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ISSN: 0971-1023 | NMIMS Management ReviewVolume XXIX April-May 2016
A Strategic Analysis of Urban Public Transport Industry:A Case of Ahmedabad, Gujarat in India
Abstract
Urban transport is the lifeblood for any urban area in
the modern era. As urban areas are expanding,
commuters spend increasing amounts of time to travel
within the city. They are also exposed to congestion of
traffic and inhale polluted air, besides spending a lot of
money individually. In doing so, an individual is
exposed to risk of accident as well. Ahmedabad in India
has been shortlisted by the government of India to be
transformed into a 'Smart City'; the city therefore
requires an efficient urban transport system. Already
multiple modes of transport are used in Ahmedabad.
The BRTS (Bus Rapid Transport System) is the latest
addition to this category, which promises to deliver an
efficient, economical and comfortable mode of
transport for commuters in the city and surrounding
expanse of Ahmedabad. Hence, this paper analyzes
industry competitiveness and profitability, two very
important dimensions to decide the fate of
participants and potential entrants in any industry. The
industry in consideration is the urban public transport
industry in the city of Ahmedabad, Gujarat, in India.
Porter's five forces namely threat of new entrants,
bargaining power of buyers, threat of substitute
products or services, bargaining power of suppliers,
and rivalry among existing competitors have been
analyzed keeping the urban public transport industry
of Ahmedabad at the centre stage. The analysis reveals
that these forces have varied strengths; most of them
have strengths ranging from medium to high. Hence,
the industry in consideration is highly competitive and
unprofitable. In the final stage, to improve
competitiveness and profitability of the urban public
transport industry in Ahmedabad, the authors
recommend various measures related to route
rationalization, creating differentiated services, taxing
the users of personal vehicles and inter para transit
players for not compensating for the costs they levy on
the society by using public infrastructure. The analysis
could be used by policy makers, urban local bodies,
companies, researchers, and academia interested in
urban public transport industry.
Key words: Public Transport; Urban Transport;
Porter's Five Forces; Profitability; Competitiveness;
Strategic Management.
A Strategic Analysis of Urban PublicTransport Industry: A Case of Ahmedabad,
Gujarat in India
Mahesh L. Chaudhary
Yogesh C. Joshi
81
Changes
cities of India, and therefore street
Contents
mall farmers. Majority of the
farmers (82%) borrow less than
Rs 5 lakhs, and 18% borrow
between Rs 5 – 10 lakhs on a
per annum basis. Most farmers
(65.79%) ar
** p < .01 + Reliability coefficie
** p < .01 + Reliability coefficie
References
Table 23: The Results of Mann-Whitney U Test for DOWJONES Index Daily Returns
ISSN: 0971-1023 | NMIMS Management ReviewVolume XXIX April-May 2016
A Strategic Analysis of Urban Public Transport Industry:A Case of Ahmedabad, Gujarat in India
ISSN: 0971-1023 | NMIMS Management ReviewVolume XXIX April-May 2016
A Strategic Analysis of Urban Public Transport Industry:A Case of Ahmedabad, Gujarat in India
1. Introduction
It is the industry structure that drives competition and
overall profitability, not whether an industry produces
a product or service, is emerging or mature, high tech
or low tech, regulated or unregulated. Understanding
the competitive forces and their inherent causes
unwrap the roots of an industry's current profitability
while providing a framework for foreknowing and
influencing competition and profitability over time
(Porter, 2008). Porter's Five Forces (hereafter referred
to as PFF) framework is derived from the industrial
economics approach. The base is that the
attractiveness and overall profitability of industry in a
particular market can be defined by understanding the
underlying market structure (Slater & Olson, 2002).
The market structure successively influences the
strategic behaviour of the organization and hence the
organizational success is therefore circuitously
dependent on the market structure (Fabian, 2014).
In addition to the points discussed above, the PFF
model is also a “useful starting point for strategic
analysis even where profit criteria may not apply”
(Johnson, Scholes, & Whittington, 2008). Hence, it
becomes pertinent for policy makers or industry
players or government bodies to understand industry
structure before they take a leap in penning down their
position in the industry. Urban public transport, as an
industry, cannot be an exception in this regard. It needs
to pass the litmus test of industry structure analysis as
explained by the PFF model. Urban transport is the life
blood for any urban area in the modern era. As urban
areas are expanding, commuters spend an increasing
amount of time to travel within the city. They are also
exposed to congestion of traffic and inhale polluted air,
besides spending a lot of money individually. In doing
so, an individual is exposed to the risk of accident as
well. Ahmedabad in India has been shortlisted by the
government of India to be transformed into a 'Smart
City'; the city therefore requires an efficient urban
transport system. Already multiple modes of transport
are used in Ahmedabad. The BRTS (Bus Rapid
Transport System) is a latest edition to this category,
which promises to deliver an efficient, economical and
comfortable mode of transport for commuters in the
city and surrounding expanse of Ahmedabad.
In this paper, an analysis of urban public transport in
the city of Ahmedabad, as an industry, has been
attempted. The paper shows how the five forces, as
described by Porter, shape competition and
profitability in this industry. Awareness of the five
forces can help Ahmedabad Municipal Corporation
(AMC) understand the structure of urban public
transport industry in the city of Ahmedabad and carve
out a position that is more profitable and less
vulnerable to attack.
1.1 Characteristics of urban public transport
scenario in Ahmedabad
Ahmedabad has one of the oldest urban transport
organizations in the country. Its traditional public bus
transport services, Ahmedabad Municipal Transport
Services (AMTS), runs under the aegis of Ahmedabad
Municipal Corporation (AMC). It commenced its
operations in the year 1947. AMTS then had a bus fleet
of 724, operating on 187 routes and serving 0.62
million passenger-trips daily with a daily revenue of Rs.
1.32 million (Central Institute of Road Transport,
1996).
Another new feature added to the AMC's urban
transport services is BRTS launched in 2009, in the
name of Ahmedabad Janmarg Limited (A JL).
Inferences from Table 1can be drawn that although the
passenger trips served per bus per day by AMTS
(705.88) is higher by twelve percent compared to
passenger trips served by its counterpart AJL (630.43)
for the year 2014-15, the revenue generated per bus
per day by AMTS (Rs. 3765) is lower by forty six
percent compared to its counterpart BRTS (Rs. 8217)
for the same period. This is due to the fact that fares of
AMTS bus services are highly subsidized compared to
fares of its counterpart AJL. It can further be
substantiated from Annexure 1 that the AMTS offers a
variety of concession schemes to its users.
Additionally, the fare of AMTS ranges from Rs 3 to Rs
25 and that of BRTS ranges from Rs. 4 to Rs. 29 per ride.
As far as IPT players are concerned, they churn around
56.25 million rupees per day. However, their
diseconomies of scale due to small size of auto
rickshaws and fragmented and plentiful number of
auto-rickshaws restrict their income per auto-
rickshaw to a meagre 450 rupees per day.
Table 1: Key performance indicators of BRTS and AMTS for the year 2014-15
Particulars AMTS AJL IPT- inter para transit
(Shared Auto)
A Fleet size 850 230 125000
B
Passenger trips served per day
6,00,000
1,45,000
5625000
C
Passenger trips served per vehicle
per day [B/A]
705.88
630.43
45
D
Revenue generated per day (INR
in
million)
3.2
1.89
56.25
E Revenue generated per vehicle per day (INR) [D/A] 3,765/- 8,217/- 450/-
Source: Authors' analysis from discussions with urban transport consultants and auto rickshaw drivers.
In order to gain greater insight into various aspects of functioning and operation of urban public transport industry
in Ahmedabad, a brief review of literature has been undertaken and the same has been presented below.
2. Review of Literature
The approach of the industrial organization (IO) theory
forms the base for Porter's Five Forces framework. The
IO theory assumes that market structure determines
the attractiveness of an industry because market
structure affects the behaviour of market participants
(Raible, 2013). It was Porter who synthesized the
disciplines of industrial organization and strategy
(Argyres & McGahan, 2002). Hence, the market
conduct or behaviour of market participants to
achieve their goals will depend on market structures,
and the overall attractiveness and profitability of the
market can be determined by market structure (Slater
& Olson, 2002; Mohamed, Shamsudin, & Latif, 2013).
The knowledge of interaction of five forces namely
rivalry among existing players, bargaining power of
suppliers, bargaining power of buyers, threat of
substitutes and threat of new entrants is of great
importance for strategy formulation by the companies
(Porter, 2008). The competitive forces facilitated
simplification of the micro-economic theory by using
only five forces. It provides an opportunity to examine
and evaluate complex interactions of competitors in an
industry in a more structured manner (Porter M. E.,
1979). The answer to number and nature of forces
identified by Porter is well explained in the interview of
82 83
Changes
cities of India, and therefore street
Contents
mall farmers. Majority of the
farmers (82%) borrow less than
Rs 5 lakhs, and 18% borrow
between Rs 5 – 10 lakhs on a
per annum basis. Most farmers
(65.79%) ar
** p < .01 + Reliability coefficie
** p < .01 + Reliability coefficie
References
Table 23: The Results of Mann-Whitney U Test for DOWJONES Index Daily Returns
ISSN: 0971-1023 | NMIMS Management ReviewVolume XXIX April-May 2016
A Strategic Analysis of Urban Public Transport Industry:A Case of Ahmedabad, Gujarat in India
ISSN: 0971-1023 | NMIMS Management ReviewVolume XXIX April-May 2016
A Strategic Analysis of Urban Public Transport Industry:A Case of Ahmedabad, Gujarat in India
1. Introduction
It is the industry structure that drives competition and
overall profitability, not whether an industry produces
a product or service, is emerging or mature, high tech
or low tech, regulated or unregulated. Understanding
the competitive forces and their inherent causes
unwrap the roots of an industry's current profitability
while providing a framework for foreknowing and
influencing competition and profitability over time
(Porter, 2008). Porter's Five Forces (hereafter referred
to as PFF) framework is derived from the industrial
economics approach. The base is that the
attractiveness and overall profitability of industry in a
particular market can be defined by understanding the
underlying market structure (Slater & Olson, 2002).
The market structure successively influences the
strategic behaviour of the organization and hence the
organizational success is therefore circuitously
dependent on the market structure (Fabian, 2014).
In addition to the points discussed above, the PFF
model is also a “useful starting point for strategic
analysis even where profit criteria may not apply”
(Johnson, Scholes, & Whittington, 2008). Hence, it
becomes pertinent for policy makers or industry
players or government bodies to understand industry
structure before they take a leap in penning down their
position in the industry. Urban public transport, as an
industry, cannot be an exception in this regard. It needs
to pass the litmus test of industry structure analysis as
explained by the PFF model. Urban transport is the life
blood for any urban area in the modern era. As urban
areas are expanding, commuters spend an increasing
amount of time to travel within the city. They are also
exposed to congestion of traffic and inhale polluted air,
besides spending a lot of money individually. In doing
so, an individual is exposed to the risk of accident as
well. Ahmedabad in India has been shortlisted by the
government of India to be transformed into a 'Smart
City'; the city therefore requires an efficient urban
transport system. Already multiple modes of transport
are used in Ahmedabad. The BRTS (Bus Rapid
Transport System) is a latest edition to this category,
which promises to deliver an efficient, economical and
comfortable mode of transport for commuters in the
city and surrounding expanse of Ahmedabad.
In this paper, an analysis of urban public transport in
the city of Ahmedabad, as an industry, has been
attempted. The paper shows how the five forces, as
described by Porter, shape competition and
profitability in this industry. Awareness of the five
forces can help Ahmedabad Municipal Corporation
(AMC) understand the structure of urban public
transport industry in the city of Ahmedabad and carve
out a position that is more profitable and less
vulnerable to attack.
1.1 Characteristics of urban public transport
scenario in Ahmedabad
Ahmedabad has one of the oldest urban transport
organizations in the country. Its traditional public bus
transport services, Ahmedabad Municipal Transport
Services (AMTS), runs under the aegis of Ahmedabad
Municipal Corporation (AMC). It commenced its
operations in the year 1947. AMTS then had a bus fleet
of 724, operating on 187 routes and serving 0.62
million passenger-trips daily with a daily revenue of Rs.
1.32 million (Central Institute of Road Transport,
1996).
Another new feature added to the AMC's urban
transport services is BRTS launched in 2009, in the
name of Ahmedabad Janmarg Limited (A JL).
Inferences from Table 1can be drawn that although the
passenger trips served per bus per day by AMTS
(705.88) is higher by twelve percent compared to
passenger trips served by its counterpart AJL (630.43)
for the year 2014-15, the revenue generated per bus
per day by AMTS (Rs. 3765) is lower by forty six
percent compared to its counterpart BRTS (Rs. 8217)
for the same period. This is due to the fact that fares of
AMTS bus services are highly subsidized compared to
fares of its counterpart AJL. It can further be
substantiated from Annexure 1 that the AMTS offers a
variety of concession schemes to its users.
Additionally, the fare of AMTS ranges from Rs 3 to Rs
25 and that of BRTS ranges from Rs. 4 to Rs. 29 per ride.
As far as IPT players are concerned, they churn around
56.25 million rupees per day. However, their
diseconomies of scale due to small size of auto
rickshaws and fragmented and plentiful number of
auto-rickshaws restrict their income per auto-
rickshaw to a meagre 450 rupees per day.
Table 1: Key performance indicators of BRTS and AMTS for the year 2014-15
Particulars AMTS AJL IPT- inter para transit
(Shared Auto)
A Fleet size 850 230 125000
B
Passenger trips served per day
6,00,000
1,45,000
5625000
C
Passenger trips served per vehicle
per day [B/A]
705.88
630.43
45
D
Revenue generated per day (INR
in
million)
3.2
1.89
56.25
E Revenue generated per vehicle per day (INR) [D/A] 3,765/- 8,217/- 450/-
Source: Authors' analysis from discussions with urban transport consultants and auto rickshaw drivers.
In order to gain greater insight into various aspects of functioning and operation of urban public transport industry
in Ahmedabad, a brief review of literature has been undertaken and the same has been presented below.
2. Review of Literature
The approach of the industrial organization (IO) theory
forms the base for Porter's Five Forces framework. The
IO theory assumes that market structure determines
the attractiveness of an industry because market
structure affects the behaviour of market participants
(Raible, 2013). It was Porter who synthesized the
disciplines of industrial organization and strategy
(Argyres & McGahan, 2002). Hence, the market
conduct or behaviour of market participants to
achieve their goals will depend on market structures,
and the overall attractiveness and profitability of the
market can be determined by market structure (Slater
& Olson, 2002; Mohamed, Shamsudin, & Latif, 2013).
