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
About the case: Uber and its fairlure
Company Introduction and Situation to Analyze Case: Uber Exits the
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 and Garrett Camp Uber started its business in 2009, and its services were first launched in 2010 to solve existing taxi ordering problems (Gomes et al.,2019).
In 2010, Uber had operations in more than 600 cities worldwide, with various smaller clones frequently modifying their business models to meet local regulations and demand patterns
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 company was valued at over $40 billion. b Products/Services
In 2014, Uber offered a ride-hailing service through a mobile app Customers who needed a ride would use the Uber app to request a trip Uber's system would automatically connect them with the nearest driver Immediately, customers would receive complete information about the cost and other basic information about the car that 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 car owners with people who needed to travel Uber's revenue came from commissions through 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 led by First Round Capital In early 2011, it raised another $11 million in a Series A funding 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 idea for it first took root.
In December, at the 2011 LeWeb conference, Kalanick announced that Uber had raised $37 million in Series B financing from Menlo Ventures, Jeff Bezos, and Goldman 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 June
2012 Next, Uber launched in Amsterdam This later became the headquarters for the company's European operations By October 2012, Uber was available in 20 different locations 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 dominant player in the U.S ride-hailing market. d Vision/Strategy
Since its founding in 2009, Uber has implemented the convenience of its ride- hailing service with flexible solutions to optimize the cost of ride-hailing services from point A to point B for consumers.
With the successes achieved in 5 years of operation (raising capital and expanding markets), Uber's goal for 2014 onwards when penetrating the Asian market in general and Southeast Asia in particular is clearly to take over the entire global ride-hailing market, expand brand awareness in the strongest way possible with the brand goal of “turning Uber into a service that is faster, more convenient and cheaper 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 using this 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 founded was to provide high-end rides for customers, serving high-end customers who are willing to pay high fees for each trip.
However, over time, Uber has expanded its customer base with the establishment of Uber X, Uber Taxi, a choice for cheap rides, suitable for customers who want to pay lower fees. f Competitors
Rising up as a “startup giant” in the field of technology-based ride-hailing based on the sharing economy, Uber has reaped countless successes from the home market of 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 from this lucrative market with many heavyweight rivals:
USA: At the home of Uber, the main rival of the company is Lyft This is a ride- hailing app launched in 2012 With a way of operation similar to Uber, Lyft still has a significant number of regular customers and provides more than tens of millions of rides each month mainly in this market.
China: Expanding the market in the country of one billion people - China is the ambition of many multinational companies in the world, with the success from the previous markets before Uber joined in 2013 and quickly took over the ride-hailing market in China at the time thanks to its available resources But in China, Uber has a formidable competitor, the Didi Chuxing ride-hailing company Didi was founded in
2012 by Cheng Wei, a former Alibaba employee Since 2012, Didi Chuxing has raised a total of 19.2 billion USD through multiple rounds of funding and is expected to raise 4 billion USD on the New York Stock Exchange.
Explain the reason for choosing this case, which is related to International Business
Uber from a small, anonymous startup over time has become a leading global ride-hailing technology company operating in more than 10,000 cities in more than 10,000 cities ,80 countries and its activities extend beyond its home country Starting as an American technology transportation company, expanding into Asian and European markets means operating across borders And Vietnam is a "lucrative" market that helps Uber realize its ambition of further global expansion The company engages in business activities spanning multiple countries, requiring an understanding of international trade dynamics, cultural differences and diverse regulatory environments This case analysis helps us better understand how multinational corporations navigate diverse markets and cultures.
And this is also a specific example showing the difficulties when a global business wants to penetrate the international market and expand its scope The case study provides an opportunity to delve into Uber's operating strategy in Vietnam as well as the challenges associated with establishing and maintaining a successful presence in foreign markets Analyzing the influence of internal and external factors affecting Uber's operations in Vietnam will help Western businesses gain specific lessons when wanting to participate in the market this school.
Analyze the case
Vietnam Market
In the period of 2013-2014, Uber decided to enter the Southeast Asian market with confidence from its previous successes Vietnam is one of the markets that is considered to be potential for Uber, promising to bring huge profits to the brand.
