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Taxi service aggregation


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Taxi service aggregation

  1. 1. 1 | P a g e Management Change & Innovation Assignment On Taxi Service Aggregation (Team-1) Submitted by Buddharaju V Samba Pavan Charan Tej (1226114108) Mohammed Naseer Khan (1226114117) Malavika Issar (1226114121) Kallepalli Manoj Varma (1226114125) Asish Pradhan (1226214101)
  2. 2. 2 | P a g e Introduction:- The taxi space in India is heating up and has been seeing a phenomenal growth in the past 6-7 years. Over $400 Mn (INR 2400 crores) of VC money has been pumped in into these companies in the past 4 years itself. Olacabs recently rose over $ 210 Mn in Series D from Softbank at a valuation of over $1 Bn to focus on expansion. TaxiforSure also rose over $30 Mn in its latest round while Uber has a warchest of over $1.5 Bn to fuel its international expansion. Uber has also committed almost $400 Mn to grow and promote its service in India. The Indian radio taxi market alone is pegged anywhere between $6-$9 billion dollars by different estimates, and is forecasted to grow at 17-20% annually. More importantly, the organised taxi market is still minuscule as compared to rest of the taxi market in India; it constitutes only 4-5% of the market in terms of sheer number of vehicles. The rest is by operators who own fleets of 2-50 cars and typically have a presence in 1 or 2 cities. Taxicabs arrived in 1911 to complement horse wagons. There are 52000 – 55000 Number of taxicabs. According to Government of India regulations, all taxicabs are required to have a fare-meter installed. However, enforcement by authorities is lax and many cabs operate either without fare-meter or with defunct ones. In such cases, fare is decided by bargaining between the customer and the driver. Taxicabs face stiff competition from auto rickshaws but in some cities. In India, most taxicabs, especially those in Delhi and Mumbai, have distinctive black and yellow liveries with the bottom half painted black and upper half painted yellow. In Kolkata, most taxis are painted yellow with a blue strip in the middle.
  3. 3. 3 | P a g e Innovations of taxi cabs:- 1. Using Geo-Location to find socially networked travel partners in an urban space. 2. Clicking on a map location to set the destination and hail the vehicle 3. Pricing the seats in any vehicle so that private people, taxis, carpools or buses can fill their conveyances in the most lucrative way 4. Using a futures exchange to permit operators to sell in advance seats in their vehicles to other road users. And to allow those road users to sell them on if so needed. 5. Providing a way to make a road system offer incentives people to use its capacity more sensibly - by paying cash or other benefits to people to stay off the road at certain times (via the congestion pricing mechanism) 6. Linking road pricing to the "utility" of the vehicles on a nexus, so that per certain size, it makes more sense to have more seats per vehicle at buys times 7. Demonstrated the Operational Constructs to prove largescale dynamic realtime ridesharing possible - based on marketing techniques which were largely unknown inside the transport industry. 8. An effective use of "BigData" (before the term gained currency) to preposition vehicles to make the trading more effective.
  4. 4. 4 | P a g e Market review of taxi service in India:- The organized taxi market in India is a relatively nascent one; multiple Aggregators have launched their services recently Taxi transportation system in India has long been characterized by paucity of well-maintained vehicles, tampered meters and unruly behaviour of drivers. For most, taxi operators the two primary pain points are acquiring customers and receiving timely payments. • The need for a hassle-free and smooth ride has long been on the anvil for the Indian transport authority. Though Government did not harp on the same tune, but private operators could fathom the potential lying with a new and improved means of communication through radio cabs. • Demand for radio cabs have been soaring in the metros and large cities as MNC executives, tourists, IT sector executives as also affluent Indians opt for a faster and smoother means of transportation through well maintained radio cabs.
  5. 5. 5 | P a g e • Today, radio cabs capitalize on its comfort quotient and availability quotient to attract people even though fares are comparatively higher than normal cabs. Taxi Market in India – Demand • The radio taxi services market in India has huge untapped opportunities. There are very few players in the organised radio taxi services market who have failed to address the market demand due to unavailability of required number of cabs. • Today, the radio cab segment is 15,000+ cabs in size with 3 large multi-city operators (Meru, Easy, Mega Cabs) holding nearly 70% market share as well as several smaller operators mushrooming in different cities. – Total operator revenue is estimated to be ~ Rs. 500 Crores, though a better reflection of the industry size would be total revenue earned from customers, ~ Rs. 1,100 Crores at present. • It is estimated that India radio taxi services market will reach 30,000 taxis by 2017. The company’s such as Meru Cabs has resulted in 120% increase in Net (loss) profit after tax for their equity shareholder which shows the kind of return on investments this newly created market segment is witnessing. Radio Taxi Market in India – Opportunities • Despite the tremendous growth in a short span of 5 years, radio cabs are a minuscule portion of the overall private taxi business in cities. – To take the example of Mumbai city, there are 150,000 – 200,000 cabs plying on the road split almost equally between the black and yellow cabs, private fixed rental cabs and fleets for corporate. In this pool, the total strength of the radio cab offering is less than 5000 implying less than 3% market share. • The current penetration of the radio cab segment is a direct indicator of the market potential for the service offering plenty room for growth both within the existing pie as well by expanding the pie itself. – So, not only is the model attracting permit owners in the conventional private taxi business to switch to the more remunerative radio model but is also inducting fresh drivers with new licenses to expand the overall taxi offering in the cities. Taxi Market in India – Revenue • Chandigarh city became the first in the country in 2006 to launch comprehensive regulation defining and introducing the radio cab segment to the urban transportation framework. It was shortly followed by Delhi state govt. in the same year. It was followed by Maharashtra, Karnataka and, Andhra Pradesh. – In the last few years, the momentum has spread to other states with fleet taxi model being introduced in several other cities including tier 2 viz. Kolkata, Amritsar, Ludhiana, Gurgaon, Indore etc. • Currently, operators earn between 30-50% of their revenue from the airport segment. The radio cab market is also likely to witness a shift from largely catering to airport pickups and drops to providing point-to-point commuting services across big cities. – With increasing
  6. 6. 6 | P a g e demand for services within the city and rising tariffs for parking at airports, operators are thinking about new ways to cater to the no airport demand. Taxi Market in Key Metro Cities • Mumbai has the largest number of public taxis (besides the 55,000 taxis, there are 30,000 auto-rickshaws) in India and provides tremendous opportunities for operators of radio cabs. – Other cities have far fewer public taxis and auto-rickshaws – Delhi has about 4,000 taxis and 30,000 three-wheelers and Kolkata around 5,000 taxis – but radio cab operators see good potential for growth. • Radio taxi is a popular mode of transport in Delhi. There are about 5,000 AC radio cabs and 3,800 economy radio taxis plying in the Capital. – The national capital region Delhi-NCR has highest potential where almost 30% calls are dropped by the companies due to unavailability cabs/taxis. Online Taxi Booking Market:- • Online cab hire in India is a sunrise industry characterized by huge demand and high growth rates. • Moreover, recent regular investments and expected entry of international players like Uber in India speaks well enough for the market potential. • To organize the rest of the market at a fast pace, the radio taxi market is moving towards the asset-light model, in which sites such as lend their brand to drivers and cab operators in exchange for a fee. Meru, too, has become part cab operator, part marketer. Business Models:- Asset – Owner Operator • There are those who take license from the government and buy cars that they use for the service Challenges • High Capital Cost as the company will need to invest in the assets. • Parking Space and maintenance cost will be the responsibility of the operator. Asset light asset:- • Those that work as aggregator of commercial cars and take commission from car owners on every trip. Pay-per-lead model and pre-paid model Challenges:- • Getting initial consumer acceptance can be tough because there is a shortage of brand presence.