The knowledge of interaction of five forces namely
rivalry among existing players, bargaining power of
suppliers, bargaining power of buyers, threat of
substitutes and threat of new entrants is of great
importance for strategy formulation by the companies
(Porter, 2008). The competitive forces facilitated
simplification of the micro-economic theory by using
only five forces. It provides an opportunity to examine
and evaluate complex interactions of competitors in an
industry in a more structured manner (Porter M. E.,
1979). The answer to number and nature of forces
identified by Porter is well explained in the interview of
82 83
Changes
cities of India, and therefore street
Contents
mall farmers. Majority of the
farmers (82%) borrow less than
Rs 5 lakhs, and 18% borrow
between Rs 5 – 10 lakhs on a
per annum basis. Most farmers
(65.79%) ar
** p < .01 + Reliability coefficie
** p < .01 + Reliability coefficie
References
Table 23: The Results of Mann-Whitney U Test for DOWJONES Index Daily Returns
Porter. On one hand, he argues that “these forces have
to be intuitively grounded and on the other hand, he
claims that the conclusion about five forces was only
after he looked at hundreds of industries (Argyres &
McGahan, 2002). Industry structure, through the
mentioned five competitive forces, determines the
industry's long-run profitability. It determines how the
economic value created by the industry is divided
among industry participants (Porter M. E., 2008).
There is substantial literature that supports, revises or
complements Porter's basic premises since the
inception of the PFF framework in 1980. Some
researchers claimed that there were deficiencies in the
PFF framework. For instance, Porter's non-recognition
of information technology (IT) as a distinctive
competitive force was critically noted by researchers
who emphasized that IT be treated as the sixth
competitive force (McFarlan, 1984; Thurlby, 1998;
Andriotis, 2004). The PFF framework did not recognize
information technology (digitalization), globalization
and deregulation as distinctive competitive forces, but
has conceived them as fleeting factors which are
considered as a means of supporting the five forces
(Fabian, 2014). These attributes could be either
enabling or inhibiting tools in any industry (Porter M.
E., 2001). One should avoid the common trap of
misinterpreting certain visible attributes of an industry
such as industry growth rates, technology and
innovation, government and complementary products
and services for its underlying structure (Porter M. E.,
2008). “While Porter's framework is the basis of a
systematic approach to strategy, it definitely does not
guarantee the scientific rigour, Porter claims for it and
also does not assure a competitive advantage that is
lasting, defensible and hard to imitate” (Aktouf, 2004).
Adding to it, “the resource based approach that
emerged in 1990 with Prahalad and Hamel's article on
“core competence” followed by an article on
“capabilities-based competition” by Stalk, Evans and
Schulman's in 1992 are of the view that the
competitive environment since 1990s has changed
significant enough that the structural approach
represented by Porter's competitive forces framework
is no longer effective” (Aktouf, 2004). However, the
robustness of the PFF framework can be appreciated
from the fact that the very purpose of the PFF
framework is “not to declare the industry is attractive
or unattractive but to understand the underpinnings of
competition and the root causes of profitability. The
five forces have diverse degrees of impact in certain
industries and individual forces and their collective
impact will change as the government policies and
macroeconomic and overall business environments
change” (Mohaptra, 2012). “The five forces reveal why
industry profitability is what it is” (Porter M. E., 2008).
Hence, the PFF framework is used for its robustness to
perform the urban public transport industry analysis to
understand the bearings of competition and the root
cause of (un)profitability which further helps in carving
strategies to thrive in the industry.
3 . Objectives, Methodology and Structure
of the Study
3.1 Objectives of the study
In the present paper, an attempt has been made to
perform strategic analysis of the urban public
transport industry in Ahmedabad city by applying the
P F F framework. I t i s used to measure the
attractiveness and profitability of this industry as
determined by the action of the five basic forces
namely threat of new entrants, bargaining power of
buyers, threat of substitute products or services,
bargaining power of suppliers, and rivalry among
existing competitors. This will facilitate better strategic
decision making by industry participants and policy
makers at the city level. Similar framework could be
applied for other cities too with necessary changes.
Because each city in itself is a different market (i.e. no
city competes with other cities for business in urban
transport services), it is appropriate to use the PFF
framework for the analysis of urban public transport
industry of Ahmedabad. Also, the robustness of the
PFF framework ensures that the analysis looks into all
aspects of the business environment throughout the
value chain of the urban public transport industry of
Ahmedabad.
3.2 Research Methodology adopted for the study:
The researcher has relied on exploratory research
design. The primary and secondary data collected for
conducting the entire research is subjected to
qualitative analysis. The findings may be considered as
tentative and the insights gained from exploratory
research might be verified or quantified to the extent
possible by conclusive research. Further, inferences
strictly refer to the period of study.
3.2.1 Data and Data Collection
Primary data
Since the research design adopted is exploratory in
nature, the research process is quite flexible and
unstructured as far as data collection is concerned.
Urban transport experts having understanding and
knowledge of Ahmedabad urban public transport
industry, bus operators of Ahmedabad Janmarg Ltd
and auto rickshaw drivers in the city were interviewed
for the purpose of this study.
Secondary data
Secondary data was collected from academic journals,
books, dissertations, theses, research papers, working
papers, monographs, magazines, circulars and tender
documents of urban t ransport pro jects of
Ahmedabad, newspapers and websites.
3.1 Structure of the study
Analysis of the urban public transport industry of
Ahmedabad using Porter's Five Forces framework was
conducted using an exploratory research design
approach. The intensity of forces determines the
profitability or competitiveness of an industry. An
industry with high intensity of forces leads to poor
profitability and high competitiveness within the
industry, and vice versa. The study encompasses how
the industry structure grows out of a set of economic
and technical characteristics that determine the
strength of each competitive force. These drivers have
been examined taking the perspective of an
incumbent AMC and its urban public transport
services provided by AMTS and AJL. Conclusions and
recommendations emerging from the study have been
made at the end.
4. Analysis of Urban Public Transport
Industry of Ahmedabad Applying Porter's
Five Forces Model:
4.1 Threat of new entrants:
The threat of entry in any industry depends on the
magnitude of entry barriers that are present and on
the retaliation entrants can expect from incumbents. If
entry barriers are low and new comers expect little
retaliation from the entrenched competitors, the
threat of entry is high and industry profitability is
moderated. It is the threat of entry, not whether entry
actually occurs, that holds down profitability (Porter,
ISSN: 0971-1023 | NMIMS Management ReviewVolume XXIX April-May 2016
A Strategic Analysis of Urban Public Transport Industry:A Case of Ahmedabad, Gujarat in India
ISSN: 0971-1023 | NMIMS Management ReviewVolume XXIX April-May 2016
A Strategic Analysis of Urban Public Transport Industry:A Case of Ahmedabad, Gujarat in India84 85
Changes
cities of India, and therefore street
Contents
mall farmers. Majority of the
farmers (82%) borrow less than
Rs 5 lakhs, and 18% borrow
between Rs 5 – 10 lakhs on a
per annum basis. Most farmers
(65.79%) ar
** p < .01 + Reliability coefficie
** p < .01 + Reliability coefficie
References
Table 23: The Results of Mann-Whitney U Test for DOWJONES Index Daily Returns
Porter. On one hand, he argues that “these forces have
to be intuitively grounded and on the other hand, he
claims that the conclusion about five forces was only
after he looked at hundreds of industries (Argyres &
McGahan, 2002). Industry structure, through the
mentioned five competitive forces, determines the
industry's long-run profitability. It determines how the
economic value created by the industry is divided
among industry participants (Porter M. E., 2008).
There is substantial literature that supports, revises or
complements Porter's basic premises since the
inception of the PFF framework in 1980. Some
researchers claimed that there were deficiencies in the
PFF framework. For instance, Porter's non-recognition
of information technology (IT) as a distinctive
competitive force was critically noted by researchers
who emphasized that IT be treated as the sixth
competitive force (McFarlan, 1984; Thurlby, 1998;
Andriotis, 2004). The PFF framework did not recognize
information technology (digitalization), globalization
and deregulation as distinctive competitive forces, but
has conceived them as fleeting factors which are
considered as a means of supporting the five forces
(Fabian, 2014). These attributes could be either
enabling or inhibiting tools in any industry (Porter M.
E., 2001). One should avoid the common trap of
misinterpreting certain visible attributes of an industry
such as industry growth rates, technology and
innovation, government and complementary products
and services for its underlying structure (Porter M. E.,
2008). “While Porter's framework is the basis of a
systematic approach to strategy, it definitely does not
guarantee the scientific rigour, Porter claims for it and
also does not assure a competitive advantage that is
lasting, defensible and hard to imitate” (Aktouf, 2004).
Adding to it, “the resource based approach that
emerged in 1990 with Prahalad and Hamel's article on
“core competence” followed by an article on
“capabilities-based competition” by Stalk, Evans and
Schulman's in 1992 are of the view that the
competitive environment since 1990s has changed
significant enough that the structural approach
represented by Porter's competitive forces framework
is no longer effective” (Aktouf, 2004). However, the
robustness of the PFF framework can be appreciated
from the fact that the very purpose of the PFF
framework is “not to declare the industry is attractive
or unattractive but to understand the underpinnings of
competition and the root causes of profitability. The
five forces have diverse degrees of impact in certain
industries and individual forces and their collective
impact will change as the government policies and
macroeconomic and overall business environments
change” (Mohaptra, 2012). “The five forces reveal why
industry profitability is what it is” (Porter M. E., 2008).
Hence, the PFF framework is used for its robustness to
perform the urban public transport industry analysis to
understand the bearings of competition and the root
cause of (un)profitability which further helps in carving
strategies to thrive in the industry.
3 . Objectives, Methodology and Structure
of the Study
3.1 Objectives of the study
In the present paper, an attempt has been made to
perform strategic analysis of the urban public
transport industry in Ahmedabad city by applying the
P F F framework. I t i s used to measure the
attractiveness and profitability of this industry as
determined by the action of the five basic forces
namely threat of new entrants, bargaining power of
buyers, threat of substitute products or services,
bargaining power of suppliers, and rivalry among
existing competitors. This will facilitate better strategic
decision making by industry participants and policy
makers at the city level. Similar framework could be
applied for other cities too with necessary changes.
Because each city in itself is a different market (i.e. no
city competes with other cities for business in urban
transport services), it is appropriate to use the PFF
framework for the analysis of urban public transport
industry of Ahmedabad. Also, the robustness of the
PFF framework ensures that the analysis looks into all
aspects of the business environment throughout the
value chain of the urban public transport industry of
Ahmedabad.
3.2 Research Methodology adopted for the study:
The researcher has relied on exploratory research
design. The primary and secondary data collected for
conducting the entire research is subjected to
qualitative analysis. The findings may be considered as
tentative and the insights gained from exploratory
research might be verified or quantified to the extent
possible by conclusive research. Further, inferences
strictly refer to the period of study.
3.2.1 Data and Data Collection
Primary data
Since the research design adopted is exploratory in
nature, the research process is quite flexible and
unstructured as far as data collection is concerned.
Urban transport experts having understanding and
knowledge of Ahmedabad urban public transport
industry, bus operators of Ahmedabad Janmarg Ltd
and auto rickshaw drivers in the city were interviewed
for the purpose of this study.
Secondary data
Secondary data was collected from academic journals,
books, dissertations, theses, research papers, working
papers, monographs, magazines, circulars and tender
documents of urban t ransport pro jects of
Ahmedabad, newspapers and websites.
3.1 Structure of the study
Analysis of the urban public transport industry of
Ahmedabad using Porter's Five Forces framework was
conducted using an exploratory research design
approach. The intensity of forces determines the
profitability or competitiveness of an industry. An
industry with high intensity of forces leads to poor
profitability and high competitiveness within the
industry, and vice versa. The study encompasses how
the industry structure grows out of a set of economic
and technical characteristics that determine the
strength of each competitive force. These drivers have
been examined taking the perspective of an
incumbent AMC and its urban public transport
services provided by AMTS and AJL. Conclusions and
recommendations emerging from the study have been
made at the end.
4. Analysis of Urban Public Transport
Industry of Ahmedabad Applying Porter's
Five Forces Model:
4.1 Threat of new entrants:
The threat of entry in any industry depends on the
magnitude of entry barriers that are present and on
the retaliation entrants can expect from incumbents. If
entry barriers are low and new comers expect little
retaliation from the entrenched competitors, the
threat of entry is high and industry profitability is
moderated. It is the threat of entry, not whether entry
actually occurs, that holds down profitability (Porter,
ISSN: 0971-1023 | NMIMS Management ReviewVolume XXIX April-May 2016
A Strategic Analysis of Urban Public Transport Industry:A Case of Ahmedabad, Gujarat in India
ISSN: 0971-1023 | NMIMS Management ReviewVolume XXIX April-May 2016
A Strategic Analysis of Urban Public Transport Industry:A Case of Ahmedabad, Gujarat in India84 85
Changes
cities of India, and therefore street
Contents
mall farmers. Majority of the
farmers (82%) borrow less than
Rs 5 lakhs, and 18% borrow
between Rs 5 – 10 lakhs on a
per annum basis. Most farmers
(65.79%) ar
** p < .01 + Reliability coefficie
** p < .01 + Reliability coefficie
References
Table 23: The Results of Mann-Whitney U Test for DOWJONES Index Daily Returns
2008). The existence of entry barriers limit the number
of companies in the industry and therefore influence
competition among existing players (Johnson et al.,
2008). “The height of barriers to entry has been found
consistently to be the most significant predictor of
industry profitability” (Rothaermel, 2008).
There are six major sources of entry barriers here,
which decide whether the industry supports high or
low threat of new entrants.
4.1.1 Supply-side economies of scale:
The urban public transport industry in Ahmedabad has
two major categories of players. One, AMC which runs
traditional and BRTS bus services under the aegis of
AMTS and AJL respectively; second, the inter para
transit (IPT) (shared auto rickshaws). AMC is a large
player with a total bus fleet of around 1,080 buses (850
AMTS buses and 230 AJL buses as referred to in Table
1) whereas auto rickshaws are around 0.125 million in
numbers but are fragmented with individual
ownership (The Times of India, 2014).
Hence, the advantage of economies of scale, if any, is
enjoyed by AMC and not by IPT players. This is
apparent from how fares have been set for bus
services and IPT services. Generally, in long distance
travel of 5km and more within the city, the fares of
AMTS, BRTS and IPT can be observed as F < F < AMTS BRTS
F This is a strong case that supports the cost IPT.
disadvantage of IPT players which are large in numbers
but fragmented and hence, has no advantage of
economies of scale. Adding to it, the ever increasing
auto rickshaw fleet has drastically reduced the
earnings of drivers. Auto rickshaw drivers who used to
earn around Rs 600 a day in the year 2010 could
manage to earn around Rs 400 per day in the year
2014. Adoption of CNG fuel has also contributed to
this. Hence, the earning declined to an extent of 33
percent in nominal terms (The Times of India, 2014).
