Ola then attracted over one million drivers andexpanded its operations to dozens of cities.

Southeast Asia: When deciding to expand into Southeast Asia, the maincompetitor of Uber is Grab, formerly known as GrabTaxi From a third-party app thatprovides convenient taxi calling services, Grab has been expanding and movingtowards a business model similar to Uber.

g PESTEL analysis

The following is a Pestel analysis of the Political, Economic, Social,Technological, Environmental and Legal factors of the sharing economy, in order tocontribute to understanding the impact of the external environment on the growth anddevelopment of the type of service that Uber provides.

Table: Analyze Pestel Model of share economy

Political Factors

No clear legislation and regulations

Delayed entries in markets

Increased risk for drivers

Pressure on politicians to scrutinize

Delayed growth in markets

Increased risk for drivers

Economic Factors

Trends Demand SupplyCheaper than

traditional taxis andeasier to use

Due to better valueproposition to customer

Profit prospect to drivers

New opportunities for drives to try

Due to better valueproposition to customer

Offer attractive salaries for drivers compared to other taxi companiesDynamic pricing No change The price of each trip is variable

depending on the distance and the weather conditions Drivers can choose their rides flexiblyHigh-profit,

potential market

Increased competition due tolow entry barriers

Continuously upgrading services, enhancing brand awareness

Social Factors

Multinational operations with reasonable fair and

Due to better value proposition to customer

Due to better value proposition to drivers

Technological Factors

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Increasing internet and smartphone usage

More geographies able to use platform

Upgrade the application platform to make it more convenient to useBuilding customer

relationship through social media channels

Due to better value proposition to customer

Increase sustainability perception

Have environmental protection policies Raise environmental awareness for driversLegal Factors

Labor law risks (drivers as employees, cam kết wage)

Adequate salary for drivers

Have policies on fair wages for drivers

Liabilities exposure (car accidents)

Safety for customers and partners

Have policies to protect partners (drivers) and ensure customer safety

h Revenue of Uber at last year 2013

In the last days of 2013, Uber announced that they reached the biggest revenue generating day in the history of the company It generated $10.7 million from anestimated ~200,000 rides in 60 markets then That was a 369% increase from the yearprior, when Uber generated a few million dollars.

-Here's how Uber fared last year during New Year's Eve 2013:

Figure 1: Revenue of Uber in their markets in the last days of 2013

And this is also a specific example showing the difficulties when a globalbusiness wants to penetrate the international market and expand its scope The casestudy provides an opportunity to delve into Uber's operating strategy in Vietnam aswell as the challenges associated with establishing and maintaining a successfulpresence in foreign markets Analyzing the influence of internal and external factorsaffecting Uber's operations in Vietnam will help Western businesses gain specificlessons when wanting to participate in the market this school.

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3 Analyze the case3.1 Vietnam Market

In the period of 2013-2014, Uber decided to enter the Southeast Asian marketwith confidence from its previous successes Vietnam is one of the markets that isconsidered to be potential for Uber, promising to bring huge profits to the brand.

3.1.1 Overview of the Vietnamese marketa Population

The average population of the whole country in 2013 was estimated to be 89.71million people In the total population of the whole country in 2013, the urbanpopulation was 29.03 million people, accounting for 32.36% of the total population,an increase of 2.38% over the previous year; the rural population was 60.68 millionpeople, accounting for 67.64%, an increase of 0.43%.

b Labor market

The labor force from 15 years of age and over is estimated to be 53.65 millionpeople as of January 1, 2014, an increase of 864.3 thousand people from the sametime last year, of which male workers account for 51.5%; female workers account for48.5% The labor force in the working age is estimated to be 47.49 million people asof January 1, 2014, an increase of 409.2 thousand people from the same time lastyear With an abundant labor force, Vietnam is considered to be promising to bringhuge revenue for foreign companies.

c Economy

Vietnam is one of the countries in Southeast Asia with a stable economy.According to statistics, the gross domestic product (GDP) in 2013 is estimated toincrease by 5.42% over 2012 The bright spot in the economic and social picture ofour country in 2013 is: The macro-economy basically remains stable and Inflation iscontrolled at a low level.

d Technology

According to a report by statista, the number of Vietnamese using smartphoneshas increased significantly in 2013-2014 Specifically, the percentage of Vietnameseusing smartphones in 2013 accounted for 9%, in 2013 accounted for 15% and in 2014increased to 22% The number of internet users accounts for up to 35% - 40% of thepopulation, equivalent to 40 million people.

