Porter's Five Forces Framework is a tool for analysing competition of a business.

It draws
from industrial organization economics to derive five forces that determine the competitive
intensity and, therefore, the attractiveness of an industry in terms of its profitability.

Figure : Porter’s Five Forces Model

Porter’s Five Forces Model for Transportation industry in is given below

1. Bargaining Power of Buyer : (High)

The strength of customers can affect the performance of a firm by lowering the prices
placed on the products and services.

 Switching Cost and Substitutes:

Customer are sensitive to price variations due to the existence of alternatives and
rivals. As the market grows bigger, the number of opponents bringing customers
more choice also becomes larger thus makes the switching cost for customers
comparatively low. Customers can therefore freely choose between Uber, Ola,
Rapido or other emerging ride-sharing entities at no cost.
2. Bargaining Power of Supplier: (High)

This is the ability of suppliers to drive up the prices of a company’ inputs. The threat of
supplies to Rapido is experienced below:

 Availability of Drivers:

Since tech based ride sharing services like Uber, Ola, Rapido does not own any of
the vehicles operating in its name, it is dependent on its supplier i.e. drivers for
their cars. They outsources their cars, bikes and the driver's services which give
the suppliers an upper hand. Thus the suppliers have a high bargaining power.
Moreover, companies has also had to take care of the suppliers that it is
outsourcing because if anything bad happens, it directly affects company’s name
and brand image.

3. Threat of New Entrants: ( Moderate)

A company’ position can be immensely affected by the ability of other organizations to

enter their market. The potential risks that the enterprise face are as follows:

 Economies of Scale:

Economies of scale would be a significant factor in any industry. The reason for
the growth in the industry is the economies which are available to existing players.

 Customer Switching Cost:

Switching costs arise when it costs a customer time, energy and money to switch
from the products offered by one established company to the products offered by a
new entrant. Customer switching cost for ride sharing service industry is very low
because customers are not incurring any significant cost to switch

 Government Regulation:

Like most large industries, the ride sharing faces regulations mainly aimed at
consumer protections. Aside from having their vehicles licensed and insured,
states vary considerably in their legislation.
4. Threat of Substitutes: (High)

In the ride sharing industry, there are numerous member organizations that can quickly
provide a replacement for each other. With the service quality that Uber, Ola, Rapido
provides, taxi services, for instance, is the closest opponent and a potential substitute
emerging from the traditional transportation industry. Taxi service is traditional to towns
with ride-sharing operations because of both its lower-cost and efficiency, and user-
friendly designing.

As such, their abundance is enough to curb each other’s service fees. It is noteworthy that
due to price sensitivity, a minor rise of Rapido rates can result in customer taking on the
services of its closest adversaries and alternatives. Moreover, due to the presence of other
public means of transport like trains, private cars that offer similar services can threaten
operations.

5. Industry Rivalry: (High)

 Industry Competitive Structure

Ride sharing industry is consolidated industry because of small number of large

companies. The competition among the players in this market will be high and
rising. The major competitors in this industry are Uber, Ola , Rapido

 Diversity of Competitors

Presently in Ride sharing industry, there is diverse kind of competitors like in 4

wheelers Ola, Uber , In 2 wheelers UberMoto, Rapido. Customer has flexibility to
use different kind of services at a point of time

 Industry Demand

The demand in this industry is growing significantly. Because of excessive traffic

congestion in India, many different technologies based ride sharing service like
Ola, Uber, Rapido got unbelieving response from the market.

6. Sixth Force: Complementors

As many ride sharing service providers is dependent on technology and condition on the
roads in India. These two factors act as a Complementors for this industry. If smart phone
adoption is high then more people get access to use the ride sharing services.

Congested roads, Traffic in major city centres are a safety and efficiency concern for
potential cab or bike drivers. If condition of roads is improved then amount of time spent
in travel can be reduced for customers as well as for drivers

Covid??
Strategic Groups within Ride Sharing Industry

Companies in an industry often differ significantly from each other with respect to the way
they strategically position their products in the market in term of such factors market
segments they serve, the quality of their products, customer service, pricing policy,
advertisement policy and promotions.

Strategic group means group of companies in which each company follows a business model
that is similar to that pursued by other companies in the group but is different from the
business model followed by companies in other group.

Long distances Short distances

Uber cab, Ola cab Rapido, UberMoto

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Changes in industry structure typically result from fundamental shifts in customer behaviour,
technology, and firm strategies which can be anticipated well in advance of their impacts on
competition and profitability.

Forecasting Industry Profitability:

Customer behaviour change due to covid

 Importance of hygiene

 Customers not preferring these kind of services over public transport