Give me an example of a business model with a mission statement.


Answer: Mission Statement: 

Transform the transportation industry with improved customer experience, efficient operations, and reliable services with cost-effectiveness and minimal environmental impact. 

This will be a good mission statement for Uber as it represents the transportation industry as a whole in which Uber can make an impact. Also, we wanted to be clear about the firm’s north star, which is improved customer experience, efficient and reliable operations with low cost, and minimal environmental impact. 

Uber’s business model: 

Value proposition:  

Uber’s value prop is to offer transportation services via internet orderings from the customer. Customers order a transportation service via a mobile-enabled app and get instant or real-time updates about the order status. This significantly differs from the current taxi-cab model, where customers must hire a taxi-cab by waiting in line at the airport or taxi station. The existing taxi hire model has a poor experience for customers and comes with a high cost. 

Activities, resources, and capabilities: 

The critical activity for Uber in this business model is to connect the passengers and drivers on a demand basis concerning a location with a computer algorithm and deliver the service over a mobile app for both drivers and passengers. 

Uber needs computational resources and engineers to build the algorithm. Also, Uber needs to develop capabilities to attract drivers and passengers to its platform for each market, country, and city. 

Revenue model: 

In this model, Uber customers will pay per hire, which will include the transportation charge, driver’s labor fees, and the driver’s car maintenance, including fuel and running and maintenance expenses of the car, and a small commission for Uber that will be the revenue for the company. On average per ride, Uber expects to earn a 3% commission for basic taxi-hire service. Top-of-the-line services like Uber-X may earn up to 10% commission. 

Scope of the enterprise: 

This business model's primary customer segment is millennials with smartphones with internet-enabled services. 

 

This business model's horizontal scope can be vastly expanded to different products. Uber can start with a standard taxi-hire service, and for the luxury segment, it can offer Uber-X and Uber-SUV. Uber can also branch to adjacent industries like food delivery with Uber Eats and freight delivery with Uber Freight. 

 

The business’s sheer scope is to develop the in-house demand algorithm for connecting drivers and passengers. Uber does not intend to employ drivers. Instead, it will lease/contract the drivers on a per-ride basis and pay the contract cost to the drivers. In contrast, the computational and other IT infrastructure services will be leased/rented on services like Amazon Web Services or Microsoft Azure. This will enable Uber to be agile and move fast in various markets while protecting its intellectual property, the algorithm.