Harvard Case - Uber Africa: Making Cash and Alternative Payments Work in Kenya through Contextual Leadership
"Uber Africa: Making Cash and Alternative Payments Work in Kenya through Contextual Leadership" Harvard business case study is written by Caren Scheepers, Anastacia Mamabolo. It deals with the challenges in the field of Strategy. The case study is 7 page(s) long and it was first published on : Mar 28, 2019
At Fern Fort University, we recommend that Uber Kenya adopt a multi-pronged strategy to address the challenges of cash and alternative payment methods. This strategy should focus on:
- Expanding access to digital payments: Partnering with local mobile money providers and financial institutions to offer seamless integration within the Uber app.
- Promoting financial literacy: Launching educational campaigns to increase awareness of digital payment options and their benefits.
- Leveraging technology and analytics: Developing a robust data-driven approach to understand customer preferences and optimize payment options based on location, demographics, and transaction history.
- Embracing a contextual leadership approach: Adapting to the unique Kenyan market by fostering strong relationships with stakeholders, including government agencies, local businesses, and community leaders.
2. Background
This case study focuses on Uber's challenges in Kenya, a rapidly growing market with a high reliance on cash transactions. While Uber's global model relies heavily on digital payments, the company faced significant hurdles in Kenya due to limited access to digital financial services and a preference for cash. The case highlights the efforts of Uber Kenya's General Manager, Loic Amado, in navigating this complex environment.
The main protagonists are Loic Amado, the General Manager of Uber Kenya, and his team, who are tasked with finding solutions to the payment challenges. They face the challenge of balancing the need for a globalized approach with the realities of a local market.
3. Analysis of the Case Study
This case study can be analyzed through the lens of several frameworks:
Porter's Five Forces:
- Threat of New Entrants: High, due to the ease of entry into the ride-hailing market and the availability of local competitors.
- Bargaining Power of Buyers: High, as customers have numerous ride-hailing options and can easily switch between platforms.
- Bargaining Power of Suppliers: Moderate, as drivers have some bargaining power but are ultimately dependent on the platform.
- Threat of Substitutes: High, with alternative transportation options like public transport and motorcycles readily available.
- Competitive Rivalry: Intense, with multiple ride-hailing companies vying for market share.
SWOT Analysis:
Strengths:
- Strong brand recognition and global presence.
- Advanced technology platform with features like GPS tracking and driver rating systems.
- Extensive data analytics capabilities.
Weaknesses:
- Dependence on digital payments, which are not widely accessible in Kenya.
- Challenges in managing driver relationships and ensuring compliance.
- Limited understanding of the local market and cultural nuances.
Opportunities:
- Growing demand for ride-hailing services in Kenya.
- Potential for partnerships with local mobile money providers and financial institutions.
- Expansion into new markets within Africa.
Threats:
- Competition from local ride-hailing companies.
- Regulatory uncertainty and potential changes in government policy.
- Economic instability and fluctuations in fuel prices.
Value Chain Analysis:
Uber's value chain in Kenya can be analyzed as follows:
- Inbound Logistics: Recruitment and onboarding of drivers.
- Operations: Matching drivers with passengers and facilitating rides.
- Outbound Logistics: Delivering passengers to their destinations.
- Marketing and Sales: Promoting services through advertising and partnerships.
- Customer Service: Providing support to drivers and passengers.
- Technology Development: Maintaining and enhancing the Uber platform.
Business Model Innovation:
Uber Kenya needs to innovate its business model to address the unique challenges of the market. This could include:
- Developing a hybrid payment system: Allowing both cash and digital payments, with a focus on integrating local mobile money platforms.
- Creating value-added services: Offering additional services like package delivery or grocery shopping to attract customers.
- Expanding into new market segments: Targeting specific demographics or geographical areas with tailored offerings.
Corporate Governance:
Uber Kenya must ensure strong corporate governance practices to maintain trust and transparency with stakeholders, including drivers, passengers, and regulators. This includes:
- Compliance with local laws and regulations.
- Promoting ethical business practices.
