Ride Sharing Industry

BUS203 Term Paper

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 Business Environment (BUS203)
Term paper
“Topic: IT Sector (Ride Sharing Industry)”

Group:02, Section:04, Summer 2021

Submitted to:
Mohammad Atiqul Basher
Lecturer
BRAC Business School

Submitted by:

Sumaiya Selim Sushme 20104071

Aminul Islam 20104143
Moumita Sarker 19104126
Md Shahidul Islam 20304056
Rafia Shajnin 19304001
Chowdhury Arafat Jahan Sultana 18304003

Date of Submission: September 16, 2021

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Letter of Transmittal (Moumita Sarker-19104126)

Date: 16 September, 2021

Mohammad Atiqul Basher

Lecturer

BRAC Business School

BRAC University

Subject: Submission of Term Paper.

Dear Sir,

Here's the report that was appointed to us on the subject as per your order. Our task was to
perform research on the Bangladesh-based IT sector. The research was done by the insights we
gained from the Business Environment course (BUS203). The execution of such current research
has been a remarkable experience. And this was also a chance for us to enhance our expertise
by getting acquainted with the activity that would support us a lot in our professions.

We will be delighted if you read the article, and we're going to try to answer all the questions you
have about the report. We have done our hardest to conclude this study as effectively and
precisely as possible. We do hope that after reading the article, our tedious commitment would
be clear to you.

Even so, if you need assistance in translating this report, please contact us. Thank you.

Best Regards,

Chowdhury Arafat Jahan Sultana (18304003)

Moumita Sarker (19104126)

Rafia Shajnin (19304001)

Sumaiya Selim Sushme (20104071)

Aminul Islam (20104143)

MD Shahidul Islam (20304056)

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Table of Contents: (Sumaiya Selim Sushme-20104071)
Page

1.Details about the Industry

1.1 An overview of the Industry……………………………………………………………………. 05

1.2 Market size of that Industry……………………………………………………………………..

1.3 Define the parties that industrialists from that particular business have to deal with

to establish their proposed business (Business model canvas of this business)…………

1.4 Current opportunities in that particular industry……………………………………………...06

1.5 Future opportunities of that particular industry……………………………………………….06

2. Challenges during COVID-19

2.1 Information on financial losses that occurred in that industry……………………………….07

2.2 Job losses that occurred in the industry……………………………………………………….07

2.3 Effects on future business opportunity…………………………………………………………08

2.4 Representatives’ prediction about the next 3 years………………………………………….09

3. Strategy for the industry

3.1Propose a short term action plan to recover sales losses, surplus labor force

management, product sales……………………………………………………………………...09

3.2 Propose a long term action plan for the next 5 years (Show your plan in a

flowchart)…………………………………………………………………………………………...10

4. Limitation of the study………………………………………………………………………………12

5. Recommendation…………………………………………………………………………………....12

6. Conclusion……………………………………………………………………………………………12

7. Bibliography…………………………………………………………………………………………..14

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1.Details about the industry
1.1 An overview of the ride sharing industry: (Moumita Sarker-19104126)

Today's world has unquestionably been changed by information technology. The world has
witnessed a surge in technology-based sharing activities that have changed dramatically over
time. The most important component of the so-called sharing economy is ride sharing. Ride-
sharing businesses have only been around for a decade. Yet, it has already had a significant
impact on the transportation industry. Ridesharing applications are used by thousands of
individuals all over the world. Many more will be utilizing it in the near future. According to the
research associates Md Oliur Rahman Tarek and Sajid Amit, have looked at the sharing economy
of the worldwide ridesharing and ridesharing in Bangladesh. They claim that, Dhaka has a good
number of start-ups that provide ridesharing services (The Business Standard, 2020). However,
the majority of ridesharing companies have developed in the capital of Bangladesh. As we all
know, Dhaka is one of the world's most densely inhabited and crowded cities, places high
expectations on passengers for mass transit efficiency, dependability, and security. So, Uber,
Pathao, and Amar Ride all launched services in Dhaka in 2016 and bringing ridesharing
technology to the market of Bangladesh. There are also other ride sharing companies which are
Obhai, Shohoz, Pickme Limited, Amarbike, Texiwala, Gariwala, Chalu etc. Nevertheless, facilities
are being extended to other main cities such as Chittagong. These initiatives have sparked a habit
of ordering a motorcycle or car by using smartphone applications either for solo or joint travel.

Figure: Showing some of the companies of the Ride-Sharing Industry (theindependent, 2021)

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1.2 Market size of that Industry: (Chowdhury Arafat Jahan Sultana-18304003)

- She didn’t participate.