Figure 2: Statistic of Internet users in Vietnam in the period 1996 – 2018

This shows that Vietnam has potential in industries related to the use oftechnology in the future, creating favorable conditions for the development of theUber ride-hailing application.

e Demand for the service

Although ride-hailing services were already popular in countries like the UnitedStates and Europe in the years 2013-2014, they were still a new concept forVietnamese people However, the service of transportation by motorcycle taxis andtraditional taxis had a place in the country, as evidenced by the huge revenues oftraditional taxi companies such as Mai Linh and Vinasun at the time With theadvantages of the popularity of smartphones, the internet, and the experience from itsgreat success in major markets, Uber had every reason to be confident about a brightfuture when it entered Vietnam.

3.1.2 Market size of Vietnamese ride-hailing in 2013-2014

Established in 2003, Vinasun is a traditional taxi company with the largestmarket share in Ho Chi Minh City.

In 2013, Vinasun was recognized as one of the 50 most efficient businesses inVietnam with sustainable growth indicators in terms of market share, revenue, andprofit At that time, Vinasun's operating market share in Ho Chi Minh City accountedfor the highest in the industry, reaching 45%.

The third quarter of 2013 results released by Vinasun showed that totaloperating revenue reached 786.74 billion dong; profit reached 72.36 billion dong,bringing total revenue in the first 9 months of 2013 to 2.271.6 billion dong, reaching81.3% of the parent company's annual business plan After 9 months, the company'stotal after-tax profit reached 166.94 billion dong, corresponding to 95% of the annualplan The above growth figures have somewhat confirmed the leading position of thistaxi company, and also show that the strategy led by Mr Dang Phuoc Thanh,Chairman of the Vinasun Board of Directors, has been effective.

It can be seen that Vinasun and Mai Linh are two taxi companies that haveachieved great success in the Vietnamese ride-hailing market at that time Uber'sentry could face many challenges in terms of brand recognition However, there is notrace of technology in the two major Vietnamese car companies, so the pioneering inthe field in Vietnam, along with the advantages from the development of technologyat the time of 2013-2014 as analyzed above, it is possible to predict that Uber willoccupy a large market share in the ride-hailing market in the future.

3.1.3 Vietnamese laws on business types

At the time before Uber entered Vietnam, the latest law for the type of passengertransportation business was in section 4 of the Circular PROMULGATING THEORGANIZATION, MANAGEMENT OF THE OPERATION OFTRANSPORTATION BUSINESS BY MOTOR VEHICLE AND SUPPORTTRANSPORTATION SERVICES BY ROAD No 18/2013/TT-BGTVT Sometypical laws are as follows:

Article 35 Regulations for taxis1 Posting:

a) On the sides of the car: name and phone number of the company, cooperative;b) Inside the car: fare table calculated by kilometers, fare table calculated by waitingtime and other costs (if any) that passengers have to pay.

2 Have a "TAXI" license plate according to the sample specified in Appendix 17 ofthis Circular; have a light box with the word "TAXI" attached to the roof of the car;the light box must be turned on when the car is empty and turned off when there arepassengers.

3 The two sides of the car doors are painted with the logo (logo) of the company,cooperative.

4 Have a meter to calculate fares that has been inspected and sealed by thecompetent authority.

Article 36 Registration of logo (logo)

1 Before putting the car into operation, the company, cooperative must register thelogo (logo) and transaction phone number on the vehicle of the company,cooperative The Registration Certificate is in accordance with the sample specifiedin Appendix 18 of this Circular.

2 Registration documents are sent to the Department of Transportation of theprovince, city where the company, cooperative has its head office or branch TheDepartment of Transportation confirms the logo (logo) of the unit if it does not matchthe logo (logo) that has been registered by other companies, cooperatives and isresponsible for publicly announcing the logo (logo) of the company, cooperative onthe website of the Department of Transportation.

Article 39 Responsibilities of companies, cooperatives11

1 Register the sample of nameplates and uniforms for drivers with the Department ofTransportation of the province, city where the company, cooperative has its headoffice or branch Issue uniforms and nameplates for drivers; nameplates must bepasted with a photo, clearly stating the driver's name, unit of management.

