A CASE STUDY ANALYSIS OF

“CHAOS AT UBER:

THE NEW CEO’S CHALLENGE”

Members of Group 2

Names Enrolment Number

Chahat Gupta 20BSP3034
Prachi Das 20BSP1623
Priyanka Kambhoj 20BSP1737
Umang Goel 20BSP2692
Sanjeeva 20BSP2115
Akash Dharmale 20BSP0139

Under the Guidance of

Prof. Jan Surya
 TABLE OF CONTENTS

Introduction_______________________________________________________1

Questions and answers following the case study______________________ 2

 INTRODUCTION
The case talks about the crisis at ride-hailing service Uber Technologies Inc (Uber). While
Uber had tasted great success, its journey had been a bumpy one. On June 21, 2017, co-
founder Travis Kalanick (Kalanick) stepped down as CEO of Uber in the face of a
shareholder revolt that made it untenable for him to stay on in that position. His resignation
came after a review of practices at Uber including allegations of sexual harassment, a
corporate theft lawsuit, defiance of government regulations, reports of misbehaviour, and a
toxic corporate culture leading to the departure of some key executives.

Uber followed a “founder-friendly” governance structure wherein Kalanick, because of the

special class of shares he owned, enjoyed sweeping authority on the Uber board. The case
highlights Uber’s boardroom battle which escalated in August 2017 when a small group of
shareholders aligned with Kalanick dissented against Uber’s biggest investor Benchmark
Capital, after it filed a lawsuit to oust Kalanick from the board. According to some industry
observers, Uber ignored corporate governance in its pursuit of growth and valuation, and
flouted ethical norms while hiding behind notions of disruption and innovation. Some key
challenges before Dara Khosrowshahi (Khosrowshahi), the newly appointed CEO of Uber,
were: fixing Uber’s culture and helping it evolve some of its own core cultural practices to
foster growth and improve stakeholder relationships; working with a splintered board and
ushering in corporate governance reforms; and regaining the confidence of its investors,
employees, and customers.
 QUESTIONS AND ANSWERS FOLLOWING THE CASE STUDY
Q1. What you have understood from the case study?

We analysed that Uber faced number of problem that arose because the company ignored
ethical and legal standards in the name of disruption and valued money, power, and control
above morality. Uber’s Board of Directors did not care about governance issues and let
Kalanick run the company the way he did as long as profits were generated. There was a
weak corporate governance and company failed to address workplace issues.

Critics said that the continued silence of board members had encouraged employees to
commit and engage in criminal conduct, opened the door to corporate wrongdoing, and
contributed to more lawsuits. Only when the scandals reached too far and investors realized
that they could lose their money if Uber’s valuation was marked down, had the board woken
up and fired Kalanick.

Q2. Why selected this one?

We selected this case study, because the problems, challenges mentioned in this case study
are very common these days, in various organizations, because I have heard good reviews
about UBER, but when such situations came up, I wished to explore more in this aspect to
understand the right and ethical steps that can be adopted to avoid such situations and ensure
good and healthy working environment in the organization.

Q3. How you are able to relate this case to business ethics & governance?

This case is related to business ethics & governance as there are events in this case like
sexual harassment, issues with cultural environment of the company and others as well which
are not appropriate as per the business ethics and governance point of view.

Experts attributed the root of Uber’s problems to weak corporate governance marked by a
rapid chase after growth, the cult of Kalanick, and the company’s failure to address
workplace issues. They felt that Uber’s Board of Directors did not care about governance
issues and let Kalanick run the company the way he did as long as profits were generated and
growth achieved.

Critics contended that Uber’s board had failed to institute a corporate governance framework
that focused on the legal, regulatory, institutional, and ethical environment of the company.
They added that the continued silence of board members had encore aged employees to
commit and engage in criminal conduct, opened the door to corporate wrongdoing, and
contributed to more lawsuits.

There were ego battles among the board of directors of Uber which is totally against a
business ethics & governance of any company.

There were also positive culture norms which are as follows:

We build globally, we live locally. We harness the power and scale of our global operations
to deeply connect with the cities, communities, drivers, and riders that we serve, every day.

