Topic: BusinessCase Study

Last updated: February 28, 2019

Table of Contents TOC o “1-3” h z u Executive summary PAGEREF _Toc510215690 h 2Table of Contents PAGEREF _Toc510215691 h 3List of Tables PAGEREF _Toc510215692 h 3I.Introduction PAGEREF _Toc510215693 h 4II.Business model PAGEREF _Toc510215694 h 4A.Building blocks PAGEREF _Toc510215695 h 41.Customer segments PAGEREF _Toc510215696 h 42.Key partners PAGEREF _Toc510215697 h 43.

Value proposition PAGEREF _Toc510215698 h 54.Key activities PAGEREF _Toc510215699 h 55.Channels PAGEREF _Toc510215700 h 56.

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Revenue streams PAGEREF _Toc510215701 h 57.Cost structure PAGEREF _Toc510215702 h 68.Key resources PAGEREF _Toc510215703 h 69.

Customer relationships PAGEREF _Toc510215704 h 6B.Interrelationships PAGEREF _Toc510215705 h 6 HYPERLINK “file:/C:/Users/maji%20cyber/Downloads/think%20big%20example.docx” l “_Toc510215706” C.Critical success factors PAGEREF _Toc510215706 h 6D.

Downside risks PAGEREF _Toc510215707 h 7E.Business model changes PAGEREF _Toc510215708 h 7III.Conclusion PAGEREF _Toc510215709 h 7IV.Recommendations PAGEREF _Toc510215710 h 8Appendix 1 – Taxify Business Model Canvas PAGEREF _Toc510215711 h 9Appendix 2 – Taxify Distribution licence Map in Australia PAGEREF _Toc510215711 h 9References PAGEREF _Toc510215713 h 12List of Tables TOC h z c “Table” Table 1 Taxify Recommended maximum ranks and hail fares from 1 July PAGEREF _Toc510215714 h 4Table 2: Taxify Recommended data to be collected for competition monitoring in Australia PAGEREF _Toc510215715 h 5Table 3: Taxify where are the Rideshre companies operating in Australia PAGEREF _Toc510215716 h 5Table 4: What are the requirements to drive for uber,ola and Taxify PAGEREF _Toc510215717 h 6IntroductionTaxify is an international transportation network company founded by Markus Villig in 2013,in 2017 it was launched its services in Australia Sydney,Melbourne.The company develops and operates the Taxify mobile application ,which allows people to request a taxi or private driver from their smartphone.Taxify operates in 25 countries and 40 cities Europe,Africa,westAsia and Central America.The company has 10 million customers globally and more than 50000 drivers use the platform to offer rides.Business modelTaxify operates their app,which enables people to hail rides from their smartphones.

Taxify’s applicaton is availabe for Android,IOSand windows phone.The riders must choose apayment method:cash,credit card or mobile carrier billing before they can use the service.The customer requests a ride and confirms their pick up location.

Once the driver accepts the trip,the customer will be able to see the driver’s name and car details.Ater the ride is completed both driver and the rider can rate each other.Taxify was the first transpotation app in the world to allow customers to pay their trips via mobile carrier billing.Building blocksThe foolwing are the nine building blocks approach details Taxify’s business model (see REF _Ref510186738 h Appendix 1 – Taxify Business Model Canvas).Customer segmentsAs a multi-sided platform business, Taxify will benefit from segmenting both sides the customers (i.e. riders) as well as the drivers Taxify will use a combination of classic market segmentation combined with highly-targeted micro segmentation CITATION Dat15 l 3081 (Data Services Inc, 2015)These are some ideas how Taxify do segment their customers and their supply side (drivers) meaningfully.