3.1.1 Overview of the Vietnamese market a Population
The average population of the whole country in 2013 was estimated to be 89.71 million people In the total population of the whole country in 2013, the urban population 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 million people, 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 million people as of January 1, 2014, an increase of 864.3 thousand people from the same time last year, of which male workers account for 51.5%; female workers account for 48.5% The labor force in the working age is estimated to be 47.49 million people as of January 1, 2014, an increase of 409.2 thousand people from the same time last year With an abundant labor force, Vietnam is considered to be promising to bring huge 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 to increase by 5.42% over 2012 The bright spot in the economic and social picture of our country in 2013 is: The macro-economy basically remains stable and Inflation is controlled at a low level. d Technology
According to a report by statista, the number of Vietnamese using smartphones has increased significantly in 2013-2014 Specifically, the percentage of Vietnamese using smartphones in 2013 accounted for 9%, in 2013 accounted for 15% and in 2014 increased to 22% The number of internet users accounts for up to 35% - 40% of the population, equivalent to 40 million people.
Figure 2: Statistic of Internet users in Vietnam in the period 1996 – 2018
Figure 3: Internet, social media and smartphone penetration forecast in
Source:ReportandForecastbyStatista
This shows that Vietnam has potential in industries related to the use of technology in the future, creating favorable conditions for the development of the Uber ride-hailing application. e Demand for the service
Although ride-hailing services were already popular in countries like the United States and Europe in the years 2013-2014, they were still a new concept for Vietnamese people However, the service of transportation by motorcycle taxis and traditional taxis had a place in the country, as evidenced by the huge revenues of traditional taxi companies such as Mai Linh and Vinasun at the time With the advantages of the popularity of smartphones, the internet, and the experience from its great success in major markets, Uber had every reason to be confident about a bright future 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 largest market share in Ho Chi Minh City.
In 2013, Vinasun was recognized as one of the 50 most efficient businesses in Vietnam with sustainable growth indicators in terms of market share, revenue, and profit At that time, Vinasun's operating market share in Ho Chi Minh City accounted for the highest in the industry, reaching 45%.
The third quarter of 2013 results released by Vinasun showed that total operating 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, reaching 81.3% of the parent company's annual business plan After 9 months, the company's total after-tax profit reached 166.94 billion dong, corresponding to 95% of the annual plan The above growth figures have somewhat confirmed the leading position of this taxi 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 have achieved great success in the Vietnamese ride-hailing market at that time Uber's entry could face many challenges in terms of brand recognition However, there is no trace of technology in the two major Vietnamese car companies, so the pioneering in the field in Vietnam, along with the advantages from the development of technology at the time of 2013-2014 as analyzed above, it is possible to predict that Uber will occupy 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 passenger transportation business was in section 4 of the Circular PROMULGATING THE ORGANIZATION, MANAGEMENT OF THE OPERATION OF TRANSPORTATION BUSINESS BY MOTOR VEHICLE AND SUPPORT TRANSPORTATION SERVICES BY ROAD No 18/2013/TT-BGTVT Some typical laws are as follows:
1 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 waiting time and other costs (if any) that passengers have to pay.
2 Have a "TAXI" license plate according to the sample specified in Appendix 17 of this 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 are passengers.
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 the competent authority.
Article 36 Registration of logo (logo)
1 Before putting the car into operation, the company, cooperative must register the logo (logo) and transaction phone number on the vehicle of the company, cooperative The Registration Certificate is in accordance with the sample specified in Appendix 18 of this Circular.
2 Registration documents are sent to the Department of Transportation of the province, city where the company, cooperative has its head office or branch The Department of Transportation confirms the logo (logo) of the unit if it does not match the logo (logo) that has been registered by other companies, cooperatives and is responsible for publicly announcing the logo (logo) of the company, cooperative on the website of the Department of Transportation.
Article 39 Responsibilities of companies, cooperatives
Evaluating the approaches of Grab and Uber in the Vietnamese market
Grab (formerly known as GrabTaxi) is a technology company headquartered in Singapore that provides car transportation and travel services in Singapore and other Southeast Asian countries such as Malaysia, Indonesia, Philippines, Vietnam, Thailand, Myanmar and Cambodia.
Grab is currently experiencing strong growth in 8 countries and 195 cities within Southeast Asia This technology car booking mobile application is estimated to have up to 90 million users Every day there are more than five million users More than 2 million drivers to date And accounts for 95% of the technology motorbike taxi market worldwide.
