MOTOTAXI Business Development - Essay Example

ASSIGNMENT Business Idea: The world has now become a global village that has turned our lives fast and speedy. People now understand the importance of time and are willing to squander amid stiff competition among employees and workers in the marketplace and organizations. The frequent traffic jams in busy city areas and places despite all the efficiency of traffic controllers, their planning and even after availability of an outstanding public transport system have added to the problems of people who have to reach their private offices, shops, homes, educational institutions, hospitals and organizations before time. For this purpose, I have come up with a new business idea of MOTOTAXI service that aims to target people who prefer convenient, efficient & effective means of transportation that not only take them to their destinations but also saves their time, money and headache of driving or waiting for public transport such as underground railway system, taxis, rickshaws and cabs. Introduction to MOTOTAXI: Mototaxi is a simple motor cycle branded as a taxi. It is made for one passenger only (either man or a woman) and it mainly targets middle class and lower middle office going employees, sole proprietors, doctors, lawyers, teachers, students and individuals etc aged between 16-45 years. The reason for choosing this market segment is because of the fact that they like to save money, are interested to reach their destinations in time, prefer secure, convenient and quality transport accessible at any point and any location with less of a hassle. Almost 50 moto taxis of cost 2,500$ will be introduced in the initial stage of this business venture that will be increased gradually after analyzing the customer response and growth opportunities in the market. MOTO TAXI Technology: Moto Taxi will be using four types of technologies for its operations that are as under: Fleet Management System: First, we will use a Fleet Management System to keep track of all the MotoTaxis across the city areas. This system will enable the company to run all its business operations such as number of available orders from our clients, the number of available drivers and their bio data, arrivals and departures of taxis and others. Radio Network: The second type of technology that we are planning is to use radio so that all the moto taxi drivers will remain connected (with each other) with our 24 hour call center at all times. This would enable the company to ensure transport services to the clients in areas where we are not operational but where a moto taxi can pick the customer from the nearest spot. Our call center will operate through special software to manage the calls and short messages (sms) from clients and will also be linked to the fleet management system to cater the clients. Passenger Log: Third, (for auditing purposes mainly) we will be using a technology (we call it Passenger Log), placed under the passenger seat, which will record how many passengers are traveling on our bikes everyday for how many hours (and the speed log to record the distance the bike covers everyday). This would enable the company to determine the most profitable routes, normal profit routes, the loss making routes and regular customers. So, our company would then be able to develop effective pricing, marketing and advertising strategies and to adjust itself in the business scenario. Special Meters: Fourth, we will use Special Meters, which will adjust the rates for longer distances automatically to calculate the fares, and will also be linked with the “passenger log” to record any discrepancies in the revenue per day. Information System- Website/ SMS/ Calls: Finally, we will definitely develop our own website will enable us to implement countless web based applications initially as a medium for obtaining the service and customer feed back. The website will provide complete information about the underlying aims and objectives of MOTO TAXI, the salient features and technology, the benefits of our services to consumers and environment, our contact details including telephone numbers, email addresses, fax number and addresses of our offices all across a city, the pricing policies that include a complete list of areas in which we are operational, per kilometer prices and available discounts if any. Also, the website will include the necessary rules and regulations that are to be followed by both our clients and drivers so that we could avoid any conflicts and reduce the chances of events that could adversely affect our market reputation and goodwill among clients. Procedure to Obtain Services: Our services will be obtained by four means that are as under: First is the hail-and-stop in which our clients could stop any passing Moto taxi with no passengers (and the one not booked by someone else) to reach their destinations. As mentioned above that we would use special meters that automatically calculate fares, so there would be no bargain and interpersonal conversation between the clients and drivers. This would not only minimize the probability of disputes but also make the task and journey hassle free for the clients since they only have to explain their target area or destination place. The second way to obtain our services is directly call our offices or our call centers where our