Internal

Corp Strategy & Innovation Assignment

Internal

Ola Cabs / ANI Technologies Private Limited

Company background:
Ola is India’s largest mobility platform and one of the world’s largest ride-hailing companies,
serving over 250 cities across India, Australia, New Zealand, and the UK.  3rd December 2010
marked the historical date when India produced its rival to the world's largest cab aggregator
Uber in the form of Ola—founded by Bhavish Aggarwal and Ankit Bhati, the ride-hailing
startup-initiated operations in Mumbai before shifting base to Bangalore. Ola successfully
pocketed two cheques from prominent investors like Tiger Global and Matrix Partner. The Indian
taxi-hailing market is worth more than $40 billion. Market size is expected to increase by 6.3%
between 2022-2024. The increase is attributed to the changing lifestyles of travellers and the
growing disposable incomes of consumers, especially in Tier-I and Tier-II cities.
Ola was an instant hit and maintained its market share even after competition with Uber, which is
globally present in 70 countries. Ola was able to create value using the following points:
1) Used more hatchback cars which are economical in fare for the price-conscious Indian
market. These cars are cheaper in price, which can be affordable for the driver
community.
2) Gave people an option to pay by cash. Indian consumers needed help finding it safe to
save their credit card details in the app.
3) Cab booking through the call centre.
4) App in the local language became a boon for drivers in tier 2 and 3 cities.
Ola was able to gain momentum using the Indirect network effect. More users created a demand
for a higher number of drivers, and a higher number of drivers benefited cab users. The multi-
sided platform significantly pushed Ola to succeed in the industry. X
Internal

Question 1 - Is that startup disrupting the industry? If yes, how? If not, why do you think so?

OLA incorporated technology and a new business model, disrupting the unorganised taxi
industry. Ola, the Indian ride-hailing company, has significantly impacted the transportation
industry since its launch in 2010. By providing a convenient and affordable alternative to
traditional taxis, Ola has disrupted the market and challenged established players. Using
technology, such as its app-based platform, Ola has made it easier for people to book rides, track
their drivers, and pay for their trips. Additionally, Ola has expanded beyond ride-hailing services
and now offers a wide range of mobility solutions, including electric vehicles, car-sharing, and
mass transportation services. These efforts have positioned Ola as a leader in the industry, with a
60% market share in India as of 2021 and have made it one of the most recognisable names in
the transportation sector.

Market advantages

Ola took advantage of the lack of regulation for digital rideshare services in India; this has
helped them to have more enormous leaps in their market share. It is in Ola’s best interest to
devote resources (economic and human) to develop and lobby industry regulations that work to
their advantage. On the contrary, taxi services have a historical political dependence on the
government due to their Union dynamics, which gives them a competitive disadvantage. In
addition, the ownership of smartphones is rising in emerging economies, providing them with an
advantage in their market penetration in many parts of our country where they are operating.

User experience

Door-to-door experience is one of the most transformational capacities within the rideshare
services; before this, time and location were significant components for finding a taxi provider in
many cities where Ola operates. The agility to open an app at any time and any place (where the
OLA service is installed) is a big game changer; before this, you must be in a location near taxi
transit and know the telephone of the local provider with the disadvantage that there might not be
the service provider at the time and place needed. In addition, price and transaction processes
were also significant innovation moments. Not having to carry cash (or obsolete credit machines)
and making price ranges (and demand variations) transparent for users is also one of the
significant benefits for user experience in the app services. To date, taxi services in major cities
still have overpriced services and need to be clarified to the price tabulation criteria.
Internal

Porter’s 5 forces study during Cab aggregators came to India.