Driver segmentation:Demographic: age, socio-economic status, family status, nationalityGeographic: by city, suburbGeo-demographic: see above exampleBehavioural: preferred work hours ; patternsCheck here how a consultancy segmented Taxify drivers pdf (but note that Taxify does not have this data about all their drivers)Customer segmentation:Micro-Geography: home, work, typical locations (the Taxify app will track your location even if it’s off unless you change the default settings)By usage patterns: regular, infrequent, etcKey partnersTaxify has three type of key partners;Firstly, the drivers; The drivers are the supply side and help deliver the value proposirion to the end customers.Secondly,the technology partners; Technology partners do the same: helpcreate a unique value proposition and remove friction between the riders and the driversThirdly, Investors and other supporters,such as lobbyist, they help navigate the rough waters of becoming an establised company in the sharing economy. Other partners that are important but not necessarily key partners:Other technology and infrastructure providersMapsGPSPaymentCloud storageData analyticsFinancing partners/banks (car loans for drivers)Hire car partners (Taxify-ready vehicles)InsurancesSydney is one of the most vibrant and exciting cities in the world. From the iconic Sydney Opera House to the scenic Eastern Sydney beaches. No matter where you are, count on Taxify to get you a ride within minutes.Melbourne being dynamic, yet cosmopolitan, is regularly named one of the most liveable cities in the world. Wherever you are, from the shores of Geelong to the bustling port of Melbourne, count on Taxify to get you a ride within minutes.

Value propositionTaxify is a multi-sided platform and as such it has to have a value proposition to both sides, the passengers as well as the drivers. For riders, the value proposition are that it is the best way to get around, to be able to call ar de with one tap 24/7 and track the driver arriving. For drivers, it’s the opportunity to earn, the freedom of choosing their work hours and the ease of getting started.

All position fall into what economist call reduction of search costs and transaction costs which is the predominant feature of multi-sided platforms.Key activitiesPositive indirect network effects are the key ingredient of platform businesses to achieving competitive advantage. The key activities should revolve around enhancing positive indirect network effects and reducing negative ones.Remove friction from all interactionsScale driver and customer side to reduce idle times for drivers and waiting times for customersReduce negative externalises, e.g.

bad behaviours on both sidesGrow the platform by getting more participants joiningKeep participants engaged and stimulate ongoing participationContinue improving the value proposition, e.g. cheaper rides for regular commuters through TaxifyLook out for complementary value propositions (e.

g. car financing, new customer segments, etc)Deliver on the customer propositionReduce churn (esp drivers)Expand to more cities (US and global)Analyse the data to fine-tune everythingEnhance technological lead and intellectual property to steepen barriers of entryChannelsChannels for the initial awareness and customer acquisition are as follows:Campaigns:free vouchers when Taxify enters a new cities for example headed out of public transport stationsFree media coverage based on the novelty factor{new-joiners have often soared even after extensive negative coverage}Word of mouthSocail media, people sharingDigital ad campaignsApp stores i.e IOS, Android and windows through high ratings being featured.Revenue streamsDepite all the setback Taxify repoerted strong revenues in 2017:Values of all fares:almost $20 billion at a growth rate of 126% from the previous financial year.As mentioned above,this is not their revenue.They show their Q3 and Q4 revenues below.A 28% growth in revues in Q4 2016And a stgering net loss of $991m in Q4 2016 excluding the losses in china.

Graph 1 : Taxify Revenue Growth Ouplaces Losses Still losses are historic, reaching $991 million in the forth quarter of 2016Cost structureIn many online platforms,the biggest cost element are customers acquisition costs {CAC}. This is not different for Taxify and its competitors uber and DIdi.Taxify has fought along bitter war with Didi in china to win on the biggest market in the world and mostly in Australia.The weapon of choice were customer acquisition subsidies on both sides the driver and the rider.

Taxify cost elements are:Cost of customer acquisition CAC:free vouchers,one-off subsidies,digital advertising,ect.Weighted average cost of capital WACC {professor Damodan assumes this to be 10% for taxify}Development of new features,ongoing fine tuning of algorithms.Taxify driver cost {but none of the other drivers.Legal cases and settlement costs.

