Analysis of Uber's Corporate Governance Challenges

School: TAFE Queensland - Course: BSB MGT517 MISC - Subject: Accounting

ACCT 6015 Corporate Governance Assessment 2 1. Uber is a private ride-sharing start-up company. It is a car-hailing application that can be used on smartphones. It was founded in 2009 by Travis Kalanick, Garrett Camp and Ryan Graves from San Francisco. The app initially offered two levels of service, UberBlack and UberX. Both ride-sharing services connect passengers with licensed and non-licensed drivers and transport them in their personal or luxury vehicles. In the short four years since the launch of the app, it has rapidly expanded its territory and provided app-based car-hailing services in 53 countries and more than 250 cities. The company has expanded its diversified business territory in recent years, including carpooling, meal, and package delivery services. Uber's diversified services provide the public with more ride choices and convenient services. The launch of Uber in 2013 also led to the fastest international expansion of venture capital firms in a year, with revenues of $125 million that year, growing to $6.5 billion three years later in 2016 (David FL and Brian T 2017). Uber's rapid revenue growth has also attracted many international investors and financing companies, including Summit Partners, Google, Alibaba and Microsoft. In 2016, Uber raised $68 billion in financing and became the most famous pre- IPO company in the United States. However, Uber has been experiencing rapid expansion and growth in 2017, but it also began to have many doubts about its business model. These challenges are not limited to endless battles with regulators but also operational and founder governance issues. This includes, operational issues Vehicle regulation issues - MIT researchers analyzed data and pointed out that since 2016, the U.S. cost essentially had traffic congestion. In cities has increased by 0.9% due to Uber commuters increase. Time spent in traffic jams increased by 4.5% (DAILYMAIL 2021). The study also found an 8.9 % of traffic congestion has dropped if public transit is used. The study showed Uber drivers exacerbated congestion problems by driving around without passengers.

The relationship between Uber and the driver - Uber and the driver are in a contractual relationship. The driver only undertakes to carry passengers, and the company is not responsible for the driver's insurance (Jacob CD 2016). This means that drivers are not covered by social insurance. Founder Governance Issues The International Consortium of Investigative Journalists released a report on Uber's document leaks between 2013 and 2017. The documents show that in the five years since the company was founded, Uber co-founder Travis Kalanick tried to secretly lobby the government to make the Uber taxi service available around the world, which means that the founders circumvented the problem by wooing local stakeholders to win support (Brett H 2022). Against laws and taxi regulations and defying the laws of the country. In addition, by using violence against drivers, according to the investigative report, Uber has weakened the balance of the mature taxi and taxi market and put pressure on many governments to change laws in their favour. The Uber mentioned scandals caused founder Travis Kalanick to resign from Uber's board of directors in 2019. In the speech of the new CEO, Dara Khosrowshahi, Uber is actively transforming and admits the mistakes it has made in the past and will not make excuses for past behaviours that are inconsistent with our current values. 2. 2017 was the year challenges spilled over to the boardroom of Uber's governance. This includes a series of scandals involving bullying, sexual harassment, and workplace discrimination that occurred under Travis Kalanick and forced him to leave. He also was a Co-founder and former CEO to controlled most of Uber's voting shares before he resigned. In the middle of the same year, Dara Khosrowshahi took over and became the new CEO of Uber. After taking headquarters, he actively transformed the company and repaired Uber's organizational culture, improving convenience between departments. In addition, due to the failure of Uber's IPO in 2019, CEO Dara Khosrowshahi initiated a senior leadership reorganization plan. Simply put, he cancelled the original positions of chief operating officer and chief marketing officer and combined Uber's communication, marketing operations and policy departments (Figure 1) Organimi (n.d.). As a result, changing the

management behind this chain of events ensures that can help the organization's stakeholders, and marketing messages are aligned.