SECTION A $[40$ MARKS$]$

Read the article below and answer ALL the questions that follow.

UBER: Redefining Transportation$-$ Bhaskar Basu

In $2009,$ Travis Kalanick and Garrett Camp developed a smartphone application to connect drivers$-$for$-$hire with people

wanting rides to a destination in their city and named it UberCab Inc. It was rechristened Uber technologies Inc. in $2010.$

Uber has expanded its operations to $66$ countries and $545$ cities around the world and is valued at around $$68$ billion as of

August $2016.$ The company has derived stupendous success and is aggressively expanding both within the United States

and worldwide.

The Uber business model leverages the increased usage of smartphone technology by consumers worldwide and links

them with independent drivers owning cars. Uber offers such independent drivers an opportunity to earn money as long as

they have a car while also offering transportation for consumers at a competitive cost. New services like UberFRESH are

allowing Uber to diversify and expand its footprint worldwide.

In March $2015,$ Uber Technologies Inc. entered into a strategic partnership with Times Internet Ltd$.($TIL$)$ with a view to

expand its business in India $$ its largest market outside the U$.$S$.\text{'}$ Uber is a perfect example of an innovative business

model relying on Big Data that utilizes location technology and smartphone capabilities. When a customer wants a ride,

drivers in the locality get notified, arrival time, ride fare and duration are predicted, all based on the optimal route depending

on the time of day. Uber$$s affordable private transportation service, combined with safety features and convenience has

enabled it to grab a significant share of the market in the Indian transportation sector dependent on traditional yellow taxis,

auto rickshaws or public transportation modes like buses or trains. India$$s cab business may be worth $$7$ billion by $2020.$

Platform$-$based models like Uber have the potential to disrupt established markets and promote almost invincible

competitive advantage. Travelers today carry smartphones wherever they go$.$ Smartphone$-$based crowdsensing can be

used to collect and aggregate traffic information for services that contribute to sustainable transportation and traffic.

Multisided platforms can grow very rapidly especially if the presence of users on one side $($Uber drivers$)$ attracts more users

to another side $($Uber travellers$)$ creating a positive feedback loop. The success of two or multi$-$sided platforms often

depends on how well they balance the benefits and costs to all the sides of the platform while fostering positive networkeffects between the sides. Uber$$s leveraging of spare capacity by recruiting private automobile owners to drive for hire in

their spare time not only employs the assets of car time but also provides extra value to each party to the transaction. Uber

thus leverages third party assets not only to create revenues, but to enhance service and develop innovations that

customers value.

Uber, however, is increasingly facing challenges in the form of legal and regulatory, social, and technical obstacles. The taxi

industry, for instance, argue that Uber rides on an unfair advantage as it does not face the same licensing requirements that

they do$.$ The number of disgruntled drivers could be difficult to control if Uber decides to further increase its profit share

deductions. Recent laws mandate healthcare insurance coverage for drivers. Uber is often accused of not having a

stringent driver screening process, thus compromising with the security of its passengers. Uber$$s operations were banned

in the National Capital Region $($NCR$)$ of Delhi following the alleged rape of a female passenger by an Uber driver in

December $2014.$

Thereafter, the company introduced two new safety options in the form of a $$Panic Button$$ and a $$Safety Net$$ in its network

in India.

While the $$Panic Button$$ allowed passengers to notify the police during emergency, the $$Safety Net$$ allowed the passengers

to share their trip and locational details with more persons. Uber also had a problem initially complying with RBI regulations

with regard to the mode of payment provided which got sorted out after its partnership with Paytm. It also had a runin with

the Government of India on avoiding service tax obligations. Its $$Surge Pricing$$ technique has been criticized for claiming

astronomical fares during peak hours. $$Surge Pricing$$ helps Uber multiply its revenues because the company keeps $20$

percent to $25$ percent of its average rides? price. However, the management justifies the system of measuring supply $($Uber

drivers$)$ and demand $($passengers hailing rides with smartphones$),$ its inbuilt algorithm determining fares for specific

occasions.

Some customers complain of long waits, inexperienced drivers, and even sexual harassment, besides the usual problems

involving service and pricing issues. Moreover, two$-$way rating system on Uber helps maintain a g