Lobbying,regulatory compliance.Tranaction feesi.e credit card and chargesExpansion to more cities and countries.

Infrastructure costs,computing power,bandwidthCustomer supportInsurance costsReaserch and development i.e Autonomous vehicles.Review of taxi fares in NSW and taxi licences outside Sydney from 1 July 2018The Urban Fare Schedule applies in Sydney, the Blue Mountains, Newcastle and surrounds, the CentralCoast, and the Illawarra. The Country Fare Schedule applies everywhere else except in 6 towns near theVictorian border, which are exempt from fare regulation. See the Glossary for a more detailed description ofthe fare areasTable 1Key resourcesThe master resource of the platform are its network effects.

It is the resource that needs to be bult and the nurtured.The data,the algorithms and the capacity to anlyse and gain insights are essential.The latter also grows with the size of the network.Network effect between the participants i.e drivers and riders.Captured data,algorithmsAnalytic capabilitiesSkilled engineering and other staff Platform architectureVenture capital to keep the business growingBrands name and assetsThe rider and the driver app and products Customer relationshipsTaxify needs to consider four elements to manage their customer relationships. Their relationships to (1) the customers(=riders), (2) the drivers, (3) the broader public and (4) regulators.

2017 has been a difficult year in terms of customer relationships (here’s a list) due to a significant amount of negative coverage and regulatory intervention, i.e. restrictions or bans. At its peak, it lead to the resignation of ex-CEO Tim Kalanick followed by an attempt to make good on their driver relationships. (1) Relevant for drivers & customersManage any safety risksManage bad behaviours (on both sides drivers and passenger) and improve rules continuouslyDeal with customer issues in an appropriate manner and timeliness (see “Channels” for more details)Transparent pricing, e.g. criticism on surge pricing by riders and decreasing hourly income by driversTransparency around privacy (a number of repeat coverage over the years on insufficient data privacy, reports of security breach cover-ups)Portray the desired company image through social and other media2) Especially for the driversCustomer relationships to the supply side (the driver) will be mainly defined by what the platform does for them, examples are:The platform’s ability to generate income (Taxify is finally testing a long-standing driver request to allow tipping)Acceptable hourly wages (an Taxify~contracted survey concludes that Taxify drivers earn at least as much as taxi drivers, see below for a differing determination by the FTC that concludes only 10% of drivers actually achieve Taxify -touted wages)Acceptable working conditions and hours (the afore-mentioned survey states that Taxify driver hours were considerably less than taxi drivers, here the full pdf)Manage issues (accidents, damages or issues affecting earnings)Support in the on-boarding process where requiredFair allocation of rides (algorithmic ride allocation avoids favouritism issues with the traditional dispatcher)Taxify is working on a trial program for enabling affordable private insurance (medical, injury, disability, life)From Taxify’s perspective: avoid groups of drivers to reduce risk of unionisation(3) The publicTaxify is working on portraying a positive image by claiming positive contributions to the communities:Pointing out positive impact on the environment, e.

g. reducing emissions through TaxifyMaking communities safer, e.g.

through reducing driving under influenceHow puts pressure on regulators through their communication campaigns pdfManage the platform’s image across the media and other relevant channels (workplace culture, leadership shadows)(4) The regulatorTaxify has faced massive public and political backlash that has put pressure on local regulators to look more closely at Taxify’s business practices. Here are few example how Taxify manages regulatory discussion:Referring to a FTC report, 1984 that shows the wasteful economic implications of the taxi medallion systemA more recent FTC report, 2015 poiting out positive effects of Taxify on existing taxi value propositionA Chicago case study showing positive effects of TaxifyAn Austin case study of the positive effect on the local transport system (Taxify had left Austin due to high regulatory hurdles and returned after these were reduced)Negative coverage on greyball which may have been used to deceive regulatorsTaxify lost its licence to operate in London, collected over 500,000 petitions from users, appealed in court and with the case still in limbo, continues operatingAnd most importantly (in the US) via lobbying (see above)InterrelationshipsTaxify has been known to partner with various established travel brands, presumably to grow its usage especially among business traveler. As early as August 2014, Taxify teamed up with United Airlines to let the airline’s app users access information about Taxify rides. Taxify’s deal with Starwood, which began in February 2015, lets riders link their accounts to their Starwood Preferred Guest accounts and accrue SPG points to be used at any Starwood hotel around the world.