The real rate of decline in earnings would be even
higher than 33 percent.
As far as the metro rail service connecting the
emerging twin city of Ahmedabad and Gandhinagar is
concerned, route rationalization is being undertaken
presently. Duplication of physical infrastructure (i.e.
running BRTS and Metro parallel) will create a dent in
the balance sheets of both AJL running BRTS and
MEGA meant for running metro service between
Gandhinagar and Ahmedabad. In urban transport,
competition in the market is not always healthy. It may
lead to a penny-war situation where all the players in
the market fight for every single passenger which is
done by reducing fares (Arturo, 2005). The end result
in such an event is that everyone loses. It is fortunate
that the government recognizes this problem and is
prepared to tackle it. There are talks that Metro train
(MEGA) and BRTS will run parallel for 8 km. Two
parallel routes have been identified - one being the
third phase of BRTS' APMC – Vadajand another being
Metro's North- South Corridor (The Times of India,
2014).
4.1.2 Demand side benefits of scale:
Since commuters of the urban public transport
industry are from the lower and middle income
groups, their demand is very price elastic. Additionally,
urban public transport services being necessity-based
services, commuters don't aim to patronize large
players (i.e. commuters don't necessarily want to be
associated with large urban public transport service
providers). Their preference for a particular mode of
transport is largely weighed by the fares charged and
the reliability of services. Hence, the demand side
benefits of scale are not very attractive for public
transport service providers. This is also one of the
reasons why a lot of IPT players enter the market on a
continuous basis.
4.1.3 Customer switching cost:
Switching costs are fixed costs that buyers bear when
they change suppliers. The competitive fares between
AMC (AMTS and BRTS) and IPT players ensure lower
switching costs to passengers. Hence, whenever
passengers feel that fares of either of the public
transport services or IPT players are hiked, they shift
from one mode of commutation to another. This
behaviour of commuters is acknowledged by AMC and
IPT service providers and hence, they fix fares with
minimal difference between each other.
AMC tries to increase switching costs for passengers
especially since it offers concession on fares for
students, differently-abled, senior citizens and heavy
users. These fares at concessional rates bring in
disparity between fares charged by AMTS and IPT.
Additionally, AMC has also provided smart cards with
very attractive recharge offers (for instance, pay for
100 kilometres and travel 110 kilometres) to promote
its BRT services. These schemes, which are meant to
promote usage of public transport, indirectly facilitate
increase in customer switching costs from public
transport mode to IPT mode. However, one has to
remember that these schemes are used by regular and
heavy users and not by infrequent users.
4.1.4 Capital requirements:
Capital requirements for unorganized and fragmented
IPT players are relatively very low compared to their
counterpart AMC. IPT players don't pay for the full
cost they impose on the society (Nicolas, et.al., 2007).
For instance, IPT players don't pay (except for paying a
minuscule amount of tax) for using physical
infrastructure that is being set up by the urban local
body (ULB). Hence, many players enter this field. The
easy availability of credit facility both from banks and
non-banking financial companies also facilitate entry
of IPT players on the roads.
On the other hand, AMC cannot scale up its operations
in the short-run period as this business is capital
intensive – it requires a huge amount of money for
procurement of buses and other allied infrastructure
facilities. This scenario further facilitates entry of
potential entrants as there is a lot of latent demand
that is unmet by AMC.
4.1.5 Incumbency advantage:
Urban public transport, by its very nature, is a natural
m o n o p o l y. I n t h e p r e s e n t c o n t e x t , ro u t e
rationalization between AMTS and BRTS essentially
supports monopoly. AMTS and BRTS don't compete.
Rather they complement each other. Also, the
incumbency advantage arises from the fact that it has a
dedicated corridor for BRT buses (no other vehicles
can use this corridor). Additionally, the major trunk
and feeder routes are already being served by either
BRTS or AMTS bus services. Potential entrants will
definitely find it difficult to create a dent to the existing
incumbent. Importantly, technological intervention in
the form of Integrated Transit Management System
helps to track the bus position on real time basis and
also keep passengers updated regarding the arrival
time of buses. This facility helps in retaining the
commuters and also in proper bus scheduling thereby
giving a cutting edge over competitors. However, lack
of sufficient fleet on some routes affects quality and
reliability of services, and subsequently loses
commuters to the IPT players.
ISSN: 0971-1023 | NMIMS Management ReviewVolume XXIX April-May 2016
A Strategic Analysis of Urban Public Transport Industry:A Case of Ahmedabad, Gujarat in India
ISSN: 0971-1023 | NMIMS Management ReviewVolume XXIX April-May 2016
A Strategic Analysis of Urban Public Transport Industry:A Case of Ahmedabad, Gujarat in India86 87
Changes
cities of India, and therefore street
Contents
mall farmers. Majority of the
farmers (82%) borrow less than
Rs 5 lakhs, and 18% borrow
between Rs 5 – 10 lakhs on a
per annum basis. Most farmers
(65.79%) ar
** p < .01 + Reliability coefficie
** p < .01 + Reliability coefficie
References
Table 23: The Results of Mann-Whitney U Test for DOWJONES Index Daily Returns
2008). The existence of entry barriers limit the number
of companies in the industry and therefore influence
competition among existing players (Johnson et al.,
2008). “The height of barriers to entry has been found
consistently to be the most significant predictor of
industry profitability” (Rothaermel, 2008).
There are six major sources of entry barriers here,
which decide whether the industry supports high or
low threat of new entrants.
4.1.1 Supply-side economies of scale:
The urban public transport industry in Ahmedabad has
two major categories of players. One, AMC which runs
traditional and BRTS bus services under the aegis of
AMTS and AJL respectively; second, the inter para
transit (IPT) (shared auto rickshaws). AMC is a large
player with a total bus fleet of around 1,080 buses (850
AMTS buses and 230 AJL buses as referred to in Table
1) whereas auto rickshaws are around 0.125 million in
numbers but are fragmented with individual
ownership (The Times of India, 2014).
Hence, the advantage of economies of scale, if any, is
enjoyed by AMC and not by IPT players. This is
apparent from how fares have been set for bus
services and IPT services. Generally, in long distance
travel of 5km and more within the city, the fares of
AMTS, BRTS and IPT can be observed as F < F < AMTS BRTS
F This is a strong case that supports the cost IPT.
disadvantage of IPT players which are large in numbers
but fragmented and hence, has no advantage of
economies of scale. Adding to it, the ever increasing
auto rickshaw fleet has drastically reduced the
earnings of drivers. Auto rickshaw drivers who used to
earn around Rs 600 a day in the year 2010 could
manage to earn around Rs 400 per day in the year
2014. Adoption of CNG fuel has also contributed to
this. Hence, the earning declined to an extent of 33
percent in nominal terms (The Times of India, 2014).
The real rate of decline in earnings would be even
higher than 33 percent.
As far as the metro rail service connecting the
emerging twin city of Ahmedabad and Gandhinagar is
concerned, route rationalization is being undertaken
presently. Duplication of physical infrastructure (i.e.
running BRTS and Metro parallel) will create a dent in
the balance sheets of both AJL running BRTS and
MEGA meant for running metro service between
Gandhinagar and Ahmedabad. In urban transport,
competition in the market is not always healthy. It may
lead to a penny-war situation where all the players in
the market fight for every single passenger which is
done by reducing fares (Arturo, 2005). The end result
in such an event is that everyone loses. It is fortunate
that the government recognizes this problem and is
prepared to tackle it. There are talks that Metro train
(MEGA) and BRTS will run parallel for 8 km. Two
parallel routes have been identified - one being the
third phase of BRTS' APMC – Vadajand another being
Metro's North- South Corridor (The Times of India,
2014).
4.1.2 Demand side benefits of scale:
Since commuters of the urban public transport
industry are from the lower and middle income
groups, their demand is very price elastic. Additionally,
urban public transport services being necessity-based
services, commuters don't aim to patronize large
players (i.e. commuters don't necessarily want to be
associated with large urban public transport service
providers). Their preference for a particular mode of
transport is largely weighed by the fares charged and
the reliability of services. Hence, the demand side
benefits of scale are not very attractive for public
transport service providers. This is also one of the
reasons why a lot of IPT players enter the market on a
continuous basis.
4.1.3 Customer switching cost:
Switching costs are fixed costs that buyers bear when
they change suppliers. The competitive fares between
AMC (AMTS and BRTS) and IPT players ensure lower
switching costs to passengers. Hence, whenever
passengers feel that fares of either of the public
transport services or IPT players are hiked, they shift
from one mode of commutation to another. This
behaviour of commuters is acknowledged by AMC and
IPT service providers and hence, they fix fares with
minimal difference between each other.
AMC tries to increase switching costs for passengers
especially since it offers concession on fares for
students, differently-abled, senior citizens and heavy
users. These fares at concessional rates bring in
disparity between fares charged by AMTS and IPT.
Additionally, AMC has also provided smart cards with
very attractive recharge offers (for instance, pay for
100 kilometres and travel 110 kilometres) to promote
its BRT services. These schemes, which are meant to
promote usage of public transport, indirectly facilitate
increase in customer switching costs from public
transport mode to IPT mode. However, one has to
remember that these schemes are used by regular and
heavy users and not by infrequent users.
4.1.4 Capital requirements:
Capital requirements for unorganized and fragmented
IPT players are relatively very low compared to their
counterpart AMC. IPT players don't pay for the full
cost they impose on the society (Nicolas, et.al., 2007).
For instance, IPT players don't pay (except for paying a
minuscule amount of tax) for using physical
infrastructure that is being set up by the urban local
body (ULB). Hence, many players enter this field. The
easy availability of credit facility both from banks and
non-banking financial companies also facilitate entry
of IPT players on the roads.
On the other hand, AMC cannot scale up its operations
in the short-run period as this business is capital
intensive – it requires a huge amount of money for
procurement of buses and other allied infrastructure
facilities. This scenario further facilitates entry of
potential entrants as there is a lot of latent demand
that is unmet by AMC.
4.1.5 Incumbency advantage:
Urban public transport, by its very nature, is a natural
m o n o p o l y. I n t h e p r e s e n t c o n t e x t , ro u t e
rationalization between AMTS and BRTS essentially
supports monopoly. AMTS and BRTS don't compete.
Rather they complement each other. Also, the
incumbency advantage arises from the fact that it has a
dedicated corridor for BRT buses (no other vehicles
can use this corridor). Additionally, the major trunk
and feeder routes are already being served by either
BRTS or AMTS bus services. Potential entrants will
definitely find it difficult to create a dent to the existing
incumbent. Importantly, technological intervention in
the form of Integrated Transit Management System
helps to track the bus position on real time basis and
also keep passengers updated regarding the arrival
time of buses. This facility helps in retaining the
commuters and also in proper bus scheduling thereby
giving a cutting edge over competitors. However, lack
of sufficient fleet on some routes affects quality and
reliability of services, and subsequently loses
commuters to the IPT players.
ISSN: 0971-1023 | NMIMS Management ReviewVolume XXIX April-May 2016
A Strategic Analysis of Urban Public Transport Industry:A Case of Ahmedabad, Gujarat in India
ISSN: 0971-1023 | NMIMS Management ReviewVolume XXIX April-May 2016
A Strategic Analysis of Urban Public Transport Industry:A Case of Ahmedabad, Gujarat in India86 87
Changes
cities of India, and therefore street
Contents
mall farmers. Majority of the
farmers (82%) borrow less than
Rs 5 lakhs, and 18% borrow
between Rs 5 – 10 lakhs on a
per annum basis. Most farmers
(65.79%) ar
** p < .01 + Reliability coefficie
** p < .01 + Reliability coefficie
References
Table 23: The Results of Mann-Whitney U Test for DOWJONES Index Daily Returns
4.1.6 Restrictive government policy:
Currently, in the city of Ahmedabad, there is no major
restrictive government policy that is enforced to
inhibit entry of potential entrants in the market.
However, Section 67 of the Motor Vehicle Act, 1988
bestows powers on the state government to control
road transport with respect to –
(a) The advantages offered to the public, trade
and industry by the development of motor
transport,
(b) The desirability of coordinating road and
rail transport,
(c) The desirability of preventing uneconomic
competition among holders of permits (the
state government may, from time to time,
by notification in the Official Gazette, issue
direction to both the State Transport
Authority and Regional Transport Authority
regarding fixing of fares).
From sub-section 3 (a) of Section 73 of the Act (refer to
Annexure 3), one can infer that the State Government
shall, if so directed by the Central Government, having
regard to the number of vehicles, road conditions and
other relevant matters, by notification in the Official
Gazette, direct a State Transport Authority and a
Regional Transport Authority to limit the number of
contract carriages generally or of any specified type as
may be fixed and specified in the notification,
operating on city routes in towns with a population of
not less than five hundred thousand. Since the
government is not able to serve existing demand on its
own, it does not discourage private operators to
provide transport services in the city. On the contrary,
it encourages entry of new operators to run city taxi
services and radio taxi services (RTO Gujarat, 2015).
These circulars reflect the restrictions that
government can lay down on the number of
passengers allowed in a taxi, types of vehicles, age of
vehicles, fuel used to run vehicles, and the area or
routes of operation of taxi services. In future, if the
government feels that the pressure of competition
from IPT players becomes grave, Section 67 and 73 of
the Motor Vehicle Act, 1988 facilitate retaliation by
AMC for bringing in the required restrictions on IPT
players, taxi and radio taxi services. The scope of
retaliation by decreasing fares by incumbent public
transport players are very gloomy bearing the fact that
it is already at subsidized rates. Further fare cuts would
rather deteriorate the financial health of both AMTS
and AJL.
From the above six factors that have been analyzed,
one can say that the threat of a new entrant is medium-
to-high at present.
4.2 Bargaining power of suppliers:
Powerful suppliers capture more of the value for
themselves by charging higher prices, limiting quality
of services, or shifting costs to other industry
participants (Porter, 2008). The bargaining power of
suppliers can be influenced by the size of the supplier,
the number of suppliers, and the availability of
alternative customers (Slater & Olson, 2002).
The major categories of suppliers are fuel and raw
material suppliers, vehicle manufacturers (i.e.
investments in fleet), spares and repairs, workforce,
financiers, and road infrastructure builders. The
capacity of public transport operation companies to
influence their suppliers' price fixing mechanism is
very limited owing to lack of bargaining power that
they have when confronted with their main suppliers,
which is particularly potent in the case of fuel, vehicles
manufacturers and tyre producers (Diaz, Martinez, &
Barea, 2000).
4.2.1 Fuel and lubricant suppliers:
Fuel pricing, in India and Ahmedabad, be it diesel or
compressed natural gas (CNG) prices, is not fixed by
municipal corporations. They cannot bargain on fuel
prices and will have to accept whatever price is
decided by oil marketing companies and City Gas
Distribution (CGD) players for diesel and CNG
respectively. Additionally, the fuel and lubricant
market in India is an oligopoly market. Hence, the
bargaining power of fuel and lubricant suppliers is very
high.
