Republic of the PhilippinesJOSE RIZAL UNIVERSITY
Shaw Boulevard, Mandaluyong City 1550
THE INNOVATIVE SOLUTIONS AND EFFICIENCY OF UBER TRANSPORT SERVICE
A Research StudyPresented to
The Faculty of the College Professionals StudiesIn Partial Fulfillment of the
Requirements for the Degree ofBachelor of Science in Business Administration
By:
Jayson TolentinoJuan Miguel V. Francisco
Year:
2015
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Contents
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Chapter I
The Problem and its Background
Introduction
The transportation system has made several changes in recent years with the
introduction of application based taxi and car service systems to the new generation
commuters, as a result new industry competitors have made Innovation to constant
changes to an basic old industry that did not materialized much the way it did in past,
with customers in need of a cab having to either physically wave at a taxi at the street
corner or made an Appointment through smartphone application to reserve a car prior to
the pick-up time is more convenient, less hassle and safe.
Some of us will think that the inclusion of new technology to services will create
disadvantages, but it would be positive to think that some various business leaders
actually care about how our well transport systems work in the previous to convince us
that transport is the best option as public utility and that would result to advantages.
Resulting to new innovation like introducing using smartphone application based cab
system to really highlight how good enough our civic leaders actually care about efficient
transport, and how much more they seem to care to everyday commuters.
Technology is now growing and developing in a faster rate without even knowing
it. One of the branches of innovations is the invention of mobile applications thru mobile
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devices or smartphones that provide mobile apps to help us be more productive and less
time consuming pertaining different services through applications.
Uber is one of the mobile applications that focuses on transportation services in
such a way that a customer can use this app to call, hire or rent a vehicle at your
fingertips making more efficient and less hassle especially to the commuters.
The innovation of mobile apps through the start of that period, since smartphones
makes us easier and user friendly, but all of this always have advantages and
disadvantages maybe socially or technologically, but this is all depends on us of how we
will control and adopt in this never ending innovations that we created.
Background of the Study
A taxicab, also known taxi or a cab, is a type of vehicle for hire with a driver,
used by a single passenger or group of passengers often for a non-shared ride. A taxicab
conveys passengers between locations of their choice. This differs from other modes of
public transport where the pick-up and drop-off locations are determined by the service
provider, not by the passenger.
The Idea for Uber came to Travis Kalanick, when he was trying to find a cab to
attend a Leweb Conference in Paris, France but he could not find one. Kalanick cites the
Paris as “The Inspiration for Uber”. Uber was founded as Uber Cab by Travis Kalanick
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and Garret Camp in 2009. Graves was appointed as CEO then later, Graves stepped down
from the pole to become the Vice President of Operations and was replaced by
Kalanick.Uber’s service and mobile app for smart phones was launched in San Francisco
2010.
Uber is originally a foreign transportation company now already here in the
Philippines. Transportation nowadays in the Philippines is already one of daily problems
commuters encounter, heavy traffic and difficult accessibility of taxis and buses. One
solution is adopting, the existing of mobile app transportation service Uber. Mobile apps
is already a life saver making us more efficient and easy to work aUber Transport Service
is one of the innovations helping the ease of people in renting or finding a cab/vehicle
through mobile apps, as of May 28, 2015, Uber app is already available in 58 countries
including one of the newest, Philippines and 300 cities around the world, several other
companies now adopting the same industry that Uber has, but Uber is the leading pioneer
in the service transportation industry, whatever the company it is, they have the same
goal in giving quality of service, comfortability and easy access to the commuters.
The primary reason for conducting the study in Uber is to educate how they
perform their innovations efficiency when it comes to customer satisfaction, safety,
reliability, and accessibility in transportation service industry.
Statement of the Problem
This study entitled, “The Innovative Solutions and Efficiency of Uber
Transport Service,” is an attempt to determine the efficiency of Uber innovations as an
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alternative transportation for the commuters. Also, the study will provide awareness of
how Uber creates a better choice for commuting.
Specifically, it seeks to answer the following:
1. What is the overall demographic profile of the respondents in the terms of:
1.1 Gender
1.2 Age
1.3 Civil Status
1.4 Educational Attainment
1.5 Occupation
1.6 Salary
2. What are the problems encountered in availing the services offered by Uber
transportation to its customers?