1.3 Define the parties that industrialists from that particular business have to deal with

to establish their proposed business? (Chowdhury Arafat Jahan Sultana-18304003)

- She didn’t participate.

1.4 Current opportunities of the ride sharing industry: (Moumita Sarker-19104126)

The ride sharing industry in Bangladesh is rapidly expanding, and it has plenty of opportunity for
further expansion throughout the country. In a short period of time, ride sharing which is online
based and dynamic have linked up the service holders and providers. Besides, it has several
advantages like lowering the stress of utilizing unnecessary private cars, repairing, other
expenses and traffic. Various ride-sharing businesses have recently cleared the platform for
people in order to investigate the potential and advantages of using the web based tools and other
marketing. According to Agatz, et al., it is helpful in creating new jobs for people as well as for the
students on a part-time basis. Additionally, the bike industry has seen an increase in sales
because of ride sharing companies. CNG has been integrated into the transportation networks of
several ridesharing applications. Moreover, using the service saves money without sacrificing
safety, comfort and also allows for a speedier journey (LightCastle Partners, 2019). Traditional
modes of transportation do not provide those advantages that ridesharing services give.
Furthermore, passengers have benefited from the convenience of locating transportation, pick-up
from their house and application based fare prediction when the application based ridesharing
services were introduced.

1.5 Future opportunities of the ride sharing industry: (Moumita Sarker -19104126)

Bangladesh is a developing country. And, the ridesharing industry is still in its initial stage.
However, individuals are becoming more interested in ridesharing facilities. Besides, it can make
the facilities well-known, boost awareness, and effectively grow the facilities in places other than
Dhaka, while also maximizing the business's possibilities (ResearchGate, n.d.). Once this industry

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grows, it will provide additional job opportunities for individuals, as well as part time jobs for
students. Since there are no economies of scale, this industry requires additional attention and
assistance from the government in terms of raising finances, infrastructure, and administration.
Private vehicles can only serve a small number of people, whereas ridesharing can service a
much greater number of people. It might be referred to as an urban solution for reducing traffic
congestion (The Financial Express, 2018). In Bangladesh, ridesharing continues to develop at its
present rate then sales of cars may decline with time. Additionally, the growing fleet of two-
wheelers is a matter of safety concern. Since an increasing number of teenagers are at risk of
being involved in accidents (LightCastle Partners, 2019). Moreover, the ridesharing sector offers
a significant chance to assist the economy grow. Although this is unfortunate, the industry may
also reduce the abstract obstacles which exist.

2. Challenges during COVID-19

2.1 Information on financial losses that occurred in that industry: (Rafia Shajnin-19304001)

When the corona virus was first detected, the govt. declared a strict lockdown. In this lockdown,
Government had kept closed all public and private offices and all transportations from 26 of March
to 4 of April 2020 where govt. enlarges the lockdown period in several times (Tuhin Shubhra
Adhikary, Rashidul Hasan, 2020). As all kind of transportation were off for a long time the IT based
rideshare companies gets a huge financial loss as their work has been completely off. In recent
times, a huge number of rideshare application users in Bangladesh have increased, but as people
didn’t get out from home during lockdown, rideshare is not used by people, resulting in huge
losses of the ride-sharing industry. One of the reputed rideshare company Uber also gets financial
losses for this pandemic. Uber has disclosed that they made a loss of dollar 985 million in 2020
(Francisco, 2021). There are thousands of rideshare service holder who has been passing very
bad time as they are forced to stay home due to the lockdown (Tipu, 2020). Therefore, ridesharing
industry in Bangladesh got many financial losses during pandemic.

2.2 Job losses that occurred in the industry: (MD Shahidul Islam-20304056)

In recent times, the ride-sharing became very popular as it fulfills the needs of both the riders and
customers. The rider found it independent and easy to do rather than other jobs. Besides,

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passengers find it safer and cost-friendly as well. But for the pandemic, many people lost their job
as ride sharers as the customer count decreased in the ride-sharing operations.

