BUSINESS MANAGEMENT

HIGHER LEVEL
INTERNAL ASSESSMENT

Examination Session - May 2025

Fig. 1. Rapido Logo

Source: https://en.wikipedia.org/wiki/File:Rapido-logo.png. Accessed 6 Sept.2024

RESEARCH QUESTION - How will the strategic change of expanding into cab services
impact Rapido’s profitability and competitive position in the Indian ride-hailing market?

KEY CONCEPT - Change

Word Count-1626

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TABLE OF CONTENTS:

1. INTRODUCTION
a. RAPIDO AND EXPANSION INTO CAB SERVICES
b. CHANGE - KEY CONCEPT
c. OBJECTIVE AND METHODOLOGY

2. FINDINGS AND ANALYSIS

a. MARKET ANALYSIS USING THE STEEPLE - TOOL
b. USE OF ANSOFF’S MATRIX
c. COMPETITOR ANALYSIS WITH PERCEPTION MAPPING

3. CONCLUSION

4. BIBLIOGRAPHY

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 1. INTRODUCTION

a. RAPIDO AND EXPANSION INTO CAB SERVICES

The Bike-Taxi segment’s unicorn, RAPIDO, is the largest bike-taxi operator in

India. It has entered the unicorn club with a valuation of $1.1 billion following a
substantial $200 million funding round (With Ref. SD4). It has a market share of
60%. The market leader was started in 2015 by Aravind Sanka, Pavan Guntupalli,
and SR Rishikesh in Bangalore. Their idea was to provide a convenient and
affordable mode of transport to people who do not have access to two-wheelers.
During their initial launch in November 2015, they launched the service with a
few dozen experienced riders named ‘captains’. By the end of the first financial
year, RAPIDO was expanded to several cities with more than 1000 registered
captains. In October 2022, they expanded their ride-sharing service into
three-wheeler transports, which allowed more choices for the users (With Ref.
SD4).

In response to the changing market dynamics and consumer preferences,

RAPIDO expanded its operations into taxi cabs in November 2023, to diversify
and enhance profitability in a competitive market that is dominated by companies
like Uber and Ola. This expansion has been a key to their rapid growth. This
research investigates the potential impact of this decision represents a change in
RAPIDO’s operations. These are examined with the question, “How will the
strategic change of expanding into cab services impact Rapido’s profitability
and competitive position in the Indian ride-hailing market?”

b. CHANGE - KEY CONCEPT

According to AntonP. Chekov, “The species that survives is not the strongest or
the most intelligent, but the one that is most responsive to change." (Hoang). For a
business to expand into a competitive market, change is inevitable and essential.
Change is the modification or transformation of business procedures in response
to internal or external influences to produce desired results (Hoang). For RAPIDO,
the decision to expand into the cab segment signifies a pivotal change in its
business model to enhance profitability and market power. This research is directly
linked to the concept of change as it explores how this strategic shift of RAPIDO
impacts the financial performance and competitive position in the ride-hailing

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 industry. This approach requires RAPIDO to adapt to changes in operations to
compete against existing players like Uber and Ola effectively.

c. OBJECTIVE AND METHODOLOGY

The primary objective of this commentary is to analyse and evaluate the potential
profitability of RAPIDO’s expansion into taxicab services and understand how this
strategic change impacts its competitive position in the cab service segment. To
achieve this objective, a mixed method of primary and secondary sources was
employed. Secondary sources were used to collect the data, such as websites,
articles in newspapers, and official websites. Such online sources tend to
exaggerate and might be biased to one side. However, a survey was conducted,
which included questions about usage rate, brand preferences, and factors
influencing their choice was asked from a self-selected sample of 50 respondents.

In addition, Ansoff’s matrix was used to evaluate RAPIDO's changes while

entering the cab service segment. STEEPLE analysis was employed to assess
external factors and RAPIDO's strategic growth opportunities. However, the
information given will only provide an approximation of how RAPIDO can
increase their market power and boost its profitability (Hoang).

2. FINDING AND ANALYSIS

a. MARKET ANALYSIS USING THE STEEPLE - TOOL

STEEPLE stands for Social, technical, economic, environmental, political,

legal, and ethical challenges and possibilities in the external business environment
(Hoang). This tool can be used to assess the factors that could impact RAPIDO’s
expansion into taxicab services which demands changes in their strategic
approach.

Social Factors.