Porter’s 5 forces Before Ola (Informal taxi Post-launch of Ola

operators[within city and
inter-city, Auto services)
Power of suppliers Low High
Power of customers Low High
Threat of substitutes High Low
Competition in the industry Medium Low
The potential of new entrants High Low

Disruption in any industry could be because of the following situations:

1) Due to the technology shift.
2) Regulatory changes.
3) Change in the business model.
4) Societal or change in consumption pattern.
With Ola, the way people booked the cab completely changed. It is now via the app and calls
centres to a very few extents. Ola identified itself as a technology firm and never had to oblige
the rules and regulations of the cab industry. Ola ensured that the way tax services are consumed
by society changes, and people get an affordable, reliable, economical and safe way of travel.
Old drove to this disruption because it saw digitisation growth in the country. Smartphones are
accessible by many Indians, and so is the disposable income for a comfortable commute. India’s
demographic also played a key role. As per Statista, 67% of the population falls into working.

Question 2 - Which incumbent in that industry is most affected? What is the incumbent's
response? 

The rise of Ola and other ride-hailing companies has affected the traditional taxi industry. These
companies have disrupted the traditional taxi business model by offering a more convenient,
affordable, and reliable alternative to conventional taxis. As a result, many traditional taxi
operators have struggled to compete and have seen a significant decline in business.

In response, some traditional taxi operators have sought to embrace technology and adopt similar
business models to Ola and other ride-hailing companies. For example, some taxi companies
have developed their app-based platforms and started offering ride-hailing services to customers.
Other traditional taxi operators have formed partnerships with ride-hailing companies to stay
relevant and compete in the market.
Internal

However, these efforts have only sometimes been successful, and many traditional taxi operators
have continued to struggle in the face of competition from Ola and other ride-hailing companies.
Conventional taxi operators have sometimes been forced to adapt their business models, cut
costs, and find new ways to generate revenue. Ultimately, the traditional taxi industry is still
undergoing significant changes, and the impact of Ola and other ride-hailing companies will
continue to be felt for many years.

Question 3 - What will you suggest the startup do (in terms of their strategy) in the next 3-5
years?

Note – We are excluding the existing businesses of Ola like Ola fleet, Ola financial services,
Ola foods, Ola EV bikes for consumers etc. and emphasizing new ventures that Ola could
think of

Plan 1: Ola Car Pool

Objectives:

1) To reduce millions of vehicles from the road in tier 1 cities already choked.
2) To reduce pollution, travel costs and better professional networking opportunities.

Porter’s 5 forces Ride-sharing app/Business

Power of suppliers Low
Power of customers Low
Threat of substitutes Low
Competition in the industry Medium
The potential of new entrants Low

Target audience: Officegoers

Few regional players like Quick ride operate in certain cities. Ola has an absolute advantage of
customer databases across India and has benefited from the indirect network effect. Their only
investment will be building an additional feature in their robust app, allowing cab sharing among
individuals residing in a similar area whose destination is also closely matching. New
Delhi/NCR, Mumbai, Bengaluru, Chennai, Surat, and Pune will be the first focus cities. Later
will stage into tier 2 cities where we see many people travelling to work in the exact location on
almost every date. Ola already has a support team working for the cabs business, and they can
support this additional function.

Cabs/Taxis can still be shared among others. However, the challenge is that an individual could
be on a different route, and cabs/taxis entertain them. This leads to a waste of time for the rider
Internal

who boarded the cab/taxi first. Drop time also could vary based on the drop location of other cab
mates. Safety is another factor. Hence, carpooling among officegoers is likely to be a better
option.

Ola can benefit with a commission of 6%-10% of what the user pays to use the carpool service—
no charges from the individual offering this service/offeror. Users are more likely to benefit from
this service, and Ola should focus only on leveraging controls from the users.

Plan 2: Ola Car rentals/lease

Objectives:

1) Allow users to lease cars for a short term. (Up to 1 month).

2) Provide a platform where individuals can lend their car to Ola, and users can lease it for a
time. Ola will have little CapEx here by buying cars.

Porter’s 5 forces Car lease business

Power of suppliers Low
Power of customers Low
Threat of substitutes Low
Competition in the industry Medium
The potential of new entrants Low

Target audience: The age group 23-30 years old belongs to the middle class segment, SME
organizations

Post-Covid era, the cost of living and interest rates on loans have significantly shot up, and so are
the families willing to travel higher than ever. Sometimes it is just revenge travel. Ola Car Lease
intends to have this group as their intended customers.

