Company background
The aim of this report is to discuss the effectiveness of the micro level factors of Ola cabs along with identifying the negative and positive factors of them. This report will also discuss about the external business factors to be faced by Ola cabs in doing business in the Australian market.
Ola cab is one of the major and leading cab aggregators in the Indian market. Ola cabs were founded in 2010 and currently they are having more than 600,000 vehicles across India. One of the major competencies for Ola cabs is offering diverse range of vehicles from luxury sedans to non-ac cabs (Olacabs.com 2018). As of now, they are present in all the metro and tier I cities of India. The major reasons of their immediate success in the Indian market are offering ac cab services at an affordable rates and easy availability of the vehicles. In addition, the customer convenience in booking the cab from the app is also contributed in succeeding in the market.
The major financial resources for Ola cabs are the backing of the Soft Bank of Japan. They have heavily invested in Ola cabs and it is helping them to have seamless flow of funds for the business development. It is also helping Ola cabs in invest heavily in their marketing activities to attract customers. It is reported that Ola is having the market leadership in the online cab market in India and they are way ahead than their close competitors Uber and Meru cabs. Human resources are another major advantage for Ola cabs due to the reason that human resources including the drivers are major sources of revenue and Ola cabs are having relatively fewer issues in regards to human resources than Uber (Surie and Koduganti 2016). However, on the other hand, the major negative factor for them is their organizational capability and expertise. Though they are the market leader in the Indian market, but they are limited to the Indian market and do not have global presence like that of Uber. This may affect their potentiality in entering in the foreign market. In the long run, this may get emerged as a major weakness for Ola cabs.
Though there are number of positive and negative factors are evident in the business operation of Ola cabs but the external business environment of Australia will also determine the effectiveness and potentiality of doing business in the country. The following sections will discuss about the external business factors to be faced in the Australian market.
Market selection
Australia is a democratic and capitalist country and thus foreign investment is having no issues. However, the government gets changed in every five years and this may cause change in the political scenario especially if communist political parties come to power (Kefford 2013). The political and government mechanism are stable and risks of military coups are low. Thus, the political environment will be favorable for Ola cabs in the doing business in Australia (Rahman and Mamun 2016). In addition, the favorable diplomatic relationship between India and Australia will also help Ola cabs to have effective entry in the country. Australia being a capitalist country is having favorable political environment for the foreign investors.
Australia is having the favorable economic environment in the country due to the fact that in the recent time, they are witnessing growth in their national economy (Manalo, Perera and Rees 2015). Thus, the more will be the economy growth, the more will be the business opportunities for Ola cabs. It is also being reported that Australia is one of the top ten countries in the world in terms of ease of doing business. In addition, the lower rate of unemployment will also help Ola cab to have customers with higher purchasing power. However, on the other hand, the presence of number of cab aggregators in the Australian market will pose challenge for Ola cabs (Devi 2016). The intensity of the competition in the Australian can market is more compared to that in India. Thus, the profitability of Ola cabs may get limited due to this factor.
Australia is much globalized country and it is evident in their social environment. Customers are having level of acceptance for the foreign brands. Thus, the probability for Ola cabs to have less social acceptance is low. However, the social requirement of Australia will be different to that of India. Ola cabs should have more premium offerings in the Australian market rather than their cheaper offerings in the Indian market. It should be noted that Australia is having huge number of immigrants and a major portion of them are from India (Khoir, Du and Koronios 2015). Thus, this population will have preferences for Ola cabs and it will help them to have a potential market.
In terms of technology, Ola cabs are at par to the industrial standards in the Indian market. However, in the case of the Australian market, they should have to go a notch higher in order meet the higher standards. Australia being a developed economy is having the access to latest set of technologies. Thus, Ola cabs should have their research and development centers in Australia (Sun, Nanda and Jaeger 2015). This can help them in determining the local trend properly and developing the technologies accordingly. However, it should also be noted that Ola cabs should have access to added funds in order to invest in the technology development.
Political factors
There are number of legal considerations in Australia that should be followed by Ola cabs in doing business in Australia. The major challenge that will be faced by Ola cabs in operating in Australia is different rules and regulations in different Australian states. For instance, New South Wales and Victorian region are having different rules and standards for the online taxi cabs (Vosko, Grundy and Thomas 2016). In addition, in the Indian market, legal control over the pricing strategy of the online cabs is low while in the Australian context, Ola cabs will have to adhere to certain legal standards in their pricing strategy.
Australia is the having more favorable infrastructure for the electric and hybrid vehicles and thus the potentiality of operating electric cabs is more for Ola cabs. Moreover, existing cab operators in the Australian market are already considering introducing electric vehicles. It is also important for Ola cabs to consider this decision in order to have favorable branding in the country.
Australia is having number of cab operators in the market and with having high intensity of competitiveness. In addition, the target market is also much diversified. Porter five forces will be used to analyze the market competitiveness.