We are customer obsessed.

We celebrate differences. We stand apart from the average. We ensure people of diverse
backgrounds feel welcome.

We make big bold bets. Sometimes we fail, but failure makes us smarter. We get back up, we
make the next bet, and we go!

So in this way we can relate the case with Business ethics and governance both in positive
and negative manner.

Q4. State its issues, problems, challenges, achievements, frauds and unique things that the
case is raising.

Issues, Problems, Challenges, Achievements, Frauds and Unique Things

ISSUES:

 Sexual harassment-a minimum 200 claims of sexual harassment against the

company still there was no proper action taken, even after the employees
complaining the HR team.
 Benchmark Capital which is the major shareholder had accused Kalanick of fraud
and of interfering in the search for a new CEO for the uber. That means there is
huge friction between the founder and shareholder.
 There had been various cases of sexual assault on passengers, this points on the
company’s background checks on drivers had not been stringent enough. As this
is huge issue which has damaged the reputation.
 Uber voting system-followed a founder-friendly governance structure wherein
some board seats carried more voting power than others, some shares have one
voting power and the other class has the 10 or more voting power.

PROBLEMS:

 Uber company ignored corporate governance as it the pillar for any organization
in its pursuit of growth and valuation also flouted ethical norms while hiding
behind notions of disruption and innovation.
 The uber company board’s aggressive infighting was spreading confusion and
uncertainty among Uber’s investors, customers, and shareholders. Which is huge
problem as it is the fundamental problem with this company’s future itself become
uncertain.
 Revenue of the company is constantly increasing but the bottom numbers that is
the profits are not showing up so it is keep on burning cash through fund rise.
 200,000 users uninstalled their Uber accounts as the Kalanick decided to be
member of Trump’s Business Advisory council.
CHALLENGES:

 As the company newly appointed CEO he should take proper steps for the future of
the company, which included innovating and growing responsibly as well as
acknowledging and correcting mistakes of the past.
 New CEO has to take every investor and the founder in to consideration, and also
don’t yield for the old infighting.
 It cannot keep on burning cash it should have to turn profitable otherwise valuations
will tumble.
 Gaining market share against the constant decline in the market share.

FRAUDS:

 Alphabet’s Law suit - one of the executives of the Uber downloaded the self-driving
technology documents and started his own company later it was acquired by the Uber.
 Trying to evade government officials who were trying to clamp down on Uber in
areas where its service had not yet been approved through the Grey ball software.

ACHIVEMENTS:

 Uber gross bookings crossed 8.7 billion dollars in the second quarter of the 2017
from 1.5 billion dollars in 2015 quarter 1.
 UBER have received the total funding of around 12.9 billion dollars it is the one
of the highest.

UNIQUE THINGS or SETTLEMENTS:

 Uber settled its legal dispute over trade secrets against Waymo in a deal that gave
Alphabet a 0.34 percent stake in Uber.

Q5. What are your observations are and how you are going to act, suggest and recommend on
the related case?

Observation on the Case:

From the case, we analysed that the culture at Uber is toxic because of various reasons that
are allegations of sexual harassment in the company, a corporate theft lawsuit, defiance of the
government regulations, reports of misbehaviour which is leading to the departure of some
key executives and the harm it is causing to the company’s reputation.

Recommendations and Suggestions on the Case:

Being the CEO Khosrow Shahi has to take some of the major steps to revive the reputation of
the company and along with that his upmost priority is to make the work environment at Uber
much more safer for its employees. The steps that can be taken are ->
1) The company should pass on an official statement of apology on behalf of everyone at
Uber globally, for all the mistakes they have done and promise to never repeat that again.

2) New Hiring in the HR Department is needed who would genuinely listen to the problems
of its employees and come out with a solution.

3) A special committee or team should be set up to look upon the safety of every employee so
that he/she do not have to face sexual harassment or abuse of any sort.

4) More stricter norms should be implemented and anyone going against it should be
punished or penalised whichever is suitable.

5) Various revival activities should be undertaken by the company to maintain the mental
well-being of the employees.

In this way, the company can create a positive workspace for its employees and can rebuild
its reputation in the market.