Month: September 2017

One of the biggest success stories in the Silicon Valley, with a net worth of over $70 billion and operating in over 70 countries globally-Uber is clearly leading the market today in providing fast and efficient transportation services at the convenience and need of customers. So will the loss of their license to operate in the city where it has been most successful outside the States really affect this company?

On Friday, Transport for London, the agency which oversees the city’s public transportation system declared that Uber’s license to operate in the city would not be renewed due to their scandalous past and several accusations against operating unlawfully and mistreating their employees and workers, which led them to be deemed as not “fit and proper.”

The company has had several allegations in the past year relating to a range of issues, from using a software ‘Greyball’ to avoid the government from getting complete access to their operations, to shoddy background checks against drivers, lack of severity with which they deal with serious criminal offenses, sexism against women and several complaints of sexual assault against employees by managers. Their long history of lack of corporate responsibility in ensuring their customer’s and employee’s safety finally caught up to them and resulted in this ban.

https://i.guim.co.uk/img/media/8ec962a205247845be85a8a4ec64340e2f559f65/0_484_4535_2721/master/4535.jpg?w=300&q=55&auto=format&usm=12&fit=max&s=da03c4b84e78b1a12369398d3f10d2ae

Uber owned the majority of the market share in London by under cutting prices of their competitors like the black-cabs by 30% and Gett and MyTaxi. Uber’s management style where employees are constantly pitted against one another and rewarded solely on their performance irrelevant of the means by which they have achieved them could be the root cause of these claims. Several former employees’ claims of sexual assault by managers and their seniors and the lack of action heeded by Uber’s HR department just goes to prove the company’s disregard for ensuring employee’s safety and the absence of a healthy workplace culture, where there is mutual respect amongst coworkers and between managers and employees. Travis Kalanick’s own style of leadership could be to blame for enforcing this type of a competitive workplace atmosphere. By openly disregarding local laws and being quick to denounce competitors in an attempt to expand exponentially, Kalanick himself has adopted an aggressive style of leadership.

With 40,000 drivers and 3.5 million customers in London, this ban is most likely to have a massive setback in the company’s operations. The company will have to change its management style and hope to prevent their brand image from being further tarnished by these severe claims. It is shocking to note how these claims have failed to come in the limelight previously considering Uber’s pervasiveness and popularity.

 

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Citations

 

1. PRASHANT S. RAO and MIKE ISAAC. (2017, September 22). Uber Loses License to Operate in London. Retrieved September 23, 2017, from https://www.nytimes.com/2017/09/22/business/uber-london.html?rref=collection%2Fsectioncollection%2Fbusiness
2. Isaac, M. (2017, February 22). Inside Uber’s Aggressive, Unrestrained Workplace Culture. Retrieved September 23, 2017, from https://www.nytimes.com/2017/02/22/technology/uber-workplace-culture.html?mcubz=0
3. Farrer, M., & Khomami, N. (2017, September 23). More than 500,000 sign petition to save Uber as firm fights London ban. Retrieved September 24, 2017, from https://www.theguardian.com/technology/2017/sep/23/thousands-sign-petition-save-uber-firm-hits-back-london-ban
4. Kirsty Major London. (2017, September 22). Uber had this coming – it was never just a ‘tech platform’. Retrieved September 24, 2017, from http://www.independent.co.uk/voices/uber-ban-london-ride-hailing-app-company-employees-taxi-drivers-customer-safety-women-protect-a7961231.html
5. (2017, September 23). Why Uber lost its licence to ply in London. Retrieved September 24, 2017, from http://www.deccanchronicle.com/business/companies/230917/why-uber-lost-its-licence-to-ply-in-london.html

Any decision made by a company most often have to be guided by few basic principles, values and morals. If a business is to focus on their long term growth and stability and aspire to gain a large customer base while increasing their market share and brand loyalty, they must ensure that all decisions taken are guided by morally acceptable principles.

One would think in the 21st century a well informed, educated branch of society would absolutely refuse to contribute towards the millions of dollars in revenue earned each year bymajor fashion brands in the industry like Forever 21, TJ Maxx, Zara and H&M.

However according to recent reports, most of these major retailers avoid paying factory workers the minimum wage and they are forced to work in extremely poor conditions. In, considerably one of the most wealthy states in America, California, a recent investigation by the California department of labour found that a jaw dropping 85% of the cases and companies were violating the labour laws and minimum wage rates and therefore had to pay millions in damages to their workers.

Owning a whopping 62% brand share in the footwear industry in US is Nike, with a sale of $28 billion per annum. However 2 decades ago this brand was under fire for their use of sweatshops overseas to reduce their costs by employing foreign workers for way cheaper wages. Reports claimed that Indonesian Nike workers were paid as less as 14 cents per hour and forced to work endlessly in extremely unfavorable conditions until they collapsed on their sewing machines. Nike’s strong foothold in the industry begun to fade with numerous protests from the public and massive masses of boycotts. This is just another explicit example of how vital it is for companies to make ethically correct decisions since it can have a direct impact on their sales, brand image and value

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http://static2.businessinsider.com/image/518bb0b4ecad04f65d00001a/how-nike-solved-its-sweatshop-problem.jpg

Nonetheless Nike managed make a turnabout on their public image by being brutally transparent about these claims. This led to a raise in minimum wages for workers, improving the worker’s environment and conditions and thus ensured to abide by the labour laws and practices. Till date Nike publishes reports which divulge the conditions in which their workers work in and their pay scales. This has finally helped the brand to knock off its image, which was synonymously linked with extreme labour exploitation, after continuous efforts.

This just goes to show the extreme consequences linked with unethical decision making by big brands and companies and how it might take years for a well reputed company to reinvent their image once exposed to the dark side linked with unethical decision making in a business.

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Lutz, A. (2015, June 06). How Nike shed its sweatshop image to dominate the shoe industry. Retrieved September 13, 2017, from http://www.businessinsider.com/how-nike-fixed-its-sweatshop-image-2015-6

Behind a $13 shirt, a $6-an-hour worker. (n.d.). Retrieved September 10, 2017, from http://www.latimes.com/projects/la-fi-forever-21-factory-workers/

Gurl.com. (2017). 11 Of Your Favorite Clothing Brands That Use Sweatshop Labor – Gurl.com. [online] Available at: http://www.gurl.com/2016/05/01/clothing-stores-and-brands-that-use-sweatshop-labor/ [Accessed 14 Sep. 2017].

Bain, M. (2017, August 01). Nike is facing a new wave of anti-sweatshop protests. Retrieved September 13, 2017, from https://qz.com/1042298/nike-is-facing-a-new-wave-of-anti-sweatshop-protests/

We know which companies sell clothes made by sweatshop workers. Consumers should shop accordingly. (2017, September 08). Retrieved September 13, 2017, from http://www.latimes.com/opinion/readersreact/la-ol-le-sweatshop-workers-apparel-los-angeles-20170908-story.html