4.2.2 Bus manufacturers/ suppliers:
When it comes to procuring a fleet of buses, the buyer
(i.e. AMC in this case) predominantly has to bear
pressures from bus manufacturers. Since procurement
of buses is at the least price quoted by suppliers of
buses, international players like Volvo are not able to
withstand competition from domestic players like
TATA Motors Ltd and Ashok Leyland. Eventually buyers
have to depend a lot on these two companies for
supply of buses. This facilitates oligopoly markets and
consequently bargaining power of the suppliers
increases. Instances of bargaining power of suppliers
of buses are reflected through the addendum of
responses to pre-bid queries for procurement of high
quality buses for AJL, Ahmedabad. This addendum
raises many technical and commercial deviations and
the efforts made by bus suppliers to get advance
payments for the delivery of buses and their
unwillingness to change the bus specifications for the
purchaser (AJL, 2012). Another instance of higher
bargaining power of bus manufacturers is reflected
from the statement made by one of the senior officials of Ahmedabad Janmarg (AJL, 2009), “There's no way
bus manufacturers will agree to lower prices. We are
approaching states where the same manufacturers
have supplied basic buses and preparing a price list. It
seems as if bus manufacturers are taking advantage of
our urgency. We will not allow this. We have just asked
for an extra door in their basic model. This leads to
saving on metal for the manufacturer.”
4.2.3 Spare and repair suppliers:
When it comes to spares and repairs, the power of
suppliers of these services is moderate-to-high. The
major factor that determines the power of spare and
repair suppliers is the brand of vehicle and
manufacturer of the vehicle. For instance, the power
of spare and repair suppliers of Volvo bus will definitely
be higher than its counterparts i.e. spare and repair
suppliers of TATA Motors and Ashok Leyland buses.
This is because TATA Motors and Ashok Leyland enjoy
the advantage of economies of scale and have many
suppliers across the nation. Volvo has a very limited
market in India and hence, will have lesser number of
spare and repair suppliers.
4.2.4 Banks and non-banking financial companies
supplying finances:
Banks generally shy away from financing urban
transport projects. They are aware that the fares in
most of the public transport services are subsidized
and the municipal corporations running these services
are making losses. This problem raises concern
regarding servicing of debt by municipal corporations.
Banks extend financial help provided they are being
counter guaranteed by the state or federal
government. In general, urban public transport
depends upon grants issued from the state and the
central government. For instance, AMC's BRTS project
in general and AMTS bus services, to the extent of bus
purchases, are funded under the Jawaharlal Nehru
National Urban Renewal Mission (JnNURM). The
situation even worsens when responsibility of
procurement of buses lies on the shoulders of private
ISSN: 0971-1023 | NMIMS Management ReviewVolume XXIX April-May 2016
A Strategic Analysis of Urban Public Transport Industry:A Case of Ahmedabad, Gujarat in India
ISSN: 0971-1023 | NMIMS Management ReviewVolume XXIX April-May 2016
A Strategic Analysis of Urban Public Transport Industry:A Case of Ahmedabad, Gujarat in India88 89
Changes
cities of India, and therefore street
Contents
mall farmers. Majority of the
farmers (82%) borrow less than
Rs 5 lakhs, and 18% borrow
between Rs 5 – 10 lakhs on a
per annum basis. Most farmers
(65.79%) ar
** p < .01 + Reliability coefficie
** p < .01 + Reliability coefficie
References
Table 23: The Results of Mann-Whitney U Test for DOWJONES Index Daily Returns
4.1.6 Restrictive government policy:
Currently, in the city of Ahmedabad, there is no major
restrictive government policy that is enforced to
inhibit entry of potential entrants in the market.
However, Section 67 of the Motor Vehicle Act, 1988
bestows powers on the state government to control
road transport with respect to –
(a) The advantages offered to the public, trade
and industry by the development of motor
transport,
(b) The desirability of coordinating road and
rail transport,
(c) The desirability of preventing uneconomic
competition among holders of permits (the
state government may, from time to time,
by notification in the Official Gazette, issue
direction to both the State Transport
Authority and Regional Transport Authority
regarding fixing of fares).
From sub-section 3 (a) of Section 73 of the Act (refer to
Annexure 3), one can infer that the State Government
shall, if so directed by the Central Government, having
regard to the number of vehicles, road conditions and
other relevant matters, by notification in the Official
Gazette, direct a State Transport Authority and a
Regional Transport Authority to limit the number of
contract carriages generally or of any specified type as
may be fixed and specified in the notification,
operating on city routes in towns with a population of
not less than five hundred thousand. Since the
government is not able to serve existing demand on its
own, it does not discourage private operators to
provide transport services in the city. On the contrary,
it encourages entry of new operators to run city taxi
services and radio taxi services (RTO Gujarat, 2015).
These circulars reflect the restrictions that
government can lay down on the number of
passengers allowed in a taxi, types of vehicles, age of
vehicles, fuel used to run vehicles, and the area or
routes of operation of taxi services. In future, if the
government feels that the pressure of competition
from IPT players becomes grave, Section 67 and 73 of
the Motor Vehicle Act, 1988 facilitate retaliation by
AMC for bringing in the required restrictions on IPT
players, taxi and radio taxi services. The scope of
retaliation by decreasing fares by incumbent public
transport players are very gloomy bearing the fact that
it is already at subsidized rates. Further fare cuts would
rather deteriorate the financial health of both AMTS
and AJL.
From the above six factors that have been analyzed,
one can say that the threat of a new entrant is medium-
to-high at present.
4.2 Bargaining power of suppliers:
Powerful suppliers capture more of the value for
themselves by charging higher prices, limiting quality
of services, or shifting costs to other industry
participants (Porter, 2008). The bargaining power of
suppliers can be influenced by the size of the supplier,
the number of suppliers, and the availability of
alternative customers (Slater & Olson, 2002).
The major categories of suppliers are fuel and raw
material suppliers, vehicle manufacturers (i.e.
investments in fleet), spares and repairs, workforce,
financiers, and road infrastructure builders. The
capacity of public transport operation companies to
influence their suppliers' price fixing mechanism is
very limited owing to lack of bargaining power that
they have when confronted with their main suppliers,
which is particularly potent in the case of fuel, vehicles
manufacturers and tyre producers (Diaz, Martinez, &
Barea, 2000).
4.2.1 Fuel and lubricant suppliers:
Fuel pricing, in India and Ahmedabad, be it diesel or
compressed natural gas (CNG) prices, is not fixed by
municipal corporations. They cannot bargain on fuel
prices and will have to accept whatever price is
decided by oil marketing companies and City Gas
Distribution (CGD) players for diesel and CNG
respectively. Additionally, the fuel and lubricant
market in India is an oligopoly market. Hence, the
bargaining power of fuel and lubricant suppliers is very
high.
4.2.2 Bus manufacturers/ suppliers:
When it comes to procuring a fleet of buses, the buyer
(i.e. AMC in this case) predominantly has to bear
pressures from bus manufacturers. Since procurement
of buses is at the least price quoted by suppliers of
buses, international players like Volvo are not able to
withstand competition from domestic players like
TATA Motors Ltd and Ashok Leyland. Eventually buyers
have to depend a lot on these two companies for
supply of buses. This facilitates oligopoly markets and
consequently bargaining power of the suppliers
increases. Instances of bargaining power of suppliers
of buses are reflected through the addendum of
responses to pre-bid queries for procurement of high
quality buses for AJL, Ahmedabad. This addendum
raises many technical and commercial deviations and
the efforts made by bus suppliers to get advance
payments for the delivery of buses and their
unwillingness to change the bus specifications for the
purchaser (AJL, 2012). Another instance of higher
bargaining power of bus manufacturers is reflected
from the statement made by one of the senior officials of Ahmedabad Janmarg (AJL, 2009), “There's no way
bus manufacturers will agree to lower prices. We are
approaching states where the same manufacturers
have supplied basic buses and preparing a price list. It
seems as if bus manufacturers are taking advantage of
our urgency. We will not allow this. We have just asked
for an extra door in their basic model. This leads to
saving on metal for the manufacturer.”
4.2.3 Spare and repair suppliers:
When it comes to spares and repairs, the power of
suppliers of these services is moderate-to-high. The
major factor that determines the power of spare and
repair suppliers is the brand of vehicle and
manufacturer of the vehicle. For instance, the power
of spare and repair suppliers of Volvo bus will definitely
be higher than its counterparts i.e. spare and repair
suppliers of TATA Motors and Ashok Leyland buses.
This is because TATA Motors and Ashok Leyland enjoy
the advantage of economies of scale and have many
suppliers across the nation. Volvo has a very limited
market in India and hence, will have lesser number of
spare and repair suppliers.
4.2.4 Banks and non-banking financial companies
supplying finances:
Banks generally shy away from financing urban
transport projects. They are aware that the fares in
most of the public transport services are subsidized
and the municipal corporations running these services
are making losses. This problem raises concern
regarding servicing of debt by municipal corporations.
Banks extend financial help provided they are being
counter guaranteed by the state or federal
government. In general, urban public transport
depends upon grants issued from the state and the
central government. For instance, AMC's BRTS project
in general and AMTS bus services, to the extent of bus
purchases, are funded under the Jawaharlal Nehru
National Urban Renewal Mission (JnNURM). The
situation even worsens when responsibility of
procurement of buses lies on the shoulders of private
ISSN: 0971-1023 | NMIMS Management ReviewVolume XXIX April-May 2016
A Strategic Analysis of Urban Public Transport Industry:A Case of Ahmedabad, Gujarat in India
ISSN: 0971-1023 | NMIMS Management ReviewVolume XXIX April-May 2016
A Strategic Analysis of Urban Public Transport Industry:A Case of Ahmedabad, Gujarat in India88 89
Changes
cities of India, and therefore street
Contents
mall farmers. Majority of the
farmers (82%) borrow less than
Rs 5 lakhs, and 18% borrow
between Rs 5 – 10 lakhs on a
per annum basis. Most farmers
(65.79%) ar
** p < .01 + Reliability coefficie
** p < .01 + Reliability coefficie
References
Table 23: The Results of Mann-Whitney U Test for DOWJONES Index Daily Returns
bus operators which operate on public-private
partnership basis. As far as IPT players are concerned,
they hardly have any bargaining power. This can be
understood from the fact that most of the IPT players
in Ahmedabad are from the lower middle class or poor
classes and they rely on financial help extended by
non-banking finance companies (NBFCs). Since these
NBFCs are aware of the underlying risk of financing
proposals from these IPT players, they charge
astronomical rates to the tunes of 18 per cent to 24
percent per annum. Banks generally charge anything
from 12 to 15 percent but IPT players find it difficult
and time consuming to avail loans from banks. Hence,
after analyzing various factors as described above, one
could say that the bargaining power of suppliers is
from moderate to high.
4.3 Bargaining power of buyers:
Powerful customers can capture more value by forcing
down prices, demanding better quality or more service
(thereby driving up costs), and generally playing
industry participants off against one another, all at the
expense of industry profitability (Porter, 2008). It is
also regarded as the “flip side of bargaining power of
suppliers” (Porter, 2008). The bargaining power of
buyers is high if buyers are large, they are able to
switch easily to another supplier and they are few in
numbers (Porter, 2008; Slater & Olson, 2002).
4.3.1 Price elasticity of demand for public transport
services:
The propensity to consume is high for the households
that fall in middle income and lower income groups.
They have to allocate their modest income among
heads like food expenses and non-food expenses such
as fuel and light, clothing and footwear, education,
medical, durables, conveyance and rent. From the
expenditure heads reflected in Annexure 2, one can
understand that the amount spent on conveyance by
the bottom 40 percent of urban population is lower
than one spent by the top 20 percent of the urban
population. Hence, one could conclude that the
bottom 40 percent of the urban population is either
using non-motorized mode of commutation (cycling or
walking) or shared auto or public bus services. They
contain their conveyance expenditure and the same is
reflected from the fact that conveyance expenditure
has gone up modestly from 2.9 percent of the total
expenditure to 3.0 percent from year 2004-05 to 2009-
10. This reflects the strength of bargaining power of
commuters. Consequently, they would not mind
retaliating to a price increase. More often than not the
retaliation is in the form of shift in mode of
commutation. The magnitude of price elasticity of
demand for BRT services can be reflected from the fact
that one rupee increase in base rate leads to a
decrease in demand of 15000 commuters on a daily
basis (The Times of India, 2014). Quoting Prof.
Shivanand Swamy's statement from this article, he
says --
“The people of Ahmedabad are very sensitive to the
fare. Surprisingly an increase of rupee one in the base
fare reduces the passenger traffic by around 15,000
passengers. Though Ahmedabad offers one of the
cheapest modes of transport, the fare factor has to be
kept in mind. Also the shuttle rickshaws (i.e. shared
auto rickshaws) are back on the road and run parallel
to BRTS; this rickshaw travel is not safe but despite
realizing the risk, people travel in such rickshaw.”
Hence, one could assess that most of the users are
from middle income or lower income groups and
safety is not ranked higher in priority compared to the
expenditure they bear in commuting.
4.3.2 Degree of convenience:
AMTS bus services are highly unreliable. Even the
quality of travel is below acceptable standards. The
headways are sometimes more than the travel time.
Also, the fleet being inadequate, commuters face the
music of overcrowding in the buses. AJL's BRT services
on the other hand provide a relatively comfortable
experience compared to AMTS bus services or IPT
services. However, it comes at a cost which not many
commuters are willing to bear. IPT too has its own
advantage. Despite commuting by IPT mode being
unsafe, it gives commuters flexibility to board and un-
board at any spot on the route and is very easily
available. This is something which is really valued a lot
among the commuters. As one commuter says, "I
travel by shared rickshaw to Shivranjani daily as I get it
within 5 minutes and it is available right at the door
step of the society and for catching BRTS, I have to walk
for nearly 10 minutes." Commuters using bus services
may shift to IPT mode and at times to non-motorized
travel mode.
4.3.3 Undifferentiated service and effect on other
costs of commuters:
Urban public transport is perceived by the commuters
as an undifferentiated service. They believe they can
always find an equivalent service (through usage of IPT
mode for commuting) and hence, end up playing one
player against another. This eventually magnifies the
degree of competition in the market.
Public bus transport service does not affect the quality
of commuters' products or services barring a few
exceptions such as workforce which requires extensive
intra-city travel as part of their work portfolio. This
workforce rarely uses public transport.
Hence, the high price elasticity of demand for public
transport services, degree of convenience in use of
public transport and the inherent quality of public
transport being an undifferentiated service results in
higher bargaining power of buyers.