  7. 7. 7 | P a g e • Maintaining a certain standard of customer service. • If any new player comes into the market with a lower fee, because there’s no commitment from the drivers toward the aggregator, they will just shift and that aggregator would be left high and dry. Investment in organized market in India:- There has been frantic investor activity in the organized taxi market recently; Ola and TFS have together risen over $320 million since 2011.
  8. 8. 8 | P a g e Size of taxi market in India:- There are 2 million taxis operating across India; aggregators have rapidly grown to account for nearly 5% of the total taxis in India. Unorganized segment:- The large number of vehicles in the unorganized segment provides a strong opportunity for affliators and aggregators to bring them under their fold. Aggregators:- In spite of their late entry into the market, aggregators have managed to increase their vehicle base rapidly on account of their asset light model. Owners:- Vehicles per player are low in this segment on account of high capital expenditure needed. Future growth drivers of organized taxi market:- Price competitive alternative to regular public transport:-  Lack of comfortable public transport options in most Indian cities has led to a growing demand for affordable cab services.  Aggregators especially have positioned their product as a price-competitive alternative to autos and regular cabs.
  9. 9. 9 | P a g e High level of customer convenience:-  App based booking has led to growing customer ease of use.  In a very short span of time, companies like Meru, Ola & TFS are receiving 30-50% of booking requests through apps.  High punctuality and safety are additional customer benefits. Popularity of aggregation leading to faster scale ups:-  Even owned taxi companies like Meru are opting for aggregating taxis in order to scale up their fleet rapidly.  Aggregator based models will allow expansion to new cities rapidly. Global investor interest:-  The industry as a whole has seen investments of $150+million in multiple deals since 2006 and the investor interest shows no signs of abating.  Availability of investor funds is allowing players to focus on aggressive expansion, customer acquisition and strengthening of backend technology systems. Entry of new players:-  There has been a rapid influx of new players recently.  Heavy competition has led players to explore new pricing models, taxi segments etc., ultimately benefiting the end customer. Evolution of the Organised Taxi Sector in India:- Mega Cabs and Fast Track Taxi started out in 2001 itself with small fleets. The market, however, started seeing traction only from 2006 onwards when the likes of Meru Cabs, Easy Cabs and Savaari came up. There are now several competitors eyeing for a piece of the pie. Phase 1 – Fully Owned Fleets In the initial phase of the market companies owned the complete fleet with the drivers as salaried employees. This was characterized by high capital costs to the company – car loan EMI’s, high maintenance costs. While this model facilitated rapid expansion, it also came at a huge cost. Caused high stress levels in drivers and there were driver strikes that affected the service. Bookings were mainly done via telephone calls and cash was the dominant model.
  10. 10. 10 | P a g e Phase 2 – Fleet Aggregation Model Companies like TaxiForSure and Ola started this model where small fleet owners or single car owners can put the company brand on the car, and get registered with them. Cars are free to take up non-company rides, but for every company-initiated ride, they pay the company a fixed percentage as commission. This model had low capital expenditure and lower maintenance costs. Booking was done via telephone calls as well as through their websites. While cash was still the dominant payment form, in-cab POS terminal for credit / debit cards started being used as well in this phase. Phase 3 – The Hybrid Model (Current Phase) In this model part of the fleet is owned by the company and part of the fleet is from an aggregation model, hence providing the best of both worlds – better control on cab availability and service quality while keeping costs low. Booking are done via telephone, website as well as mobile apps and the payments via cash, card and wallets. OLA cabs:- 1. Name:- OLA cabs (aggregator) 2. Founders:-Ankit Bhati, Bhavish Agarwal 3. How it started:-Bhavish had a bad personal experience with a cab which led him to realize potential in the industry. 4. Date of Incorporation: - December 3, 2010 5. Business model:- 6. OLA partners with Taxi, auto owners, provides modern technology and processes for booking, dispatch etc. without holding any inventory 7. Revenue Model: - runs on a pay-for-performance model. Charges a commission in whatever sales they make. 8. Service Provided Hassle-free, reliable and technology-efficient: Car rental, Auto rental, Ola Café 9. No. of Taxis:- Approximately 150000 10. Technology: - Website, Mobile Application, Analytics, Servers etc. 11. Operational in 100 cities, Plans to expand in 200 cities by the end of 2015
  11. 11. 11 | P a g e 12. Financial evaluation:- $ 2.5 to 4.5 billion (October 2014) 1. It was founded on 3 December 2010 by Anshul Gupta (currently CEO) and Ankit Bhati. 2. Ola started as an online cab aggregator in Mumbai, now based out of Bangalore and is among the fastest growing businesses in India. 3. Ola cabs have expanded to a network of more than 200,000 cars across 85 cities. 4. Ola expanded to incorporate autos in Bangalore. Ola Auto expanded to other cities like Delhi, Pune and Chennai. Successful Entrepreneurs of ola cabs:- Founded: December 3, 2010 1. Bhavish Aggarwal, Co-Founder and CEO Bhavish drives the company's vision and manages customer and partner relations. He graduated with a B.Tech in Computer Science and Engineering from IIT Bombay in 2008 and worked at Microsoft Research for 2 years after that. He had a wonderful time there, filing 2 patents and publishing 3 papers in International Journals. But the entrepreneurial itch was too hard to resist and he decided to quit his job in August 2010 and moved to Mumbai to start Olacabs! When not talking to Cab operators and customers, He loves cycling and playing squash and most recently spent a whole week cycling in the beautiful Nilgiris! He also enjoys photography and maintains a photoblog.
  12. 12. 12 | P a g e 2. Ankit Bhati, Co-Founder and CTO Ankit heads the technical aspects of Olacabs, ensuring a quick, convenient and instinctive experience for customers and partners. He joined IIT Bombay in 2004 for Btech in Mechanical Engg and MTech in CAD and Automation. By 2009 he had already worked on several freelance projects and startups like Wilcom, QED42 etc. and finally decided to give up his nomadic professional life for a start-up of his own. He joined the Olacabs journey in November 2010. When not engrossed with his laptop, he loves to travel (preferably, to a beach) and often joins Bhavish in his cycling trips. Identify entrepreneurial skills, Entrepreneurial Competencies:- Ever decided to take a weekend holiday from the city, but spent hours finding a car rental? Or taken one on the reference of a friend, only to have the operator leave you stranded in the middle and make you miss an important business meeting? Or did the cab just not show up? All faced the same problems too. Bhavish & Ankit decided to help fix it. So we've created, a marketplace for all types of cabs and car rentals. It's very simple: You enter your city and your need. OLA teams search the available inventory of our partners and provide you with a list of results and prices of different available cars from different operators. You can see OLA rating of that operator, what other customers said of them, and then book it right here on Or you can call us and we'll help you through the process! It's that simple! OLA has a young and energetic company based in Mumbai. Nothing excites us more than using technology to bring the same efficiency and customer experience to the car rental industry that you expect from flights! The Challenge:- Ride sharing is an interesting area where Ola has still not set foot into. While this could be a sustainable and scalable solution, there have been no success stories in the past around this in our country. This product can potentially change the way Indian cities move and can at least partially solve for the ‘Indian transportation problem’. There are clearly three use cases here: • Ola users who are also personal car owners - enabling ride sharing for privately owned cars across the city. • Public transport users or others who do not use a cab today only due to the entry barrier of prohibitive pricing at an individual level. • Existing cab users who can potentially travel at a far lower fare. Why isn’t ride sharing an Indian phenomenon? • A car is seen as something very personal, may not be something Indians are prone to share proactively. • Privacy while travelling is a concern – travelling with strangers and the possibility of making new friends doesn’t seem very motivating. • Predictability and planning are tough nuts to crack in the Indian context - with roads, traffic etc. adding to the woes • Regulation, safety measures, payment system etc. create another level of barrier to adoption.