An individual willing to invest 10-15 Lakhs INR can invest in getting a car (New or pre-used)
and lend it to Ola. Ola, as an aggregate, will list the vehicle offered and investinvestorset a fixed
income monthly.

On the other hand, a user can spend money on something different than purchasing a car. They
need not spend it on the car's maintenance, registration, insurance or any other ad-hoc expenses.
However, they will be required to pay slightly higher only when they want to use the vehicle.
The cost of ownership will be less however cost per KM will be higher for the user.

Currently, we see zoom car, Myles, Avis and a few local vendors as competitors in a few tier 1
cities. However, Ola has the potential to launch this across India. Brand awareness and
Internal

consciousness are higher with Ola. Customers and investors are more likely to trust Ola than the
other brands because of their presence in broad offerings in the mobility industry.

Plan 3: Autonomous driving ( Ola to invest on future technologies)

Objectives:

To cope up with Future technological disruptions by competitors in mobility industry

To reduce the man dependence in providing the mobility services to customer

Porter’s 5 forces Autonomous driving

Power of suppliers High
Power of customers Low
Threat of substitutes Low
Competition in the industry Medium
The potential of new entrants High

Currently all Automotive OEMs are heavily investing on validating the autonomous driving (eX
Tesla,Mercedes, etc). This technology has two parts to it , one is to have complete AI based
driving and second is to have semi autonomous ( driving from remote location) technology.

Currently battery vehicles technology has reduced the complexity of the vehicle significantly by
replacing engine with simple electric motor attached to wheels ,which are driven by centralized
electronic controller. With the years to come this technology will get commoditized leading to
significant competition in Automobile industry , Hence Automobile OEMs are researching and
investing on different business model and different products (Ex: Mercedes Benz Germany is
investing on developing small cars which can replace taxi services , also investing on developing
Software for Automobiles etc.).

Hence Ola has to come with a systematic investment plan by collaborating with current OEMs
who are developing such technologies in India.

Plan3 Insurance solution

Objectives:

Optimize the Vehicle insurance premium based on taxi drivers’ driving behaviors, vehicle
conditions(by monitoring number KMs covers, number of services done per year/kms).
Internal

Reduces the insurance cost liability on genuine taxi drivers

Also to reduces the liability on insurance company due to reckless taxi drivers

Indirectly improve the driving behavior of taxi drivers.

Porter’s 5 forces Vehicle insurance solution

Power of suppliers Low
Power of customers Low
Threat of substitutes Low
Competition in the industry Medium
The potential of new entrants Low

Currently calculation of vehicle insurance premium amount for commercial taxi’s or cars is
entirely based on flat yearly depreciation percentage considered for particular car with some no
claim bonus which does not serve any purpose for genuine drivers, any small amount claim will
increase the insurance liability for genuine drivers of taxi

On other hand reckless drivers who are claiming insurance on regular basis are liability for
insurance company

To balance out this , Ola can act as information provider to insurance company based on which
insurance premium can be decided. The information can involve below information

1. 1.Number of kms covered per year

2. How many times driver exceeded the speed limit range (i.e more than 100kmph) .
3. Customer compliant for rash driving and negligent driving
4. Registered police cases on violation of traffic rules
5. Vehicle service history / details about spare part change etc/ Emission certificate history.
6. Number of hours vehicle under operation per day

The above such parameters can be deciding factors to decide the insurance premium amount for
the insurance company.

Security cams

Commercial EV 2-wheeler – for delivery boys

Internal

The five major elements of strategy

1) Arenas
2) Vehicles
3) Differentiators
4) Staging
5) Economic logic
Testing the quality of the strategy:
1) Does your strategy fit with what’s going on in the environment?
2) Does your strategy exploit your critical resources?
3) Will your envisioned differentiators be sustainable?
4) Are the elements of your strategy internally consistent?
5) Do you have enough resources to pursue this strategy?
6) Is your strategy implementable?