Around 70% of those who provided ridesharing services in Dhaka came from other districts. For
approximately half of the riders, ride-sharing was their only source of income in our country.
During the pandemic, the government had to shut down the ridesharing activities to withhold the
contagiousness of the virus by prohibiting from getting close contacts. The worst part is, a mass
number of people from other districts, made their choices to move to the divisional city with an
eagerness to make a stable living by involving in ridesharing trades. Whereas, they ended up in
a disaster as more strict shutdowns were executed to prevent the pandemic from getting into a
monstrous form. Eventually, people had to stay home, ridesharing activities were idle, and as a
result, it had a terrifying impact on the lives of those who were solely making their living along with
their keen ones, based on the income from ridesharing jobs. In this way, gradually they lost their
job in ride-sharing as the riders became inactive with their performances that automatically
reflected on their profiles to get terminated. After Covid-19 wreaked havoc on the ride-sharing
industry, the company announced that 3,700 employees would be laid off. Uber, on the other
hand, said on Monday that it would be making more cuts (Danielle Zoellner, Monday 18 May
2020).

2.3 Effects on future business opportunity: (MD Shahidul Islam-20304056)

“For the second year in a row, the COVID-19 pandemic has hit the ride-sharing industry. Experts
predict that the ride-hailing market will fully rebound in the third quarter of 2021 or the first quarter
of 2022, with urbanization serving as the primary driver of demand. The majority of city dwellers
have relocated to the countryside; yet, the worldwide urbanization rate in 2020 was close to 56
percent, up from 55 percent in 2019.( DUBLIN, June 25, 2021)”. The ride-sharing companies are
not only limited to provide the service of carrying passengers but also they are expanding their
business to other options. The ride-sharing companies are now expanding their business to food
delivery, parcel service, e-ticket for transport, and many other services. The industry is growing
faster and greater day by day. Nowadays the ride-sharing companies are also offering internship
jobs at the office and they are also offering whole day ride service, intercity ride service.As a
result, the number of users of the ride-sharing service is increasing.

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2.4 Representatives’ prediction about the next 3 years: (Rafia Shajnin-19304001)

Although there is a huge negative impact in ridesharing industry due to Covid-19, representatives
predicting that the estimated market value of ridesharing will reach 1 billion dollars within the next
five to seven years (Md Oliur Rahman Tarek, Sajid Amit, 2020). As there will be an increase in
the market value of ridesharing industry, the uses of mobile apps or applications of ridesharing
will also expand. These would result in an increase in the demand for IT supports, ridesharing
service holders, and so on. As the demand for ridesharing services increases, there will be a great
opportunity to the ridesharing industry to make a profit from this. But there can also be any kind
of adverse situation. For example, if the pandemic again affects the ridesharing market negatively,
there can be threats to ridesharing industry.

3. Strategy for the Industry

3.1 Short term strategy: (Sumaiya Selim Sushme-20104071)

In a very short period of time, the ride-sharing industry of Bangladesh has earned huge popularity.
However, like in all other industries; Covid-19 has wreaked havoc on the ride-sharing industry,
creating great hardship on individuals whose livelihoods rely on it. After facing multiple halts from
the government when the industry started again it was estimated by the service operator that it
would take at least six months to recover the losses experienced during the Covid-19 lockdowns
(Hasan, 2021). Besides, changed public opinions, improved health awareness, and new trends
of remote work and online education all contributed to a considerable reduction in ride-sharing
demand, particularly in the four or five months after March. So to deal with this issue the ride-
sharing companies i.e Pathao, Uber, Shohoz, and others have come together and planned a
safety protocol. To ensure that safety protocol is strictly maintained, some rules were made,
Pathao riders are now obliged to take a selfie while wearing a mask. The selfie serves as a daily
log that is maintained in the company's database; without it, the riders are unable to get online
and thus provide rides to the company's users. These businesses have been ensuring that safety
procedures are followed by training their drivers to use masks, hair covers, gloves, disinfectants,
and hand sanitizers in accordance with World Health Organization requirements. Passengers are
not permitted to sit in the front seat, and drivers are advised to keep the windows down unless
the passenger specifically wants air conditioning. Drivers are hand-picked and asked to sanitize
their vehicles before each ride to ensure safety. Moreover, Shohoz has worked with the
Bangladesh E-commerce Association (eCAB) to create and implement safety measures based
on technical recommendations issued by the Directorate General of Health (DGHS) to ensure the

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safest method of transportation for users and riders. Furthermore, Uber Bangladesh has formed
a Transport Safety Alliance (TSA) with DBL Pharma, Zantrik, Dettol (Reckitt Benckiser), and
Fresh Tissue, with the goal of raising user awareness of safety measures and providing necessary
supplies to Uber drivers through Zantrik-provided distribution sites (Gomez, 2020). In addition to
these short-term strategies that are already existing, companies can add something new like
getting all their driver vaccinated and measuring the temperature of both the drivers and
customers before each ride.