Grab entered the Vietnamese market from February 27, 2014 and serves all travel and transportation needs of people in Vietnam Initially, Grab also used the name GrabTaxi After 2 years of operating with many types of services, Grab began to change its brand identity and collectively called all types of services identical to the name Grab. a Mission, goals, core strengths and values brought by Grab
Creating the safest transportation platform: safety is a top priority at Grab Grab focuses 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 the operating 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 for a sustainable business is not only to make a profit but also to share and contribute to improving the lives of all both parties and, more broadly, aim to enhance social benefits.
Attract the target market with useful features, typically offering quick trips at a known cost
Improve digital literacy and digital literacy in Southeast Asia, ensuring that everyone can benefit from the growth of the digital economy
In the digital economy, Grab aims to spread technological knowledge and improve technological capacity to millions of people in Southeast Asia by 2025 through cooperation programs with governments and private companies and non- profit organizations
Building future-ready human resources: 16% of young Southeast Asians want to work in the technology sector in the future.
Core strengths: “Fastandeasy”
Grab has entered the Vietnamese market as a breath of fresh air, breaking the tradition of the existing travel system Grab always wants to bring users the most convenient experience.
Promote the use of cashless payments Contribute to strongly promoting the growth of the cashless economy.
Contributing to changing the face of urban traffic and the transportation industry: Grab has supported hundreds of thousands of driver partners, helping them increase their income and have a better life.
The sharing economic model applied by Grab: helps connect many small and medium-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 monthly income of full-time partners by more than 100%.
Since Grab appeared, competitive pressure has become the driving force for innovation for traditional taxi companies These businesses have proactively made many improvements such as ride-hailing "apps" and changing service style.
The 3 benefits that Grab offers drivers include: Increased income (collaborating with Grab helps drivers increase the number of rides they receive per day); Savings (helps drivers save time and gas costs when they don't have to run around looking for passengers, helping drivers maintain their own health); Safety (the app clearly displays customer information as well as the customer's route to help the driver feel more secure when picking up passengers). b Available Market (TAM) Overview
According to Statista.com, 2021 revenue increased to $3.1 billion and almost reached its pre-pandemic value Statista Mobility Market Outlook estimates that this growth will continue and market revenues will reach over $4.5 billion by 2025.
According to Statista Mobility Market Outlook, in 2021, the average revenue per capita of the ride-hailing and taxi market in Vietnam is approximately 156.8 USD This growth is expected to reach about 218.21 USD by 2025.
According to Statista Mobility Market Outlook, in 2021, the number of people using ride-hailing and technology taxi services in Vietnam is approximately 19.9 million people It is estimated that the number of users of such services in Vietnam will reach about 21 million by 2025.
In 2021, the penetration rate of the car and taxi booking market in Vietnam increased to 20.2%. c Deliverable Market (SAM) Overview
According to a survey of 890 people over 16 years old by Q&Me conducted in May 2021, in Hanoi, 46% of survey participants always or often use technology car- hailing services more than traditional taxis, in This figure in Ho Chi Minh City is 62%.
Also according to this survey, 48% of survey participants in Hanoi always or often use technology motorbike hailing services more than traditional motorbike taxis, of which this number in Ho Chi Minh City is 78%.
Implication
Implication for Uber and European businesses when entering emerging ride-
With this type of ride-hailing service on the rise, many markets welcome this service, including Vietnam To achieve good results and the right direction, businesses from Europe such as Lyft, or investors in the same field need to pay attention to the following lessons:
Most Vietnamese people have the habit of paying in cash, now the number of people using card payments has increased more than before However, looking back at the time Uber entered the Vietnamese market, the number of people using payment cards was quite small, so the rigid application of card payment methods caused Uber to lose a big opportunity To avoid this basic mistake, the lesson for European technology vehicle businesses is to carefully consider popular payment methods preferred in Vietnam Many surveys show that the COD rate in Vietnam is still the majority, however the payment method by credit card has developed more than before, if businesses want to encourage users to pay by card, they should have Price incentives when paying by card rather than cash In addition, card payments(prepayment) in Vietnam account for less than cash payments (post payment) because users still do not trust 100% of businesses Hence, businesses need to have a policy that guarantees customers' rights that if they do not receive the service, they must refund the amount paid.
