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1
UBERGroup K
PRESENTED BY:
Alessio Mascolo Andrea Saponaro Marcella Ancona Elido Caputi Zhao Xinyu Liu Ling Xu Shang
2
AGENDA
Part 1 Part 2
Part 3
Part 4
UBER DESCRIPTION AND INDUSTRY ANALYSIS COMPETITOR ANALYSIS
NEW OPTIONS
ACTION PLAN
3
PART 1UBER DESCRIPTION AND INDUSTRY ANALYSIS
4
1American Multinational Online Transportation Network Company Founded by Garrett Camp and Travis Kalanick Headquartered in San Francisco, California.
WHY
2010
WHAT
WHEN
Inspired by a bad experience of getting a cab in Paris
5
Online/Mobile market is increasing rapidly
2010 2011 2012 2013 2014e2015e2016e2017e0.0%
10.0%20.0%30.0%40.0%50.0%60.0%70.0%80.0%90.0%
100.0%
0.00
100.00
200.00
300.00
400.00
500.00
600.00
4.0%
77.3%
91.7%81.2%
57.5% 50.6%
44.4%34.9%
Mobile Market Value(yuan) Growth Rate
ONLINE/MOBILE MARKET IN CHINA
ONLINE CHAUFFEUR INDUSTRY— A RAPID INCREASING MARKET
CAGR (COMPOUND AVERAGE GROWTH RATE) OF LAST 5 YEAR:
52,96%
6
Private car ownership is increasing rapidly
PRIVATE CAR OWNERSHIP IN CHINA
2005 2006 2007 2008 2009 2010 2011 2012 2013 20140
5
10
15
20
25
0
20
40
60
80
100
120
140
3.4 4.36.1
8.810.9
13.1
18.621.5
Number of private-owned vehicles(Millions)
ONLINE CHAUFFEUR INDUSTRY— A RAPID INCREASING MARKET
CAGR (COMPOUND AVERAGE GROWTH RATE) OF LAST 5 YEAR:
21,95%
7
The number of taxi is increasing slowly
NUMBER OF TAXIS IN CHINA
2005 2006 2007 2008 2009 2010 2011 2012 2013850000
900000
950000
1000000
1050000
1100000
-2.0%
-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%3.7%
-0.9%
3.3%
1.0% 0.3%1.5%
1.7%2.4%
2.6%
Numberof Taxis in China Growth rate
ONLINE CHAUFFEUR INDUSTRY— A RAPID INCREASING MARKET
CAGR (COMPOUND AVERAGE GROWTH RATE) OF LAST 5 YEAR:
1,69%
8
2013 2015Aug Nov 2014 May Aug Nov 2015 May Aug
Uber Black pilot program in Shanghai8/23/2013
Price Reduction in Shanghai
Launch of People's Uber
10/22/2014Partnership with BAIDU12/6/2014
UberGreen in Wuhan
5/13/2015 - 10/10/2015
People's Uber Price Reduction 30%
11By 2015.6, Uber had covered 11 major Chinese mainland cities
1 million1 million rides per day in the Chinese market
NOWADAYSKalanick
«At the current market growth rate, Chinese market will surpass the United States market before year-end»
But let’s have a look at the market share…
10
2 78.3%
2.4%
10.9%
8.4%
Didi KuaidiOther
Uber
Chinese Online Chauffeur Market,Fist Quarter,2015
Yidao
Source: Analysys International, « Online Chauffeur Business Growing Rapidly in China in 2015 Q1, » May 12, 2015, www.analysys.cn/yjgd/8926.shtml, accessed July 1, 2015
MARKETSHARE
11
PART 2 COMPETITOR ANALYSIS
12
20152012 2013 2014 2015
Kuaidi Launched
8/13/2012Didi Launched10/10/2012
Yihao Zhuanche by Kuaidi --> Chauffeur market
Didi Zhuanche -->Chauffeur market
1/13/2014 - 2/14/2015Promotion Price War2/15/2015 - 11/26/2015
Didi Kuaidi Strategic Merger
They make war…
Then they make love
DIDI KUAIDI IN CHINA
13
2010: Founded
2014.6: APP was launched
High Customized Services
2 YIDAO
Focus on Chauffeur Service
Riders enter a pickup location
Choose preferred kind of vehicles
The Uber system automatically match a driver and a rider
Riders enter both pick-up location and destination
Wait for drivers to respond
All taxi drivers currently using the app decide whether to take the order
Riders choose the time of using a car
Riders select their preferred vehicle type
Riders choose which driver to fulfill the order
UBER
DIDI KUAIDI
YIDAO
BUSINESSMODEL
15
Option Service
UBERPeople’s Uber Non-profit ride-sharing
Uber X Cheaper than Uber Black & Regular cars
Uber Black Luxury cars for each trip
DIDI KUAIDI
Kuaiche Private car owners & Regular cars
Taxi Taxi - hailing
Shunfengche Carpooling
Zhuanche Different kinds of vehicles options & Licensed rental companies & Travel insurance & high-end service
Daijia Substitute drivers
YIDAOZhuanche Chauffeur service
Shijia Test driving of selected cars
Daijia Substitute drivers
SERVICE
16
PRICING • Based on distance & time• Different base rate for different service• Pay additional tips to attract drivers to
pick up
• Based on distance & time• All services require base rate
• Based on distance & time• Surge Pricing ( based on current
supply-demand ratio, eg. 1.2X,1.8X)
Didi Kuaidi
Yidao
Uber
Base Rate Rate per KM Rate per min
Didi Fast Ride 0 1.5 0.25
People’s Uber 0 2.17 0.35
Base Rate Rate per KM Rate per min
Didi Chauffeur One 15 2.9 0.5
Yidao 10 2.8 0.4
UberX 15 2.3 0.4
Note: The prices listed are the lowest offerings available in Beijing; km=kilometer; unit=yuan;Source: Case writer, data collected on the Uber official site, the Didi Kuaidi official site and the Yidao official site.