  13. 13. 13 | P a g e Identify Entrepreneurial Opportunity Search and Identification:- Ever decided to take a weekend holiday from the city, but spent hours finding a car rental? Or taken one on the reference of a friend, only to have the operator leave you stranded in the middle and make you miss an important business meeting? Or did the cab just not show up? The company is touting the service as "beta launch of autos" on the Ola App. Media Name reports that the on-demand auto service from Ola works similar to the cab booking service. It said, "The fare payable is the regular meter fare plus Rs. 10 as convenience fee. Interestingly, one has to enter the drop-off point before an auto driver accepts the booking.“ • Ola Cab is currently offering each auto rickshaw driver a minimum salary of Rs. 10,000 alongside Rs. 1,500 as mobile charges per month, claims a report by Deccan Chronicle. Strategies adopted:- The industry was highly unorganized. Training the drivers here particularly in Indian context where many of them are illiterate was a challenge. Making them use tabs and devices was a big operational problem and thus greatly increase their dependency on call center operations. This is where Uber has a big lead. Then off-course behavioral issues of the drivers, maintaining the quality of service as well as cars were a challenge. A big challenge was and remains are maintaining the supply. Drivers will just log off from their devices and do personal bookings in peak seasons leading to a lot of rejects for customers. The industry here is not just about keeping customers happy but keeping your supply happy as well. Earning the trust of drivers was key here. Happy drivers = Happy Customers Drivers are the customers for Ola and TFS, while people ie end customers availing cabs are merely users of the platform. As you got a lot of drivers on the platform, managing them was also a challenge, which these guys overcome successfully through various measures. Once you have setup processes scaling up is relatively easy here. That is 1 reason the industry is a darling for investors and series of funding happening in very quick succession. Key variables that supported them to achieve an epitome of success:- 1) Mobile App 2) Offers New User. 3) Order Cab in any location. 4) Fast & Consistency service. 5) Track the current position of the cab in real-time. 6) TFS standard rates will be valid for all cab booking done via Ola app.
  14. 14. 14 | P a g e Insights as an entrepreneur-360 degree dimension:- Created, a marketplace for all types of cabs and car rentals. It's very simple: You enter your city and your need. We search the available inventory of our partners and provide you with a list of results and prices of different available cars from different operators. You can see rating of that operator, what other customers said of them, and then book it on Or you can call and They’ll help you through the process! It's that simple! A young and energetic company based in Mumbai. using technology to bring the same efficiency and customer experience to the car rental industry that you expect from flights! 4Ps:- 1. Promotion:- Promotion:- Promo codes by referral, various discounts, Blogs, Rating optimization in app stores, digital media promotions, word of mouth Challenges: Customer response against existing promotions Solution: Analytical approach 2. Process:- App Based booking, reporting time, Payment Refund Challenges: Technical Glitches, People non-compliance Solution: Training, Investment in technology 3. People:- Taxi drivers, Call centre staff Challenges: Security, Inappropriate behaviour, Solution: Stringent Background check, audits, Training 4. Physical Evidence/ environment:- Condition of the car, inside the taxi environment Challenges: unhygienic condition, Bad condition of the car Solution: Audits, Trainings, incentives
  15. 15. 15 | P a g e Ola cabs Swot analysis:- Technology:-  Heat mapping technologies to assess demands  God View- Real time aerial view of the movement of the car  Data Analytics: how many times app is opened, probability of predicting popular destinations, analyzing demand prediction accuracy to update the algorithm  Dynamic price algorithm  Web servers  GPS technology  Various Software’s
  16. 16. 16 | P a g e Quality of Service:- Drivers and Customers both share the rating Challenges:-  Technology (Location tracking):- More investment in technology  Data usage of drivers, Battery life of handset Technology, incentives,  Ride later: Process Training, loyalty, incentives  Background checking of drivers, non-regulated drivers strict verification processes, Zero tolerance  Data privacy of customers: history of travel, other personal information Strengthening of personal data security  Tough Competition Economy of scale, Diversification, consolidation  Pressure from investors Creation of customer base, loyalty programs  Law-compliance: using mobile while driving Training, Technology Key Learning:- Use of technology is essential for capturing marketing. Use of internet & need of customer can Startup new business successfully. For Idea on a Page: Insight for Building Ride Sharing and their plan for that insight. For Campus Round Presentation: In addition to deliverable 1, elucidate the go to market strategy and social media plan.
  17. 17. 17 | P a g e Winning Billionth for impactful mobile innovation:- Thursday last week at the Royal Ballroom of Eros Hilton, Delhi was an evening to remember! From over 291 nominations across categories, Olacabs emerged the winner in the travel and tourism category of the mBillionth Award, South Asia- 2013. The Olacabs mobile application for Android and iOS is the first of its kind in the whole of Asia which allows users to view, plan, book and even track a cab in real-time through the app. The application has added benefits like user safety, transparency and hassle-free trip experience that make it a full blown personal transport solution that a user can blindly trust. The jury also appreciated the social impact created by the business model – using available cab inventory efficiently to maximize supply rather than adding more cars to the road and creating a strong entrepreneurial ecosystem at the driver’s end directly impacting livelihoods and socio-economic status of over 4000 families. The mBillionth Award recognizes outstanding application of mobile innovations across 9 categories from countries all over South Asia. This is hosted jointly by the Digital Empowerment Foundation and the Vodafone Foundation in association with IAMAI, Mint and PwC. The jury comprises of experts from disciplines as wide as mobile, internet, social entrepreneurship, media, academia, corporate as well as the Government. We congratulate Redbus and SmartShehar who were co-winners in the category. Other notable nominees and Uber taxi:- About Uber • Uber officially launched in India in October 2013. Currently, the company is operating in 6 cities - New Delhi, Mumbai, Chennai, Bangalore, Hyderabad and Pune. – The concept is gaining lots of popularity around the world. It is posing real challenge to traditional taxi market. With a recent funding of $1.2 billion, total valuation of the company is $17 billion. – The company is signing up around 20,000 drivers every month around the world. It is not only serving the existing market but expanding it. • Uber does not own cars, uses state-of-the- art technology to connect drivers with passengers within minutes through a mobile app for a fee. • Given their track records in some of the emerging markets they have entered, Uber’s play is just to create a foothold in India. – Hertz, Avis etc. have all been in the Indian market but are tiny. So unless Uber makes a big investment in India, local players need not to worry much.