The target customers for the online cab operators are mainly the professionals. This is due to the reason that professionals are having the requirement of comfortable transportation that will be available in time. The major favorable factor for Ola cabs will be the increasing trend of professionals in the country. In addition, the teenage customer sector can also be targeted due to the reason that they are increasingly availing cab services (Kumar and Kumar 2016). However, the bargaining power of this customer segment is high due to the presence of number of similar cab services in the market. Thus, customers are having the options to choose from the available option with lower switching cost. If the price of the Ola cabs is high compared to the competitors, then the customers will opt for other options.
Suppliers for the Ola cabs are mainly the automakers who will supply cabs. Apart from that, they are less depended on the external suppliers. The bargaining power of the suppliers is low due to the reason that there are number of car brands operating in the Australian market (Ganapathy 2017). On the other hand, Ola cabs generally not maintain their own inventory rather the cabs belong to the respective owners. Thus, the influence of the suppliers is low for Ola cabs.
Economical factors
Threat of substitute is high for Ola cabs in the Australian market. There are number of online cabs operating in the Australian market including Uber, Premier Cabs, Rydo and GoCatch. All these cab services are offering same value to the customers (Rose and Hensher 2014). Moreover, the existing cab operators are having more brand value and identity, which are not with the Ola cabs. Thus, they will face high threat of substitute services in the Australian market.
Threat of new entrants is low for Ola cabs due to the reason that huge investments are required in this sector. It is also to be noted that in operating in the cab market in Australia, new entrants should have large fleet of cabs along with other operational elements (Porter and Heppelmann 2014). This is limiting the entrance of the new players in the market.
Competitive rivalry is having huge intensity due to the huge competition among the existing players. Thus it is important for Ola cabs in initiating different marketing activities such as sales promotion by offering discount codes to the customers. Effectiveness of the marketing activities will determine the extent of staying ahead in the competition.
Conclusion
Thus it is concluded that Australia will be one of the most potential markets for Ola cabs. In this report, the external business factors to be faced by them in operating in the Australian market are being analyzed and it is identified that Ola cabs will face number of challenges as well as opportunities. The major advantage for Ola cabs identified is huge market potentiality for the online cab service providers. On the other hand, the major challenge for Ola cabs will be competing with the large number of established cab operators in the Australian market. It is also identified that threat of substitute will be more for Ola cabs along with having higher degree of bargaining power of the buyers.
- It is recommended that Ola cabs should have diverse service portfolio ranging from affordable cab service to premium service. This will help them to cater to larger customer segments.
- Ola cabs should also have to opt for geocentric approach in their higher management. This will ensure that Australians will be there in the management and it will help to manage the Australian operations.
- It is also recommended that Ola cabs should also initiate differentiation strategy in order to have distinctive service offerings compared to their competitors. Thus, the intensity of the competition will be less for Ola cabs.
Reference
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Ganapathy, V., 2017. Urban Mobility In The Era Of Sharing Economy: An Empirical Study Of Smartphone App Based Ridesourcing Services. Journal of Global Economy, 13(4), pp.268-289.
Kefford, G., 2013. The presidentialisation of Australian politics? Kevin Rudd’s leadership of the Australian Labor Party. Australian Journal of Political Science, 48(2), pp.135-146.
Khoir, S., Du, J.T. and Koronios, A., 2015. Everyday information behaviour of Asian immigrants in South Australia: A mixed-methods exploration. Information Research, 20(3), pp.20-3.
Kumar, P.K. and Kumar, N.R., 2016. A Study on Factors Influencing the Consumers in Selection of Cab Services. International Journal Of Social Science And Humanities Research, 4(3), pp.557-561.
Manalo, J., Perera, D. and Rees, D.M., 2015. Exchange rate movements and the Australian economy. Economic Modelling, 47, pp.53-62.
Olacabs.com (2018). About us | Car rental | car hire | taxi India | olacabs.com. [online] Olacabs.com. Available at: https://www.olacabs.com/about.html [Accessed 14 Aug. 2018].
Porter, M.E. and Heppelmann, J.E., 2014. How smart, connected products are transforming competition. Harvard business review, 92(11), pp.64-88.
Rahman, M.M. and Mamun, S.A.K., 2016. Energy use, international trade and economic growth nexus in Australia: New evidence from an extended growth model. Renewable and Sustainable Energy Reviews, 64, pp.806-816.
Rose, J.M. and Hensher, D.A., 2014. Demand for taxi services: new elasticity evidence. Transportation, 41(4), pp.717-743.
Sun, Y., Nanda, S. and Jaeger, T., 2015, November. Security-as-a-service for microservices-based cloud applications. In Cloud Computing Technology and Science (CloudCom), 2015 IEEE 7th International Conference on (pp. 50-57). IEEE.
Surie, A. and Koduganti, J., 2016. The emerging nature of work in platform economy companies in Bengaluru, India: The case of Uber and Ola Cab drivers. E-Journal of International and Comparative Labour Studies, 5(3).
Vosko, L.F., Grundy, J. and Thomas, M.P., 2016. Challenging new governance: Evaluating new approaches to employment standards enforcement in common law jurisdictions. Economic and Industrial Democracy, 37(2), pp.373-398.
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