operators work diligently to serve our respective clients. The clients will locate their areas and our operators in turn will send moto taxis to their points as part of our pick and drop facility. This service is available for 24 hours a day. Third way is to use our SMS service through which clients can book their taxis and timings by sending a short message to our only SMS receiving numbers. However, this type of booking is a bit risky because in case we did not receive the SMS due to some technical problems or cellular service failures, we might lose our clients. So, we have already planned to highlight the consequences of using this procedure of obtaining our transport service. Finally, we will take orders and consumers’ requests through our website where we will not provide a direct booking option but also booking-through-email facility. This type of method is more convenient, flexible, cheap and easy in nature. Clients can easily place their orders by just a single click if they have access to internet or wireless fidelity (wi-fi). It is extremely helpful for low middle class group and students who prefer online booking procedure who like to save their money on their phone bills. There will be no additional or hidden charges for online booking. Market Analysis and Business Location: The current economic growth is perhaps the major reason that has not only increased the purchasing power and standard of living of people but also has created an enormous potential for auto-manufacturers and assemblers who are busy in meeting current market demand (continuously increasing with the passage of time due to economic strength) of automobiles. This situation has led to increasing use of fossil fuels that are used in passenger cars and leading to greater occurrences of traffic jams in the city that become very problematic for commuters in the peak hours such as morning office timings and school hours, office closures and in evenings when people are heading towards markets to purchase groceries, daily consumer products etc. So, in order to cope with this situation, we after thoroughly analyzing the market potential have drawn this conclusion that if we target our market segment with a quality, single passenger transport service that would offer pick and drop facility to people while simultaneously reduce the number of automobiles on the roads enabling the people to get rid of traffic jams. Obviously, we will take some time to establish ourselves in this new business venture. The benefits could be truly achieved when we increase our fleet of Moto taxis to a mammoth figure since this would be the only way to win trust of potential clients on our services. One of the most important factors is the choice of locations for setting-up our business offices and booking points. It is worthwhile to mention that we would carefully choose our locations as they would not only serve as booking points but also as our marketing and information providing units. They will be used to build a clear, distinctive and unique image about our services and products in the minds of consumers so that they use themselves as well as become our customer evangelists and network marketers by bringing new clients. It is planned that we will pay monetary commission to our existing clients who introduce new customers to our company. According to initial expectations, well be able to receive 1,500 customers in a 24-hour day from our all the booking points and offices. We will prefer different commercial areas (mostly) with multistory office buildings, banks, plazas, shopping malls, schools, colleges, universities, hospitals, markets and other institutions for setting-up our business offices because we expect that we will catch most of our clients from these prime locations. Also, we will prefer some residential areas that are near to commercial sites if we can acquire office space at cheapest possible rents. Here we assume that we will not purchase our own office property in the wake of our limited budgets but we can modify our strategy in near future if we receive an overwhelming market response. The benefits that we expect to receive from offices at or near commercial hubs include higher customer response amid easy booking because of lesser distance, better marketing opportunities to attract as many customers from those commercial areas, timely arrivals (or sometimes immediate) and availability of our moto taxis to customers, lower costs because of higher bookings and sales turnover etc. Sources of Finance: A business entity refers to a continuous venture; therefore, we have undertaken both the short-term and long-term sources of finance. However, it is worthwhile to mention the fact that our business will be established on a relatively smaller scale in initial stages which will then be expanded with the passage of time after observing some growth. We will require sufficient funds to finance the purchasing costs of 50 moto taxi units, the purchasing of office furniture, computers, telephones, laptops, internet servers and other stuff, the costs of employee training programs (especially drivers, receptionists, marketers and sales staff) and to finance the spaces for building motor garages. We have planned to set up 10 offices (at an investment of 3,000$ excluding monthly rent) in different commercial areas in a way that each area