This business travel strategy seems to be working: Taxify and other ride-sharing apps have become the transportation option of choice among business travelers, many of whom also belong to the loyalty programs offered by airlines and hotels.So, it only makes sense for Taxify and Hilton to partner together.Critical success factorsBenefits for CustomersTaxify is a problem solver for riders. It is a problem solver first because the service provides a ride for those individuals who need taxi cab services at reasonable prices. There are millions of people, across major cities who utilize such services and Taxify has de-monopolized the taxi cab service and reinvented it in every way. Taxify is also fixing up the structure of the taxicab industry and making the industry more reputable. It is doing this by providing rides that are clean, offering up quality customer experiences, and accepting different forms of payments.

They have also made the experience more customer oriented in that they allow the customer to track their vehicle as it is in route to them. They have also allowed customers to pay with their credit cards from the inside of the vehicle.Word of MouthThe early adopters of in the tech community saw that Taxify provided a solution to the failing taxicab industry in San Francisco.

As they enjoyed the free rides and tech events sponsored by the service, they began to spread the news. The tech community took to social media sites like Twitter and their blogs to tell their friends and fans about a new way to catch a ride in the city. As they began to spread the news, Taxify saw growth in its business.

Benefits for Taxify DriversCustomers aren’t the only ones experiencing positive effect from the implementation of this service. Taxify drivers are also benefiting. The company is creating jobs for drivers and limo companies that are having difficulty finding work in the city. As the company does not employee the drivers through the service, they do connect qualified drivers with customers who need rides located within a specified geographical area.Early Adopters:Taxify had much success when the early adopter tech community began to take notice and use of the technology. They knew opening in the San Francisco area was a smart move on their part as they would have access to a highly interactive tech community who would take an interest, and be looking for services that would improve their quality of life. They also found success because they found that the taxicab market in the area was not the best quality and was not widely used by the inhabitants, so their business structure and services would seek to improve the quality and taxi cab service.

Taxify began to market to these individuals and promote in different ways and channels. They did this by hosting tech events. One of their prime ideas was to give members of the community free rides through the services and host awareness meetings for those who would most likely take part in utilizing their services.Downside risksFollowing a series of attacks on its drivers, ride-hailing service Taxify has launched an in-app safety button in partnership with Namola aimed at improving driver safety.Taxify country manager, Gareth Taylor says this initiative is not a silver bullet for all their troubles but hopes it will help minimise the number of incidentsHe says other initiatives such as armed response services will be launched in the coming months to compliment this partnership with Namola.Table 2We consider it would be useful to collect information to monitor the development and impact of the policy changes from the Point to Point Transport Act and our recommendations. It would better inform any future decisions and recommendations.

This data would provide IPART and the Government with the ability to analyse: RIDESHARING COMPANIESRidesharing companies are our downsides in terms of competion. Uber drivers in Australia can expect to take home 75% of their weekly Uber income. Uber says you can expect to earn between $35-$40 per hour and will guarantee you this income when you start out.

You can use the calculator below to get an idea of how much you will earn minus expenses. Taxify takes a commission fee of between 10-15% from the final price per order. It also offers a fairly lucrative bonus program designed to encourage drivers to increase more trips.

