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[[STRATEGY SELECTED: BUSINESS EXPANSION IN MIDDLE EAST]]

OUTLOOK:

BlaBlaCar is the world's largest long-distance ridesharing community. Conceived in December 2003 by Frdric
Mazzella, and founded in 2006, BlaBlaCar connects drivers and passengers willing to travel together between
cities and share the cost of the journey. BlaBlaCar has more than 20 million members across 20 countries.
As of April 2015, the company had raised USD$100 million from blue-chip venture-capital firms including ISAI,
Index and Accel, plus earlier rounds of 1.2 million from ISAI and 600,000 from founders, friends, and family.
[1]
On September 17, BlaBlaCar announced it had raised another US $200 million "primarily from US investors" in
a round that valued the company at USD$1.6 billion. [2]
The service is accessible via the web, mobile and also via apps for iOS and android.
Before the on-line payment, BlaBlaCar (ex-covoiturage.fr) has made his living with web ads and selling custom
ride sharing platforms for companies (e.g. Ikea, Carrefour) and cities.
The revenue (Business Model) was generated basically as below;

Most of BlaBlaCars revenue is derived from commission fee that averages at 10-15%
Rest of the revenue is coming from ad monetization (not sure but read somewhere) plus
partnerships (like the one with AXA insurance)

It usually doesn't charge any commission in the new markets like India and Mexico, so as to build a sizable
customer base and then slowly starts to monetize a market. As of now France, Spain, UK, Italy, Portugal &
Netherlands are the markets being monetized.
Backed by strong investors, BlaBlaCar aims to grow its customer base and eat away competition (through
acquisition) so that it can charge a commission fee that would be supported by a strong customer base
Since mid-2012, they deployed a booking system and then charge a few fees when people book a ride through
their site. Since the introduction of such system, BlaBlaCar's revenue has been increasing each year and the
company has developed to become a European market leader in ride sharing (current leader is carpooling in
Europe).

STRATEGY INTRODUCTION:
BlaBlaCar is serving 19 countries around the globe. It has grown significantly in the recent year facing a
competition from similar-concept companies like Uber, Lyft and Drivey.
For the next move, which strategy should it pursue in the future? Should it enter more countries? Add products
and services in existing countries? What would your recommend?
Since the company is facing a tough competition with similar-concept companies, it is noticeable that there is
still an untapped market that might potentially be BlaBlaCar next move. As BlaBlaCar is showing a clear
interest in operating and developing its business in emerging markets e.g.: India, Mexico. Next step for
BlaBlaCar is to expand in Middle East countries where people usually struggle to have a good taxi service as
well as crowded-cities would create a hassle for individuals to get a taxi.

Aboud George Khederchah

For: Strategic Management & Innovation Course Capstone Project Phase l


Coursera & Copenhagen Business School

WHY MIDDLE EAST?


Over the last few decades, the Middle East and North Africa region witnessed rapid population growth, with its
population swelling from 97 million in 1960 to 441 million [3] in 2015. The region also witnessed a process of
rapid urbanization during the same period. While only 30% of the regions population lived in cities and
Towns in 1960 -compared to 32% globally- the urban proportion of the Middle East has almost doubled to 57%
And exceeded the world average, which currently stands at 50%.
Case study of Dubai, United Arab Emirates suggested that though Dubai have invested heavily in developing
the Public Transport System introducing Dubai Metro the worlds longest fully automated metro system and an
operating 1,500 buses, still only 11% of population use it. The Taxi services available by the Road
Transportation Authority contains of 3,000 Taxi car of 35 million [4] trips in one year which still way behind
fulfilling market demand especially on weekends.

STRATEGY FORMULATION:
In order to achieve the selected strategy, prior study of below points should be intensively researched and
investigated;

PUBLIC POLICY UNDERSTANDING AND ADAPTATION: Looking at the current situation, Dubai has its
own government related taxi companies. Entry to this market would be quit hard to do as will impact on
governmental revenue and government budgets. Unlike in Cairo, for instance, Uber start to function covering
larger areas of Egypt itself. Suggestion that to carry discussion with
RTA (Road & Transportation Authorities) to tackle the idea of
partnering together. E.g.: some % will go to the RTA, and/or
taxies under governments company would be using BlaBlaCar
software as well.