4.4 Threat of substitutes:
A substitute performs the same or a similar function as
an industry's product by different means. Substitutes
are always present, but they are easy to overlook
because they may appear to be very different from the
industry's product (Porter, 2008). Had anyone ever
thought that cell-phone instruments might be
substitutes for wrist watches or smart-phones might
be substitutes for cameras or even computers? Some
of the key factors that influence threat of substitutes
are switching costs between substitute products/
services and industry products, or buyers' addiction to
buy substitutes (Klemperer, 1995; Hubbard &
Beamish, 2011; Porter, 2008).
4.4.1 Advent of information technology and
switching costs between substitute products/
services:
Urban public transport service is not an exception and
it too has substitutes in the form of personal vehicles
or car pooling in personal vehicles facilitated by online
platforms like blablacar (visit www.blablacar.in for
more details) or organized taxi services in the city like
Ola cabs, Meru cabs, etc. In the advent of information
technology, many markets have been revolutionized
and urban transport cannot be an exception.
Information technology has changed the way
businesses are done and Internet economies are
taking shape.
Since substitutes that have been discussed are at a
nascent stage of development as of now, they are not
ISSN: 0971-1023 | NMIMS Management ReviewVolume XXIX April-May 2016
A Strategic Analysis of Urban Public Transport Industry:A Case of Ahmedabad, Gujarat in India
ISSN: 0971-1023 | NMIMS Management ReviewVolume XXIX April-May 2016
A Strategic Analysis of Urban Public Transport Industry:A Case of Ahmedabad, Gujarat in India90 91
Changes
cities of India, and therefore street
Contents
mall farmers. Majority of the
farmers (82%) borrow less than
Rs 5 lakhs, and 18% borrow
between Rs 5 – 10 lakhs on a
per annum basis. Most farmers
(65.79%) ar
** p < .01 + Reliability coefficie
** p < .01 + Reliability coefficie
References
Table 23: The Results of Mann-Whitney U Test for DOWJONES Index Daily Returns
bus operators which operate on public-private
partnership basis. As far as IPT players are concerned,
they hardly have any bargaining power. This can be
understood from the fact that most of the IPT players
in Ahmedabad are from the lower middle class or poor
classes and they rely on financial help extended by
non-banking finance companies (NBFCs). Since these
NBFCs are aware of the underlying risk of financing
proposals from these IPT players, they charge
astronomical rates to the tunes of 18 per cent to 24
percent per annum. Banks generally charge anything
from 12 to 15 percent but IPT players find it difficult
and time consuming to avail loans from banks. Hence,
after analyzing various factors as described above, one
could say that the bargaining power of suppliers is
from moderate to high.
4.3 Bargaining power of buyers:
Powerful customers can capture more value by forcing
down prices, demanding better quality or more service
(thereby driving up costs), and generally playing
industry participants off against one another, all at the
expense of industry profitability (Porter, 2008). It is
also regarded as the “flip side of bargaining power of
suppliers” (Porter, 2008). The bargaining power of
buyers is high if buyers are large, they are able to
switch easily to another supplier and they are few in
numbers (Porter, 2008; Slater & Olson, 2002).
4.3.1 Price elasticity of demand for public transport
services:
The propensity to consume is high for the households
that fall in middle income and lower income groups.
They have to allocate their modest income among
heads like food expenses and non-food expenses such
as fuel and light, clothing and footwear, education,
medical, durables, conveyance and rent. From the
expenditure heads reflected in Annexure 2, one can
understand that the amount spent on conveyance by
the bottom 40 percent of urban population is lower
than one spent by the top 20 percent of the urban
population. Hence, one could conclude that the
bottom 40 percent of the urban population is either
using non-motorized mode of commutation (cycling or
walking) or shared auto or public bus services. They
contain their conveyance expenditure and the same is
reflected from the fact that conveyance expenditure
has gone up modestly from 2.9 percent of the total
expenditure to 3.0 percent from year 2004-05 to 2009-
10. This reflects the strength of bargaining power of
commuters. Consequently, they would not mind
retaliating to a price increase. More often than not the
retaliation is in the form of shift in mode of
commutation. The magnitude of price elasticity of
demand for BRT services can be reflected from the fact
that one rupee increase in base rate leads to a
decrease in demand of 15000 commuters on a daily
basis (The Times of India, 2014). Quoting Prof.
Shivanand Swamy's statement from this article, he
says --
“The people of Ahmedabad are very sensitive to the
fare. Surprisingly an increase of rupee one in the base
fare reduces the passenger traffic by around 15,000
passengers. Though Ahmedabad offers one of the
cheapest modes of transport, the fare factor has to be
kept in mind. Also the shuttle rickshaws (i.e. shared
auto rickshaws) are back on the road and run parallel
to BRTS; this rickshaw travel is not safe but despite
realizing the risk, people travel in such rickshaw.”
Hence, one could assess that most of the users are
from middle income or lower income groups and
safety is not ranked higher in priority compared to the
expenditure they bear in commuting.
4.3.2 Degree of convenience:
AMTS bus services are highly unreliable. Even the
quality of travel is below acceptable standards. The
headways are sometimes more than the travel time.
Also, the fleet being inadequate, commuters face the
music of overcrowding in the buses. AJL's BRT services
on the other hand provide a relatively comfortable
experience compared to AMTS bus services or IPT
services. However, it comes at a cost which not many
commuters are willing to bear. IPT too has its own
advantage. Despite commuting by IPT mode being
unsafe, it gives commuters flexibility to board and un-
board at any spot on the route and is very easily
available. This is something which is really valued a lot
among the commuters. As one commuter says, "I
travel by shared rickshaw to Shivranjani daily as I get it
within 5 minutes and it is available right at the door
step of the society and for catching BRTS, I have to walk
for nearly 10 minutes." Commuters using bus services
may shift to IPT mode and at times to non-motorized
travel mode.
4.3.3 Undifferentiated service and effect on other
costs of commuters:
Urban public transport is perceived by the commuters
as an undifferentiated service. They believe they can
always find an equivalent service (through usage of IPT
mode for commuting) and hence, end up playing one
player against another. This eventually magnifies the
degree of competition in the market.
Public bus transport service does not affect the quality
of commuters' products or services barring a few
exceptions such as workforce which requires extensive
intra-city travel as part of their work portfolio. This
workforce rarely uses public transport.
Hence, the high price elasticity of demand for public
transport services, degree of convenience in use of
public transport and the inherent quality of public
transport being an undifferentiated service results in
higher bargaining power of buyers.
4.4 Threat of substitutes:
A substitute performs the same or a similar function as
an industry's product by different means. Substitutes
are always present, but they are easy to overlook
because they may appear to be very different from the
industry's product (Porter, 2008). Had anyone ever
thought that cell-phone instruments might be
substitutes for wrist watches or smart-phones might
be substitutes for cameras or even computers? Some
of the key factors that influence threat of substitutes
are switching costs between substitute products/
services and industry products, or buyers' addiction to
buy substitutes (Klemperer, 1995; Hubbard &
Beamish, 2011; Porter, 2008).
4.4.1 Advent of information technology and
switching costs between substitute products/
services:
Urban public transport service is not an exception and
it too has substitutes in the form of personal vehicles
or car pooling in personal vehicles facilitated by online
platforms like blablacar (visit www.blablacar.in for
more details) or organized taxi services in the city like
Ola cabs, Meru cabs, etc. In the advent of information
technology, many markets have been revolutionized
and urban transport cannot be an exception.
Information technology has changed the way
businesses are done and Internet economies are
taking shape.
Since substitutes that have been discussed are at a
nascent stage of development as of now, they are not
ISSN: 0971-1023 | NMIMS Management ReviewVolume XXIX April-May 2016
A Strategic Analysis of Urban Public Transport Industry:A Case of Ahmedabad, Gujarat in India
ISSN: 0971-1023 | NMIMS Management ReviewVolume XXIX April-May 2016
A Strategic Analysis of Urban Public Transport Industry:A Case of Ahmedabad, Gujarat in India90 91
Changes
cities of India, and therefore street
Contents
mall farmers. Majority of the
farmers (82%) borrow less than
Rs 5 lakhs, and 18% borrow
between Rs 5 – 10 lakhs on a
per annum basis. Most farmers
(65.79%) ar
** p < .01 + Reliability coefficie
** p < .01 + Reliability coefficie
References
Table 23: The Results of Mann-Whitney U Test for DOWJONES Index Daily Returns
in a position to place a ceiling on prices. However, in
coming days, one cannot ignore these services which
are facilitated by information technology. The quality
and performance of the current public bus transport
services have to be raised in order to avoid losing
commuters to substitutes.
The commuters' switching costs are vital in deciding
upon the threat of substitutes. At present, the
switching costs to substitutes for commuters using
public transport services are low-to-medium for
shared services and medium-to-high for owning one's
own vehicle. If commuters are not satisfied by the
services provided by public bus transport services,
they may go ahead with purchasing their own two-
wheeler or may opt for car pooling with daily
commuters travelling the same route and timings.
4.5 Rivalry among existing competitors:
High rivalry among existing competitors limits
profitability of an industry. The degree to which rivalry
drives down an industry's profit potential depends,
first, on the intensity with which companies compete
and, second, on the basis on which they compete
(Porter, 2008). The important factors that influence
this force are industry growth rate, fixed costs/ storage
costs, number and size of competitors, switching costs
between competitors, degree of differentiation, or exit
barriers (Hubbard & Beamish, 2011; Johnson, Scholes,
& Whittington, 2008; Slater & Olson, 2002).
The intensity of rivalry is greatest if competitors are
numerous or are roughly equal in size and power,
industry growth is slow, exit barriers are high, rivals are
highly committed to the business and have aspirations
for leadership, or firms cannot read each other's
signals well because of lack of familiarity with one
another (Porter, 2008).
4.5.1 Number and size of competitors and existing
rivalry among them:
The urban public transport industry confronts
numerous competitors. On the one hand, there are
AMTS and BRTS bus services run by AMC and on the
other hand, we have thousands of auto rickshaws that
compete with each other for commuters on the same
routes. As a matter of fact, there is no clear industry
leader in the urban public transport industry. This, in
turn, increases the incidents of poaching of business
among rivals. AMC has solved poaching of business by
route rationalization between AMTS bus services and
BRTS bus services. However, the route rationalization
has not been extended to the IPT service providers.
This is one of the major reasons why commuters switch
among rivals if fare rates are increased by either of the
service providers.
4.5.2 Exit barriers for rivals and their commitment
levels:
Exit barriers for AMC are high. Being a municipal
corporation, it is obliged to provide the city's residents
with bus services (public good). A high investment in
bus services, especially for BRTS bus services, results
in a high exit barrier. The IPT players are from the
middle income and low income groups and most of
them don't have any other skills making them
ineligible to be absorbed by labour markets. Hence,
earning livelihood by driving an auto rickshaw seems
to be the most suitable option. Also, they are
financially indebted to banks for loans taken to
purchase their auto rickshaws. Hence, they cannot
leave the business very easily and therefore, exit
barriers for even IPT players are from medium-to-high.
High exit barriers retain competitors in the market
even though they may be earning low or negative
returns.
AMC has goals that go beyond economic performance
in urban public transport services. AMC's BRTS bus
service is a matter of prestige for AMC to provide
quality public services. The same can also be justified
from the fact that despite operational losses, the BRTS
bus service keeps expanding in leaps and bounds. It
serves with social benefits like environment
protection, decongestion of roads, less accidents,
tension free ride and economic benefit while travelling
for passengers, etc.
4.5.3 Basis of Competition:
The basis of competition in urban public transport
services is price, which is a major concern for rivals. If
rivals compete on the basis of prices, they destroy the
profitability of the industry as the competition
transfers profit directly to its customers. In this case,
profits are transferred from urban public transport
service providers to commuters. Pricing of bus services
and IPT service providers is very close to each other
and are responding to each other with frequent price
adjustments that are detrimental to profitability of all
the players.
Price competition in the urban public transport
industry occurs due to the fact that services of rivals
are nearly identical and there are few switching costs
for buyers. Fixed costs in the urban public transport
industry are high (highest for BRTS and lowest for auto
rickshaw service providers) and marginal costs are low.
This creates intense pressure for competitors to cut
fares below their average costs. In some cases, fares
are close to their marginal costs. AMTS and BRTS have
to serve fixed networks of routes regardless of
volumes and this further creates a dent in their
profitability. Also the perishable nature of transport
services, i.e. the unused capacity can never be
recovered by urban public transport service providers,
puts southward pressure on fares.
Ideally BRTS, AMTS and IPT service providers
compete to meet the same need of providing
commuting services to commuters. However, their
attributes are different. BRTS is a rapid transit service
which promises to provide comfort, reliable, safe and
speedy commuting services. AMTS provides very
subsidized bus services while IPT provides cheap and
speedy commuting services and lacks comfort and
safety.
5 . Conclusion
The PFF framework discussed above in the context of
the urban public transport service industry can be
summed up as follows:
The threat of new entrants is from medium to high.
This can be substantiated from the fact that supply side
economies of scale and the demand side benefits of
scale are low and hence, facilitates the entry of new
players in the market. Among other factors is the low
capital requirement by IPT players facilitated by easy
availability of credit facilities which paves the way for
easy entry into the market.
Bargaining power of suppliers is from high to moderate
bearing the fact that fuel and lubricant suppliers, bus
manufacturers, spare and repair suppliers are
operating in oligopoly market conditions. Either due to
regulatory framework (as seen in the case of fuel and
lubricant suppliers) or due to high price disparity
among the costs of buses by various manufactures, the
city bus services players have hardly any say or options
left with them to enhance their bargaining power
against the suppliers.
ISSN: 0971-1023 | NMIMS Management ReviewVolume XXIX April-May 2016
A Strategic Analysis of Urban Public Transport Industry:A Case of Ahmedabad, Gujarat in India
ISSN: 0971-1023 | NMIMS Management ReviewVolume XXIX April-May 2016
A Strategic Analysis of Urban Public Transport Industry:A Case of Ahmedabad, Gujarat in India92 93
Changes
cities of India, and therefore street
Contents
mall farmers. Majority of the
farmers (82%) borrow less than
Rs 5 lakhs, and 18% borrow
between Rs 5 – 10 lakhs on a
per annum basis. Most farmers
(65.79%) ar
** p < .01 + Reliability coefficie
** p < .01 + Reliability coefficie
References
Table 23: The Results of Mann-Whitney U Test for DOWJONES Index Daily Returns
in a position to place a ceiling on prices. However, in
coming days, one cannot ignore these services which
are facilitated by information technology. The quality
and performance of the current public bus transport
services have to be raised in order to avoid losing
commuters to substitutes.