  18. 18. 18 | P a g e Background –Taxi Services:-  More convenient than other modes of public transport when going at a specific destination  Higher fees than other modes of public transport  Fixed price based on base fare, distance, time, peak hours/weekends & public holidays, advanced booking fees  Requires a government license to be a taxi driver  Car rented by the taxi operator  Taxis can be hired  Hailing on the street  Waiting at specific taxi stations  For immediate booking by SMS, phone call, app  For advanced booking by phone call, apps What does Uber Technologies Inc do?   Network Orchestrator, connecting passengers with drivers  Manages a network of drivers and passengers through a phone application  Provides options and varieties in the transportation service Uber: Real-Time Ridesharing:- (FROM) RIDESHARING:- Shares the same car and destination Shares the cost of gas, toll fees, parking Pairs passengers and drivers who are heading in the same direction / heading to the same destination Time Sharing (TO) REAL-TIME RIDESHARING:- Shares the same car and destination Individual costs Uses latest technologies Uses GPS and smart phones Social Networks
  19. 19. 19 | P a g e Geared towards profit or commercial gain Brief Description of the Business Model:- Uber is not a conventional taxi business as it owns no cabs or has employed drivers. However it is simply a platform that allows riders to hail a cab through a smartphone application to summon the ride of their preference by choosing from several brands provided by Uber. After clicking on a “request and Uber” button on the app the user is automatically assigned a driver. Uber users have the ability of tracking the driver’s position on a Google map and vice versa. First users subscribe to Uber by submitting their personal and credit card information to utilize Ubers’ service. The service can be obtained in any place Uber operates and at all times. The fare is automatically charged to the users’ credit card and is calculated using pre- set rates for distance travelled, demand and length of the trips. Uber charges user’s different rates according to the type of service requested taking its revenue as 20% of each fare. Uber brands. A more detailed description of these services is provided in the company summary: • UberBlack • UberLux • UberSUV • UberXL • UberTaxi • Uber for Business Uber’s Uniqueness:- Various differences make Uber unique in the Taxi &Limousine service industry. The way the app simply works adds fun to necessary short waiting times. As the customer waits, the app shows a Google map image of his exact location and tracks the location of his assigned driver. Unlike regular Taxi services, the app gives the users beneficial data they did not ask for including the length of the trip, miles travelled and the average speed. These differences
  20. 20. 20 | P a g e also include; reliability, wages, and accessibility, legal and registration differences (Egan: Started determined nun et al., 2014). SWOT Analysis Strengths Uber revealed several strengths as regards diverse aspects. Competitors. Uber in comparison to its competitors showed the following; • Uber is the first company to provide ridesharing services. Being first in the market provided Uber with a head start building in its clientele and branding (Hausman, 2013). • Uber currently has more cars providing its service therefore drivers reach the pick locations faster (, 2014a). • Uber pays the drivers more than what Uber’s closest competitor Lyft (Huet, 2014). • Compared to Uber’s competitors, Uber has the widest distribution as it currently operates in 50 countries and over 200 cities (, 2014a). • Uber has the ability to defy competitors by providing other modified more affordable services such as UberX, which is believed to be 20% cheaper than its main competitor Lyft and local taxi rates (Medium, 2014). • A unique feature that Uber and ride sharing firms possesses is that they are not required to auction for a Medallion. Taxi companies are required to purchase a Medallion, which is a cap, set to limit the number of cars operating for this company. Profits:- Ubers profits were outstanding for a startup company featuring the following; • Revenue percentages continue to increase month to month. According to CEO Kalanick, revenues have been doubling every six months (Rusli, 2014). • Uber’s potential has been repeatedly proven by investor’s optimism with regards to future performance and thus raising capital through multiple strong financing rounds. • Uber does not own of the vehicles providing the service therefore Uber’s startup expenses are moderate and are mainly contributed to improving the platform by which Uber delivers the service (Uber Blog, 2014a). Service:- Uber was unique in many aspects as follows; • Quality service, safe and comfortable marketed as highly efficient with elegance. Uber allows its users to rate their drivers giving them the ability to monitor the quality at which their users are being served (, 2014a). • Uber provides the users with an easier method of payment as users already submitted the required credit card information. This reduces the hassle of dealing with cash or making sure that the vehicles credit card machine is working. • A new feature added to the app called “Fare Split” which helps passengers split the cost of a ride easily (Uber Blog, 2013b). • High Transparency regards the pricing rates, and driver’s information. Uber minimizes any extra charges due to any mistaken or on purpose detours by the drivers raising credibility (Board of Innovation, 2014). • Uber has a shorter waiting time and a more guaranteed service when compared to local taxis that currently dominate the Taxi & Limousine industry (CityLab, 2014). • Continuous availability covering late night hours where most other transportation means service halt
  21. 21. 21 | P a g e • The majority of transportation services are under vast regulations which in turn results in lowering the quality and efficiency of their services and increasing prices Technology:- Uber’s used technology description is as follows; • Uber, founded in 2009, is leading in terms of patenting activity, with patent applications for both driver and passenger-facing aspects of ride -sharing and taxi scheduling technology (Envision IP, 2014). • Uber is a technologically driven service in an old standstill industry, which gives it the potential of changing the means by which the whole industry operates. • Mobile app – upon demand based service using a push of a button technology that geo- locates a nearby cab. • Mobile app is user friendly and provides a medium in which the delivery of the service is more efficient and convenient to the passengers. The app allows the passengers to have direct contact with the driver as well as the luxury of tracking their whereabouts on a map (Hausman, 2013). Weakness:- Uber’s weakness may not be many but are extremely serious to the company’s further continuity and growth if not resolved which are as follows; • Uber is recognized as an unregulated service, which is the main reason why Uber is facing a lot of legal controversy (CTVNews, 2014). • Insurance and liability concerns frequently raised (Hausman, 2013). • Company charged in lawsuits for having illegal practices, not following other standard contracts between cities and cab service providers, and not in parallel with union laws (Hausman, 2013). Idea monetizing; limitations to potential market cap may still occur because of overhead and potential legal costs in spite of the constant demand for cabs (Hausman, 2013) • Uber pricing rates are very inconvenient for rides of short distances in some cities (Hong, 2014). • Given that Uber is a firm operates in the shared economy market, investors face difficulty with valuation models regards such business structure due to the recent emergence and popularity of this market development. Opportunities Uber’s unique business model has great opportunity potentials in the market as follows: • Uber has expansion plans to have full coverage for cities it is currently operating in and to cover areas of large populations that reside in less affluent locations with little or no cab access to decrease wait times and distance coverage to access services downtown. • Uber has no limitations on pursing international markets as the service provided is of better quality and less time consuming than any of the services provided by existing taxi companies globally (Hausman, 2013). • Uber’s recently introduced services suggest that the company could be offering more than ridesharing services. UberRush, a new service introduced in Manhattan that provides the app
  22. 22. 22 | P a g e users the ability to request pickups and deliveries is an experiment to test the logistics market which Uber could be tapping in the foreseeable future (Ong, 2014). Threats Uber is facing many external threats to its expansion described as follows: • Any lawsuits won by cities against Uber for illegal taxi practices may destroy the successful model with subsequent high liabilities and limit its expansion and growth (Hausman, 2013). • Due to operating in a variable legal environment it is hard to quantify the costs of cease- and-desist orders, court injunctions and the impounding of cars. • Threats of enforcing local bylaws if company refuses to acquire a broker’s license whereas competitors agree to this condition could increase Uber’s expenses. • It is illegal to drive any public regular vehicle with a charging meter in some countries, which could hinder operations (, 2014). • A pre-set fixed hiring charge is mandatory for public passenger vehicles is allowed (livery vehicles) in some countries • It is illegal for anyone without a livery license to render a livery service in some countries • Taxis are forbidden from doubling or more their rates in some countries as Uber does which could hinder operations in the future (Wikipedia, 2014). • Extra fees or a surcharge imposed on customers for non-cash electronic payment methods is prohibited in some countries. How UBER works:-
