Ola: Business Strategy and Business Model

OLA CABS, which is better known by the name Ola, is an Indian startup company which
provides online cab services to the greater population of the country. It was founded on
December 3rd, 2010 by Ankit Bhati (current CTO) and Bhavish Aggarwal (current CEO). The
startup cab company initiated its operations and services from Mumbai and now the headquarters
of this startup company is based in Bangalore. Within a span of few years, the Ola cabs have
expanded its base to as many as 85 cities across the country with around 2lakh cars operational
in its online cab services. In 2014, the startup company also went forward to provide auto-
rickshaw services to the middle-class clan of the Indian families through its mobile app in few
selected cities like Mumbai, Bangalore and so more.

Ola’s Business Objective:

Ola over some years into operations and services across the country has planned to lay focus on
and expand the cab services in the Indian market. To achieve the same, the startup company is
aimed at customizing the range of services provided by it to enhance the image of the company
in the local market and also to develop a strong customer base in the country amongst all of its
competitors like Uber being the topmost competitor of Ola. Ola also operates as a marketplace
for the businesses and organizations with similar business models and has coordinated with the
biggest e-commerce players like the Flipkart, Amazon, and Snapdeal. The Ola online cab service
provider aims to target around one million driver partners in the forthcoming year. It also aims to
make use of the innovative technology to dominate the Indian online cab market.

Ola’s Business Strategy:

Ola Cabs is amongst the fastest growing online cab service providers in India and aims to
dominate the Indian market with its innovative and customer-oriented business strategy which
includes:

 Mobile App awareness to the common people through the launch of a customized
mobile-specific technique named as “App Analytics” with the help of which the app can
track and measure the overall performance of the services in particular city or through the
particular drivers.
 Ad campaigns on various social media platforms.
 Targeting the right audience which as per a recent study has confirmed that the average
customers were of 20-25 years of age who were working in the corporate companies and
needed cab services to pick them up and drop them to their office premises.
 Ola’s initiative named “Chalo Niklo” and to take it to the next level.

Ola’s Business Model:

Some of the key points of the business model or the working model of India’s leading online cab
service provider include:

 X% commission from the total fare of the trip which usually ranges from around 15-20
percent depending on the type of vehicle and the city.
 Ola started out as a Taxi Rental Fleet Business. But later on, they altered their attention to
an app-based cab aggregation service which is similar to Uber.
 McDonald’s Corporation
When most firms were struggling in 2008, McDonald’s increased its revenues from $22.7 billion
in 2007 to $23.5 billion in 2008. Headquartered in Oak Brook, Illinois McDonald’s net income
nearly doubled during that time from $2.4 billion to $4.3 billion—quite impressive. Fortune
magazine in 2009 rated McDonald’s as their 16th “Most Admired Company in the World” in
terms of their management and performance. McDonald’s added 650 new outlets in 2009 when
many restaurants struggled to keep their doors open. McDonald’s low prices and expanded menu
items have attracted millions of new customers away from sit-down chains and independent
eateries.
Jim Skinner, CEO of McDonald’s, says, “We do so well because our strategies have been so well
planned out.” McDonald’s served about 60 million customers every day in 2009, 2 million more
than in 2008. Nearly 80 percent of McDonald’s are run by franchisees (or affiliates).
McDonald’s in 2009 spent $2.1 billion to re model many of its 32,000 restaurants and build new
ones at a more rapid pace than in recent years. This is in stark contrast to most restaurant chains
that are struggling to survive, laying off employees, closing restaurants, and reducing expansion
plans. McDonald's restaurants are in 120 countries. Going out to eat is one of the first activities
that customers cut in tough times. A rising U.S. dollar is another external factor that hurts
McDonald’s. An internal weakness of McDonald’s is that the firm now offers upscale coffee
drinks like lattes and cappuccinos in over 7,000 locations just as budget conscious consumers are
cutting back on such extravagances.
About half of McDonald’s 31,000 locations are outside the United States. But McDonald’s top
management team says everything the firm does is for the long term. McDonald’s for several
years referred to their strategic plan as “Plan to Win.” This strategy has been to increase sales at
existing locations by improving the menu, remodeling dining rooms, extending hours, and
adding snacks. The company has avoided deep price cuts on
its menu items. McDonald’s was only one of three large U.S. firms that saw its stock price rise in
2008. The other two firms were Wal-Mart and Family Dollar Stores.
Other strategies being pursued currently by McDonald’s include replacing gasoline-powered cars
with energy-efficient cars, lowering advertising rates, halting building new outlets on street
corners where nearby development shows signs of weakness, boosting the firm’s coffee business,
and improving the drive-through windows to increase sales and efficiency.
McDonald’s receives nearly two thirds of its revenues from outside the United States. The
company has 14,000 U.S. outlets and 18,000 outlets outside the United States. McDonald’s
feeds 58 million customers every day. The company operates Hamburger University in suburban
Chicago. McDonald's reported that first quarter 2009 profits rose 4 percent and same-store sales
rose 4.3 percent across the globe. Same-store sales in the second quarter of 2009 were up another
4.8 percent.
Business Strategy Model: How Did Reliance
Jio Enter The Telecom Network Market Late
And Acquire A Larger Customer Base Fast