3.2 Long term strategy: (Aminul Islam-20104143)

Ridesharing has been a big addition to the transportation of the country. But the advent of this
global innovation in our developing country the Industry had been facing multiple challenges since
its inception in the country. With the occurrence of the global pandemic, the challenges have
become more robust.

The industry now should look at the bigger picture and should be future-oriented in order to cover
up losses and move towards sustainable growth. Problems and a recommended 5 years plan are
described below.

From the recent perspective of the country, ride-sharing can be considered a very minuscule
industry in comparison to the entire transportation sector of the country. The industry couldn’t
make itself widespread in all the corners of the country as a result of which attaining Economies
Of Scale is not being possible which is resulting in a price hike. Moreover, the government-
imposed 5% tax rate has added to the challenge and pricing of the service. More than 50% of the
transportation using population rely more on public transport than ride-sharing service for cost
efficiency.

The solution to these problems is entering more regions with service via market analysis and
economic analysis. This will secure the economy of scale keeping the fixed expense constant,
government incentives can be provided to enhance the growth of this profitable economic sector.
Moreover, the managers of the organizations should make prudent decisions for the future by
maintaining employees and partners. The business might boom by offering the low price strategy
though it might be hectic in the short run profit will multiply in the long run. The inclusion of well-
facilitated public transport like bus or minibus might be a good initiative this might attract more
customers and could be cost-efficient for customers. Furthermore, bargaining power of the

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customers could be added to make the services more attractive to the customers. Therefore,
these long-term strategies could be included to recover the business losses within the next five
years.

PRESENT CONDITION OF RIDE

SHARING SERVICES

In Sufficient management Intense Competition

Lack of Fund Presence of International

Competitors
Limited Market Covered
Less Government Incentives
Limited Offer to attract
Customers

PROPOSED ACTION PLAN

1. Providing Service in all the regions of 1. Offering Low Price Strategy

the country 2. Including Bargaining Power for

the customers
2. Ensuring Cost Efficiency For customers
3. Introducing Public transport
3. Ensuring Economies Of scale by expanding facilities with Bus
Territory And heavy vehicles
4. Strategic alliance with transportation 4. Training own drivers and
introducing own
Companies
Vehicles other than relying on
partners.
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4. Limitation of the study (Sumaiya Selim Sushme-20104071)
Since the pandemic situation is still going on, we couldn't conduct any face-to-face interviews. So,
we are mostly dependent on secondary sources to complete the report. Moreover, even while
using secondary sources there were some limitations that were encountered. Firstly, the
tremendous volume of data on the internet, which contains both useless and valuable information,
makes it difficult for us to identify relevant material. Secondly, due to some complex subscription
strategies of some websites, we were unable to access certain databases. Thirdly, unable to
locate any library in order to gather information. However, despite the constraints, we make every
effort to deliver a complete report on time by meticulously reviewing each step of the report
preparation process.

5. Recommendations: (Moumita Sarker-19104126)

Considering Bangladesh's viewpoint, ridesharing services present unique opportunities and
problems. Managers and legislators must take the appropriate action to address the difficulties
and risks. Also, to capitalize on the possibilities and chances, so that this service may effectively
expand to certain other locations. The government should play an essential role in improving the
quality and facilities of ridesharing companies by implementing suitable steps, such as giving
subsidies to rescue new industries, giving logistical and infrastructural assistance, gaining an
advantage in obtaining a permission and path authorization, and granting loans with favorable
terms. Moreover, the administration might rethink the 5 percent tax imposed and give tax credits
to help people cope with difficult situations that they are now suffering from. The businesses also
needed to improve the performance of its applications and servers as quickly as possible by
expanding and concentrating on additional locations. Companies must try to increase awareness
of its facilities and get out to all possible consumers through appropriate marketing and publicity
to become known, accepted, as well as for vendors to understand the comparative benefits of
using such facilities.

6. Conclusion (Sumaiya Selim Sushme-20104071)

Over the course of several years, significant progress has been made in the IT sector toward the
creation of a "Digital Bangladesh," with additional efforts on the way. Besides, in order to fully
exploit the opportunities presented by global IT expansion, Bangladesh should devote significant
resources to further improving the IT sector in order to attract international investors in competition
with other technologically advanced invested Asian countries. Moreover, with proactive safety

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protocols and adjustments, Bangladeshi ride-sharing services are slowly recovering from the
losses of Covid-19 and regaining the trust of majority of their loyal users and people across the
country. As the world changes, it's fascinating to see what creative measures these companies
have in store for their customers in the long run.