3. How do respondents assess the Uber in terms of:
3.1 Affordability
3.2 Reliability
3.3 Safety
3.4 Comfortability
3.5 Accessibility
4. Is there any significant on the assessment of the respondents of selected areas in
manila and Quezon on the following Uber’s affordability, reliability, safety,
comfortability, and accessibility?
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Null Hypothesis
The hypothesis to be tested at .05 level of significance is:
There is no significant difference on the assessments of the commuters of selected
areas in Manila and Quezon on the efficiency of Uber in terms of – affordability,
reliability, safety, comfortability, and accessibility.
Significance of the Study
The research we will conduct benefits to the following:
Commuters, from the various customers that using Uber, whether a working
employee or a student, they will have knowledge of the Uber’s quality, affordability and
efficiency of their service to them.
Company, because from the commuters, the company will learn and gain more
outputs from the customers thus, the result will help to improve and gaining more ideas to
ensure Uber offers the outmost better quality and efficient service to the commuters.
Drivers and Uber Partner Drivers, drivers that working at Uber have better
compensation and benefits from the company unlike other cab companies, ordinary
drivers have minimum or less than the salary from the company or the fare itself.
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Students, it provides additional information and awareness to enhance their level
of knowledge regarding the effectiveness managing innovation and efficiencies of
transport service through application base.
Researchers, the researchers tries to convince an audience that the research is
worth going, and could provide information on the issues of Uber transportation services
particularly on the affordability, reliability, safety, comfortability, and accessibility.
Scope and Limitations
The cover of the study will be focusing more on Uber efficiencies and managing
innovations when it comes to transportation services and will use the descriptive
approach. This approach will be discussed extensively in Chapter 3, on the study’s
research methodology.
The sample consists of commuters located in Manila and Quezon, as they are the
targeted clients of Uber transportation. Due to the nature of the sample, the results may
not be representative of the rest of the commuters that patronized Uber. Only the clients
in selected areas in Manila and Quezon will served as the respondents of the study.
Exempted from the study are other commuters that do not reside in Manila and Quezon.
There will be limitation in obtaining data in company’s information, the reason
behind it is to avoid any case of leaking information on the company’s confidential
strategies and techniques that the other service cab companies may obtain and use it as
advantage. Furthermore, there will be limited amount of information that we will obtain
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through their I.T. Department regarding system of application based Uber services at
their satellite office, which is situated at Cubao, Gateway.
The time frame for this study is from August 2015 up to October 2015, covering
the data gathering period and November – January 2016 for processes and analysis,
writing up for the report and final thesis. Thus, any or all developments that occurred
thereafter are deemed excluded. These developments may contain situations in the
transpiration alternatives and other future trends that may influence the findings,
observations and recommendations of the study.
Conceptual Framework
Figure 1. Concept Framework of the Study
Formulation of the problem
And the research questions
Methodology
Data Gathering
Analysis
Conclusions
Frameworks of Reference
(Literature)
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The first step in doing this research was the formulation of the problem and the
creation of the research questions. Thereafter, the proponent think about the methodology
that will be best fit the problem under research. Next, he will gather secondary data in the
form of books and articles in order to improve our understanding of the research problem.
At this time, the proponent will have to start writing the research outline. The
questionnaire about Uber’s innovations and efficiency, based on the knowledge of the
theoretical research.
Thereby, several decisions in data gathering such as the form of the questions, the
language used in the questionnaire, as well as the procedure in performing the survey
instrument has to be made. The questionnaire will be tested and several days later will be
delivered to selected respondents that patronize Uber taxi. After which the respondents
answer the questionnaires, it will be collected and a period of editing and analyzing the
data will begin. These results will be used to get a deeper understanding of the study.
During the entire time between determining the methodology and the end of writing
down the analysis the frameworks of reference was created. Finally, the research report
was completed by adding the conclusion and the closing comments.
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Chapter 2
REVIEW OF RELATED LITERATURE AND STUDIES
This chapter presents concepts, theories, opinions, viewpoints, and insights of
related literature and studies. It is organized in the following manner. First, it will give a
local literature where a discussion on the background of Uber in Philippines. Second, it
will provide related studies on the awareness of Uber’s innovations and efficiency.
