Uber is a ridesharing company that has revolutionized the transportation industry. Through its application, users around the world can connect with drivers in their area and arrange a ride. In addition to its primary ridesharing service, Uber also offers food delivery services through Uber Eats and freight delivery services through Uber Freight (Hinkle & Taylor, 2020). The company has leveraged economies of scale and scope in order to become one of the most successful companies in existence today.
Economies of scale refer to reducing costs by increasing production or output. By leveraging this concept, Uber was able to reduce unit costs due to larger production volumes associated with more customers (Curtis et al., 2019). Furthermore, it enabled them to offer lower prices for customers compared to other taxi companies while still achieving profitability. Additionally, since they are operating on such a large scale now with millions of customers worldwide, it allows them to take advantage of opportunities for further cost savings such as purchasing discounts from vendors or negotiating better deals for network connectivity (Hinkle & Taylor , 2020). This allows Uber’s business model not only be profitable but also sustainable over time.
Apply the concepts of economies of scale and economies of scope to Uber’s business model.
Furthermore, economies of scope can be seen within Uber’s business model as well. Economies of scope refer to reducing costs by performing multiple tasks more efficiently than if they were done separately (Curtis et al., 2019). For example, when developing their app platform they were able capitalize on existing technologies like GPS tracking that could be used across both their ridesharing and delivery businesses (Wang & Shenoy-Packard , 2018). By being able to use some resources across different functions within the organization they are able reduce overhead expenses associated with maintaining separate systems as well as duplicate efforts between departments( Hinkle & Taylor ,2020 ). As a result this helps increase efficiency while simultaneously reducing overall costs which enables them remain competitive and continue growing .
Overall given how disruptive technology continues driving down cost barriers it is important for firms today understand how leverage economics principles such scales and scopes effectively optimize operations in order remain competitive marketplace now future . Through use these concepts successfully demonstrated ability turn early prototype into multi billion dollar global giant that changed way people travel forever .