  23. 23. 23 | P a g e Macro-Level Analysis: Porter’s Five Forces:- Threat of Potential Entrants Although Uber has already filed for several patents to protect their system and process [0], their patents were filed recently and will not provide protection until they are approved. While the timeline for the patents’ approval is not clear, Uber currently does not have any protection from new entrants as it have no proprietary elements that can prevent new entrants from competing in the industry. In terms of capital cost, Uber’s seed capital was $200,000 paid in full by the two co-founders [1]. Prospective new entrants into the industry can expect relatively low seed capital. Due to the low capital requirement to enter the industry, Uber faces low protection against new entrants. Since Uber does not require membership for prospective customers and offers their app for free, there is virtually no cost to switch services. Due to the lack of propriety elements, low initial capital requirement, and lack of switching cost, Uber faces high threat from potential entrants. These factors will likely limit Uber’s profitability. Supplier Power Since Uber does not own any vehicles, their business model depends entirely on drivers with their own vehicle and partners. Essentially, Uber outsources all assets and labour to limo companies and individuals who are willing to use their web application. There is also no substitute for individual drivers. Although there was news of Uber buying driverless cars from Google, the news proved to be a hoax. In addition, prospective drivers have the option to pick and choose between Uber, rival services, or traditional taxi services. Therefore, suppliers have the power to negotiate for a higher price at Uber’s expense. Lastly, drivers do not face any switching cost since they essentially own everything other than the app. These factors give drivers immense bargaining power. This is not to say Uber is powerless; since there are many qualifying drivers, Uber has the power to set terms and rates. Taking all factors into account, suppliers have moderate power to impact Uber’s profits in the industry. Buyer Power Uber is a service that customers do not need on a day-to-day basis. Most customers only use Uber in specific circumstances. Therefore, Uber customers have the option to choose when to utilize Uber and when to go with a competitor. In addition, Uber has many competitor and substitute in the industry. Lastly, since Uber is a free app that only requires prospective users to register with them, the switching cost for customers is quite low. When taking into consideration the low switching cost and an abundance of competitors and substitutes, it is clear that customers are more likely to be price sensitive. These factors give buyers significant power to limit Uber’s potential profits. Threat of Substitutes Since Uber competes in the Network Transportation Industry, it has many substitutes across the transportation industry. The closest substitute to Uber is traditional taxi service. Although taxi services cost more than Uber on average, its prevalence and established presence also limits Uber’s ability to raise prices. Public transportation is substitute that poses serious threat; in exchange for a slower speed public transit also offer substantially lower fare. Since Uber poses virtually no switching cost, it faces very high threat of substitute from a wide array of transportation methods. As a result Uber’s profitability is seriously impacted by the
  24. 24. 24 | P a g e high threat of substitutes. Competitors There are many competitors in the Network Transportation Industry which Uber is classified under. Notable, the two biggest competitors in the space are Sidecar and Lyft. The three companies use very similar business model and suppliers; therefore, they are competing not only for customers but also for suppliers. In addition, the different companies target customers living in the same geographical locations, notable major cities across the United States. Although rivalry and competition is fierce in the space, Uber has much more capital compared to its competitors. Uber’s $307 million in funding overshadows Lyft’s $82.5 million in funding and Sidecar’s $10 million [4] [5]. Therefore, Uber can be regarded as an industry leader. However, due to low switching cost and little differentiation in the industry, Uber’s price and profits are once again seriously limited by the fierce rivalry. Micro-Level Analysis: Sustainable Advantage:- Macro-level industry outlook alone will not determine Uber’s potential for success in the industry. In order to gain a holistic understanding of Uber, we must examine the sustainable advantages Uber has over its competitors. In order to determine Uber’s sustainable advantages, we will examine their proprietary elements, economic viability, and superior processes or resources. In terms of proprietary elements, Uber has an advantage over its competitor in the sense that it have filed for patents. Although the patent is still pending, Uber still own more proprietary elements compared to their competitors. Since their competitors utilize technology that not only function similarly, but also look similarly to Uber’s software, Uber can potentially sue their competitors once their patents are approved. Uber has no proprietary elements for the time being. In fact, outside perception refer to Uber, Lyft, and Sidecar as “clones of each other.” [6] It is safe to conclude that Uber does not have the proprietary elements necessary to sustain its first-mover advantages at the moment, but this will change in the future. Uber’s economic viability is relatively sound, but undifferentiated from its competitors. Uber’s sole fixed cost is their app and software hosting services. Software and hosting services are inexpensive and can be maintained by contribution margins. Operating cash cycle is also relatively short since payments are done electronically. Uber’s biggest economic viability concern is its high customer acquisition and retention cost, especially in a highly competitive environment. Since competitors’ business structure is undifferentiated, Uber has no sustainable advantage in terms of economic viability. Ultimately, Uber’s competitive advantage comes from their access to resources that are unavailable to competitors. Uber has received over $300 million in funding so far. The number is especially impressive considering Uber has more than three times their competitors’ funding. The access to extra capital allows Uber to spend more money on acquiring more drivers, pushing into more markets, and developing better infrastructure. As a result of Uber’s superior access to capital, it is present in 9 different countries and over 30 cities worldwide. Their competitor will have an extremely difficult time reproducing results like this, especially given their funding. Uber’s superior access to funding is the driving force behind their sustainable advantage.
  25. 25. 25 | P a g e On the macro-industry level, Uber faces high threat of potential entrants, high supplier power, high buyer power, moderate threat of substitutes, and fierce competition among rivals. It is safe to conclude from the five forces that Uber is competing in a cutthroat industry where prices and profit margins will be kept relatively low. However, since the industry is relatively immature, there is huge potential for growth. The current outlook for the industry at the macro-level is not very attractive. This is not to say that the industry is doomed; should the industry mature and Uber is the only one left standing, there is a huge profit to be reaped from the sheer volume of potential customers that is still untapped. In addition, Uber has the resources to secure those potential customers. Of all the competitors in the industry, Uber is the one that has the best odds of becoming the industry leader. If Uber survives the currently crowded industry, it will become the leader in network transportation and prove to be an extremely lucrative company. Uber’s most important innovation is the way it prices its services. But that innovation has not been unreservedly welcomed by customers. They’re wrong. The four years since the car service Uber launched, it has been beset by criticism from myriad groups, including city officials annoyed by its sometimes cavalier attitude toward regulation and taxi companies annoyed by increased competition. Some of the harshest criticism, though, has come from an unlikely place: Uber’s own customers. Thanks to its reliance on what it calls “surge pricing”— meaning that during times of high demand, Uber raises its prices, often sharply—the company has been accused of profiteering and exploiting its customers. When Uber jacked up prices during a snowstorm in New York last December, for instance, there was an eruption