STRATEGIC

ANALYSIS
OF
OLA CABS

Group 2
Sarthak Jalali (B19044)
Sharmishta R Somayaji (B19046)
Shashwat Nandan (B19047)
Shobhit Sharma (B19048)
Shrey Bhala (B19049)
Vivitsa Upasti (B19059)
Table of Contents

Executive Summary............................................................................................................................................................... 2
Introduction.............................................................................................................................................................................. 2
Industry Analysis.................................................................................................................................................................... 2
Porter’s Five Forces Analysis............................................................................................................................................ 2
Rivalry among competitors................................................................................................................................................ 3
Threat of new entrants......................................................................................................................................................... 3
Threat of substitutes.............................................................................................................................................................. 3
Bargaining power of buyers............................................................................................................................................... 3
Bargaining power of suppliers.......................................................................................................................................... 3
Inbound Logistics................................................................................................................................................................... 5
Operations................................................................................................................................................................................. 5
Outbound Logistics................................................................................................................................................................ 5
Marketing and Sales.............................................................................................................................................................. 5
Service......................................................................................................................................................................................... 5
Recommendations.................................................................................................................................................................. 6
References.................................................................................................................................................................................. 8

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Executive Summary

Before the introduction of online ride hailing services, the taxi market was fairly fragmented in
India. After the introduction of Ola and Uber, this market has consolidated to a certain extent and
these two are dominating this space. Ola, being the first mover in India has enjoyed a majority of
market share by employing certain strategies that have been discussed in the following report.
An attempt to analyse the industry has been made and suitable recommendations have been made
based on this analysis.

Introduction

Ola Cabs is an Indian ridesharing company based in Bangalore which has been valued at $10
billion as of October, 2019. It was founded in December 2010 by Bhavish Aggarwal, the current
CEO, and Ankit Bhati. Ola has enjoyed the first mover’s advantage in India, albeit facing fierce
competition from Uber. Despite its chief rival being a global player, Ola has managed to hold the
Indian market due to its aggressive expansion domestically, with its presence in more than 250
cities and towns. The company has recently made its presence felt internationally as well.
Keeping up with the changing trends in the automobile industry, Ola has also ventured into the
EV market with Ola Electric, which has recently been infused with $250 million by SoftBank.

Industry Analysis

Porter’s Five Forces Analysis

To understand the attractiveness of the industry through competitive ferocity, we have used the
Porter’s five forces framework. This will enable a thorough analysis of the external environment
of this industry.

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Rivalry among competitors

Rivalry in this industry is intense- one of the foremost signs is the constant discounts and
coupons offered by major players like Ola Cabs and Uber. Despite the many discounts offered by
the players, price is no more a point of differentiation. Other factors such as availability of the
cab, safety measures, variety of services being offered, like cab-sharing, cab rentals, etc. have
taken precedence over price, which tends to be similar . There are also the conventional and
specialized cab service providers like Meru which offer airport drop-offs and pickups.

Threat of new entrants

The technology, although recent, is easy to replicate and so is the business model. VCs are ready
to invest in such companies as we have seen, which further increases the threat of new entrants.
New entrants like Rapido have found innovative ways to adapt this model to bike-hailing and
sharing services. Customer loyalty in this industry is low, which means that customers would
lean towards lower prices. There could be barriers in the form of government regulations, lack of
skilled drivers etc. Moreover, the remuneration standards for driving-partners set by the
behemoths of the industry, like Ola and Uber are difficult to replicate for a new entrant.

Threat of substitutes

The industry has substitutes in the form of public transport, private vehicles. However, private
vehicles are becoming less, and less popular and public transport is not conveniently and easily
available everywhere. The convenience of this industry offsets some part of the threat.

Bargaining power of buyers

Low switching cost in the industry along with high market knowledge makes the bargaining
power of buyers high.

Bargaining power of suppliers

Suppliers like car dealers have low bargaining power since they are many but their customers are
limited. However bargaining power of skilled drivers is high because they are lesser in number
and are in high demand.

With Ola and Uber retaining a stronghold of the market and analyzing the five forces, the
industry cannot be deemed attractive. However, with services such as Electric Vehicles, the
dynamics can change.

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Company Analysis
To understand the internal capability of Ola in depth we have used the VRIO framework and
Porter’s Value Chain analysis.

1. VRIO Analysis

A tele-interview with Mr. Dinesh Kumar, HR Manager (Performance & Rewards) at Ola has
resulted in the conclusion that the culture of Ola has stood out as a resource that can be
categorized as a sustained competitive advantage. Apart from this, resources such as services,
brand reputation can be strengthened further to get a sustained competitive advantage.