Making use of Uber difficulty as a case study and its [5] struggle in


Dubai, some points can be taken and discussed thoroughly with the
Coverage Network of Uber in Cairo
RTA. The opportunity that UAE is the only country in Middle East
that doesnt allow taxi freelancing, which gives BlaBlaCar a potential
opportunity to establish a government relationship and operates in
this highly-consumer-demanding market. Chances that other countries potentially intergraded by Uber,
However, the competition is still fresh which also gives BlaBlaCar a good chance to entre as the Public Policy of
those countries are not yet formalized to allow/disallow concepts like Uber and BlaBlaCar.
CULTURE UNDERSTANDING AND PUBLIC SERVICES ACCEPTANCE LEVEL: While Middle East
countries fall under different types of cultures, behavior and social-relation aspects, majorly there is a wide
shared cultural practices where BlaBlaCar need to understand and adapt with. Following are some examples;
1.

Arab Culture is so about Family, unlike some European countries where individualism is taking over,
family loyalty is the greatest lesson taught in Arab families. BlaBlaCar should be expecting a miss-use
of the service in a sense of many-people will use one car. E.g.: A family. Since Arabs have
comparatively large-sized families, an option should be considered to notify the drivers about the
number of passengers.

2.

The Arab world is very influenced by Islam and it practices even if though not all Arabs are Muslims.
However, in that context, some of the family members, in particular, females would rather to have a
female taxi driver. That option can strength the use of BlaBlaCar if offered.

Aboud George Khederchah

For: Strategic Management & Innovation Course Capstone Project Phase l


Coursera & Copenhagen Business School

3.

The widely used official language in Arabic. However, Arabic might vary based on the spoken accent
of each country e.g.: Lebanese, Syrian, Iraqi, Saudi accents might vary to understand. By BlaBlaCar
understanding of this point, a customized lingual services can be offered through customized
marketing activities and campaigns, would be a very strong point for BlaBlaCar to have.

COST OF INTERNATIONALIZATION/EXPANSION: Starting to invest in Middle East requires full attention


to the details, ease-of-business, regulations and laws to help and protect businesses to grow. However, The
Free Zone of Dubai, known as Jebel Ali Free Zone (JAFZA) have been widely attracting investors to operate on
regional level. It offers a wide variety of services as we as a very minimal taxation. Needless to say, in the case
of BlaBlaCar, it also might be a potential decision to go to the Media City Free Zone where most of the hightech companies are based, e.g.: Google, Microsoft, Oracle, etc... The cost majorly will be running around
establishing a trade license, office operations and human resource. Following to that, an additional approvals
and permits should be taken from the DED (Dubai Economical Departments) so the company can operates
directly in the market.
Better understanding of the cost can be taken from the competition side. Uber have recently announced [6] an
investment of 250 Million Dollars to operate and grow business in Middle East UAE, Qatar, KSA, LEBANON,
EGYPT and BAHRAIN.
The cost of establishing a Fee Zone company can go around 6,800 USD for approvals and trade license issuing,
also, will be another 6,000 USD for DED permits. To operate a business, you need an office, majorly around
300 sq-m would cost of 40,000 USD. Aside to the Human Resource and other variable costs.

COMPETITION ANALYSIS: BlaBlaCar will majorly face a competition from the solo player Uber in Middle
East market. Ofc, some local similar businesses are starting to grow. E.g: Careem.
Uber Middle East is an office of maximum 20 employees, majorly, into business development and marketing.
Though normal people cannt feel Uber presence via local marketing activation, however, since UAE is majorly a
multicultural city, people carry the concept of Uber from Europe to Dubai.
Currant available data on Uber finances are not made for public, however, some leaks suggested that Uber is
not doing fine as a company. However, a leaked [7] document suggest that Uber was able to generate around
34,000 USD in Dubai and Abu Dhabi (probably, before the regional expansion) which obviously a loss making
business for Uber. Since then, Uber planned to invest 250 million to enhance and improve operation and
profitability in Middle East [6]

Aboud George Khederchah

For: Strategic Management & Innovation Course Capstone Project Phase l


Coursera & Copenhagen Business School

FORECASTING: Forecasting business in Middle East, especially for online business is a tough task. However,
taking UAE for example and setting a worst-case scenario-forecasting plan, we can look at below numbers [8];

Dubai Taxi - Owned by GOV. Sample Simulation


# Taxies
Trips Per year
Fair/Starting
Fair/KM
Average Trip/KM

Yearly Revenue


%Target Share via Government Partnership
BlaBla Revenue in UAE / Year
GP (Uber Estimation)*

Profit
Net Profit

$
$

3000
35,000,000
2.72
0.82

15

$ 1,857,648,340


0.35%
$ 6,501,769.19
20%

$

1,300,354
#N/A

Looking at the above simulated profit model, it has clearly missing the operating cost and other marketing and
variable costs. Needless to say, this model is highly dependent on government partnership of 0.35% targeted
trips shares and solely for one city in Middle East. It shows how potential is the Middle East market for a startup company like BlaBlaCar.

