AN ASSESSMENT OF CHALLENGES AFFECTING THE EFFECTIVENESS OF TAXI BUSINESSES IN NIGERIA(CASE STUDY OF UBER,  LAGOS STATE)

CHAPTER ONE

INTRODUCTION

1.1 Background of the Study

In Lagos, Nigeria, the taxi industry is a sizeable and essential part of the city's transportation system. It is essential for giving local residents and visitors access to mobility and transit options. However, taxi industry in Nigeria has experienced massive competition and entry by private individuals and small-scale firms (Gilbert, Hitt, Ireland & Sirmon, 2019). These new entrants make use of e-platforms/hailing as a strategy for sustainability. According to Johnson, Dunn & Sack (2020) in their insight to impact's systematic review of platform ecosystems in Africa, Nigeria has become one of the largest e-hailing markets in Africa within a space of few years. E-hailing platforms entered the Nigerian taxi industry for the first time in 2014, with Uber starting its operations in Lagos (Meagher, 2018). Uber is a multinational transportation network company that operates a ride-sharing and transportation service platform. It was founded in 2009 and has since become one of the most well-known and widely used ride-hailing services in the world.  Beyond that, Uber has extended its operations to the nation's capital territory in 2016 (Johnson, Dunn & Sac2020). In the same year 2016; Taxify (currently known as Bolt) then joined the taxi market in Lagos 2016. The industry now comprises a few big international players, as well as several smaller homegrown/local firms such as Oga Taxi, which has extended its business operations to Abuja (The Africa Report 2018; Johnson, Dunn & Sack 2020; Meagher, 2018). Further more, The issue at hand is how well and steadily these businesses can create long-term plans that will allow them to hold onto their leadership positions in the face of intense competition. It is very pertinent for every business organization in this modern time to embrace constant strategy restructuring (Okechukwu; Ekwochi & Eze, 2018). Uber Technology Inc., a ride-sharing transportation firm  was introduced in Nigeria in the year 2014 in a bid to achieve competitive advantage and remain on top in a highly competitive and saturated market that is witnessing a lot of low-cost local taxi operators, has adopted a number of strategies (Martin, 2016).These tactics have given the business a competitive advantage over rivals in the two Nigerian cities where it operates. Uber's strategies include sharing economy consumption, a flexible price structure, celebrity brand ambassadors, etc. Uber primarily employs the disruptive technology/innovation strategy out of all of them. According to Mutai (2017), Uber uses novel digital transformation technology and ensures digital interference in the taxi industry. Technology disruption is the emergence of rapid technological advancement in industries (Chau & Witcher, 2016)

Additionally, Uber's consumers primarily consist of individuals experienced in procuring transportation services in Nigeria, The differentiating factor lies in their value-added initiatives, which encompass comfort, convenience, safety, rapid response, and unwavering reliability. This firm has progressively augmented the overall demand, often achieved when a business enterprise devises superior, cost-effective solutions to address a widespread customer requirement within a fiercely competitive sector (Clayton; Dillon; Hall & Duncan, 2016). however, the firm leverages mobile taxi apps, which have experienced a remarkable surge in popularity in Lagos State and the Federal Capital Territory of Abuja (Uber Technology, 2016). Uber Nigeria have ventured into an already saturated taxi industry, implementing innovative and disruptive strategies through contemporary technological applications. Traditional taxi drivers in the areas where Uber operates are worried about this action since it affects the future of their industry. This is demonstrated by the fact that some independent drivers are no longer able to compete effectively, while others are still trying to make ends meet while keeping their status quo with no apparent intentions of changing their business practices to keep up with the times. However, there is evidence that other transportation providers have entered the market using some of Uber's techniques. This should further motivate Uber to implement all essential measures to maintain their innovation-driven competitiveness, as it is the sole path to guarantee their long-term viability (Gilbert, Hitt, Ireland & Sirmon, 2017).Therefore, a survey will be conducted  to  assess the challenges affecting the effectiveness of taxi businesses in Lagos state