Business Strategy Model Of Reliance Jio :

It is said that, almost 80 percent of Indian population has experienced Reliance Jio’s network
services within months of its inception. It quickly became a household name in India. Few
industry insiders argue that – Reliance brand popularity over years on other sectors helped Jio to
gain quick momentum in the telecom sector. But, personally, I disagree with it. I agree to certain
extent about the brand popularity that Reliance carried, but, I strongly feel – it is the business
strategy model for creating another remarkable service that worked out for Reliance. Reliance
Chairman Mukesh Ambani’s idea of Jio is a one of the best business strategy examples for the
business students to study across the world.

This case study is about how Reliance Jio Infocomm Limited (Jio), who, after a very delayed
entry into the telecom network market, grew to become one of the leading telecom networks in
India beating more than a decade old big players like Airtel, Idea, Vodafone, Aircel etc. Reliance
Jio has acquired a large market share and achieved numbers that normally took the competition
over a decade to achieve using its unique business strategy model. It is India’s only network
which is solely 4G.

Reliance Jio knew the fact very well that, to acquire a huge customer base who are already
customers to other big players, they got to offer something that the customers are in badly need
for. After a thorough research, the Reliance Jio team could have arrived at the conclusion that, in
this information era, where information is scattered all over the internet, people are looking for
cheaper means to access internet. The team also understood that, customers have become more
obsessed with the data usage (internet access) over mobile phones for which they were paying
the network providers in terms of Giga Bytes(GBs) used. So, the only way, Reliance Jio could
lure customers of other service providers towards Reliance Jio was by providing free data usage
for customers for several months – a business strategy model that scripted success for Reliance
again.
The unique selling point ( or the USP ) that Jio used to acquire customers is by offering free
services to its customers. The company adopted a predatory pricing strategy (Predatory pricing
strategy – also called as under cutting strategy – is an example of business strategy model in
which a product or service is set at a very low price with the core intention of driving
competitors out of the market space or creating strong barriers to entry for potential new and
emerging competitors) to enter the competitive Indian telecom market and offered free voice,
data, and message services as its “Welcome Offer” from September 5, 2016, to up to December
31, 2016. The offer was later extended up to March 31, 2017, as the “Happy New Year Offer”.

Reliance’s business strategy model created a disruption of competition in the Indian telecom
sector and major competitors like Airtel, Idea, Vodafone, Aircel started to loose customers. The
competitors were forced to resort to lowering their tariffs with an intention to retain customers
from migrating to Reliance Jio. Intense competition in India’s telecom market has hurt service
provider Aircel as they lost customers quickly, faced partial network shutdowns and suffered
massive cash crunch which forced them to file for bankruptcy.

The crucial challenge for Reliance was to hold on to Jio’s subscribers even after the free offers
expired which they successfully managed. The company commercially launched its services on 5
September 2016. Within the first month of its launch, Jio announced that it had acquired 16
million subscribers. This is the world’s fastest ramp-up by any mobile network operator. Within
83 days of its launch, Jio crossed 50 million subscriber mark, subsequently crossing 100 million
subscribers on 22 February 2017. By October 2017 it had about 130 million subscribers.

Today, after the entry of Reliance Jio into the telecom market, we can notice a large number of
people having unlimited access to internet at a very cheap subscription price. All thanks to
Reliance Jio. To be honest, even I am one of the indirect beneficiary of Reliance’s business
strategy model. Because, though, I have not used Reliance Jio, after the entry of Reliance Jio,
my service provider poured in enough data to my account, more than what I actually needed.
That is the reason I told you I am an indirect beneficiary. Like me, there are millions who
indirectly got benefitted after the entry of Reliance Jio into the telecom market.