Aboud George Khederchah


For: Strategic Management & Innovation Course Capstone Project Phase l
Coursera & Copenhagen Business School

STRATEGY IMPLEMENTATION PLAN OF EXPANDING IN MIDDLE EAST:


As described above, moving business and expanding operations to new markets requires several points to be
considered, however, upon discovering some of this points in the above part of formulating a strategy, below is a
suggested implementation plan for the expansion strategy in middle east.

STRUCTURING THE ORGANIZATION:


BlaBlaCar operates in Europe via multiple geographical teams. However, those teams do the reporting mostly
through one chain of communication and reporting which goes upwards to the person sits on a chair in Paris HQ.
Suggestion while moving operations to Middle East, particularly Dubai Office is to follow the Divisional Structure
Organization, which will have a greater customer focus and the ease to coordinate with the HQ level of
communication.
Divisional structure-type will allow BlaBlaCar local MENA team to better understand the local background and
consumer behavior, which mostly related to cultural background and certain characteristics, needless to say,
adjusting and creating some services that is organically suits the market. Needless to say, creating those services
will be an outcome of smooth and quick coordination with HQ or other reporting office (e.g.: India office). Upon
formatting below structure model, a proper selection of international assignment candidates is required for the
set-up process of the actual company.

Aboud George Khederchah


For: Strategic Management & Innovation Course Capstone Project Phase l
Coursera & Copenhagen Business School

LEVERAGING ORGANIZATIONAL CULTURE


Moving forward to a characteristic market requires attention to the culture needed on subculture level. Middle
East is a famous market of its unique culture, however, understanding overall culture will give us better
understanding of the subculture required to leverage within the new MEA office. The culture of BlaBlaCar in HQ or
Europe office wont necessarily work out in MEA office. Middle east is well-know as a mix subcultures region, as
stated [9] Subcultures: Complex societies such as the United States are made up of a large number of groups

with which people identify and from which are derived distinctive values and norms and rules for behavior. These
groups have been labeled subcultures. A subculture resembles a culture in that it usually encompasses a
relatively large number of people and represents the accumulation of generations of human striving. However,
subcultures have some important differences. They exist within dominant cultures and are often based on
economic or social class, ethnicity, or geographic region.
To better understand what culture is needed, it also requires a recruiting plan based on business needs in every
country of middle east, hiring employees from Levant, GCC, and North Africa would requires a carful
understanding of each regions background. Subcultures can work greatly as it shares main value of the overall
context, e.g.: honesty, similar spiritual believe, similar social habits, etc.
The new culture should be evolving about respecting spiritual believes of the new employees, e.g.: prayer times.
Also, suggestion to offer life-work balance especially as the Arab employees
is so family-centric and rather enjoys time with family on over-time tasks.
For that, carful delegation of work, business planning, and resource
allocation should take place in order to maintain healthy and proactive
subculture in the new business unite of Middle East Office. Arabs are
exceptionally proud of their language, which is a strong, uniting bond right
across the Arab world, expect to work-out the office /or see/ a bit of

oriental and middle eastern type of office.


GOALS, MATRICES & KPI
Defining key objectives is a core factor of organizational success, specifying strategies and activities that the
company needs to achieve is central to get to this objectives, also, specifying the measures to this activities is
essential to understand how was the performance towards achieving those objectives, in another word, to better
understand the future performance and monitor the progress of establishing and expanding in a new market,
certain KPIs and Matrices needs to take place in order to assure that all process goes towards the goals that
based on the global strategy, suggestions of below items to take place further;

Aboud George Khederchah


For: Strategic Management & Innovation Course Capstone Project Phase l
Coursera & Copenhagen Business School

FINANCIAL GOALS & MATRICES


As mentioned above, the company is aiming to generate sales of 6.5 million USD$ via partnering with Dubai
Government-affiliated taxi company, that target was designed on the best understanding of the required netprofit requested by the HQ for the business to be worthily profitable. Also, since considering the risk of being
overly-estimated of the requested numbers, 80% achievement of the Net Profit assumption would be accepted by
maintaining healthy operating cost, in a chance to avoid any implication on the company performance P&L
FINANCIAL
OBJECTIVE

MEASURE
GUIDELINE

TARGETS

INITIATIVES

ACHIEVE
SIMULATED
TARGET

100%

6,501 MILLION USD$ IN SALES

PARTNERING WITH RAT

ACHIEVE NET
PROFIT BOTTOM
LINE

80%

1 MILLION USD$

MAINTAINING HEALTHY
OPERATING COST

CUSTOMER RELATED GOALS AND MEASUREMENTS;