The commuters' switching costs are vital in deciding
upon the threat of substitutes. At present, the
switching costs to substitutes for commuters using
public transport services are low-to-medium for
shared services and medium-to-high for owning one's
own vehicle. If commuters are not satisfied by the
services provided by public bus transport services,
they may go ahead with purchasing their own two-
wheeler or may opt for car pooling with daily
commuters travelling the same route and timings.
4.5 Rivalry among existing competitors:
High rivalry among existing competitors limits
profitability of an industry. The degree to which rivalry
drives down an industry's profit potential depends,
first, on the intensity with which companies compete
and, second, on the basis on which they compete
(Porter, 2008). The important factors that influence
this force are industry growth rate, fixed costs/ storage
costs, number and size of competitors, switching costs
between competitors, degree of differentiation, or exit
barriers (Hubbard & Beamish, 2011; Johnson, Scholes,
& Whittington, 2008; Slater & Olson, 2002).
The intensity of rivalry is greatest if competitors are
numerous or are roughly equal in size and power,
industry growth is slow, exit barriers are high, rivals are
highly committed to the business and have aspirations
for leadership, or firms cannot read each other's
signals well because of lack of familiarity with one
another (Porter, 2008).
4.5.1 Number and size of competitors and existing
rivalry among them:
The urban public transport industry confronts
numerous competitors. On the one hand, there are
AMTS and BRTS bus services run by AMC and on the
other hand, we have thousands of auto rickshaws that
compete with each other for commuters on the same
routes. As a matter of fact, there is no clear industry
leader in the urban public transport industry. This, in
turn, increases the incidents of poaching of business
among rivals. AMC has solved poaching of business by
route rationalization between AMTS bus services and
BRTS bus services. However, the route rationalization
has not been extended to the IPT service providers.
This is one of the major reasons why commuters switch
among rivals if fare rates are increased by either of the
service providers.
4.5.2 Exit barriers for rivals and their commitment
levels:
Exit barriers for AMC are high. Being a municipal
corporation, it is obliged to provide the city's residents
with bus services (public good). A high investment in
bus services, especially for BRTS bus services, results
in a high exit barrier. The IPT players are from the
middle income and low income groups and most of
them don't have any other skills making them
ineligible to be absorbed by labour markets. Hence,
earning livelihood by driving an auto rickshaw seems
to be the most suitable option. Also, they are
financially indebted to banks for loans taken to
purchase their auto rickshaws. Hence, they cannot
leave the business very easily and therefore, exit
barriers for even IPT players are from medium-to-high.
High exit barriers retain competitors in the market
even though they may be earning low or negative
returns.
AMC has goals that go beyond economic performance
in urban public transport services. AMC's BRTS bus
service is a matter of prestige for AMC to provide
quality public services. The same can also be justified
from the fact that despite operational losses, the BRTS
bus service keeps expanding in leaps and bounds. It
serves with social benefits like environment
protection, decongestion of roads, less accidents,
tension free ride and economic benefit while travelling
for passengers, etc.
4.5.3 Basis of Competition:
The basis of competition in urban public transport
services is price, which is a major concern for rivals. If
rivals compete on the basis of prices, they destroy the
profitability of the industry as the competition
transfers profit directly to its customers. In this case,
profits are transferred from urban public transport
service providers to commuters. Pricing of bus services
and IPT service providers is very close to each other
and are responding to each other with frequent price
adjustments that are detrimental to profitability of all
the players.
Price competition in the urban public transport
industry occurs due to the fact that services of rivals
are nearly identical and there are few switching costs
for buyers. Fixed costs in the urban public transport
industry are high (highest for BRTS and lowest for auto
rickshaw service providers) and marginal costs are low.
This creates intense pressure for competitors to cut
fares below their average costs. In some cases, fares
are close to their marginal costs. AMTS and BRTS have
to serve fixed networks of routes regardless of
volumes and this further creates a dent in their
profitability. Also the perishable nature of transport
services, i.e. the unused capacity can never be
recovered by urban public transport service providers,
puts southward pressure on fares.
Ideally BRTS, AMTS and IPT service providers
compete to meet the same need of providing
commuting services to commuters. However, their
attributes are different. BRTS is a rapid transit service
which promises to provide comfort, reliable, safe and
speedy commuting services. AMTS provides very
subsidized bus services while IPT provides cheap and
speedy commuting services and lacks comfort and
safety.
5 . Conclusion
The PFF framework discussed above in the context of
the urban public transport service industry can be
summed up as follows:
The threat of new entrants is from medium to high.
This can be substantiated from the fact that supply side
economies of scale and the demand side benefits of
scale are low and hence, facilitates the entry of new
players in the market. Among other factors is the low
capital requirement by IPT players facilitated by easy
availability of credit facilities which paves the way for
easy entry into the market.
Bargaining power of suppliers is from high to moderate
bearing the fact that fuel and lubricant suppliers, bus
manufacturers, spare and repair suppliers are
operating in oligopoly market conditions. Either due to
regulatory framework (as seen in the case of fuel and
lubricant suppliers) or due to high price disparity
among the costs of buses by various manufactures, the
city bus services players have hardly any say or options
left with them to enhance their bargaining power
against the suppliers.
ISSN: 0971-1023 | NMIMS Management ReviewVolume XXIX April-May 2016
A Strategic Analysis of Urban Public Transport Industry:A Case of Ahmedabad, Gujarat in India
ISSN: 0971-1023 | NMIMS Management ReviewVolume XXIX April-May 2016
A Strategic Analysis of Urban Public Transport Industry:A Case of Ahmedabad, Gujarat in India92 93
Changes
cities of India, and therefore street
Contents
mall farmers. Majority of the
farmers (82%) borrow less than
Rs 5 lakhs, and 18% borrow
between Rs 5 – 10 lakhs on a
per annum basis. Most farmers
(65.79%) ar
** p < .01 + Reliability coefficie
** p < .01 + Reliability coefficie
References
Table 23: The Results of Mann-Whitney U Test for DOWJONES Index Daily Returns
Bargaining power of buyers (i.e. commuters) is high
bearing the fact that the demand for public transport
services is price elastic, the degree of convenience in
public transport is low and public transport services
are inherently undifferentiated. Due to this condition,
we often find commuters moving from one mode of
commutation to another resulting in players cutting
fares to capture/recapture commuters.
The threat of substitutes might not necessarily be very
apparent at this instance, but one cannot neglect this
threat. Due to the advent of information technology,
new industry structures are shaping up. At present,
switching costs to substitutes are from medium to high
for shared services (such as Ola cabs, Blabla cars, Meru
cabs, etc by car pooling) and owning one's own vehicle
respectively.
Finally, the rivalry among existing competitors is from
high to moderate owing to the fact that there are
numerous players in the market with no clear leader,
high exit barriers for the players due to large sunk
costs, and basis of competition being price. This brings
down the profitability of the industry.
Hence, the analysis of the urban public transport
industry using PFF framework concludes that the
urban public transport industry in Ahmedabad is very
competitive in nature accompanied by poor
profitability. AMTS, BRTS and IPT players are
financially bleeding due to lack of profitability. Even
the commuter is not a winner as his value triad is badly
affected. The quality and services of the urban public
transport services are not worth the prices the
commuters pay. Otherwise, why would more than one
million vehicles get registered in Ahmedabad in the
last five years? Such a whopping number of vehicles
would add to the social costs by leading to congestion,
air pollution, increased accidents, etc. Also, it indicates
a significant negative demand for urban public
transport services.
6 . Recommendation
Based on conclusions, it can be recommend that the
urban public transport industry's profitability and
attractiveness could be improved to a certain
extent, provided the following measures are taken
by the AMC:
• Route rationalization should not be restricted
between AMTS and AJL only. AMC should go ahead
with cooperative strategy whereby shared auto-
rickshaws are also taken into consideration while
deciding route rationalization. Doing so will ensure
that the competition of shared auto-rickshaws with
AJL or AMTS gets annihilated and undue price-war
among these competitors to grab commuters is
restricted. The integrated multi-modal transit
system should ensure a similar level of service
delivery throughout the commuters' journey.
• Let the AMC not fall in the trap of a chicken-egg
dilemma. The present bus fleet of AMTS is very low
and hence, the bus services are highly unreliable,
overcrowded, and unsafe. It needs to increase the
bus fleet so that it facilitates better headways which
in turn, will ensure better flow of commuters to bus
transport services resulting in better revenue.
• AMTS has a plethora of concession schemes for
commuters. It is high time to think about adding
more buses to its fleet with value added services for
upper middle income group of commuters which
have negative demand for public transport. AMC
cannot think of serving only the bottom of the
pyramid. Adding high end bus services with value
added services will facilitate better flow of
commuters since the service levels will be at par
with the service levels of AJL bus services and will
cross-subsidize for the commuters that travel on
concessions.
• Today's commuter is very techno-savvy. Bus
services provided by AJL and AMTS and IPT players
need to be integrated using information technology.
Real time reliable and consistent information
regarding the movement of these vehicles could be
made available to the commuters. This will
eventually lead to acceptance of urban public
transport services by commuters.
• A culture of using public transport needs to be
inculcated among people to increase demand in the
city of Ahmedabad and in other Indian cities in
order to derive full advantage of efficient public
transport systems. Awareness programmes and
better communication strategies should be
adopted by AMC to inculcate the required culture of
using public transport services. We need to educate
commuters on how they help in achieving the triple
bottom line goals of economic benefit, social
benefit and environmental benefit by commuting
through public transport. This will help in catering to
commuters who fall in the negative demand
category for public transport services.
• Owners of personal vehicles don't pay for the usage
of infrastructure (especially roads and parking
space) in its entirety. In order to discourage the rise
in the number of personal vehicles, the policy of
owning or purchasing a parking space from AMC
before owning a vehicle should be put into practice.
These funds, in turn, could make up for operational
losses of bus services. Singapore already has this
policy in place.
Implementation of the above stated measures may
help in making urban public transport services more
reliable, convenient, comfortable, safe, and rapid so
that the value triad of commuters is in place; this shall
help industry players AMTS, BRTS, and IPT players
achieve profitability. This can be achieved by not
competing with each other but complementing each
other.
ISSN: 0971-1023 | NMIMS Management ReviewVolume XXIX April-May 2016
A Strategic Analysis of Urban Public Transport Industry:A Case of Ahmedabad, Gujarat in India
ISSN: 0971-1023 | NMIMS Management ReviewVolume XXIX April-May 2016
A Strategic Analysis of Urban Public Transport Industry:A Case of Ahmedabad, Gujarat in India94 95
Changes
cities of India, and therefore street
Contents
mall farmers. Majority of the
farmers (82%) borrow less than
Rs 5 lakhs, and 18% borrow
between Rs 5 – 10 lakhs on a
per annum basis. Most farmers
(65.79%) ar
** p < .01 + Reliability coefficie
** p < .01 + Reliability coefficie
References
Table 23: The Results of Mann-Whitney U Test for DOWJONES Index Daily Returns
Bargaining power of buyers (i.e. commuters) is high
bearing the fact that the demand for public transport
services is price elastic, the degree of convenience in
public transport is low and public transport services
are inherently undifferentiated. Due to this condition,
we often find commuters moving from one mode of
commutation to another resulting in players cutting
fares to capture/recapture commuters.
The threat of substitutes might not necessarily be very
apparent at this instance, but one cannot neglect this
threat. Due to the advent of information technology,
new industry structures are shaping up. At present,
switching costs to substitutes are from medium to high
for shared services (such as Ola cabs, Blabla cars, Meru
cabs, etc by car pooling) and owning one's own vehicle
respectively.
Finally, the rivalry among existing competitors is from
high to moderate owing to the fact that there are
numerous players in the market with no clear leader,
high exit barriers for the players due to large sunk
costs, and basis of competition being price. This brings
down the profitability of the industry.
Hence, the analysis of the urban public transport
industry using PFF framework concludes that the
urban public transport industry in Ahmedabad is very
competitive in nature accompanied by poor
profitability. AMTS, BRTS and IPT players are
financially bleeding due to lack of profitability. Even
the commuter is not a winner as his value triad is badly
affected. The quality and services of the urban public
transport services are not worth the prices the
commuters pay. Otherwise, why would more than one
million vehicles get registered in Ahmedabad in the
last five years? Such a whopping number of vehicles
would add to the social costs by leading to congestion,
air pollution, increased accidents, etc. Also, it indicates
a significant negative demand for urban public
transport services.
6 . Recommendation
Based on conclusions, it can be recommend that the
urban public transport industry's profitability and
attractiveness could be improved to a certain
extent, provided the following measures are taken
by the AMC:
• Route rationalization should not be restricted
between AMTS and AJL only. AMC should go ahead
with cooperative strategy whereby shared auto-
rickshaws are also taken into consideration while
deciding route rationalization. Doing so will ensure
that the competition of shared auto-rickshaws with
AJL or AMTS gets annihilated and undue price-war
among these competitors to grab commuters is
restricted. The integrated multi-modal transit
system should ensure a similar level of service
delivery throughout the commuters' journey.
• Let the AMC not fall in the trap of a chicken-egg
dilemma. The present bus fleet of AMTS is very low
and hence, the bus services are highly unreliable,
overcrowded, and unsafe. It needs to increase the
bus fleet so that it facilitates better headways which
in turn, will ensure better flow of commuters to bus
transport services resulting in better revenue.
• AMTS has a plethora of concession schemes for
commuters. It is high time to think about adding
more buses to its fleet with value added services for
upper middle income group of commuters which
have negative demand for public transport. AMC
cannot think of serving only the bottom of the
pyramid. Adding high end bus services with value
added services will facilitate better flow of
commuters since the service levels will be at par
with the service levels of AJL bus services and will
cross-subsidize for the commuters that travel on
concessions.
• Today's commuter is very techno-savvy. Bus
services provided by AJL and AMTS and IPT players
need to be integrated using information technology.
Real time reliable and consistent information
regarding the movement of these vehicles could be
made available to the commuters. This will
eventually lead to acceptance of urban public
transport services by commuters.
• A culture of using public transport needs to be
inculcated among people to increase demand in the
city of Ahmedabad and in other Indian cities in
order to derive full advantage of efficient public
transport systems. Awareness programmes and
better communication strategies should be
adopted by AMC to inculcate the required culture of
using public transport services. We need to educate
commuters on how they help in achieving the triple
bottom line goals of economic benefit, social
benefit and environmental benefit by commuting
through public transport. This will help in catering to
commuters who fall in the negative demand
category for public transport services.
• Owners of personal vehicles don't pay for the usage
of infrastructure (especially roads and parking
space) in its entirety. In order to discourage the rise
in the number of personal vehicles, the policy of
owning or purchasing a parking space from AMC
before owning a vehicle should be put into practice.
These funds, in turn, could make up for operational
losses of bus services. Singapore already has this
policy in place.