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7.Bibliography:

The Business Standard. (2020). With 7.5m rides a month, ridesharing services take over
Bangladesh. Available at: https://www.tbsnews.net/economy/75m-rides-month-
ridesharing-services-take-over-bangladesh-45453.

LightCastle Partners. (2019). Global Ride-Sharing and Opportunities in Bangladesh. Available

at: https://www.lightcastlebd.com/insights/2019/04/global-ride-sharing-and-opportunities-
in-bangladesh

Idlc.com. (2017). Ride- Sharing in Bangladesh: Disrupting the way we commute. Available at:
https://idlc.com/mbr/article.php?id=125.

ResearchGate. (n.d.). The Ride-Sharing Services in Bangladesh: Current Status, Prospects,

and Challenges. Available at:
https://www.researchgate.net/publication/343733536_The_Ride-
Sharing_Services_in_Bangladesh_Current_Status_Prospects_and_Challenges

Dhaka Tribune. 6April (2021).Ride-sharing business hit hard by covid-19 again.Available at:
https://www.dhakatribune.com/bangladesh/communication/2021/04/06/ride-sharing-
businesses-hit-hard-by-covid-19-again

Nawaz F. A., 30 June 2021. Covid-19:what will happen to those whose only income is ride
sharing?.Dhaka Tribune. Available
at:https://www.dhakatribune.com/bangladesh/2021/06/30/covid-19-what-will-happen-to-
those-whose-only-income-is-ride-sharing

DS S., 6 may 2021.How the pandemic has affected ride-sharing services. Dhaka Tribune.
Available at:https://www.dhakatribune.com/business/2021/05/06/how-the-pandemic-has-
affected-ridesharing-services

DUBLIN., 25 june 2021.Global Ride Sharing Market Report 2021-2026: New Business Models
to Cover Losses in Ride Sharing Business / Food & Freight Delivery / Micro-Mobility /
Emergence of Autonomous Ride Sharing. CISION PR Newswrite. Available
at:https://www.prnewswire.com/news-releases/global-ride-sharing-market-report-2021-
2026-new-business-models-to-cover-losses-in-ride-sharing-business--food--freight-
delivery--micro-mobility--emergence-of-autonomous-ride-sharing-301320121.html

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Francisco, S. (2021). Uber posts big loss as pandemic clobbers ridesharing. The Daily Star.
Retrieved from https://www.thedailystar.net/business/news/uber-posts-big-loss-
pandemic-clobbers-ridesharing-2043465

Tipu, M. S. (2020). Lives of ridesharing drivers turned upside down by the coronavirus
pandemic. Dhaka: Dhaka Tribune. Retrieved from
https://www.dhakatribune.com/bangladesh/2020/05/05/lives-of-ridesharing-drivers-
turned-upside-down-by-the-coronavirus-pandemic

Tribune, D. (2021). BRTA approves 12 ride sharing companies. Dhaka Tribune. Retrieved from
https://www.dhakatribune.com/business/2019/12/04/brta-approves-12-ride-sharing-
companies

Tuhin Shubhra Adhikary, Rashidul Hasan. (2020). Closer to lockdown. The Daily Star. Retrieved
from https://www.thedailystar.net/frontpage/news/closer-lockdown-1885474

Md Oliur Rahman Tarek, Sajid Amit. (2020). With 7.5m rides a month, ridesharing services take
over Bangladesh. The Business Standard. Retrieved from
https://www.tbsnews.net/economy/75m-rides-month-ridesharing-services-take-over-
bangladesh-45453

Antara,N,F.(2021, April 06).Ride-sharing businesses hit hard by Covid-19 again. Dhaka

Tribune.https://www.dhakatribune.com/bangladesh/communication/2021/04/06/ride-
sharing-businesses-hit-hard-by-covid-19-again

Gomes, V.(2020, October 02). Are ride-sharing services on the right path to recovery?.The Daily
Star.https://www.thedailystar.net/toggle/news/are-ride-sharing-services-the-right-path-
recovery-1971213

Markets and Markets, 2021. Ride Sharing Market. [online] Available at:
<https://www.marketsandmarkets.com/Market-Reports/mobility-on-demand-market-
198699113.html> [Accessed 14 September 2021].

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Sajid Ami, M., 2021. With 7.5m rides a month, ridesharing services take over Bangladesh. The
Business Standard, [online] Available at: <https://www.tbsnews.net/economy/75m-rides-
month-ridesharing-services-take-over-bangladesh-45453> [Accessed 14 September
2021].

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