Finally, a synthesis explaining the salient differences of the present study from the others
is presented at the end of the chapter
Local Literature
In cities of developed nations, a good land transportation mix generally exist, that
is, the presence of motorcycles, private vehicles and a good range of public transport
system notably buses in different sizes, choices in trains and monorails as well as the
presence of pedestrian and non-motorized lanes. On the other hand, especially with that
of the public transportation, the opposite seems to be happening in most cities of
developing countries, particularly in Southeast Asia. The lack of common or traditional
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forms of public transport network and infrastructure such as mass public transportation is
usually substituted with other innovative modes of public transportation (Guillen, 2004)
And so the birth of Uber has come to penetrate the public transportation to
provide a new venue for the riding costumers. Uber was officially lunch last February
2014 in Manila. Originated from San Francisco, Uber is an on-demand car service and
it’s now available in 45 countries and more than 200 cities.
A review of Uber’s efficiency found in an article pinoytechblog, found the
following:
More convenient – getting your ride with Uber is easy as pie. Just set your
pickup location and wait for your ride. The app lets you know the estimated time and
exact location of the car so you don’t have to wait and stand outside the streets for
minutes. The app also provides you with the number of the driver so you can call or text
the driver for directions or exact location. Most often, after requesting a ride, I
immediately get text messages or calls from the driver. With Uber, you don’t have to wait
for minutes and stand in long lines or wrestle in crowded taxi stands to get your ride.
Clean, brand new cars – almost all Uber cars I’ve rode are brand new or less
than a year old. Unlike taxis, Uber cars are clean, smells fresh and doesn’t have that
cigarette smoke odors.
Courteous drivers – Every now and then, we experience riding taxis with the
driver asking us on how to get to our destinations, circling around the streets or getting
lost and asking for directions. Sometimes, we encounter irate drivers speeding up and
cursing other drivers or cars on the road. Oftentimes we end up arguing with the driver
over these things, especially on the taxi meter or bill. Uber drivers are well-mannered.
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They engage you in a good conversation and sometimes they open up the doors for you
or help you with your things and luggage.
Cheaper –With a regular taxi, you get charged Php 3.50 every 300 meters and
Php 3.50 every 2 minutes but usually you’d end up getting surprised (ripped off J) with
the fare for the entire trip. Not to mention the ‘plus’ or additional fee they ask you during
rush hours. Uber cars are generally cheaper especially with long rides. You can also
estimate your fare before you request your ride. And since you use your credit card, Uber
charge you with just the exact fare. Taxi drivers normally round up the fare and don’t
give you change. Uber also allows you to split your payment with friends who are also
using Uber.
Feedback system – Uber has a good feedback system that allows you to rate or
comment on your driver or ride. You also receive a fare breakdown showing the base
fare, distance and trip time immediately after your trip.
Safe – safety is everyone’s concern when riding a cab. Uber improves on this by
providing you the driver’s name and photo as well as the car model and plate number
right after you request your ride. You can also share your ride details and your ETA to
your friends and relatives via email and social media
(http://www.pinoytechblog.com/archives/seven-reasons-why-we-love-uber).
Another online article by Jimeno in philstar.com (2015), “Uber is a mobile-based
application which connects commuters to drivers through crowd-sourcing. Instead of
stepping out on the street and flagging down a cab, the Uber app allows a person to view,
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in real time, Uber-registered cars driving around within a proximate distance
(http://www.philstar.com/motoring/2015/04/22/1446311/should-we-uber-drive).”
Unfortunately, taxi operators have complained that Uber and other similar apps
are unlawfully and unethically competing with them. They view this as illegal practices
since our law implemented “public utility vehicles” (PUVs) are required first to have a
franchise and a Certificate of Public Convenience (CPS) issued by the LTFRB. When
you’re in this business, you have to comply with requirements to obtain a franchise and
without these requirements; taxi operators will be considered as “colorum” or illegal.
The legal basis which the taxi operators felt that Uber is prohibited because Uber
car drivers may be considered as PUV drivers since it is defined as “motor vehicles for
hire and used to carry or transport passengers.”
On the contrary, the PUVs are limited to motor vehicles, meaning the Uber and
providers of similar apps do not seem to fall under such category. The Uber consider
itself as not transportation provider but an app that offers a platform where drivers and
commuters connect and interact. Furthermore, in the said article many of its customers
felt safer than in riding a taxi.