RAPIDO operates in over 100 cities in India and has over 25 million app
downloads (Tech Crunch), which indicates a broader reach that can be grasped for
the new cab services. This can be validated through the primary research as 58%
of respondents prefer using RAPIDO over its competitors like Uber and Ola (With

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Ref. SD3), indicating strong brand loyalty. However, concerns about service
quality continue to exist as 55.1% of respondents reported issues with the wait
times (With Ref. SD3). The findings explain that despite having potential for
RAPIDO’s growth through expansion into cab services, the service issues will play
a crucial role in retaining and attracting new customers in the middle of this
change. Additionally, when asked about how often they use cab services has been
revealed that 54% of them use them mostly (With Ref. SD3). This reveals an
opportunity for RAPIDO to increase this rate through targeted marketing
strategies.

Fig. 2. BM IA Survey-Rapido’s Cab Services (With Ref. SD3)

Source: Self, Self. BM IA Survey-Rapido’s Cab Services, using Google Forms, 2024.

Fig. 3. BM IA Survey-Rapido’s Cab Services (With Ref. SD3)

Source: Self, Self. BM IA Survey-Rapido’s Cab Services, using Google Forms, 2024.

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 Fig. 4. BM IA Survey-Rapido’s Cab Services (With Ref. SD3)

Source: Self, Self. BM IA Survey-Rapido’s Cab Services, using Google Forms, 2024.

Furthermore, ‘RAPIDO believes that cabs as a category and the cab drivers
have been stagnant for the past four to five years because the existing players and
business models are not being conducive enough for all the drivers to participate
effectively’ as mentioned by Pavan Guntupalli. This presented an opportunity for
RAPIDO to differentiate itself from its competitors as it offered a zero-commission
model for drivers (With Ref. SD1). This could attract both the drivers and the
customers who are looking for a reliable service in this changing phase.

Economic Factors.

In Fig.3, Rapido’s operational revenue surged from ₹144.8 crore in FY22 to

₹443 in FY23 marking a 206% increase. However, losses also rose significantly
from ₹439 crore in FY22 to ₹674.5 crore in FY23, which reflects the challenges of
measuring operational efficiency while investing heavily in growth initiatives
(With Ref. SD4). Moreover, Pavan Guntupalli mentioned that “around 20-22 lakh
active cabs are currently plying on the road. Out of which, not even five lakh cabs
are operating on all the other platforms like Uber and Ola.” (With Ref. SD1). This
allows Rapido to increase its market power by attracting both drivers and
customers who are dissatisfied. Through the primary research, 46% rated that
RAPIDO’s pricing same compared to Uber and Ola, which may play a crucial role
in attracting or retaining users (With Ref. SD3).

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 Fig. 5. Rapido’s Revenue over the Years (With Ref. SD2)

Source: https://www.ajuniorvc.com/rapido-case-study-startup-story-ola-uber-competition-economics.
Accessed 20. Oct.2024

Fig. 6. BM IA Survey-Rapido’s Cab Services (With Ref. SD3)

Source: Self, Self. BM IA Survey-Rapido’s Cab Services, using Google Forms, 2024.

b. USE OF ANSOFF’S MATRIX

Ansoff's matrix aids businesses in selecting the best market expansion

strategies (Hoang). In the context of RAPIDO, it implemented a product development

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strategy using Ansoff’s matrix. RAPIDO decided to introduce their new cab services to
the ride-hailing sector(an existing market) to achieve 15-20% of its total revenue through
this approach by 2025 (With Ref. SD1). The product development plan is implemented
by introducing Rapido Cabs with a fleet of 1-1.5 lakh vehicles across Delhi-NCR,
Hyderabad, and Chennai (With Ref. SD1). In addition to this expansion to boost
profitability, RAPIDO changed their business model to zero-commission where cab
drivers will have a minimal subscription fee of ₹500 on reaching a monthly earnings of
₹10,000(With Ref. SD1). This benefits both internal and external stakeholders, drivers,
and consumers by providing more reliable services.

Fig. 7. Ansoff Matrix

Source: https://corporatefinanceinstitute.com/resources/management/ansoff-matrix/. Accessed 20 Oct.2024

c. COMPETITOR ANALYSIS WITH PERCEPTION MAPPING

RAPIDO’s expansion into cab services places it directly against

well-established competitors like Uber and Ola who dominate India’s ride-hailing
market. The reliability of Uber and Ola secured them a loyal customer and driver
base over the years. RAPIDO might not have been effective if it had competed
with these giants through a traditional approach (With Ref. SD2). Their strategy of
coming up with a subscription-based model for the cab drivers made a clear

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statement that they wanted to get more supply of drivers. This model offered a
unique alternative to the drivers to join RAPIDO where they have no burden of
commission rates. This strategy already made promising results in areas like
Hyderabad, where RAPIDO captured 23-25% of market power in the cab segment
shortly after the launch in October 2023 (With Ref. SD2).