of complaints, the general mood being summed up by a tweet calling Uber “price-gouging assholes.” Thing reviewed Uber's dynamic pricing model What’s striking about the Uber backlash is that the company is hardly the first to use dynamic pricing. There have always been crude forms of price differentiation—or, as it is known in economics, price discrimination. If you go to a movie matinee, you pay less than if you go at night, and if you’re willing to wait to buy a new dress (and run the risk that it might sell out), you can often get it at a marked-down price. But dynamic pricing in a more rigorous sense was pioneered in the 1980s by Robert Crandall, CEO of American Airlines, as a way to fight off competition from discount airlines like People Express. American began by slashing prices for tickets bought well in advance, while keeping prices for tickets bought closer to takeoff (when ticket inventory was lower, and demand was less price-sensitive) as high as possible. In the decades since, this kind of yield management has become integral to the business models of airlines, hotels, and rental-car companies, and greater computing power and more sophisticated data analysis has turned pricing in these industries into an incredibly complex process. (Dynamic pricing has also allowed sites like Priceline and Hotwire to flourish, since when hotels are stuck with extra rooms, they’re often willing to drop prices rather than let a room sit empty.) More recently, as technology has made it easier to segment the market and change prices on the fly, dynamic pricing has become common in other
  26. 26. 26 | P a g e industries, too. Many professional sports teams now use it to set ticket prices—games against high-profile teams cost more than games against cellar dwellers—while concert ticket prices wax and wane with demand. If dynamic pricing is hardly unusual, why has Uber taken so much flak? Some of it is a matter of history: early on, Uber’s pricing was not especially transparent, so customers occasionally found themselves stuck with fares that were much higher than they expected. The fact that some of the most high-profile examples of surge pricing have been the result of big storms also matters, since it taps into people’s visceral dislike of price gouging. A 1986 study by Daniel Kahneman, Jack Knetsch, and Richard Thaler found that most people thought “raising prices in response to a shortage is unfair even when close substitutes are readily available”—a situation that almost perfectly describes Uber. Then, too, the price increases during surges are often magnitudes greater than customers are used to; during that New York snowstorm, Uber charged up to nearly eight times as much as it usually did. Thaler has suggested that people find price increases above three times normal psychologically intolerable. It’s also important that Uber’s prices only rise above the base rate and never fall below it, since customers seem to accept dynamic pricing more easily when it’s characterized as a discount. At the movies, for instance, prime-time tickets aren’t presented as a few dollars more than the normal price—rather, matinees are presented as a few dollars less. When American introduced dynamic pricing, it framed the 21-day advance-purchase requirement as a chance to buy “super-saver” fares. And happy hours at bars are, similarly, framed as a markdown from the regular price. These framing devices don’t change the underlying economics or price structure, but they can have a big impact on customer reaction. In 1999, for instance, Douglas Ivester, then the CEO of Coca-Cola, suggested that smart vending machines would allow Cokes to be more expensive on hot days, when demand was presumably higher. There was an immediate, intense backlash, and the company quickly backed down, saying Ivester’s comments were purely hypothetical. Had Ivester instead suggested that Coca-Cola could use dynamic pricing to charge less on cold days (even if it had raised the base price of a can), response would probably have been very different. Uber’s competitor Lyft seems to have recognized the power of framing: it recently introduced what it calls happy-hour pricing, offering discounts during slow business hours. Finally, Uber also faces a challenge simply because of the industry it’s in: a business in which fares have historically been regulated (for cabs) and fixed (if you take a car service to the airport in New York, for instance, you typically pay the same price whether you leave at 6 a.m. or 5 p.m.). Uber’s pricing scheme is more complicated and harder to grasp intuitively, so that even though Uber is transparent about surge pricing, some people inevitably find it vexing. Uber’s also combating the sense that transportation is, in some sense, a public utility, and that it’s offensive to charge people so much more than they’re used to paying. This is a mysterious complaint, since there are many alternatives to using Uber. But it’s a surprisingly common one.
  27. 27. 27 | P a g e Uber's Indian innovations go worldwide:- BENGALURU: For the world's biggest cab player Uber, India has been home to a number of successful innovations, some of which have forced the venture to alter its basic tenets. Now, Uber is taking these learning’s to other countries including Turkey, Indonesia, the Philippines, South Africa, Kenya and Vietnam. The innovations, often the result of challenges the Indian market posed, include acceptance of cash, use of mobile wallets, introduction of the SOS safety feature, the concept of UberGo (lower-end cars) and most recently Wi-Fi in cabs. "Apart from being the second biggest priority market for us, India is also an innovation hub and learning ground for Uber. When a process innovation is introduced, it leads to a product innovation as well that can be taken to other markets," said Karun Arya, Uber spokesperson for South East Asia and India. Uber headquarters initially opposed the idea of introducing cash payments because it necessitated changes in the way the Uber app was designed and complicated the process for both drivers and consumers. But when the pilot project in Hyderabad saw 80% users preferring cash, the top management was convinced. Now the cash option is available in Nairobi and Vietnam and is expected to be introduced in several other global cities. "We knew that cash was essential for us to scale in India," said Arya. Rival Ola always had the option, one reason why it has a much bigger share of the Indian market today. The mobile wallet innovation was forced on Uber by an RBI mandate that required two-factor authentication for credit card payments. Since introduction of two-factor authentication would have complicated the customer experience, Uber opted for the Paytm wallet, which remained the only payment option for several months. UberGo, which uses hatchback cars, was developed in India as the segment constituted the mass market here. Most competitors were already offering hatchbacks. That product is now available also in Turkey. Meru:- About “Meru”:- Meru Cabs is one of the first companies to launch metered "Radio cabs" in India under its brand "Meru." First launched in Mumbai in April 2007, Meru Cabs has grown exponentially in terms of fleet size and geographical presence. Customers benefit from a relaxed commute in a well equipped, air-conditioned cab, which is readily available 24/7. Headquartered in Mumbai, Meru Cab Company provides a radio taxi service in the four key metros of India -
  28. 28. 28 | P a g e Mumbai, Delhi, Hyderabad and Bengaluru. Meru Cabs delivers a reliable taxi service by concentrating on each touch point with its customers and devising systems, processes or technologies that will deliver a reliable interface. Meru Cabs uses GPS/GPRS enabled technology in all of the cabs to ensure complete passenger safety. Each Meru cab is owned & maintained by Meru Cab Company Private Limited. The name "Meru" is derived from the symbolic mountain of the gods, an icon of unshakeable reliability and character - a core value which lies at the heart of Meru's promise to its customers. • Modern, brand-new, air-conditioned luxury cabs. • India’s fist and largest radio taxi operator, it changed the way metered taxis operate in India. • Round the clock availability of cabs backed by a location tracking GPS - based dispatch technology. This means a quicker pickup and faster response time to your call for a cab. • Advance Booking available “on demand” by calling 24*7 customer care center by calling 4422 4422 , or through “SMS -a-Meru” & “Meru –on-the-Net”. • Operated by environment friendly fuel, i.e. CNG • A printed receipt for every fare, providing details of distance traveled and total amount payable. Entrepreneur:- Mr. Neeraj Gupta Managing Director A first generation entrepreneur, Mr. Neeraj Gupta created the finest radio taxi service in India under the Meru brand name. Under his guidance, now, Meru has become a synonym to radio taxi. His entrepreneur skills have made Meru, a single largest radio cab service in India with fleet size more than 5000 cabs operating in Mumbai, Delhi, Hyderabad & Bangalore. He has a simple mantra of success - self belief, focus on goal and giving 100 %. According to Mr.Gupta advice to budding entrepreneurs is the equally same. He says, "Avoid all shortcuts as they always lead to dead ends. It's only your hard work and true efforts that give result." • Neeraj Gupta is simply a commerce graduate from Mumbai University.
