Read the case study below and answer the question that follows:

Business Model Innovation (Uber) Uber Business Strategy: User Convenience through Technological Innovation

Uber Technologies Inc. is a global transportation technology company that operates in more than 760 cities in more than 70 countries all over the world. The ride-hailing giant booked $20 billion in rides and generated net revenues of $6.5 billion (excluding China) in 2016, but it also lost $2.8 billion during the same year. The largest taxi company in the world has no cars of its own. Drivers are independent contractors for the company who use their own or rented cars to drive for Uber using the Uber app.

The company has effectively disrupted the taxi industry on a global scale. The Uber business strategy involves increasing their service range to cater for the needs of many customers, and focusing on high levels of user convenience. Moreover, cost-saving through technological innovation is placed at the core of Ubers business strategy.

The ride-hailing giant had a leadership crisis recently. The lack of leadership skills of cofounder and previous CEO, Travis Kalanick, resulted in a poor corporate culture. As a result, the company suffered from a range of serious scandals involving discrimination, sexual harassment and even mobbing. The Uber CEO was even caught on video rudely arguing with drivers about declining fares. Mr Kalanick had to step down from the leadership role, as demanded by investors. Expedia CEO, Dara Khosrowshani, became the new CEO of Uber.

Uber possesses considerable strengths, such as the first mover advantage, global market leadership, and a brand value of USD69 billion. At the same time, the company has serious weaknesses too, such as a damaged brand image due to numerous scandals, and increasing losses of the business. The Uber business strategy consists of the following three pillars:

1. Increased service range to cater for the needs of customers. Extensive offering is rightly considered as Ubers competitive advantage. Depending on their budget, the occasion and purpose of ride, customers can choose among Uber X, Uber XI, Uber Pool, UberGO, Uber AUTO, Uber Access, Uber MOTO, Uber Premium or Uber Rush.

2. High level of user convenience. Uber offers unprecedented user convenience at multiple levels. No need to call dispatch, wait in a line, or wave from a curb. Customers can tap request on their phone from the comfort of their homes and wait for a notification that their driver is arriving now. Even in dense urban locations, Uber drivers usually arrive in 1-2 minutes.

When they reach their destination, customers just say, thank you and get out of the car. No need to reach for cash or credit card. The payment is automatically charged to card on customers Uber account, and a receipt is sent via email. Moreover, dispute resolution with Uber is easy. Each ride receipt includes a map and a GPS track, and customers can complain if their driver took a longer route. In cases like this, Uber is prompt with refunds.

3. Cost-saving through innovation. Extensive user conveniences described above come at a little cost for the company, thanks to the app that integrates these innovative features and capabilities. Therefore, it can be argued that operating at low costs thorough innovation is placed at the core of Ubers business strategy. Moreover, first mover advantage in the internet-based ride-hailing sector is one of the most important points of Ubers competitive advantage

Question

Required: Explain the value of Ubers digital strategy as a business model innovation (BMI); include practical examples to illustrate the influence of the digital strategy on Ubers Mobile App, customer value creation and revenue generation.

Note: this question requires insights beyond the basic information provided in the case study. The case study only signals the context and scope of knowledge required to answer the questions. Students are required to supplement the case study with prescribed content and information from other sources, such as online resources, popular press articles and personal interviews. The answer outline can be found in your study guide (Topic 4 BMI).