Another factor that Uber has risen the awareness of efficiency it is because of
customer satisfaction. Before, when you commute and use the regular taxi, we might
encounter bad experiences like a taxi driver refuse to carry us during peak hours,
extorting high rates, or worst, kidnapping or stealing our belongings. None of these
experiences have occurred with Uber Philippines.
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Possibly because there is a self-policing mechanism that works well for Uber is its
“rating system” wherein Uber drivers and riders rate each other. This rating system
reflects any positive or negative feedback about a driver or customer, thereby allowing
more informed decisions when customers choose Uber drivers and vice-versa. For
customers who are conservative and want to ensure their safety, Uber cars with 100
percent positive reviews may be a prudent option. Philippine laws on PUVs, while
stringent and well written, still have to hurdle the challenge of effective enforcement
(http://opinion.inquirer.net/81096/uproar-over-uber-taxi).
Moreover, according to InterAksyon.com (2015), found the following:
“Uber, the company behind an app that is disrupting public transport sectors throughout the
world, is hailing the Philippine government for new regulations that recognizes "ridesharing"
as a legitimate new component of the national transport mix – one that can benefit passengers
while and at the same time lending itself to regulation.
The new Philippine regulations, announced in Manila at the start of the week, creates a modus
vivendi that Uber hopes can be a template for other countries. Uber, whose service revolves
around a mobile app that matches passengers with registered vehicles, has blurred the lines
between the "private" and "public" classification of vehicles. It has been a hit with consumers
tired of inefficiencies in public transportation - manifest in everything from difficulties in
haling cabs to the decrepit state of all forms of public transportation - but has been
condemned as unfair competition by the traditional transport sectors that run a gauntlet of
government regulations and franchise rules.”
In the said article, the Uber Company hailed the DOTC for issuance of
‘Transportation Network Vehicle Service (TNVC)’ classification that will bring
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“transportation network companies (TNC)” as Uber will be in this category within the
scope of the country’s regulatory framework.
This development is considered as a historic day as the DOTC authorized a new
order on “Promoting Mobilty” that aims to modernize and enhance transport services to
commuting public by acknowledging new forms of transport solutions that can have a
substantial impact on reducing congestion while creating thousands of new opportunities
for drivers.
The new DOTC rules classifies a TNC as any organization that provides pre-
arranged transportation services for compensation using Internet-based technology
applications, or a digital platform technology to connect passengers and drivers using
their personal vehicles. TNCs (Uber the company) are providers of TNVS (Uber the app.)
As DOTC's aim is not just to recognize "ridesharing" as a legitimate service, but
also to regulate TNCs, the new regulations will require enrolled vehicles to meet vehicle
eligibility standards, and to install global positioning system (GPS) tracking and
navigation devices. TNVS, for example, will be limited to passenger car sedans, Asian
utility vehicles (AUV), sports utility vehicles (SUV), vans and similar vehicles. Under
the new regulations, such vehicles should also be no older than seven years to qualify as
TNVS providers.
Much like public utility vehicles, operators will be required to obtain a certificate
of public convenience (CPC) for every vehicle, while drivers must be screened and
accredited by the TNCs and registered with the LTFRB.
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A new classification, meanwhile, is also being created for premium taxi services
which, compared with regular taxis, will have the advantage of being equipped with GPS,
of having online and smartphone booking capability, a seven-year age limit, and cashless
transactions through credit or debit card payments.
Foreign Literature
What is Uber?
Imagine you are a MBA student at work in downtown Chicago who just got off
an endless two hour conference call at 5:30pm and realize that you are most likely going
to be late for a midterm which starts at 6:00pm unless you can get a cab. However, you
know the chance of getting a cab will be next to impossible at rush hour, so you pull out
your iPhone and order an Uber, which promises to arrive in 10 minutes or less (Heath,
2012). It arrives; the driver welcomes you by name, and provides a peaceful ride to
Kellogg for the midterm.
