Abstract

This case is about the growth strategies followed by Ola, one of the leading taxi aggregators in India, to expand its presence across the country. When the company started its operations in the year 2010, the taxi sector in India was mostly unorganized with individual taxi drivers owning and maintaining their cars. Ola pioneered a unique business model in India under which the company did not own its fleet of cars. Instead, it entered into tie-ups with independent taxi drivers and took a commission for every ride booked through the company. The model was successful in the Indian market as customers were able to book cabs online easily or through the Ola apps. Customers were also happy that they did not have to argue with cab drivers on the cab fares as the rates were fixed beforehand by Ola and the fare to be charged for a ride was calculated remotely and communicated electronically to the driver at the end of the journey. In the years that followed, the company expanded its services by launching new services catering to different sections of society. It relied on making the best use of the latest technology like the Internet and smartphones to provide a good experience to its customers. Despite increasing its market share substantially, Ola was still making losses. Moreover, it was also facing heavy competition in the market from foreign players like Uber which wanted to aggressively expand their operations in India. In order to further increase its revenues, Ola was looking to expand into India’s small cities and towns. But smaller cities posed several limitations due to their poor infrastructure and the lower income levels of consumers there. Ola was also looking to expand its revenues by diversifying into other related and unrelated business areas like auto-rickshaw aggregation and delivery of groceries and food. Another way the company was planning to diversify its business operations was to launch a carpooling service targeting people who traveled by the same route every day. However, some analysts opined that diversification into other business areas could put more of a strain on Ola’s finances. As the share of organized players in the Indian taxi market was still low at just 4 to 5 percent, Ola had the opportunity to further grow its revenues by focusing on its existing taxi aggregation service. The company now needs to decide whether to stay focused on its existing taxi aggregation business or diversify into other related and unrelated business areas.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• Understand the factors that lead to the success of taxi aggregators in India
• Appreciate the importance of the diversification strategy to expand business operations
• Analyze the options available for Ola to diversify into related and unrelated businesses

Keywords

Ola,Diversification,Taxi Business,Taxi Aggregators,Cars,Business Model,Uber,Apps,E&Y Entrepreneurial Winning Women Program,Android,Auto Rickshaw,Food Delivery,Carpooling,UberPop,Foodpanda