17
顶部“开始”面板中可以对字体、字号、颜色、行距等进行修改。顶部“开始”面板中可以对字体、字号、颜色、行距等进行修改。
2Payment Solution Didi Kuaidi Yidao Uber
Cash √ ╳ ╳
Wechat √ √ ╳
Debt Card / Credit Card √ √ ( Credit Card Only) √Alipay √ √ √Charge the account √ √ √
PAYMENT SOLUTION
18
OUTSIDE
Fierce competition in Chinese market
Conflicts with local drivers and ride- hailing services
Legal issues
ISSUES & PROBLEMSINSIDE
Surge pricing may charge too much on customers regardless of the nature of the change
Payment solution is not as convenient as competitors
The quantity of Uber drivers is small compared to the amount of taxi drivers
19
PART 3 NEW OPTIONS
20
STRATEGIC PRIORITIES
REMAINING IN CHINA
YES
GREATER MS MORE GENEROUS SPENDING
TO GAIN CONSUMERS & PROFIT FROM ITS
BUSINESSANOTHER WAY
NO
We decided among those 4 options according to the following criteria…
21
New Options
•Price War• Imitation
•M&A
• Strategic allieances & Partnership
22
M&A Price War
Strategic Alliances
& Partnershi
p
Taxi Hailing
OPTIONS
Low
Costs to sustain
High
HighResults in terms of level of competition
Low
Product to be pushed: People’s Uber
Main aim of the strategy: Market Share
Through a penetration pricing strategy Uber could set lower prices with the goal of exponential growth of both customers and team drivers together with the possibility of gaining market shares.
PriceWar
Competitive advantage: Cost Leadership
GAP
24
PROS
• Stimulate the market• Enlarge customers base• Create more trade through
”word of mouth”• Discouraging new possible competitors• Exploiting demand elasticity
CONS
• ST solution not sustainable in the LR• Incurring high costs (2,4b RMB
spent by Didi and Kuaidi)• No economies of scale available• Never ending price war with
competitors• From a penetration to a predatory
strategythreat(government legal issues)
PRICE WAR
25
PRICE WARPROS
• Stimulate the market• Enlarge customers base• Create more trade through
”word of mouth”• Discouraging new possible competitors
• Exploiting demand elasticity
CONS
• ST solution not sustainable in the LR
• Incurring high costs (2,4b RMB spent by Didi and Kuaidi)
• No economies of scale available• Never ending price war with
competitors• From a penetration to a predatory strategythreat(government legal issues)
26
New Options
•Price War
•Imitation: Taxi-Hailing•M&A
• Strategic alliances & Partnership
Product to be pushed: new services taxi-hailing (based on Didi Kuaidi)
Main aim of the strategy: Increase the number of app’s users and increase the market share
Imitation:Taxi Hailing
Competing with Didi Kuaidi in both businesses: Taxi-hailing and Chauffeur Online
28
IMITATION STRATEGY: TAXI HAILING
PROS
• Improving relationships with taxi drivers and government
• Increasing new channels• Increasing number of users
CONS
• Difficult to find an agreement• Deteriorate brand image and core
value• Didi monopoly • Government banned the practice
of taxi drivers to monitor different taxi-hailing apps
29
IMITATION STRATEGY: TAXI HAILING
PROS
• Improving relationships with taxi drivers and government• Increasing new channels• Increasing number of users
CONS
• Difficult to find an agreement• Deteriorate brand image and core
value• Didi monopoly • Government banned the practice of taxi drivers to monitor different taxi-hailing apps
30
New Options
•Price War
• Imitation: Taxi-Hailing
•M&A • Strategic alliances & Partnership
31
time
salesSTART UP DEVELOPMENT STEADY STATE DECLINE
• M&A• Alliances/strategic Partnerships• Defence advisory
• Corporate refocus• Turnaround• Takeover advisory
M&A strategy: acquisition of Yidao
Product to be pushed: People’s Uber, Yidao Zhuanche, Uber Black, Uber XMain aim of the strategy: Acquiring shares on the high-end market
Assumptions:Yidao estimated value 1.22 Billion dollars, 10.9% of the market sharesUber estimated value 41.2 Billion; 8.4% of market shares
Forecast:Being a growing industry, Uber acquiring Yidao can strategically maximize its financial position.