This is an Uber experience and it’s all for about 1.5 times the cost of a cab
(Mangalindan, 2012). Uber is a software company and does not own any of the cars
which transport Uber customers. Instead, Uber has negotiated contracts with drivers and
takes 25 percent of the fare. The initial launch city was San Francisco in 2010 and
Kalanick has been busy raising capital ever since. Kalanick and co-founder Garrett
Camp invested $200,000 as seed money, followed by $1.25 million in angel capital by
First Round Capital, an $11 million Series A round led by Benchmark Capital, Founder
Collective and First Round Capital, and finally $32 million Series B with Menlo
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Ventures, Jeff Bezos, Goldman Sachs and Benchmark in December 2011 (Sinanian,
2012)
As of March 2012, Uber service was available in Chicago, New York, Boston,
San Francisco, Paris, Seattle and Washington D.C. The firm was also conducting test
services in Los Angeles and Toronto. Upon a launch, Uber benefits from various means
of social media such as Twitter and Facebook, as users share their experiences. As a
result, the firm has experienced rapid user proliferation of 30-40% per month
(Mangalindan, 2012).
Why are Taxis Not Able to Compete with Uber?
In a depth study why Uber is able to disrupt the taxi market, this article online
(http://www.irrpal.com/out-of-the-box/what-uber-business-model-can-teach-investors-
about-market-analysis/) provides us with valuable lessons that we can apply when
conducting a marketing analysis and a full picture of its innovation and efficiency. The
study found the following:
Taxi drivers feel threatened by Uber.
It’s like Uber is taking market share from taxi industry similar to Amazon is taking
market share from bookstores. It is said that Uber is able to provide transportation in
affordable rates or as almost half the price of taxi on certain routes. Yet at the same
time, Uber drivers are said to earn up three times as much as a cab driver.
Lawmakers of various cities and countries are putting bans on Uber in order to protect
taxi drivers. Recently, a German court ruled, that Uber’s low cost UberPop could no
longer take on passengers due to a lack of public permission.
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But the problem lies on why the ordinary taxis can’t be as competitive as Uber? The
answer is that taxis are regulated. However, it doesn’t explain the full scenario.
What’s the sense of the regulation of taxis if makes them vulnerable to more efficient
competitors?
Taxi market is not a single market.
The taxi market is consists of different market segments. Each market segment is
characterized by different needs of customers and by different economics. The first
one is we classified as the street hail/cruising segment that includes those customers
who flag a taxi at the street. Those customers need a taxi right now. In such cases, the
for the transport system to function, it is essential to ensure that a constant supply of
‘flaggable’ taxis is available at any time. And in real life situation, there’s a perfect
balance of supply and demand. If there is an undersupply of taxis, a taxi can have a
bargaining power wherein he can demand an additional fare which is if you are the
customer, you might be tempted to pay and the driver can take advantage of the
situation. Another problem, customers cannot assess the reliability of drivers,
Ensuring safety therefore is critical. In order to solve these problems, to ensure a
sufficient supply of taxis at constant rates and to ensure the safety of passengers – this
market is usually regulated. One must be licensed to operate a taxi.
Uber is not a taxi operator. It is a match-maker who helps operators increase
capacity utilization.
The second kind of market is the pre-book wherein the customers who do not
need a taxi right now. They are able to pre-book their ride using mobile apps. The
pre-booking provides the opportunity to increase the capacity of utilization by
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matching supply and demand. Thus, matching of supply and demand is a major part
of the value, which Uber creates. Uber allows drivers to increase their utilization
rates, which in return enables them to operate more profitable. Hence, it is possible to
balance supply and demand in Uber’s market, the-booked and mobile apps supported
market, and no regulation is needed to make it efficient.
Legal requirements for taxis also try to ensure safety of passengers in the street
hail segment of the market. Again, no regulation is needed in Uber’s market segment.
Uber is able to ensure safety and quality standards by providing ratings of drivers.
Why is this possible? Because Uber’s business model is built on return-customers.
Uber can only operate profitably, if customers return frequently to Uber. Acquiring
customers is expensive for Uber. In order to recoup that cost of customer acquisition,
they need to ensure that the customer takes many rides with them. Uber therefore is
incentivized to generate happy customers. They do this by ensuring quality standards
for its drivers. If the driving style of an Uber driver is inspired by Nascar racers he
won’t stick with Uber for long.
Different segments = different economics
Legal requirements for taxis also try to ensure safety of passengers in the street hail
segment of the market. Again, no regulation is needed in Uber’s market segment.
Uber is able to ensure safety and quality standards by providing ratings of drivers.