2 Organize training, instructing transportation business procedures, traffic safety andprofessional ethics for drivers, service staff on board according to the frameworkprogram issued by the Vietnam General Department of Roads.

From  the  above  analysis,  it  can  be  seen  that  the  Vietnamese  market  has  manypotentialsforUbertodevelop,specifically:

Large population, rapid growth rate: With a population of over 90 million and

an average annual population growth rate of 1.2%, Vietnam is a potential market forbusinesses, including Uber.

Stable economic development: Vietnam's economy is on a stable growth path

with an average GDP growth rate of 6.8% per year in the period 2011-2015 Thiscreates favorable conditions for people to have higher incomes, thereby increasingthe demand for Uber's ride-hailing services.

Abundant labor force: Vietnam's labor force currently reaches over 50 million,

of which about 40 million use the internet This creates a plentiful supply of driversfor Uber, helping the company to easily expand its market.

Technology development: The rate of smartphone use in Vietnam is increasing

rapidly, reaching 22% in 2014 This creates favorable conditions for Uber to reachcustomers through mobile applications.

In addition to these potential factors, Uber also has some advantages that give itthe confidence to enter the Vietnamese market, including:

The experience of success in other major markets: Uber has successfully enteredand grown in many major markets around the world, including the United States,Europe, and Asia This experience gives Uber a strong foundation to build on inVietnam.

The use of technology: Uber's use of technology to provide a convenient andefficient ride-hailing service is a key factor in its success This technology is alsolikely to be attractive to Vietnamese consumers, who are becoming increasinglyfamiliar with and comfortable with using technology.

Overall, the Vietnamese market is a favorable environment for Uber to develop.With its strong potential and advantages, Uber is well-positioned to succeed inVietnam.

3.3 Evaluating the approaches of Grab and Uber in the Vietnamese market3.3.1 Grab Overview

Grab (formerly known as GrabTaxi) is a technology company headquartered inSingapore that provides car transportation and travel services in Singapore and otherSoutheast Asian countries such as Malaysia, Indonesia, Philippines, Vietnam,Thailand, Myanmar and Cambodia.

Grab is currently experiencing strong growth in 8 countries and 195 cities withinSoutheast Asia This technology car booking mobile application is estimated to haveup to 90 million users Every day there are more than five million users More than 2million drivers to date And accounts for 95% of the technology motorbike taximarket worldwide.

Grab entered the Vietnamese market from February 27, 2014 and serves alltravel and transportation needs of people in Vietnam Initially, Grab also used thename GrabTaxi After 2 years of operating with many types of services, Grab beganto change its brand identity and collectively called all types of services identical tothe name Grab.

a Mission, goals, core strengths and values brought by Grab

 Mission

Creating the safest transportation platform: safety is a top priority at Grab Grabfocuses on training necessary skills for drivers, establishing in-app safety features,such as traffic safety training, as well as working closely with local authorities in theoperating process.

Travel made easier for everyone: Grab's goal is to make travel easy, anywhere,and affordable for everyone

Improving the lives of partners: Grab believes that the most important thing fora sustainable business is not only to make a profit but also to share and contribute toimproving the lives of all both parties and, more broadly, aim to enhance socialbenefits.

 Goals

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Attract the target market with useful features, typically offering quick trips at aknown cost

Improve digital literacy and digital literacy in Southeast Asia, ensuring thateveryone can benefit from the growth of the digital economy

In the digital economy, Grab aims to spread technological knowledge andimprove technological capacity to millions of people in Southeast Asia by 2025through cooperation programs with governments and private companies and non-profit organizations

Building future-ready human resources: 16% of young Southeast Asians want towork in the technology sector in the future.

 Core strengths: “Fastandeasy”

Grab has entered the Vietnamese market as a breath of fresh air, breaking thetradition of the existing travel system Grab always wants to bring users the mostconvenient experience.

The sharing economic model applied by Grab: helps connect many small andmedium-sized taxi companies, hundreds of transport cooperatives escape bankruptcy,due to quick connection with customers in need, increasing efficiency driving,reducing the empty vehicle rate by more than 70%, increasing the average monthlyincome of full-time partners by more than 100%.

Since Grab appeared, competitive pressure has become the driving force forinnovation for traditional taxi companies These businesses have proactively mademany improvements such as ride-hailing "apps" and changing service style.