Perception mapping which is a strategic tool used for visualizing consumer

perceptions of different brands or products (Asana), is used to analyse the
consumers’ perception of RAPIDO. In the earlier survey, 46% of respondents
indicated that the price is comparable to its competitors, while 58% preferred
RAPIDO over Uber and Ola (With Ref. SD3). Also, when asked about what
factors influence their choice of using Rapido over other taxi services like Uber or
Ola, 42% of them chose based on their pricing and 48% of them mentioned their
service quality (With Ref. SD3).

Fig. 8. BM IA Survey-Rapido’s Cab Services (With Ref. SD3)

Source: Self, Self. BM IA Survey-Rapido’s Cab Services, using Google Forms, 2024.

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 Fig. 9. Perception Map

Source: Self,Self. 20 Oct 2024.

According to the survey results, RAPIDO having a high quality of service at an

affordable price is placed close to the plane above its competitors - Uber which has
moderate quality of services and Ola which has slightly lesser quality of services than
Uber. (Inc42). This insight is crucial for Rapido as it seeks to differentiate itself in a
competitive market through better service quality in the short term, it can increase its
market power through innovation and brand loyalty in the long term and thus boost its
profitability.

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3. CONCLUSION

With reference to the question, “How will the strategic change of expanding into cab
services impact Rapido’s profitability and competitive position in the Indian
ride-hailing market?” the expansion of RAPIDO into taxicab services holds promises
for boosting profitability and changing their business model to a subscription-based one
holds promise for boosting profitability. They implemented this change through the
product development approach which was analysed using Ansoff’s matrix. In line with
the STEEPLE framework, RAPIDO requires careful measurement of the challenges
associated with the competitive ride-hailing sector along with growth opportunities.
Enhancing ride availability and reducing wait times could significantly improve customer
satisfaction in the middle of the changing consumer expectations.

Furthermore, the competitor analysis through perception mapping revealed that

while RAPIDO is gaining grip among users, it faces a significant amount of competition
from well-established players like Uber and Ola which have built strong consumer
loyalty in the cab service segment. RAPIDO can effectively compete if it addresses its
challenges and strategizes accordingly. It can position itself as a reliable and lasting brand
and meet its goal of achieving 15-20% revenue from the ever-changing cab service
sector. Thus, it can capture high market power and boost its profitability.

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4. BIBLIOGRAPHY

a. “Rapido targets 15-20% of total revenue via cab services by 2025” Fortune India
www.fortuneindia.com/enterprise/rapido-targets-15-20-of-total-revenue-via-cab-services-
by-2025/114983. Accessed 6 September. 2024.

b. “Can 6,000 Cr Rapido Win India’s 2L Cr Shared Mobility Rollercoaster?” A Junior VC

www.ajuniorvc.com/rapido-case-study-startup-story-ola-uber-competition-economics.
Accessed 29 September. 2024.

c. “Rapido Success Story: From Startup to Unicorn” Startup Talky

startuptalky.com/rapido-success-story. Accessed 19 October. 2024.

d. “India’s bike taxi startup Rapido is getting into the cab business” TechCrunch
https://techcrunch.com/2023/10/26/rapido-cabs-india. Accessed 19 October. 2024.

e. “Cancelled Rides, Declining Service & Safety: How Do Ola & Uber Fare On Customer
Experience?” Inc42
inc42.com/features/uber-vs-ola-how-does-the-two-cab-giants-fare-on-customer-experienc
e. Accessed 20 October. 2024.

f. Hoang, Paul. Business Management 5th Edition. 5th ed., Victoria, Australia, IBID Press,
2022. Accessed 6 September. 2024.

Images

Fig. 1, “File:Rapido-logo.png.” Wikipedia, en.wikipedia.org/wiki/File:Rapido-logo.png.

Accessed 20 October 2024.

Fig. 2, Peterdy, Kyle. “Ansoff Matrix - Overview, Strategies and Practical Examples.”
Corporate Finance Institute,
http://corporatefinanceinstitute.com/resources/management/ansoff-matrix. Accessed 20
October 2024.

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