M&A strategy: acquisition of Yidao
33
M&A
PROS
• Double market share• Improve relationship with government
& Chinese company• Acquire new resources and channels• Yidao insists on the high quality and
premium price of customized chauffeur service
CONS
• Extremely risky• Too expensive• Recently Yidao increased
its capital amount of 100 millions.
34
M&APROS
• Double market share• Improve relationship with government & Chinese company• Acquire new resources and channels
• Yidao insists on the high quality and premium price of customized chauffeur service
CONS
• Extremely risky• Too expensive• Recently Yidao increased its capital amount of 100 millions.
35
New Options
•Price War
• Imitation: Taxi-Hailing
•M&A
•Strategic alliances & Partnership
36UBER – DDIM 2015/2016
M&A Price War
Strategic Alliances
& Partnershi
p
Taxi Hailing
Results in terms of level of competition
Low
Low
Costs to sustain
High
High
Product to be pushed: UberX, Uber Black
Main aim: Acquiring shares focusing on the high-end market
In order to have success in this market, Uber needs to invest in the right wayStrategic
alliances &partnerships
Uber needs financial support and governmental protection from a Chinese partner
FIRM’S RELATIVE MARKET SHARE
OVERALL MARKET GROWTH
Question marks Stars
Dogs Cash cows
INVEST
MILKDIVEST
38
Strategic alliances & partnership
PROS
• Direct contact with managers that knows chinese market
• Creating additional value• Financial availability • Improve relationship with chinese
government and customers.
CONS
• Hard to find partners• As you share resources
you have to share also profit• Long-time to be achieved
39
Strategic alliances & partnership
PROS
• Direct contact with managers that
knows chinese market
• Creating additional value
• Financial availability
• Improve relationship with chinese
government and customers.
CONS
• Hard to find partners
• As you share resources
you have to share also profit
• Long-time to be achieved
40
PART 4 ACTION PLAN
41
ACTION PLAN
• Uber should focus on High-end market because of the congestion of low- and medium-end markets and because of the failure of the previous strategy.
• Uber should maintain the core value of the company of high quality.
• We should create a strong brand image.
42
Short-Term plan
Short Term
Mid Term
Long Term
• SHUT DOWN PEOPLE’S UBER
• Expensive strategy with no effective financial returns:
• 30% price reduction without effect
• 1 billion spent for supporting the project
• Leads to a price war with competitors
NOT SUSTAINABLE IN THE LONG-RUN
43
Strategic Alliances
Short Term
Mid Term
Long Term
Quick Deals with companies in order to gain more consumers
Aim of the SR alliances: expand in the high-end market using the
money saved by shutting down People’s Uber
Examples:
• Top quality Hotels and Restaurants (ShangriLa Hotels)
• Travels&Tours
44
Government Collaboration
•Creation of a regulatory protocol for the chauffeur industry to help the Shanghai Committee of Transportation
•Construction of the chauffeur service platform in Guangzhou and other chinese cities
•Deals with government and car rental and chauffeur companies (based on estimation of the car needed in each city)
Short Term
Mid Term
Long Term
45
Forecasted cars needed to bid
Short Term
Mid Term
Long Term
City Population Number of Cars estimated
Guangzhou 11 070 654 2950
Beijing21 500 000 5729
Shenzhen10 628 900 2832
Tianjin15 469 500 4122
Suzhou10 580 000 2819
Chongqing18 284 100 4872
Chengdu10 152 632 2705
Wuhan10 607 700 2827
Hangzhou8 892 000 2369
TOTAL 28 275
46
New big partners
Short Term
Mid Term
Long Term
• Association with high-profile chinese companies, also in order to
build a good relationship with local government
• Continue to modify our portfolio to target with customized products
new cities (UberGreen in Wuhan)
• New booking channels (online platforms, apps, Wechat)
• Theatre industry and Cinema Industry (Wanda Group)
47
Long-Term plan
• If the government regulates the industry, Uber will lunch in the market a new version of People’s Uber
• NEW People’s Uber• This time for profit• Customized version User can choose the driver
(Yidao) • Premium Price Differentiation advantage• Only licenced drivers are allowed to this service
Short Term
Mid Term
Long Term
2020Today
2016 2017 2018 2019 2020
People's Uber Shut Down
Partnership with local small high-end companies
Be an active player in the regolamentary process of the chauffeur market
Find new big partners and make alliances
Launch of New People's Uber--> more customized and for profit
Short-Term RunMid- Term Run
Long –Term Run
ACTION PLAN: FORECAST
49
UBER THANKYOU!PRESENTED BY Group K