What Are The Factors Affecting Lyft's Performance

As Lyft continues to expand its presence in the transit market, external threats become their greatest concern. Lyft is vulnerable to many threats that could affect their financial position and relative market value. Thus, Lyft can expect a decrease in performance because of the factors beyond their control. With increasing competitors for ride-sharing services, large existing competitors such as Uber own a significant relative market share. Additionally, driver and customer loyalty which are influenced by online reviews (technology), can dictate the market strength for Lyft. Finally, government regulations for legal services such as taxi services can cause a risk to their investment and create liabilities. The most common threat to Lyft

Since this type of business depends on the number of drivers and customers, Lyft is always at risk of losing existing or new workers. The two-sided business model explains the market for ride-sharing services where it is difficult to satisfy both sides and obtain both loyal customers and drivers (Levinson, 2015). Thus, the decision of customers and drivers are influenced by how well Lyft can satisfy its internal and external stakeholders. Customer and driver reviews can be the deciding factor for a stakeholder to choose another company over Lyft. Lyft 's strongest competitor Uber is beginning to develop an easier system for its drivers and passengers to make ratings on the app (Hawkins, 2017). It is suggested that by making rating more visible and accessible to the stakeholders, they can encourage a better ride experience which will help them retain or attract new customers (Hawkins, 2017). In most cases, feedback or reviews can mislead customers to choose a different ride service and Lyft has yet to find a better systematic rating system than Uber (Lyft, 2018). In their rating policy, it states that when a "passenger rates a driver poorly", the driver will be compared to other drivers with low ratings on a 1-5 scale (Lyft, 2018). However, Uber has changed their rating system to where the driver or passenger has to justify or explain their rating (Hawkins, 2017). This feature

The government has issued new laws to support taxi driver and consumers who use government-funded services. A report suggests that taxi drivers will be able to provide discounts to passengers who call or use mobile applications (“Toronto Propose different rules for taxis”, 2016). Safety concerns have also raised the requirements of ride-sharing services to carry 5 million in liability insurance compared to 2 million dollars for taxi drivers (“Toronto Propose different rules for taxis”, 2016). Additionally, other proposed laws have introduced new fees for ride-sharing services such as licensing, mandatory training and background checks (“Toronto Propose different rules for taxis”, 2016). This “level playing field” allows taxi drivers to stay competitive with ride-sharing services such as Lyft but made Lyft services costly to operate (“Toronto Propose different rules for taxis”, 2016). Moreover, the debate of treating Lyft’s driver as employees rather than independent contractors has caused conflict with government laws and regulations (Smalley, 2017). The issue is Lyft drivers are not treated as regular employees rather they are independent, work themselves and not given regular duties (Smalley, 2017). Thus, as independent contractors, they have to incur more expenses which affect Lyft as a business because they could lose existing drivers if