is almost connected to another one. This division will help us in delivering quality services and running our operations smoothly. It is estimated that our per unit cost would remain between 2500-3000$ per unit, so if we take the lower limit as a threshold we will require, Cost of Taxis 2500 * 50 = 125,000 $ Office Set-up costs 3,000 * 10 = 30,000 $ Employees Training Programs = 2000 $ (one time initial investment) Total initial investment will be 160,000$ excluding the prepaid money to landlords. In simple words, a total of 200,000$ will be required to start this business. There are two major sources of finance including debt investment and equity investment. I, being an owner of the firm, have planned to finance 50% expenditures from my personal investment whereas remaining 50% will be financed through a bank loan of 100,000$. Well will request bank Z to sanction a business loan at an annual interest rate of 5%. Business Model: The proposed business model is that Revenues will be earned through differential of rent charged and the cost of traveling that includes fuel expense plus monthly salary and maintenance costs of motor bikes, utilities expense, rent, insurance and interest expense. Sales Revenues = Rental / fares Expenses include fuel expense + salary expense + maintenance/repair costs + monthly insurance premium + utilities + interest Profit = Sales Revenues – Expenses This will be a highly profitable business since the contribution margin per kilometer traveled by the rider of Mototaxi increases with the number of kilometer traveled. Our main advantage lies in the fact that motorcycles are highly fuel efficient and cost effective (approximately $0.05 /km while we charge highly attractive and reasonable fare ($0.4/km for first 7 km and $0.3/km for every additional km). Competition Analysis: This must be pinpointed that moto taxis is extremely cheap than using private cars, taxis, rickshaws, underground trains and buses (in most cases) because of the price factor. Without any doubt, people still pay considerable attention to lower prices besides their desires of quality and convenient transport facility. Secondly, this option saves time because of long stop-overs of buses and slow speed of rickshaws which have to abide by the traffic laws and regulations. Obviously, Moto taxis are not beyond those rules but can travel at much faster pace than others. Also because of the maneuverability of Moto Taxi in (frequent) high traffic situations and jams (because of its small size compared to rickshaw/taxi/busses), it is a must pragmatic option than private cars and taxis. Also, there is some probability of pick-pocketing and mobile theft in public transport option whereas Moto taxis are quite secure and reliable. Mototaxi with the initiative for an investment to train the drivers on numerous grounds- secure and safe driving being the primary areas, has no competition in the market since no one so far has come with this kind of idea before. In addition, it helps in late night traveling where you can sms or call and get our Taxi-bike. Moto Taxis are environment friendly as there is no sound pollution, there are no parking issues, have fixed known rates and the facility to go in small streets and in any area unlike busses. Management Team: This business will be started on a partnership basis and there will be two partners including my father and me as owners. My father will invest and look after the operations whereas I will solely facilitate in running and conducting the business operations and do not invest. My father will therefore enjoy 75% share of total profit while I receive 25%. Marketing, Strategic Planning and Finance departments will directly work under my supervision while Human Resource, Information Technology and Mechanics will be under supervision of my father. However, we will conduct employee training programs with mutual cooperation in which will train drivers, call center representatives, receptionists and coordinators for our 10 offices. Rollout Plan Step 1: Compile our funds through our debt and equity financing steps to make investments into the inputs. Step 2: Register our business and acquire a license from government to commence our operations officially and legally in market. Step 3: Set up offices- call centers, radio system, website and sms coordination. Step 4: Buy bikes (customize), hire/train drivers and other employees. Step 5: Start open marketing that will include radio advertising, pamphlets, brochures, sign and bill boards, internet marketing through digital communities like Facebook, My Space, Twitter, banner advertising, blogs etc., newspapers, magazines and other print media, some television advertisements, network and social marketing, direct and personal selling. Step 6: Receive orders and start delivering our services to our clients. Risks: The first type of risk we may face in the market is Unacceptability of the idea by the masses. Consumers may not agree with this business concept and may consider it ruthless because of one-passenger phenomenon. Secondly, government may not allow us to grant license for such unique type of services. Thirdly, our drivers will face problems in times of rains and storms because motor bike driving will become riskier and chances of losses become higher in uncertain weather conditions. Another risk associated with our