Since BlaBlaCar is a direct service provider to end-user, ensuring companys relationship goals with customers is
essential,

market share achievement is a great indicator for the companys performance in the new market

against the competition, for that, since our business is online-based with considerable start-ups and strong
competition, Customer Retention Ration should be one of the most important goals, for that, below measures and
goal need to be part of the organization direction;
CUSTOMER
OBJECTIVE

MEASURE
GUIDELINE

TARGETS

INITIATIVES

ACHIEVE MARKET
SHARE
ASSUMPTION

25%

25% OF MARKET SIZE ASSUMPTION

MARKETING CAMPAIGNS

SUSTAIN
CUSTOMER
RETENTION

90%

ALLOWING 1 CUSTOMER TO SKIP THE


SERVICE MONTHLY

OFFERING MONTHLY
PROMOTION TO KEEP
CUSTOMERS

Aboud George Khederchah


For: Strategic Management & Innovation Course Capstone Project Phase l
Coursera & Copenhagen Business School

INTERNAL BUSINESS PROCESS GOALS & MEASURES:


Since our business process has a direct effect on consumer decision of using our services, we need to extremely
make sure that our services can reach as much our customer can go, for that, measuring our geographical
coverage where our service is in reach of customers;

Internal Business Process


Objective

Measure
Guideline

Targets

Service Coverage

70% of assigned
country

To be able to offer our service in most


of the geographical area of each
Widen Drivers Network
country

Initiatives

ORGANIZATIONAL LEARNING GOALS AND MEASURES:


New market entry is a new experience for our corporate business, our expectation that we need to adapt with the
new market dynamic and situation, for that, continues investigation and learning of this market is highly required,
our goal is to introduce 3 new services in the first entry year that comes from our R&D initiative efforts. To
accommodate with what previously mentioned, localization of our service might be highly advised to ease
communication with local end-user and market, our aim is to localize our services of 100% when it comes to
bring our communication to the local language via translation and design and create localized contents.

Learning
Objective

Measure Guideline

Targets

Initiatives

Market
Adaptation

3 New Products
Yearly

Adapted with Market Character


by customized offers

R&D Initiatives and


markets surveys

Localization

100% Localization of
MARCOM

Ease of communication between


customers and us

Translation and designing


of local content

Aboud George Khederchah


For: Strategic Management & Innovation Course Capstone Project Phase l
Coursera & Copenhagen Business School

CONCLUSION:
Market Entry and business expansion plan should be studied and planned carefully, our aim to tap on new market
like middle east will help us to go international, support our customers whenever they are and create financial
growth for BlaBlaCar. Formulating a strategy that is based on understanding of Public Policy, Culture, Cost of
Internationalization, and Competition status will help us better implement our master strategy, to do that,
implementing should consider re-working of our organizational structure by adding a geographically new business
unite, leveraging the culture based on that specific region and expectation of subcultures dimensions, and fixing
our goals and measures will allow us to implement our strategy successfully in alignment with the global direction
of BlaBlaCar.

1* Cowan, Matt (14 April 2015). "BlaBlaCar has turned ride-sharing into a multi-million-euro business.". Wired Magazine UK. Retrieved 21
July 2015 via web.
2* Scott, Mark (16 September 2015). "BlaBlaCar, a French Ride-Sharing Start-Up, Is Valued at $1.6 Billion". New York Times. Retrieved 17
September 2015
3* According to Wikipedia: https://en.wikipedia.org/wiki/List_of_Middle_East_countries_by_population
4* 2011 Figures by RTA Official Report, Pg:24: http://www.rta.ae/wpsv5/links/stats/RTA_stats_2011.pdf
5* According to Khaleej News, Local UAE Media: http://www.khaleejtimes.com/nation/transport/uber-taxis-in-dubai-facing-crackdown
6* According to Bloomberg: http://www.bloomberg.com/news/articles/2015-11-03/uber-invests-250-million-for-expansion-in-the-middle-east
7* Uber's numbers seem ugly either way you look at them: http://www.businessinsider.com/uber-leaked-financials-look-ugly-2015-6
8* Uber's Blog. A Deeper Look at Ubers Dynamic Pricing Model: https://newsroom.uber.com/guest-post-a-deeper-look-at-ubers-dynamicpricing-model/
9* Defining Culture and Identities: http://www.sagepub.com/sites/default/files/upm-binaries/45974_Chapter_1.pdf

Aboud George Khederchah


For: Strategic Management & Innovation Course Capstone Project Phase l
Coursera & Copenhagen Business School