  29. 29. 29 | P a g e • Neeraj Gupta borrowed Rs. 50,000/- to start a garage in 1998 from his wife. • Started garage ‘elite’, which was meant for high profile clients. • Started 1 bus for pick up facility for Tata InfoTech in 2000. • Got the contract of Pick-in-facility for Sitel India, a BPO outfit floated by Tata InfoTech. • By 2002, Neeraj was owner of few buses with a turnover of just Rs.11 lakh. • August 2006, when Neeraj applied for taxi service license offered by the Maharashtra govt. • Today, Neeraj is Managing Director of V-Link Taxis and owns a fleet of 5,000 vehicles including 60-odd buses with a turnover of Rs. 250 crore having operation in Mumbai, Delhi, Hyderabad & Bangalore. Y this Business:-  It was totally on research theory:  Electronic Meters  Mileage  Upholstery  Speed  Driving comfort Facts of Meru:- • April, 2007 – Launched in Mumbai with India Value fund advertising with 30 cabs. • October, 2007 – Started pick up and drop from Mumbai chatrapati airport terminals. • June, 2007 – Increased cabs from 30 to 200. • July, 2007 – Extend its pickup service to all areas within BMC limits. • November, 2007 – Launched driver training programs. • March, 2008 – Launched in Delhi with 250 cabs. • April, 2008 - Launched in Bangalore with 500 cabs. • May, 2008 - Launched in Hyderabad with 400cabs. • September,2008– Launched, Meru for women: Safe, secure & convenient transport option • December, 2009 - Launched credit/debit card payment options for Bangalore.
  30. 30. 30 | P a g e • February, 2010 – Launched credit/debit card payment options for Delhi. Entrepreneur Awards:- During his journey with Meru Cabs, Mr. Neeraj Gupta was felicitated with, • Entrepreneur of the Year Award by the Bombay Management Association (BMA) for his significant contribution in the Public Transportation and to provide high quality innovative transportation service. • Udyog Rattan Award by the Institute of Economic Studies (IES) in 2007 • Excellence Award to his company given by Institute of Economic Studies (IES) • Award from All India Passengers Association – Largest & Best Taxi Company in the Country • Best Entrepreneur of the Year Award from All India Passengers Association. • Best IT User Award to Meru Cab Company Pvt. Ltd. -Nasscom in 2008 & 2009 Business Model:- • Agent from companies go to the areas where drivers hang out, such as airport, parking lot, call centers, malls and then explain business to them. • After and formal application successful drivers pay a refundable deposit and an application fees and undergo two weeks of training. • The driver is then given a vehicle for which he has to pay daily fees. Any profit after the fees and fuel expenses go to the driver. • The operator owns the vehicles in the fleet and vehicles are bought in batches of 100- 200 form various manufacturers. • Drivers are assuring a certain numbers of fares every day. However, driver has to pay a fee if they take leave on a day of duty. • Driver performance is monitored through customer feedback and Global Positioning System (GPS) module fitted in the car. Convergence cab:- Meru - has reaffirmed the belief that IT can be deployed in just about any domain, and can lead to phenomenal gains. GIS Global Positioning System (GPS)
  31. 31. 31 | P a g e General Packer Radio Service (GPRS) Mobile Data Terminal (MDT) Future aspects of Meru:- Neeraj has plans to develop his company V-Link into an end-to-end transportation company as he mulls over entering into bus rapid transit system and looks forward to a private-public partnership in Indian Railways too. Meru cabs business till now:-  Meru Cabs was one of the first companies to launch metered "Radio cabs" in India under its brand "Meru."  Meru Cabs has grown exponentially of fleet size and geographical presence. Customers benefit from a relaxed commute in a well equipped, air-conditioned cab.  Meru Cabs launched in Mumbai with 45 cabs in 2007; started operations in 2008 at Delhi, Hyderabad & Bangalore. It extended its services Jaipur & Ahmedabad in 2013 and Chennai by March 2014.  Serves more than 1.8 million passengers its also 3rd largest "Radio Taxi" company in the world Meru Cab Advantages:- 1) Simplifies Decision Making of the customer: As Meru cab provides timely service, level of comfort and since booking is also quite easy as compared to other competitors existing in the industry, it compels people to opt for Meru Cabs as compared to its competitors. 2) Reasonably a few features like reliability, re-booking, easy accessibility, GPS/GPRS technology and maintenance, the Meru Cab brand earns competitive advantage in the market as compared to other cab service providers 3) Willingness to pay more for Meru Cabs. MERU’S IT STRATEGY:- Business with Technology  Use of GPS/GPRS/Tablets  Tamper proof digital fare meters integrated with GPS system Reaching out to the customers  Taking feedback from every customer  SMS after every trip
  32. 32. 32 | P a g e  Using Digital Signage for advertisement  Third party customer satisfaction survey Partnering with the best in business Process flow diagram of Meru:- Meru's Mobile Site is a Classic Innovation:- In the age of fierce competition, innovation is what drives Meru Cabs. It is innovation that wins us customers. It is an important factor for us to provide better customer service. But ironically innovation cannot be just a onetime act. It is to sustain for a longer period of time. Any innovation or service that we launch today soon becomes gets replicated across the industry. In such a situation I guide my IT department to constantly reinvent and be on the edge to improvise. I feel if you involve in business processes, understand the market realities, talk to the marketing, sales, field forces, it is easier for IT to innovate. Recently Meru upgraded its mobile website to the HTML 5 version, making cab bookings simpler and quicker for customers on the go. This initiative, designed especially for Touch Phones, was based purely on the feedback that we received from our customers. So, if you are constantly talking to your end customers, understanding their usage patterns and most importantly, listen to their feedback, the solutions come in the form of innovation. It is a fact that touch screen smart phones have become tremendously popular and have raged the market. The new HTML5-based mobile site of Meru now caters to all brands and models of touch smart phones. This upgrade will provide great convenience to consumers on the go.
  33. 33. 33 | P a g e The website is optimized for touch screens and enables cab bookings directly and quickly from Smartphone’s. Through this app one can avail of various user-friendly facilities like storing trip details in the account and track cab proximity once they have received a booking confirmation through a map on the website. Other facilities include the convenience of booking the cab within a couple of clicks, calling the driver assigned for pick up with a single click, accessing a record of the receipt over the phone, rating the service etc.In all such initiatives, our primary focus has always been to provide customers with high quality services through use of technology and innovation. With the launch of this new website, we have once again raised the bar to provide high-end innovative services and value for money to our customers. I again emphasize the point that to be innovative one doesn't need to look out. If you see inside, talk to customers, peers, employees, you can get ideas that convert into small but effective innovations. MERU CABS: FOLLOWING THE PRINCIPLES THAT GUIDE INNOVATION OPPORTUNITIES Mumbai, India has been famous for its fleets of black and yellow taxis and auto-rickshaws for short- or long-distance hauls. With people’s income beginning to rise in the last decade and Mumbai now becoming a financial stronghold, there was a sudden demand for better service. Taxi owners and co-operatives responded by making the existing options more comfortable, providing comfort in the form of cleanliness and air conditioning. But to the current market segment, this move was underwhelming. It was merely considered an improved and more expensive taxi. In order to view how this industry took a turn, we first must look at the Job To Be Done (JTBD)—it is the fundamental need of a customer for which companies create solutions (products or services). Consider candle manufacturers. They had made constant efforts to improve the life of candles (to last longer), reduce smoke, and increase the intensity of light so that they serve the JTBD of “providing illumination when required.” The invention of the tungsten wire and light bulb created a better solution for the JTBD of illumination. Today, candles are decorative items that occupy a corner in our home but not a source of light or illumination. Several such examples (see figure) have revolutionized their respective domains by either creating a new market, or redefining the meaning of success in their industry. And we can credit their achievement to appropriately identifying the JTBD. So for the taxi owners and cooperatives in Mumbai, they needed to figure out the JTBD in order to create a better service. In 2007, a company called Meru introduced a new concept called “radio cabs.” One may consider the services of Meru cabs—advanced booking, reliable drivers and security—as a similar upgrade to what the other taxis were providing. But
  34. 34. 34 | P a g e the numbers tell a different story. Meru has scaled to 5,000-plus cabs in three years, across Mumbai, Delhi, Hyderabad and Bangalore. The third-largest "radio taxi" company in the world and the largest operator in each of the cities where it operates, Meru makes 20,000 trips per day and carries over 1 million passengers a month. The key of Meru’s success lies in identifying the job that taxi companies performed. The JTBD can be simply considered as “reach one destination from another.” Customers like to get this job done with criteria such as increased convenience, increased comfort, minimal waiting, increased safety and increased reliability. This is what Meru identified correctly, and the solution features that Meru provides satisfy these hiring criteria for the JTBD. Neeraj Gupta, founder of Meru Cabs, identified this gap when he was travelling in London and Singapore, where such services were available. Even though the concept of radio cabs existed, to adapt it to a new environment was a struggle in itself. In the case of Meru, the factors the company had to struggle with included permits, licenses, drivers, logistics, political revolt and much more. The real challenge, though, was to convince their customers that Meru could help them “reach a destination with ease” since this was a cultural as well as a behavioural shock. Taxi for sure:- Taxi For Sure (Serendipity Infolabs Pvt Ltd) • Taxi For Sure is one of leading Cab Aggregator in India and was acquired by Ola Cab in February 2015. – The company has grown at a rate of 25-30% MoM and has clocked three million transactions. • As an aggregator of car/cab rentals, its offerings include local point-to-point pick-up and drop, airport transfer, local packages (for four or eight hours) and outstation packages. – Besides regular rentals, it provides luxury cars to the commuters. Founded In: June 2011 Founder: Raghunandan and Aprameya Investor: Bessemer Venture Partners, Accel Partners, Helion Venture Partners, Blume Venture Fund Raised: $36 Million Cab Model: Aggregator Bhavish Aggarwal CEO, OlaCabs There is significant complementary value that this acquisition adds both on the supply and demand sides for Ola and TaxiForSure. The latter follows a different model of supply and distribution by working with cab operators, while Ola works with driver- entrepreneurs. The Starting:- • TaxiForSure has a pool of 18 operators and 1,750 cabs in Bangalore and New Delhi. • The founders, both Raghunandan and Radhakrishna, are alumni of the Indian Institute of Management, Ahmedabad as well as the National Institute of Technology Karnataka, Surathkal.