- Ensuring fair treatment of drivers and passengers.
4. Recommendations
Short-Term:
- Partner with local mobile money providers: Integrate platforms like M-Pesa and Airtel Money into the Uber app, allowing users to pay for rides through their existing accounts.
- Introduce a cash payment option: Allow drivers to accept cash payments, but implement measures to ensure transparency and accountability.
- Run targeted marketing campaigns: Educate customers about the benefits of digital payments and promote the availability of mobile money options.
- Invest in driver training: Provide training on using mobile money platforms and accepting digital payments.
Medium-Term:
- Develop a dedicated mobile money platform: Create a seamless and user-friendly mobile money platform specifically for Uber users in Kenya.
- Explore partnerships with financial institutions: Collaborate with banks and microfinance institutions to offer financial services to drivers and passengers.
- Leverage data analytics: Utilize data to understand customer preferences and optimize payment options based on location, demographics, and transaction history.
Long-Term:
- Embrace a contextual leadership approach: Foster strong relationships with stakeholders, including government agencies, local businesses, and community leaders.
- Invest in technology and innovation: Develop new features and functionalities to enhance the user experience and address local market needs.
- Expand into new markets within Africa: Replicate the successful model in other African countries with similar payment challenges.
5. Basis of Recommendations
These recommendations are based on the following considerations:
- Core competencies and consistency with mission: Uber's core competency lies in its technology platform and global network. This strategy leverages these strengths while adapting to the local market context.
- External customers and internal clients: The strategy addresses the needs of both passengers and drivers by offering a range of payment options and improving accessibility.
- Competitors: The recommendations aim to differentiate Uber Kenya from its competitors by focusing on local payment solutions and building strong stakeholder relationships.
- Attractiveness - quantitative measures: While quantifying the impact of these recommendations is challenging, the potential benefits include increased market share, improved customer satisfaction, and enhanced driver engagement.
6. Conclusion
Uber Kenya faces a unique challenge in navigating the complex payment landscape of the country. By embracing a contextual leadership approach and leveraging technology, partnerships, and local knowledge, Uber can overcome these challenges and achieve significant growth in the Kenyan market. The multi-pronged strategy outlined above provides a roadmap for success, allowing Uber to adapt to the local context while maintaining its global brand identity.
7. Discussion
Other alternatives not selected include:
- Focusing solely on digital payments: This would alienate a large segment of the population who do not have access to digital financial services.
- Ignoring the local market: This would result in a lack of understanding of customer needs and preferences, leading to a less effective strategy.
Key assumptions of this recommendation include:
- Continued growth of the ride-hailing market in Kenya.
- Availability of reliable mobile money platforms and financial institutions.
- Government support for the ride-hailing industry.
8. Next Steps
- Develop a detailed implementation plan: Outline specific actions, timelines, and responsible parties for each recommendation.
- Secure necessary resources: Allocate budget and personnel to support the implementation of the strategy.
- Monitor progress and adjust as needed: Regularly track key performance indicators (KPIs) and make adjustments to the strategy based on data and feedback.
By taking these steps, Uber Kenya can successfully navigate the challenges of cash and alternative payments, establishing itself as a leading player in the Kenyan ride-hailing market.
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Case Description
On September 30, 2017, the general manager (GM) of Uber Technologies Inc. (Uber) for sub-Saharan Africa, arrived in Nairobi, Kenya, and paid for his Uber service with cash. This functionality of the Uber app represented a new business model for Uber. The GM had to convince global management of the business case for offering cash payment options in Africa; he did so by conducting experiments and showing data that indicated rider numbers had tripled with adoption of the cash payment option. Uber's driver-partners were concerned about safety when they transported passengers who paid by cash, both because credit card payments offered Uber rider identification and because the driver-partners were concerned about driving around with large amounts of cash. In spite of their concerns, the rationale for introducing a cash payment option was relevant, and it had to be considered carefully in the context of African locations with high crime rates. The GM considered various initiatives for utilizing data from their technology platform to safeguard their riders and drivers. They needed to address local needs in Africa while adhering to global Uber standards.
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