Why is this possible? Because Uber’s business model is built on return-customers.
Uber can only operate profitably, if customers return frequently to Uber. Acquiring
customers is expensive for Uber. In order to recoup that cost of customer acquisition,
they need to ensure that the customer takes many rides with them. Uber therefore is
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incentivized to generate happy customers. They do this by ensuring quality standards
for its drivers. If the driving style of an Uber driver is inspired by Nascar racers he
won’t stick with Uber for long.
Synthesis
After reading and compiling the relevant literatures above, one idea remains – that
the Uber’s transportation had greatly made an impact to our taxi industry everywhere in
any parts of the world. Most likely it’s because of its innovation, revolutionizing the
traditional commuting of riding a tax.
Uber is an App-Powered on-demand car service provider for smart phones.
Notwithstanding its very unique name, investors have begun to take note of Uber during
the past year as it has stolen market share from traditional transportation companies.
Why Uber’s made a difference? Think about – efficient customer acquisition,
volume and the ability to maximize capacity utilization, customer service and long-term
customer relationships, and the ability to source a large number of reliable drivers. All
these factors are present in Uber’s more than what you can expect which makes other taxi
operators left behind.
The readings in this chapter will help the researcher to further describe and
analyze the Uber’s innovations and efficiency. These literatures, both foreign and local
will enlighten the researcher with the what, why and how Uber becomes successful in
penetrating the market and chance of what we think about taxi.
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Research Paradigm
INPUT PROCESS OUTPUT
Figure 2 Research Paradigm
Figure 2 explains the interrelationship of Input-Process-Output of the study which
focuses on the research on the Uber’s efficiency and transportation.
The input for this study refers to the profile of the respondents’ of selected areas
in Manila and Quezon in terms of their age, gender, civil status, educational attainment,
and salary. These variables will be used to further understand the background of the
respondents. The pursuit for understanding will be done through the process stage,
wherein data analysis on Uber’s efficiency and innovations in terms of Affordability,
Reliability, Safety, Comfortability, and Accessibility would be evaluated. The last is
output stage, wherein it will produce awareness of Uber’s efficiency and transportation
based on the findings.
Respondents from Selected Manila and
Quezon Areas
Independent Variables
Gender Ager Civil Status Educational
Attainment Occupation Salary
Data Analysis on Uber’s Efficiency and Innovation in
terms of:
Dependent Variables
Affordability Reliability Safety Comfortability Accessibility
Recommendations and Awareness of Uber’s
Efficiency and Transportation as an Alternative Means of
Transportation
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Definition of Terms
Transportation – is the movement of people, animals and goods from one location
to another. (Wikipedia.com)
Commuters – a person who commutes, especially between home and work.
(thefreedictionary.com)
Mobile Apps – are usually available through application distribution platform,
which began appearing in 2008 and are typically operated by the owner of the mobile
operating system. (Wikipedia.com)
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Bibliography
Guillen, M. “A Study on Development of Local Public Transport Policy: The
Case of Tricycles and “Habal-habal’ in Davao City, Philippines.
Heath, T.“Technology firms to heat up taxi wars in Washington region”, The
Washington Post, December 14, 2011,
http://www.washingtonpost.com/business/economy/technology-is-set-to-heat-up-taxi-
wars-in-washington-area/2011/12/14/gIQAvupquO_story.html (accessed March 4, 2012).
Mangalindan, J. “The Trials of Uber,” CNN Money, February 2, 2012,
http://tech.fortune.cnn.com/2012/02/02/the-trials-of-uber/ (accessed February 29, 2012).
Sinanian, M. “On heels of new funding and global expansion, car service Uber
launches in D.C. today,” VB News, December 15, 2011
http://venturebeat.com/2011/12/15/uber/ (accessed March 2, 2012)
Online Articles:
Jimeno, K. (2015) http://www.philstar.com/motoring/2015/04/22/1446311/should-we-
uber-drive.
http://opinion.inquirer.net/81096/uproar-over-uber-taxi)
Martin Hoffman, in Out of the Box, http://www.irrpal.com/out-of-the-box/what-uber-
business-model-can-teach-investors-about-market-analysis/
http://www.pinoytechblog.com/archives/seven-reasons-why-we-love-uber
interaksyon.com
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