4.1.2 Culture of traveling by motorbike
Looking at the traffic density on the street, it can be seen that more people use motorbikes than other means of transport Using motorbikes is understood as a unique cultural feature of Vietnam from past to present However, when entering Vietnam, Uber chose to provide services by luxury cars and 4-wheel vehicles like how Uber approached the US market this was a very flawed choice and it clearly shows Moreover, Uber did not fail to thoroughly understand the market it wanted to develop From this failure, businesses must understand that user needs come first. From there, the business's previous campaigns can be changed to suit the current market For example, Lyft in the US provides users with the form of Lyft-taxi, but in the Vietnamese market, it can expand the form of Lyft-bike to suit user needs.
There have been many articles and public opinion that have raised questions about whether Uber's business model is ultimately a transportation business or a technology business In addition, because Uber entered Vietnam by exporting and providing services via cross-border supply, it refused to establish a company in Vietnam, meaning it did not have a commercial presence Without tax integrity, Uber took advantage of loopholes in Vietnamese law to avoid paying taxes, but Uber also had to pay the price for its actions Law is one of the important lessons that needs to be emphasized, so when entering Vietnam, businesses as well as investors in the same field must make sure they clearly understand the law in the field of business. Businesses must comply with legal tax responsibilities, must have an official headquarters in Vietnam, etc.
Compared to what Uber did, which was a very arrogant, determined attitude, not respect any competitors, this is also a lesson that needs to be learned for future businesses When entering a new market, instead of being arrogant and considering yourself the best, carefully observe your competitors' steps and the stumbles they have made to avoid them for your own business A competitor is not just an opponent, a competitor is also a teacher who teaches businesses many valuable lessons Uber is also a teacher for technology vehicle businesses about to enter theVietnamese market as well as investors in the same sector.
Recommend for technology car companies and investors in the field of ride-
Currently, we can see that the technology ride-hailing market belongs to "old drivers" such as Grab, Gojek, and Be These three companies account for 99% of the market share Aggregated data shows that Grab and Gojek together own about 200,000 partners (including 2-wheeled and 4-wheeled vehicles), while Be Group's application owns about 300,000 drivers Delivery app Ahamove has 100,000 drivers. Thus, in the technology motorbike taxi industry alone, the "big guys" have about 600,000 drivers.
A survey by Q&Me published in June 2021 based on the number of customers using two-wheeled vehicle calling services in Vietnam, Grab accounts for about 60% of the market share, Gojek accounts for 19%, and Be accounts for 18% For cars, Grab's market share is overwhelming at 66%, Be accounts for 22% and the rest is divided among other applications.
Figure 1: The percentage of call vehicle market share of 2-wheel and
From the data table above, it can be seen that from the time Uber withdrew from the market due to its failure until now, Grab has been the name most mentioned as an image of success in the field and has followed closely behind We also have Be,Gojek,
Uber missed out on a delicious piece of cake in "Vietnam" because of its shortcomings Through the "huge numbers" that Grab, Gojek, and Be have achieved, it can be seen that Uber's moves have led to failure Unfortunately, Uber lost the opportunity to compete for a foothold with competitors in the field.
4.2.1 Recommend for technology car companies and investors in the field of ride-hailing that are entering and about to enter the Vietnamese market
Nowadays, users are very smart and discerning Grasping that mentality, any technology car company that wants to enter Vietnam must clearly understand that
"customer insight" must be given top priority Next are surrounding factors such as culture, law, Uber should be seen as an example of a lesson in failures for this. Technology car companies intend to enter the Vietnamese market.
So what do they need to do to have "smooth" steps? a Positioning the brand in the direction of green development
In Vietnam, people are currently very concerned about environmental issues, green development is a global trend and Vietnam is also one of the countries that is transforming to follow that trend, so developing The form of electric vehicle service is very popular with users Besides, brand positioning is also very important to create success or failure because it is the first impression any car company wants users to know Sticking to what the market needs, car companies should build car service brands that need to grasp global trends, always stating the goal of " Green environment, green development", in this way car companies Choose colors blue and green to symbolize fresh things.