2. Porter’s Value Chain Analysis

Inbound Logistics

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Ola does not own the vehicles it uses to serve customers. The vehicles are owned by the drivers
or renting companies. The drivers are not employees of the company, they are on contract basis.
Despite having large operations, inbound logistics are limited to hardware like smartphones and
internet connections.

Operations

Ola’s operations are majorly on its application which is its main source of value. The operations
from Ola’s side involves onboarding the drivers onto the application, after which the application
does all the work, right from booking a ride to payment.

Outbound Logistics

Owing to the nature of the industry, no specific outbound logistics worth exploring have been
found.

Marketing and Sales

Ola’s marketing happens on both social and traditional media. It is also heavily dependent on
word-of-mouth marketing. It offers a lot of promotional offers to retain existing customers and
attract the slippery ones from competitors.

Service

Ola has been credited with good customer service. Customer’s feedback is immaculately
incorporated in the application. Better the feedback for a driver, higher the number of rides
obtained by them. There is also a user-friendly grievance redressal procedure for handling
customer complaints.

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Recommendations
The recommendations are based on the core business of Ola and the key stakeholders that are
involved at each stage.

● Technology: Ola needs to do continuous improvement on their app platform as it is the most
important part of the business. They must continuously research about what difficulties its
customers and drivers face on the app. E.g. Drivers often find it difficult to reach the exact
location based on the suggestion from the app. On talking with some of the Ola drivers, they
complained of inaccurate map locations. Therefore, they must improve the GPS technology in
their app. This is the backbone of their business and hence this needs to be perfected.

● Driver partner: They also need to make efforts to make the experience of the driver better,
especially considering the lack of trained drivers in the market. Proper training must be
provided to the drivers for using the app. Apart from this they should also penalize errant
drivers, as some of the drivers remain online even when they are unavailable to accept user
requests. They do this simply to earn a bonus which the company provides for being online
for a certain threshold time. In addition to this, it being a service industry, Ola can also
undertake training for drivers on how to interact with customers to make their experience
better, which in turn will result in more rides for the drivers as well.

● User experience: Ola should also work towards improving the user experience. E.g: Drivers
get to know the destination only by asking the user, once the driver has confirmed the ride. If
the destination is not favourable to the driver, they often cancel it. Users face a lot of trouble
due to this. The company must penalize such drivers so as to curb this practice in order to
provide a better user experience.

● Subsidiary:

○ Ola electric: Electric vehicles are the next big thing in the automotive industry.
The next 3-5 years are going to be critical in the electric vehicle industry.
Therefore, the company must keep a close eye on its development so that they can
leverage it. They have already made good progress in this direction, as the
concerned subsidiary, Ola Electric, has become the second fastest unicorn (after
Udaan), when it confirmed $250 million funding from Softbank group in July,
2019. Apart from this, they should also give due focus to the self-driving vehicles
segment.

○ Foodpanda: Ola acquired FoodPanda’s India unit in Dec, 2017. It started off
well, but couldn't compete with the likes of Swiggy and Zomato as these
companies have been providing heavy discounts.Ola took the right decisions by

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 divesting money in it by laying off several employees. They should continue to
leverage their cloud kitchen brands through other platforms instead of providing
complete food delivery services for now.

● International expansion: Ola has done pretty well in the three international countries in
which it expanded its business, namely, Australia, UK and New Zealand. Ola was supposed to
expand to the Netherlands, Kenya, Dubai, Israel, and Brazil but because of a lot of
developments and some troubles that Ola faced in the home country, they have paused their
future international expansion plans.
So instead of expanding to new countries, they should focus on consolidating the market in
the three foreign countries where they are already present and can venture into other countries
in the long term.

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References

● https://en.wikipedia.org/wiki/Ola_Cabs
● https://www.livemint.com/companies/start-ups/how-ola-swung-a-funding-flip-
1565195590035.html
● https://www.livemint.com/companies/start-ups/ola-drops-foodpanda-delivery-lays-
off-several-employees-1558463350377.html
● https://inc42.com/buzz/ride-hailing-unicorn-olas-international-expansion-plans-
may-halt-report/
● https://www.businessinsider.in/here-are-10-facts-youve-never-known-about-
ola/articleshow/50729669.cms
● https://techcrunch.com/tag/ola/
● https://theatlas.com/charts/SJzf5hc8z
● https://tech.economictimes.indiatimes.com/news/internet/uber-and-ola-claims-to-
control-market-share/74049217
● https://bstrategyhub.com/business-model-of-ola-how-does-ola-make-money/

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