Fasten Challenging Uber and Lyft with a New Business Model Case Solution

1. What are the main elements of Fasten's operations strategy? What differentiates Fasten from Uber and Lyft? 

Fasten, which introduced itself as a start-up in the Boston ridesharing market, entered the competition in September 2015. The company introduced a fresh and unique model to drivers and passengers and vowed to be transparent in the system. What makes this start-up unique and different from other competitors is that it kept the fare of rides low and charged a flat 0.99-dollar fee to drivers per ride. This is something new in the market as other competitors such as Uber and Lyft are operating the business by adopting a commission-based pricing model and charging 20 to 30% commission. This unique operational strategy of Fasten differentiated them from its competitors as the start-up challenged the ride-share giants by introducing a transparent model with low fares and flat fees. 

Moreover, another attractive element is guaranteed hourly payment, which ensures drivers that they get the payment if they would remain logged in to the app. The flat 0.99-dollar fee per ride gives drivers the leverage to keep the rest of the money in their pocket, and they can believe in the system's transparency and fairness. Also, the incentives are aligned among drivers, riders and the company's bottom line, making the services more attractive. Another attractive attribute of Fasten is its in-app rating system, which allows the company to monitor and regulate drivers' performance, unlike Lyft. This shows that the company can provide security to riders, and drivers are bound to follow the rules of transparency as the system restricts them from abusing the model's flexibility. This is something unique value proposition offered by Fasten, as with this service, the company could easily identify patterns even if the drivers are squeaky clean. Also, the very same app also weeds out bad riders means the services work both ways and ensure the rider and drivers are both respectable for the company.

2. What are network effects (or network externality)? Please give some examples. 

Network effects which are also known as network externality, is a concept that explains that with the help of increased participants, the value of goods/services can be improved. The phenomenon leads to more improvements in experiences due to the more participation of users, and it also encourages other consumers to look into and benefit from the network. Moreover, in this particular concept, product/service demand depends on the other consumers who buy or utilize the product/service. To put it in another way, we can say that others' decisions sway the consumer's buying pattern in purchasing products. Other than the case, a suitable example to explain this terminology is the internet. Earlier, internet users were limited to the mass level, and its value was not perceived highly; however, over time, users started to gain access. By doing so, more information and knowledge were produced by users. Also, the improvement in website development started attracting an audience through which more users got connected and exchanged information. This way, the user experiences grew, and traffic increased, which eventually made the internet an interesting platform, increasing its value.