The following sections include research and observations related to the topic of expanding a service-based model in the city of Barcelona, Spain. These sections include reasons for and against investing in a business in the city, followed by a proposal in support of bringing the Uber business model to Barcelona.
Reasons a US company would want to invest in operations in the city of Barcelona:
1. Barcelona has a massive local population of over 5,000,000 inhabitants in the local area.
2. The city is a center of technology and innovation for the country, which is beneficial for attracting tech-savvy talent to a business.
3. Barcelona has over 250k local college students and two of schools of business ranked in Spain’s top 10.
4. Barcelona is an exciting destination city, which is attractive for talented employees to relocate to.
5. The quality of life that Barcelona is known for helps to foster retention and satisfaction among employees, which is known to correlate with business success.
6. The city is welcoming and encouraging towards new business, featuring resources through Barcelona Activa and the Departament d’Empresa i Ocupacio.
7. Barcelona features convenient access to all major forms of travel and shipment: air, river/sea, and land. Its airports and ports are sizable, and road infrastructure features highway access.
8. The location of Barcelona is relatively central to both the European mainland, and other Mediterranean locations.
9. The city’s economy is strong enough to feature of supplemental business services and retail access, which makes starting and conducting a business easier.
10. Having an international location in Barcelona is an accomplishment in itself, and showing that a business can operate successfully in the city shows the prestige of a corporation.
Reasons to be wary investing in expansionary operations Barcelona:
- Political risk:Despite the city’s overall economic prosperity, Barcelona has long been a center of political unrest. Catalonia (of which Barcelona is the capital city) has been fighting for its independence for many years, with a recent push occurring in latter half of 2017. The shakeup and instability that would occur if Catalonia were to separate from the nation of Spain creates unpredictable risk for any business that is invested in the region.
- Economic stability: Spain’s economy suffered heavily in the world economic crisis in 2008. The economy saw widespread loss of jobs and as a result, Spain became an emigrant country as many citizens migrated. The value of the Euro also declined over this period, which harmed any business holding the currency. It took four years and a Eurogroup bailout to begin the recovery of the nation. This kind of crisis will hopefully not occur again anytime soon, but the recent occurrence showed that economic downturn is possible and dangerous for the health of businesses.
Proposal to Expand Uber Services to Barcelona
Proposal: To expand Uber’s ride-sharing taxi and food- delivery services to the city of Barcelona
Introduction: Uber’s business model has been successful in hundreds of cities around the world. The ride-sharing app connects users to drivers who can provide transportation and deliver meals (via the newly added UberEATS feature). The app uses GPS services built-in to smartphones in combination with complex algorithms to produce route guidance, arrival estimates, and prices for Uber users to choose from. The company has been praised for creating employment and lowering taxi costs in the cities it operates in. Barcelona could be a great recipient for Uber’s services, if a mutual agreement can be established to bring the company in.
Potential Risks / Obstacles:
Although there are some inherent risks that would come in expanding Uber’s operations to Barcelona, those risks are similar to risks that Uber has overcome in many other cities around the world. The real main challenge would lie in gaining government approval and public popularity. If Uber were to establish operations in Barcelona, all signs point towards the investment becoming successful and profitable.
who is cj?
CJ is a Senior at St. John's University, hailing from Winston-Salem, NC. He studies finance in the Tobin College of Business. Following graduation at St. John's, CJ will be working on Data Analytics in the Internal Audit function at Synchrony Financial.