Implementation of the above stated measures may
help in making urban public transport services more
reliable, convenient, comfortable, safe, and rapid so
that the value triad of commuters is in place; this shall
help industry players AMTS, BRTS, and IPT players
achieve profitability. This can be achieved by not
competing with each other but complementing each
other.
ISSN: 0971-1023 | NMIMS Management ReviewVolume XXIX April-May 2016
A Strategic Analysis of Urban Public Transport Industry:A Case of Ahmedabad, Gujarat in India
ISSN: 0971-1023 | NMIMS Management ReviewVolume XXIX April-May 2016
A Strategic Analysis of Urban Public Transport Industry:A Case of Ahmedabad, Gujarat in India94 95
Changes
cities of India, and therefore street
Contents
mall farmers. Majority of the
farmers (82%) borrow less than
Rs 5 lakhs, and 18% borrow
between Rs 5 – 10 lakhs on a
per annum basis. Most farmers
(65.79%) ar
** p < .01 + Reliability coefficie
** p < .01 + Reliability coefficie
References
Table 23: The Results of Mann-Whitney U Test for DOWJONES Index Daily Returns
References
• Ahmedabad Janmarg Limited. (2012, May 30). Response to Queries for RFP for Procurement of High Quality
Buses. . Ahmedabad, Guajrat, India.Addendum -1
• Schemes: Ahmedabad Municipal Transport ServicesAhmedabad Municipal Transport Services. (n.d.). .
Retr ieved August 23, 2015, f rom Ahmedabad Munic ipal Transport Serv ices Web S i te:
http://www.amts.co.in/SitePage.aspx?id=60 .
• AJL, S. O. (2009, May 1). AJL, Bus Makers Price War hits BRTS. (T. Paul John, Interviewer) Times of India.
• REvista Aktouf, O. (2004). The False Expectations of Michael Porter's Strategic Management Framework.
Universidad & Empresa, VI (6), 9-41.
• Andriotis, K. (2004). Revising Porter's Five Forces Model for Application in the Travel and Tourism Industry.
Tourism Today, 131-145.
• Academy of Management Executive, 16Argyres, N., & McGahan, N. (2002). An Interview with Michael Porter.
(2), 43-52.
• Arturo, A. (2005). UPI.Study of urban public transport conditions in BOGOTÁ (Colombia): Draft Report.
• Central Institute of Road Transport. (1996). Ahmedabad Municipal Transport Services: A Report on Structure
and Strategies. Pune: CIRT Publication.
• CITDiaz, A., Martinez, O., & Barea, P. (2000). El futuro del transporte de viajers por carretera. .
• Fabian, D. (2014). Are Porter's Five Competitive Forces Still Applicable? A Critical Examination concerning the
Relevance for Today's Business. Enschede, The Netherlands: University of 3rd IBA Bachelor Thesis Conference.
Twente.
• Strategic management: Thinking, Analysis, Action.Hubbard, G., & Beamish, P. (2011). Australia: Pearson
Education.
• Exploring Coporate Strategy: Text & Cases.Johnson, G., Scholes, K., & Whittington, R. (2008). Pearson
Education.
• Klemperer, P. (1995). Competition when consumers have switching costs: An Overview with Applications to
Industrial Organization, Macroeconomics, and International Trade. (4), The Review of Economic Studies, 62
515-539.
• Harvard Business Review, 62McFarlan, F. (1984). IT Changes the Way you Compete. (3), 98-103.
• Mohamed, Z., Shamsudin, M. N., & Latif, I. A. (2013). Measuring Competition Along the Supply Chain of the
Malaysian Poultry Industry. Penang, Malaysia.International Conference on Social Science Research.
• Information Systems TheoryMohaptra, S. (2012). IT and Porter's Competitive Forces Model and Strategies. ,
265-281.
• Nicolas, E., Andres, G.-L., Ramon, M.-R., & Tomas, S. (2007, December). Policy Research Working Paper 4440.
Affordability and Subsidies in Public Urban Transport: What Do We Mean, What Can Be Done? Latin America
and the Caribbean Region: The World Bank.
• Financial ManagementPandey, I. M. (2010). Financial Management. In I. M. Pandey, (pp. 110-130). New Delhi:
Vikas Publication.
• Harvard Business ReviewPorter, M. E. (1979). How Competitive Forces Shape Strategy. , 21-38.
• Harvard Business ReviewPorter, M. E. (2001). Strategy and the Internet. , 62-78.
• Harvard Business Review,Porter, M. E. (2008, January). The Five Competitive Forces that Shape Strategy. 1-17.
• Raible, M. (2013). Industrial Organization Theory and Its Contribution to Decision-making in Purchasing.
Enschede, The Netherlands: Faculty of Management and Governance, University of Twente.
• Advances in the Study of Rothaermel, F. (2008). Competitive Advantage in Technology Intensive Industries.
Entrepreneurship, Innovation & Economic Growth, 201-225.
• RTO Gujarat.RTO Gujarat. (2015, January 3). Retrieved May 14, 2015, from RTO Gujarat Website:
http://rtogujarat.gov.in/documents/notifications/radio_call_taxi.pdf
• RTO Gujarat.RTO Gujarat. (2015, February 5). Retrieved May 10, 2015, from RTO Gujarat Web site:
http://rtogujarat.gov.in/documents/notifications/AHMEDABAD_CITY_TAXI_SEVA.pdf
• Business Horizons, 45Slater, S., & Olson, E. (2002). A Fresh Look at Industry and Market Analysis. (1), 15-22.
• BRTS fails to make inroads in passenger trafficThe Times of India. (2014, November 10). . Retrieved May 4,
2015, from The Times of India Website: http://timesofindia.indiatimes.com/city/ahmedabad/BRTS-fails-to-
make-inroads-in-passenger-traffic/articleshow/45096884.cms
• Gujarat mulls 6-month ban on fresh auto registrationsThe Times of India. (2014, October 23). . Retrieved June
29, 2015, from The Times of India Web site: http://timesofindia.indiatimes.com/city/ahmedabad/Gujarat-
mulls-6-month-ban-on-fresh-auto-registrations/articleshow/44913321.cms
• Home, City: The Times of IndiaThe Times of India. (2014, January 17). . Retrieved May 4, 2015, from The Times
of India Web site: http://timesofindia.indiatimes.com/city/ahmedabad/Metro-route-will-run-parallel-to-
BRTS/articleshow/28913741.cms
• Management Decision, 36Thurlby, B. (1998). Competitive forces are also subject to change. (1), 19-24.
ISSN: 0971-1023 | NMIMS Management ReviewVolume XXIX April-May 2016
A Strategic Analysis of Urban Public Transport Industry:A Case of Ahmedabad, Gujarat in India
ISSN: 0971-1023 | NMIMS Management ReviewVolume XXIX April-May 2016
A Strategic Analysis of Urban Public Transport Industry:A Case of Ahmedabad, Gujarat in India96 97
Changes
cities of India, and therefore street
Contents
mall farmers. Majority of the
farmers (82%) borrow less than
Rs 5 lakhs, and 18% borrow
between Rs 5 – 10 lakhs on a
per annum basis. Most farmers
(65.79%) ar
** p < .01 + Reliability coefficie
** p < .01 + Reliability coefficie
References
Table 23: The Results of Mann-Whitney U Test for DOWJONES Index Daily Returns
References
• Ahmedabad Janmarg Limited. (2012, May 30). Response to Queries for RFP for Procurement of High Quality
Buses. . Ahmedabad, Guajrat, India.Addendum -1
• Schemes: Ahmedabad Municipal Transport ServicesAhmedabad Municipal Transport Services. (n.d.). .
Retr ieved August 23, 2015, f rom Ahmedabad Munic ipal Transport Serv ices Web S i te:
http://www.amts.co.in/SitePage.aspx?id=60 .
• AJL, S. O. (2009, May 1). AJL, Bus Makers Price War hits BRTS. (T. Paul John, Interviewer) Times of India.
• REvista Aktouf, O. (2004). The False Expectations of Michael Porter's Strategic Management Framework.
Universidad & Empresa, VI (6), 9-41.
• Andriotis, K. (2004). Revising Porter's Five Forces Model for Application in the Travel and Tourism Industry.
Tourism Today, 131-145.
• Academy of Management Executive, 16Argyres, N., & McGahan, N. (2002). An Interview with Michael Porter.
(2), 43-52.
• Arturo, A. (2005). UPI.Study of urban public transport conditions in BOGOTÁ (Colombia): Draft Report.
• Central Institute of Road Transport. (1996). Ahmedabad Municipal Transport Services: A Report on Structure
and Strategies. Pune: CIRT Publication.
• CITDiaz, A., Martinez, O., & Barea, P. (2000). El futuro del transporte de viajers por carretera. .
• Fabian, D. (2014). Are Porter's Five Competitive Forces Still Applicable? A Critical Examination concerning the
Relevance for Today's Business. Enschede, The Netherlands: University of 3rd IBA Bachelor Thesis Conference.
Twente.
• Strategic management: Thinking, Analysis, Action.Hubbard, G., & Beamish, P. (2011). Australia: Pearson
Education.
• Exploring Coporate Strategy: Text & Cases.Johnson, G., Scholes, K., & Whittington, R. (2008). Pearson
Education.
• Klemperer, P. (1995). Competition when consumers have switching costs: An Overview with Applications to
Industrial Organization, Macroeconomics, and International Trade. (4), The Review of Economic Studies, 62
515-539.
• Harvard Business Review, 62McFarlan, F. (1984). IT Changes the Way you Compete. (3), 98-103.
• Mohamed, Z., Shamsudin, M. N., & Latif, I. A. (2013). Measuring Competition Along the Supply Chain of the
Malaysian Poultry Industry. Penang, Malaysia.International Conference on Social Science Research.
• Information Systems TheoryMohaptra, S. (2012). IT and Porter's Competitive Forces Model and Strategies. ,
265-281.
• Nicolas, E., Andres, G.-L., Ramon, M.-R., & Tomas, S. (2007, December). Policy Research Working Paper 4440.
Affordability and Subsidies in Public Urban Transport: What Do We Mean, What Can Be Done? Latin America
and the Caribbean Region: The World Bank.
• Financial ManagementPandey, I. M. (2010). Financial Management. In I. M. Pandey, (pp. 110-130). New Delhi:
Vikas Publication.
• Harvard Business ReviewPorter, M. E. (1979). How Competitive Forces Shape Strategy. , 21-38.
• Harvard Business ReviewPorter, M. E. (2001). Strategy and the Internet. , 62-78.
• Harvard Business Review,Porter, M. E. (2008, January). The Five Competitive Forces that Shape Strategy. 1-17.
• Raible, M. (2013). Industrial Organization Theory and Its Contribution to Decision-making in Purchasing.
Enschede, The Netherlands: Faculty of Management and Governance, University of Twente.
• Advances in the Study of Rothaermel, F. (2008). Competitive Advantage in Technology Intensive Industries.
Entrepreneurship, Innovation & Economic Growth, 201-225.
• RTO Gujarat.RTO Gujarat. (2015, January 3). Retrieved May 14, 2015, from RTO Gujarat Website:
http://rtogujarat.gov.in/documents/notifications/radio_call_taxi.pdf
• RTO Gujarat.RTO Gujarat. (2015, February 5). Retrieved May 10, 2015, from RTO Gujarat Web site:
http://rtogujarat.gov.in/documents/notifications/AHMEDABAD_CITY_TAXI_SEVA.pdf
• Business Horizons, 45Slater, S., & Olson, E. (2002). A Fresh Look at Industry and Market Analysis. (1), 15-22.
• BRTS fails to make inroads in passenger trafficThe Times of India. (2014, November 10). . Retrieved May 4,
2015, from The Times of India Website: http://timesofindia.indiatimes.com/city/ahmedabad/BRTS-fails-to-
make-inroads-in-passenger-traffic/articleshow/45096884.cms
• Gujarat mulls 6-month ban on fresh auto registrationsThe Times of India. (2014, October 23). . Retrieved June
29, 2015, from The Times of India Web site: http://timesofindia.indiatimes.com/city/ahmedabad/Gujarat-
mulls-6-month-ban-on-fresh-auto-registrations/articleshow/44913321.cms
• Home, City: The Times of IndiaThe Times of India. (2014, January 17). . Retrieved May 4, 2015, from The Times
of India Web site: http://timesofindia.indiatimes.com/city/ahmedabad/Metro-route-will-run-parallel-to-
BRTS/articleshow/28913741.cms
• Management Decision, 36Thurlby, B. (1998). Competitive forces are also subject to change. (1), 19-24.
ISSN: 0971-1023 | NMIMS Management ReviewVolume XXIX April-May 2016
A Strategic Analysis of Urban Public Transport Industry:A Case of Ahmedabad, Gujarat in India
ISSN: 0971-1023 | NMIMS Management ReviewVolume XXIX April-May 2016
A Strategic Analysis of Urban Public Transport Industry:A Case of Ahmedabad, Gujarat in India96 97
Changes
cities of India, and therefore street
Contents
mall farmers. Majority of the
farmers (82%) borrow less than
Rs 5 lakhs, and 18% borrow
between Rs 5 – 10 lakhs on a
per annum basis. Most farmers
(65.79%) ar
** p < .01 + Reliability coefficie
** p < .01 + Reliability coefficie
References
Table 23: The Results of Mann-Whitney U Test for DOWJONES Index Daily Returns
Annexure 1: Various Concession Schemes by AMTS
S.N. Name of the Concession
Scheme
Particulars of the Scheme
1 Students’ Concession Scheme Term pass - Rate of Rs. 300/- per month for any distance travelled in
the city.
2 Concession for the blind Free journey
3
Concession for Deaf and Dumb
50 percent discount on the regular bus-fare
4
Concession for the
Handicapped
Defects up to 50
percent
and with monthly income less than Rs.
1000;
such applicants can travel any distance by paying minimum bus
ticket
fare.
5
Concession for mentally
challenged children and their
Wards
Such children are eligible to obtain
free pass
only for going to and
coming back from their school. Their parents or wards also get such
pass to accompany their child to school at the concessional rate.
6
Concession scheme for senior
citizens (aged
between 65 and
75years)
Holder of the pass can travel for any distance and as m any times as
he wants. He has to purchase the ticket at
50
percent
discount
on
the existing rates.
7
Concession scheme for senior
citizens
(above 75 years of age)
Holder of the pass can travel free of cost.
8
Concession for Sportsmen
They can travel in AMTS buses paying
minimum fare for any distance
9
Monthly Pass Scheme
The pass-holder
can travel for 30 days by paying the fare for 15 days
10
“Travel as you like” monthly
pass scheme
Under this scheme, a monthly pass is issued at the
cost of Rs.900 for
a month. The pass-holder can travel any time, in any AMTS bus, as
many times as he wishes.