  35. 35. 35 | P a g e • TaxiforSure has tied up with MakeMyTrip to tap into that site’s customers. It is also in talks with redBus for the same. The partnerships would allow a customer who books a bus ticket on redBus or an airline ticket on MakeMyTrip to also book a taxi for the airport or a bus depot pickup and drop.  On asking about the starting and the motivation for starting up, Aprameya said “It all started with the typical ‘in-a-bar’, ‘on-the-tissue-paper’ evening.  Since that point, our idea to become a taxi aggregator has become a reality, we call ourselves TaxiForSure  Started with the personal investment of 8-10 lakh Aprameya Radhakrishna, Co-Founder Raghunandan G, Co-Founder BUSINESS MODEL:-  In a market flooded with taxi operators, ‘reliability’ is the USP of this company  They take a share from the fare paid by the customer referred by them, to the operator From the bigger, organized operators, they get a 7-10 per cent share. From the smaller ones, they earn around 20 per cent  They don’t have to invest in a fleet of cars. The other costs would only be on setting up a Call Centre to coordinate with drivers and customers and the technology to connect them.  Driver performance is monitored through customer feedback and Global Positioning System (GPS) module fitted in the car. COMPETITIVE ADVANTAGE:-  Mobile application facility  Multiple car types to choose from - Indica, Sedans, AC cabs, Non-AC cabs - for your travel  Premium cabs like BMW, Mercedes and Jaguar too, can be book through us  Rates are cheaper that most radio taxis  Can book airport taxis, city cabs, local hire/rental cabs as well as outstation cabs. MARKET OPPORTUNITIES:-  These are the places JAIPUR, INDORE, BHOPAL, CHANDIGARH
  36. 36. 36 | P a g e  It constitutes .5% of market share  There are about 600,000(88-92%) taxis in the unorganized sector that can be aggregated, which is a $2.5-billion opportunity.  Opportunities for companies keep increasing their fleet size and the new locations (major Cities) BUSINESS STRATEGY:- • Our rates are cheaper that most radio taxis. We also have flat rates for airport cabs in some cities. • You can book a cab either online, through our mobile site, our apps or by calling us at 6060 1010 (Ahmadabad, Bangalore, Chennai, Delhi) & 4040 9090 (Hyderabad). • Book now and pay later. We don’t need you to make a payment when you book a cab online! • Multiple car types to choose from - Indica, Sedans, AC cabs, Non-AC cabs - for your travel. • You can book premium cabs like BMW, Mercedes and Jaguar too, through us. VALUE PROPOSITION:-  The customer, with a safe, reliable and easy taxi service, still proved to be the focal point  Face book ads and radio campaigns widened their reach  Ample Choice for Economy car rental services, Standard cars for hire, SUV rental service in India, Luxury Car rental service in India, and Premium Car rental service in India  Car Rentals for Outstation trips with passenger relaxing back seat REVENUE MODEL:- • Taxi For Sure, is eyeing a revenue of Rs 7.2 crore in this fiscal year • It takes a cut of 10-12 per cent of the final fare • The firm posted a turnover of Rs 10 lakh in the first year of operations • In 2012, the company raised Rs 28 crores risk capital funding from Accel Partners, Helion Venture Partners and Blume Ventures. • Its revenue last year was around Rs 80 lakhs, and the Bangalore operations are already profitable.
  37. 37. 37 | P a g e Conclusions:- The radio taxi space in India has huge headroom for growth and is far from saturation. While there is a good scope for expansion in tier 2 cities, the metros will still be the primary market for all the players. Hence we might see price wars and more fleet variations (like Ola Auto, Ola Nano and UberGo) being introduced. More and more hatchbacks and low cost options will be introduced to cater to the price conscious Indian market and to compete against other forms of public transportation. Service assurance & quality and convenience will emerge as the long-term differentiators. Ride-sharing might come up in the next 3 years and has the potential to bring down costs even further for the consumer as well as reduce costs even further for the taxi players. There are quite a few small ride sharing startups already like LetsRide, Ridingo, Zify, PoolCircle and Rocket Internet’s Tripda to name a few. Uber is already experimenting with this in other markets and might bring this to the Indian market soon as well. There will also be scope for M&A activities with consolidations happening among ridesharing players or one of these taxi companies scooping up ride sharing players to fuel its foray into ride sharing. There are definitely some exciting times ahead, both for consumers as well the taxi companies. At this moment, the application development has been completed both an Android App and an iPhone App. Now the processing of research is under evaluation by experts and example user group. The trial version is able to be downloaded for free on App store for iPhone and on Google play for Android by searching for taxi friend. After application evaluation has done, and then we will introduce this app to our partner and supporter to help us promote the application into public scale. We would like to spread promote as much as possible to gather many user to push this application recognition because the aims of this application is to be an ideal application for a taxi passenger. We expect this applications make a good benefit for our society. Reduce the tense atmosphere of the driver and passengers that may occur on a taxi. Reduce worrying of parent or people you love when you have to travelling alone or travelling in the night time. Help to find taxi you were ride on in case some item on. And of cause we hope this application will satisfy our customers.
  38. 38. 38 | P a g e References:-  Rusli, E. (2014). Uber CEO Travis Kalanick: We’re Doubling Revenue Every Six Months. WSJ. Retrieved 1 December 2014, from doublingrevenue-every-six-months/       