1.2 Statement of the Problem

Uber has brought innovation and convenience to the transportation industry in Nigeria, but it has encountered unique issues in this dynamic and densely populated region. It faces several challenges that affect its effectiveness in Lagos State, Nigeria. Some of theses challenges includes; regulatory hurdles, safety concerns, and competition from local transportation providers. However, Uber drivers may encounter issues related to licensing, permits, and compliance with transportation regulations. Also, drivers can face safety challenges, including confrontations with passengers or attempts at fraud.  Additionally, Lagos roads and infrastructure can be challenging to navigate as  affects the efficiency and speed of trips. According to Ogbonna (2019), inaccurate or outdated mapping data can result in longer routes and delays.

Further more, the consistency and stability of income are influenced by factors such as passenger demand, time of day, market conditions, and seasonal variations. Earnings may vary widely, impacting drivers' financial stability thereby affecting the effectiveness of taxi businesses in Nigeria. Also, high fuel costs can be a significant expense for Uber drivers in Lagos. Fluctuations in fuel prices can impact their profitability. However, it is in the light of these that the study seeks to assess challenges affecting the effectiveness of taxi businesses in Lagos state

1.3  Objectives of the Study

The main purpose of this study is on an investigation on the strategies for enhancing the competitive advantage of Uber taxi business in Lagos state. Specifically, the study will;

1.  Identify the environmental factors  affecting the effectiveness of taxi businesses in Nigeria.

2. Investigate on the customer related factors  affecting the effectiveness of taxi businesses in Nigeria.

3. Assess the organizational factors  affecting the effectiveness of taxi businesses in nigeria.

1.4 Research Questions

The following questions have been prepared for the study:
1. What are the key challenges faced by taxi transportation services in Lagos state?

2. To what extent has the emergence of Uber enhanced the taxi transportation business in Lagos state?

3. What strategies have contributed to the improvement and maintenance of the competitive advantage of Uber's taxi transportation business in Lagos state?

1.5  Significant of the Study

An investigation on the strategies for enhancing the competitive advantage of Uber taxi business in Lagos state will be revealed to the government at various levels, stakeholders, business owners, Uber drivers, media houses, policy makers and people in Lagos in this study.  It will reveal to policy makers, researchers and the public about the various impacts, challenges, and opportunities associated with ride-sharing services. Additionally, it will help stakeholders and business owner  to contribute make more informed policy making, business strategies, and have a better understanding of the evolving landscape of transportation and the gig economy. Further more, subsequent researchers will use it as a literature review. This means that other students who may decide to conduct studies in this area will have the opportunity to use this study as available literature that can be subjected to critical review. Invariably, the result of the study contributes immensely to the body of academic knowledge with regard to an assessment of challenges affecting the effectiveness of taxi businesses in Nigeria.

1.6 Scope of the study

The scope of this study is boarded on an assessment of challenges affecting the effectiveness of taxi businesses in Lagos state. Theoretically, this study will discuss the environmental factors affecting the effectiveness of taxi businesses in Nigeria, investigate on the customer related factors affecting the effectiveness of taxi businesses in Nigeria and  assess the organizational factors affecting the effectiveness of taxi businesses in Nigeria.

Geographically, the study will be delimited to people in Eti- Osa local government, Lagos state.

1.7 Limitation of the study

In the course of carrying out this study, the researcher experienced some constraints, which included time constraints, financial constraints, language barriers, and the attitude of the respondents.

In addition, there was the element of researcher bias. Here, the researcher possessed some biases that may have been reflected in the way the data was collected, the type of people interviewed or sampled, and how the data gathered was interpreted thereafter. The potential for all this to influence the findings and conclusions could not be downplayed.

More so, the findings of this study are limited to the sample population in the study area, hence they may not be suitable for use in comparison to other schools, local governments, states, and other countries in the world.

1.8 Definition of Terms

Competitive: as good as or better than others of a comparable nature.

Taxi: a motor vehicle licensed to transport passengers in return for payment of a fare 

Transportation: the movement of goods and persons from place to place by the means of a vehicle.

Strategies:  plan of actions designed to achieve a long-term or overall aim.