11
Free-
Pass Travelling Scheme
Applicable to:
·
Press-reporters
·
Municipal Councillors
and members of the School-Board
·
Union post-holders
·
Freedom fighters and their widows
· Elderly people staying in old-age homes
Source: AMTS official website. http://www.amts.co.in/SitePage.aspx?id=60.
Annexure 2: Expenditure pattern of Bottom 40% and top 20% of urban population, 2004-05 and 2009-10
Item 2004-05 2009-10
Value of
bottom
40% (INR)
Value of
top 20%
(INR)
Bottom
40%
(%age)
Top 20%
(%age)
Value of
bottom
40% (INR)
Value of
top 20%
(INR)
Bottom
40%
(%age)
Top 20%
(%age)
Food
281
762
58.4
31.9
446
1254 53.6
29.6
Non Food
200
1627
41.6
68.1
387
2979 46.4
70.4
-Fuel & Light
62
186
12.9
7.8
89
250
10.7
5.9
-Clothing and
Footwear
13
136
2.7
5.7
61
243
7.3 5.7
-Education
12
153
2.5
6.4
31
511
3.8
12.1
-Medical
0
57
0.0
2.4
33
261
3.9
6.2
-Durables
3
184
0.6
7.7
15
336
1.8
7.9
-Conveyance
14
208
2.9
8.7
25
336
3.0
7.9
-Rent
12
174
2.5
7.3
20
365
2.5
8.6
Taxes &Cess
3
19
0.6
0.8
6
40
0.7
0.9
-Other Items
81
510
16.8
21.3
107
638
12.9
15.1
Total 481 2389 100 100 833 4233 100 100
Source: NSSO (2006 and 2011).
ISSN: 0971-1023 | NMIMS Management ReviewVolume XXIX April-May 2016
A Strategic Analysis of Urban Public Transport Industry:A Case of Ahmedabad, Gujarat in India
ISSN: 0971-1023 | NMIMS Management ReviewVolume XXIX April-May 2016
A Strategic Analysis of Urban Public Transport Industry:A Case of Ahmedabad, Gujarat in India98 99
Changes
cities of India, and therefore street
Contents
mall farmers. Majority of the
farmers (82%) borrow less than
Rs 5 lakhs, and 18% borrow
between Rs 5 – 10 lakhs on a
per annum basis. Most farmers
(65.79%) ar
** p < .01 + Reliability coefficie
** p < .01 + Reliability coefficie
References
Table 23: The Results of Mann-Whitney U Test for DOWJONES Index Daily Returns
Annexure 1: Various Concession Schemes by AMTS
S.N. Name of the Concession
Scheme
Particulars of the Scheme
1 Students’ Concession Scheme Term pass - Rate of Rs. 300/- per month for any distance travelled in
the city.
2 Concession for the blind Free journey
3
Concession for Deaf and Dumb
50 percent discount on the regular bus-fare
4
Concession for the
Handicapped
Defects up to 50
percent
and with monthly income less than Rs.
1000;
such applicants can travel any distance by paying minimum bus
ticket
fare.
5
Concession for mentally
challenged children and their
Wards
Such children are eligible to obtain
free pass
only for going to and
coming back from their school. Their parents or wards also get such
pass to accompany their child to school at the concessional rate.
6
Concession scheme for senior
citizens (aged
between 65 and
75years)
Holder of the pass can travel for any distance and as m any times as
he wants. He has to purchase the ticket at
50
percent
discount
on
the existing rates.
7
Concession scheme for senior
citizens
(above 75 years of age)
Holder of the pass can travel free of cost.
8
Concession for Sportsmen
They can travel in AMTS buses paying
minimum fare for any distance
9
Monthly Pass Scheme
The pass-holder
can travel for 30 days by paying the fare for 15 days
10
“Travel as you like” monthly
pass scheme
Under this scheme, a monthly pass is issued at the
cost of Rs.900 for
a month. The pass-holder can travel any time, in any AMTS bus, as
many times as he wishes.
11
Free-
Pass Travelling Scheme
Applicable to:
·
Press-reporters
·
Municipal Councillors
and members of the School-Board
·
Union post-holders
·
Freedom fighters and their widows
· Elderly people staying in old-age homes
Source: AMTS official website. http://www.amts.co.in/SitePage.aspx?id=60.
Annexure 2: Expenditure pattern of Bottom 40% and top 20% of urban population, 2004-05 and 2009-10
Item 2004-05 2009-10
Value of
bottom
40% (INR)
Value of
top 20%
(INR)
Bottom
40%
(%age)
Top 20%
(%age)
Value of
bottom
40% (INR)
Value of
top 20%
(INR)
Bottom
40%
(%age)
Top 20%
(%age)
Food
281
762
58.4
31.9
446
1254 53.6
29.6
Non Food
200
1627
41.6
68.1
387
2979 46.4
70.4
-Fuel & Light
62
186
12.9
7.8
89
250
10.7
5.9
-Clothing and
Footwear
13
136
2.7
5.7
61
243
7.3 5.7
-Education
12
153
2.5
6.4
31
511
3.8
12.1
-Medical
0
57
0.0
2.4
33
261
3.9
6.2
-Durables
3
184
0.6
7.7
15
336
1.8
7.9
-Conveyance
14
208
2.9
8.7
25
336
3.0
7.9
-Rent
12
174
2.5
7.3
20
365
2.5
8.6
Taxes &Cess
3
19
0.6
0.8
6
40
0.7
0.9
-Other Items
81
510
16.8
21.3
107
638
12.9
15.1
Total 481 2389 100 100 833 4233 100 100
Source: NSSO (2006 and 2011).
ISSN: 0971-1023 | NMIMS Management ReviewVolume XXIX April-May 2016
A Strategic Analysis of Urban Public Transport Industry:A Case of Ahmedabad, Gujarat in India
ISSN: 0971-1023 | NMIMS Management ReviewVolume XXIX April-May 2016
A Strategic Analysis of Urban Public Transport Industry:A Case of Ahmedabad, Gujarat in India98 99
Changes
cities of India, and therefore street
Contents
mall farmers. Majority of the
farmers (82%) borrow less than
Rs 5 lakhs, and 18% borrow
between Rs 5 – 10 lakhs on a
per annum basis. Most farmers
(65.79%) ar
** p < .01 + Reliability coefficie
** p < .01 + Reliability coefficie
References
Table 23: The Results of Mann-Whitney U Test for DOWJONES Index Daily Returns
Mahesh Chaudhary has research interest in management and efficiency of infrastructure projects. He
has published research papers in international conferences and peer reviewed international journals. He
serves Gujarat National Law University (GNLU), Gandhinagar since August 2013 as Assistant Professor
of Management. Before joining academics, he was associated with a management consultancy,
Coordinates Infrastructure Consulting, consulting to local/ State/ Central Governments and private
sector clients in India on projects in a variety of PPP formats. He has experience in planning, structuring,
bid process, financial modeling, and financial and economic analysis of PPP projects in the areas urban
transport and urban infrastructure. He can be reached at [email protected] or
Yogesh C. Joshi is Ph.D. in Economics, M.A. (Gold Medal) from University of Jodhpur. He has been
teaching Business Economics in the faculty of management, Sardar Patel University, Vallabh Vidyanagar
for more than 20 years. Before joining Sardar Patel University, he had worked on research projects with
ICAR, ICSSR, Ministry of Welfare, Government of India, other universities and at IIM, Ahmedabad. He
has published and presented more than 70 papers in various research journals and national and
international conferences (including conferences in Norway, Scotland, Bhutan, Maldives and the
Netherlands). He organized a panel of research papers on "Fulfilling Millennium Development Goals
(MDGs) Institutional Responses in South Asia" at the 19th European conference on Modern South Asian
Studies held at Leiden, Netherlands. His research interest involves issues on Development Economics,
Infrastructure, Sustainable Development, and public policy. Recently, he has completed a major research
project funded by UGC on "Institutional Changes and Poverty alleviation programmes in Western
India”. He has been a resource person for All India Management Association (AIMA) and preparation of
District Human Development Report for Government of Gujarat, UNDP for various districts in Gujarat.
He can be reached at [email protected]
Annexure 3: Subsection 3 (a) of Section 73 of the Indian Motor Vehicle Act, 1988
The Regional Transport Authority, if it decides to grant a contract carriage permit, may, subject to any rules
that may be made under this act, attach to the permit any one or more of the following conditions, namely:
i. that the vehicles shall be used only in a specified area or on a specified route or routes;
ii. that except in accordance with specified conditions, no contract of hiring, other than an extension
or modification of a subsisting contract, may be entered into outside the specified area;
iii. the maximum number of passengers and the maximum weight of luggage that may be carried on
the vehicle, either generally or on specified occasions or at specified times and seasons;
iv. the conditions subject to which goods may be carried in any contract carriage in addition to, or to
the exclusion of, passengers;
v. that, in the case of motorcabs, specified fares or rates of fares shall be charged and a copy of the
fare table shall be exhibited on the vehicle;
vi. that, in the case of vehicles other than motorcabs, specified rates of hiring not exceeding specified
maximum shall be charged;
vii. that, in the case of motorcabs, a specified weight of passengers luggage shall be carried free of
charge, and that the charge, if any, for any luggage in excess thereof shall be at a specified rate;
viii. that, in the case of motorcabs, a taximeter shall be fitted and maintained in proper working order,
if prescribed;
ix. that the Regional Transport Authority may, after giving notice of not less than one month,-
a) vary the conditions of the permit
b) attach to the permit further conditions;
x. that the conditions of permit shall not be departed from save with the approval of the Regional
Transport Authority;
xi. that specified standards of comfort and cleanliness shall be maintained in the vehicles;
xii. that, except in the circumstances of exceptional nature, the plying of the vehicle or carrying of the
passengers shall not be refused;
xiii. any other conditions which may be prescribed.
ISSN: 0971-1023 | NMIMS Management ReviewVolume XXIX April-May 2016
A Strategic Analysis of Urban Public Transport Industry:A Case of Ahmedabad, Gujarat in India
ISSN: 0971-1023 | NMIMS Management ReviewVolume XXIX April-May 2016
A Strategic Analysis of Urban Public Transport Industry:A Case of Ahmedabad, Gujarat in India100 101
Changes
cities of India, and therefore street
Contents
mall farmers. Majority of the
farmers (82%) borrow less than
Rs 5 lakhs, and 18% borrow
between Rs 5 – 10 lakhs on a
per annum basis. Most farmers
(65.79%) ar
** p < .01 + Reliability coefficie
** p < .01 + Reliability coefficie
References
Table 23: The Results of Mann-Whitney U Test for DOWJONES Index Daily Returns
Mahesh Chaudhary has research interest in management and efficiency of infrastructure projects. He
has published research papers in international conferences and peer reviewed international journals. He
serves Gujarat National Law University (GNLU), Gandhinagar since August 2013 as Assistant Professor
of Management. Before joining academics, he was associated with a management consultancy,
Coordinates Infrastructure Consulting, consulting to local/ State/ Central Governments and private
sector clients in India on projects in a variety of PPP formats. He has experience in planning, structuring,
bid process, financial modeling, and financial and economic analysis of PPP projects in the areas urban
transport and urban infrastructure. He can be reached at [email protected] or
Yogesh C. Joshi is Ph.D. in Economics, M.A. (Gold Medal) from University of Jodhpur. He has been
teaching Business Economics in the faculty of management, Sardar Patel University, Vallabh Vidyanagar
for more than 20 years. Before joining Sardar Patel University, he had worked on research projects with
ICAR, ICSSR, Ministry of Welfare, Government of India, other universities and at IIM, Ahmedabad. He
has published and presented more than 70 papers in various research journals and national and
international conferences (including conferences in Norway, Scotland, Bhutan, Maldives and the
Netherlands). He organized a panel of research papers on "Fulfilling Millennium Development Goals
(MDGs) Institutional Responses in South Asia" at the 19th European conference on Modern South Asian
Studies held at Leiden, Netherlands. His research interest involves issues on Development Economics,
Infrastructure, Sustainable Development, and public policy. Recently, he has completed a major research
project funded by UGC on "Institutional Changes and Poverty alleviation programmes in Western
India”. He has been a resource person for All India Management Association (AIMA) and preparation of
District Human Development Report for Government of Gujarat, UNDP for various districts in Gujarat.
He can be reached at [email protected]
Annexure 3: Subsection 3 (a) of Section 73 of the Indian Motor Vehicle Act, 1988
The Regional Transport Authority, if it decides to grant a contract carriage permit, may, subject to any rules
that may be made under this act, attach to the permit any one or more of the following conditions, namely:
i. that the vehicles shall be used only in a specified area or on a specified route or routes;
ii. that except in accordance with specified conditions, no contract of hiring, other than an extension
or modification of a subsisting contract, may be entered into outside the specified area;
iii. the maximum number of passengers and the maximum weight of luggage that may be carried on
the vehicle, either generally or on specified occasions or at specified times and seasons;
iv. the conditions subject to which goods may be carried in any contract carriage in addition to, or to
the exclusion of, passengers;
v. that, in the case of motorcabs, specified fares or rates of fares shall be charged and a copy of the
fare table shall be exhibited on the vehicle;
vi. that, in the case of vehicles other than motorcabs, specified rates of hiring not exceeding specified
maximum shall be charged;
vii. that, in the case of motorcabs, a specified weight of passengers luggage shall be carried free of
charge, and that the charge, if any, for any luggage in excess thereof shall be at a specified rate;
viii. that, in the case of motorcabs, a taximeter shall be fitted and maintained in proper working order,
if prescribed;
ix. that the Regional Transport Authority may, after giving notice of not less than one month,-
a) vary the conditions of the permit
b) attach to the permit further conditions;
x. that the conditions of permit shall not be departed from save with the approval of the Regional
Transport Authority;
xi. that specified standards of comfort and cleanliness shall be maintained in the vehicles;
xii. that, except in the circumstances of exceptional nature, the plying of the vehicle or carrying of the
passengers shall not be refused;
xiii. any other conditions which may be prescribed.
ISSN: 0971-1023 | NMIMS Management ReviewVolume XXIX April-May 2016
A Strategic Analysis of Urban Public Transport Industry:A Case of Ahmedabad, Gujarat in India
ISSN: 0971-1023 | NMIMS Management ReviewVolume XXIX April-May 2016
A Strategic Analysis of Urban Public Transport Industry:A Case of Ahmedabad, Gujarat in India100 101
Changes
cities of India, and therefore street
Contents
mall farmers. Majority of the
farmers (82%) borrow less than
Rs 5 lakhs, and 18% borrow
between Rs 5 – 10 lakhs on a
per annum basis. Most farmers
(65.79%) ar
** p < .01 + Reliability coefficie
** p < .01 + Reliability coefficie
References
Table 23: The Results of Mann-Whitney U Test for DOWJONES Index Daily Returns