business is the threat of fake or false calls for bike-service from people that has to be minimized to ensure prosperity and goal accomplishment. Another risk could be that our drivers getting robbed by miscreants and malefactors in different neighborhoods. Also, these felons can call in our office, show themselves as interested customers and rob once our driver arrives to pick from their points. In order to cope with these risks, we will first conduct a survey to determine the actual potential of this venture. Once we are through, we will seek ways to acquire a legal permission from government. We will cease our operations in rainy areas. To determine fake calls, we can remain in contact with telephone exchange to track such calls. The last risk could be minimised by mentally preparing our drivers to master self-defense techniques in case they find some thing above normal circumstances. Growth Strategies: We will adopt the competitive penetrating pricing (market penetration) strategy in the first phase to attract a maximum pool of customers towards our prices. We will charge less than planned prices in the name of discounts to our target market for publicity purposes. We hope that reduced prices will lure many a students, sole proprietors, office workers, other self-employed people, individual shoppers and general public. Positioning: “Convenient, Efficient & Effective Means of Transportation for Young to Middle Age People!” Once we successfully cross the initial stages, our next strategy would be the market development strategy in which we would offer the same products or services to new market segments such as people above 45 years and teens around 7-16 years. Also, we would market Upper-middle and rich market segments by altering our advertising and marketing strategy towards these groups. We would consider that only ‘utmost satisfaction’ from our services can bring rich clients in our offices. This would enable us to cater another large group of people and simultaneously add to our profits. Prices may be increased to initially planned levels depending upon the scope of business. Our third strategy would focus specifically on “product development”. Here, we will come up with new improved services (new 2-passenger bikes) to our existing market segments. Also, we can introduce a new luxurious radio car cab at extremely competitive rates to cater the elite and rich segments of society. Exit Strategy The main strategy employed here caters to reducing sunk or overhead costs as much as possible to maximize profits margins. This can be done in the following ways: The bikes we shall be using could be arranged on leases. Secondly, we will reach a consensus with the bike seller regarding the resale value of the used bikes. This would enable us to dispose our used vehicles and update them with the modernized ones to maintain the quality of our services while also enable us to wind up our business in short span after selling all the capital. Next, as mentioned previously that the office space be rented and this would not involve any investment in property and blockage of our money. In addition, the call center/coordination equipments are also generic and can be sold to new/existing cab companies that may require those used materials to minimize their overheads. This would enable us to liquidate immediately by selling all office-related inputs to new parties. Last but not the least; the rollout plan has been designed in a way so that there is minimal loss of resources in case of any unforeseen barriers/hurdles. Each step has to be cleared before moving on towards the next step so in case we fine any impediments in successful implementation of our policies, strategies, measures and tactics during any stage of our business activities, we can reverse the process and cash out to avoid any losses. Conclusion: The Moto Taxi business has an enormous growth potential if develop and implement rational pricing, product, place and promotion policies. This service will provide a reasonable in fact a very good option to those middle class self-employed individuals, office workers and business men who although own private automobiles but finding difficult to assimilate the increasing trend in international oil and fuel prices coupled with global recession that has aggravated the employment prospects and has debilitated the purchasing power of these people after affecting their household budgets. Hence, availability of safe, secure, efficient, hassle-free, cheap and convenient transport option for a single passenger along with the luxury of pick and drop from the point of choice will surely receive due attention from potential consumers. Also, there is higher profit contribution in this business than any other transport venture in terms of percentage that provides the service provider a room to lower prices considerably in the wake of tough economic scenario while enjoying a handsome margin at the same time. Once, the fleet starts increasing after observing initial business growth, much higher profits can be expected, as in my opinion, people wouldn’t take long to understand the immediate availability of adequate transportation facilities that create a big room for businesses like Mototaxi. Source: Kurtz, David and Louis E. Boone (2007). “Contemporary Business”. Thomson South Western; 12th Edition. Read More