Table 3Table 4Business model changest also hopes that allowing drivers to take cash as well as credit card fares will also help it attract more passengers. “Taxify’s biggest advantage is the focus on good service by treating the drivers and riders better than other platforms. This means having higher pay for drivers thanks to lower fees,” Chief Executive Markus Villig told Reuters at Taxify’s headquarters in Estonia.

“By the end of the year, I think we will be Number One in about 10 countries in Europe and Africa.The basic business model is identical – both hook up passengers with self-employed drivers. Many incumbent cab companies in Europe have developed Apps to operate in a similar manner but most have focused on their domestic markets.

But Taxify is unusual in launching in around 18 countries, mainly smaller markets in Eastern Europe and Africa, where Taxify is not present or is not yet dominant. Taxify usually takes market share by giving drivers money to sign on to its App – paying them even if they are not driving passengers. Then, as it becomes more popular with passengers, it withdraws the inducements.

Analysts says Taxify aims to build a customer franchise and stable of drivers to dominate the market.ConclusionIt’s no news that Taxify will always fight to retain its position at the top in various markets. China’s Didi Chuxing toppled Taxify to become a market leader in China. Ola is leading the pack in India as well. Can Taxify topple Uber to become a market leader in Australia as is been circulated in the news? We will have to wait to see.RecommendationsTo ensure optimal performance of your Taxify driver app, please make sure you follow these requirements:It is highly recommended to use higher-end devices on our platform that run on at least OS 6.0 (for Android) or at least iOS 8 (for Apple)Your device should have at least 1.

5GB of RAMDo not use battery saver mode as this may cause GPS errorsConnect your phone to a charger during a rideUse a phone holder to make sure you always get the best possible GPS signal and Internet connectionOn your phone settings, set your location accuracy as highRooted phones are not recommendedHere is a our suggested list of flagship devices:Moto E4 PlusHuawei Honor 7XNokia 6Samsung Galaxy S9Samsung Galaxy Note 8iPhone 8/XOnePlus 6Huawei P20LG V30Note: When choosing your device, keep the above requirements in mind. Your account may be disabled if your device shows problematic GPS behaviour.Appendix 1 – Taxify Business Model Canvas8860221-66000-660004309176000-6600APPENDIX 2 – TAXIFY DISTRIBUTION LICENCES MAP IN AUSTRALIAReferences “New Ride-Hailing App Taxify to Launch in Egypt and Compete with Uber, Careem, and Ousta”. Cairo Scene. Retrieved 2017-03-30.Jump up^ ERR (2017-04-12).

 “Estonian taxi-hailing app Taxify expands to Baku, Malta”. ERR. Retrieved 2017-05-04.Jump up^ ERR (2017-10-05). “Estonia’s Taxify expands ride-hailing platform to Paris”. ERR. Retrieved 2017-11-23.

Jump up^ Taxify (2018-04-27). “Taxify Hits 10M Users Globally”. Taxify. Retrieved 2018-05-19.^ Jump up to:a b “Taxify global user numbers hit 10 mln”. The Baltic Course. Retrieved 2018-05-19.Jump up^ Treija, Ieva.

 “Taxi startup forces countries to change Transport Law by offering new business model | EU-Startups”. Retrieved 2017-03-30.

Jump up^ “Taxify launches in London, acquiring a cab firm to scale and discounting prices – TechCrunch”. Retrieved 2018-05-19.Jump up^ “Uber-Rival Taxify Suspended in London Amid License Investigation”. Bloomberg.

com. 2017-09-08. Retrieved 2018-05-19.Jump up^ Titcomb, James (2018-02-24). “Uber rival Taxify plots London comeback”.

 The Telegraph. ISSN 0307-1235. Retrieved 2018-05-19.

Jump up^ Auchard, Eric. “After London setback, Taxify trails Uber into Paris market”. U.S. Retrieved 2018-05-19.

Jump up^ Barber, Lynsey (2018-01-11). “Uber rival Taxify launches in Lisbon as London wait continues”. Retrieved 2018-05-19.


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