Understanding the Value Net of Ola Cabs:Indian Taxi market space prior to 2010 majorly consisted of unorganized players with a market share between 88%-92% and remaining was shared in the organized sector by Radio Cabs and Affilliators. The taxi prices were high and they were mostly catering to the higher middle class and affluent people in India. The highly unorganized nature of the Industry lead to the poor quality of taxi services and discriminative pricing strategies by the cab drives. There was a huge gap in Indian taxi industry, on one hand you have high quality services offered by organized Radio Cabs and Affiliators, whereas on the other hand you have local individual cab operators whose quality of service and safety are always at a question. In this context, new breed of players aggregating taxis under a brand name have emerged to bridge this gap. Ola Cabs, started in 2010, is the frontrunner in this segment of players, currently operating a fleet of 60,0001 cabs in 52 Indian cities, aggressively expanding to reach 200 cities by the end of 2015. In order to understand whether Ola Cabs can change the game for Taxi Industry, Let us analyse the firm using PARTS framework.

a) PLAYERSThe Value Net maps the different roles of the players interacting in the industry. As the

figure below shows the different players are customers, suppliers, Substitutors and Complementors interacting with our current firm. None of the players in the Value Net are fixed, the entry of Ola cabs has changed the game by changing who is playing the game. They came up with an aggregation model, providing a technology platform to the driver or operators which generates additional revenue streams and provides a great customer experience. This model has drastically brought down the entry barriers into organized taxi market. It is highly capital intensive to enter organized Radio Cabs segment, It requires to own your fleet and obtaining Radio Cab licences makes it much more costlier.

The aggregation business model doesn’t require to own the fleet, this made it flexible to ramp up the fleet in a very short time to large number of cities. This model made individual operators who competed in unorganized taxi market to become suppliers to Ola-Cabs. Soon, many players adopted this model such as Taxi For Sure, Book My Cab and Uber. Uber has been emerging as a biggest Substitutors for Ola Cabs, backed up by technology giants such as Amazon, Google, Uber cabs made their presence in India by providing services across 11 cities in India within one year. To fight with this international player, instead of going for deep price cuts Ola Cabs has adopted acquisition strategy to consolidating the aggregators segment of the market, it has acquired Taxi-For-Sure, Which is struggling to raise funds from investors and loosing market to Ola and Uber. This strategy helps Ola-cabs to leverage the complementary strategy of Taxi-For-Sure both on supplier side and Consumer side to further expand its market. Thus Ola-Cabs are able to effectively enter the

1 http://www.forbes.com/sites/saritharai/2015/01/15/indias-cab-hiring-app-market-growing-at-breakneck-speed-despite-uber-setback/

organized Taxi Market, even though there were established Substitutors like, Meru, Mega, Savaari, Tab and easy cabs by coming up with a new model and creating a market for themselves.

Suppliers for Ola-Cabs are the independent taxi operators or owners, Ola-Cabs initially served as an additional revenue stream for the entrepreneurial cab drivers, identifying the cab drivers and getting them on board for this has been a challenging task, Ola-Cabs has adopted right incentive strategies to get them on board and provide quality service to the consumers. This enabled them to have a wide network of fleet dispersed on every corner of the street, increasing the availability and built a sense of trust and satisfaction among the consumers. Ola-Cabs has been incentivising heavily its suppliers initially to poach drivers and operators from its rivals as they see them as a valuable resource to ensure an uninterrupted, quality service to its consumers, no matter which part of city they stayed in. Ola-Cabs are slowly moving into the hybrid model, in which part of the fleet is owned by the firm and other part from aggregation model to reduce the dependence on independent cab owners alone, providing them with better control on cab availability and service quality at the same time keeping the costs low.

The other important player in the value net are the consumers, Ola-Cabs didn’t find much difficulty in getting its consumers on board as it found in suppliers. The increasing disposable incomes of middle class, rising hassle of auto rickshaws, highly unorganized nature of taxi market made customers look for a reliable, hassle free alternative which they could trust. In line with the consumer demand, Ola Cab was able to leverage technology to provide a secure, hassle free, affordable mode of transportation. They understood that consumers can only have either one or two taxi apps in their smartphones and incentivized installing Ola-Cab app initially by offering Ola Money for installing the app and additional money for referring to their friends and family and successful installation of the app. This campaign has increased its app downloads more than 1million in play store and app store making it most downloaded app among other competing players2.

The below strategy canvas gives a picture of how Ola-cabs was able to position itself in comparison to its competitors in terms of price, security, fleet, flexibility in payment options and the variety of services it has been able to offer to its consumers. The value curve of Meru Cabs shows that prior to Ola-Cabs, The prices were high, The security was questionable, Fleet was limited, limiting the availability to only frequently travelled destinations, payment was almost completely through cash. Ola-Cab was able to differentiate itself by providing a low-cost taxi service, which is secure and reliable with tracking your ride made available to your close family or friends. It also made the service available from any corner of the city, which created new markets which were underserved earlier. It also provided slew of payment modes through credit/debit cards or Ola Money or through cash payment. It has slowly diversified its services depending on the customer’s choice, they can choose across Ola mini, sedan, prime and even autos options. This has given a strategic advantage for the firm which has created its own market segment in the form of aggregators. It should also ensure to set up entry barriers for new players, control its suppliers

2 http://inc42.com/features/evolution-indian-taxi-market-comparison/

bargaining power through a balanced hybrid model and build a loyal customer base across the country to reduce the threat of competition and Substitutors.