Besides, there are also other brand positioning directions such as the car company always promoting the goal of low prices but always giving customers good and safe experiences. b Grasping the green development trend - electric motorbikes
Due to the impacts of rising gasoline prices and environmental issues,consumers are increasingly concerned Green development is a global trend and using electric vehicles is consistent with that trend Currently, electric vehicles in other countries are gradually gaining popularity and coming into operation, and so isVietnam The advantages of electric vehicles such as minimizing negative impacts on the environment, ensuring safety for users, etc help save the State budget in treating pollutants and reducing overload caused by electric vehicles The market access strategy with electric motorbikes can be a highly promoted way to reach customers when foreign car manufacturers enter Vietnam A survey conducted by the United Nations Development Program (UNDP) commissioned by the High-Quality Vietnamese Goods Business Association (HVNCLC) has shown that among electric vehicles, electric bicycles are the most popular means of transportation used the second most in Vietnam with a rate of 27%, according to Thanh Nien.
Meanwhile, electric motorbikes are still the most preferred electric means of transport with a rate of 33%, while electric cars are only the third most popular electric means of transport, with a rate of only 2%.
Figure X: The rate of use of different types of traffic
Source:UNDPreport-compiledbyDoanhChinh
In addition, what can be most clearly seen is that Vietnam is a country with a dominant number of motorbikes on the streets, this has promoted the electric motorbike industry to constantly develop, and this is a potential market to develop electric motorbike services According to the Ministry of Industry and Trade, electric motorbike sales in Vietnam have increased by about 30% - 35% in recent years, making Vietnam the largest electric motorbike market (E2W) in the ASEAN region and the second largest 2 globally, just behind China The Vietnam Automobile Manufacturers Association (VAMA) forecasts that Vietnam will reach the milestone of 1 million electric vehicles around 2028 and about 3.5 million electric vehicles by in Vietnam is expected to achieve an annual growth rate (CAGR) of 22.9% in the period 2020-2025 These are data that show that the electric motorbike model has the potential to continue to develop in the future Therefore, ride-hailing companies can focus on developing this type to best meet customer needs. c The price policies for consumers
Users are very skillful in choosing what is best for themselves, so it helps users enjoy incentives and the car company does not suffer losses Companies and businesses should create distance promotion programs Specifically, on holidays such as Valentine's Day, Christmas, Mid-Autumn Festival, etc., users will need to use the service for delivery and pick-up more than usual At this time, bus companies can apply discount codes Hot prices attract customers and the profit for each trip, although less than usual, compensates for the number of customers using the service.
In addition, the "membership registration program" on the car-hailing application is also a good way for customers to enjoy many good price incentives while the car company still retains loyal customers In return for discount programs, limited hours such as from 12 pm to 5 am the next morning can increase rates, or in rainy weather can increase service rates to neutralize the company's sales. d The convenient payment method
The development of "digital" consumers in Vietnam The COVID-19 pandemic has changed consumer behavior around the world and Vietnam is no exception. According to Visa's 2022 Consumer Payment Attitudes Study, the proportion of Vietnamese users using card or e-wallet payments has increased across all age groups compared to 2021 About 66% of users pay by card or e-wallet online card payments, 70% of e-wallet payments online or in the app - recording a significant growth compared to 32% in 2021 Similarly, the rate of payments using QR codes increased dramatically, with 61% (2022) compared to 35% (2021) Furthermore, 90% of people surveyed have made cashless payment transactions (2022), up from 77% (2021), and 77% believe they can go cashless for 3 days.
Figure X: The figure of the payment attitudes of Vietnamese consumers in
Current users have prioritized choosing quick and convenient payment methods such as paying by credit card, Momo e-wallet, Zalo pay, Viettelpay, ShopeePay (Airpay), VNPay, or Moca (Grabpay) From there, car companies can combine with e-wallet businesses to develop popular forms of payment that are both convenient for customers and increase brand recognition For example, Gojek has also been very successful when combined with Momo e-wallet - the e-wallet application accounts for 68% of the market share in the field in Vietnam, this has helped Gojek's brand recognition become closer more with users. e Deploying community-oriented campaigns
Vietnamese people pay a lot of attention to love, morality, trust, and useful contributions to society If foreign technology car companies want to penetrate theVietnamese market or new car companies take their first steps into Vietnam, they can stick to this point to develop slogans and brand positioning that are close to people.more people by implementing community campaigns and helping the poor through public benefit activities organized by the company For example, dedicating company funds to donate to children in remote areas, giving gifts to homes raising orphans, and donating clothes to working-class areas where the poor live, These are campaigns that can make the closest step to reaching the trust and loyalty of Vietnamese people. f The legal compliance