Lyft case Team 6 (1)
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Team 6: Akash Kathavate, Manish Saunshi, Nivedita Ratna Senthil Narayanan, Shri Desai, Subha Mohan Sundar Raj,
Lyft Case Study
Executive Summary This Report is for the Board of Directors of the GCI team, to state the business analysis situation at Lyft,
the consulting team’s strategic recommendations, and whether to invest in Lyft or not. Lyft started as a visionary in the MaaS (Mobility as a Service) space where users who wanted to get from
point A to point B could just use their smart phones to hail a cab at any given location and time, without
needing to move from their pick-up point. This proved to be extremely useful for the JTBD for people
who did not want to invest in their own cars or where private transport was not available to them However, Uber has become a major competitor in space and is now the most dominant company in ride-
share services, offering competitive pricing, more EV (Electric Vehicle) car selections, and UberEats
food delivery service as well. Tesla is also looking to get into the market with the Tesla Network to allow
Tesla owners to share their cars with pre-approved friends and family members. GM is looking into acquiring Lyft, to broaden its network of AV and EV vehicles using the market
already acquired by Lyft. Currently, Lyft needs to do something to make itself unique in the MaaS market and have a close eye to
see who else might shape the market. They need the early adapter advantage because many incumbents
are looking to break into this space. The team has conducted Strategic Research on Societal, Technological, Economic, Environmental, and
Political (STEEP) shifts in the firm’s Strategic Landscape. The landscape was thoroughly analyzed to
identify the Competitive/Complementary moves resulting from the disruptions in the current market. The Consulting Team believes that Lyft is now in the visionary range and must move into the adaptive
range to build a sustainable model in the MaaS market. The consulting team has proposed that Lyft make the following changes to survive in the current
landscape,
Horizon 1: Provide better offers to students and people living in university areas
Horizon 2: Diversify Product/Service Portfolio
Horizon 3: Move into AV space with GM acquisition of Lyft
The consulting team recommends that GCI not invest in Lyft.
Team 6: Akash Kathavate, Manish Saunshi, Nivedita Ratna Senthil Narayanan, Shri Desai, Subha Mohan Sundar Raj,
1. Situation 1.1 E-hailing taxi services industry
The ride-sharing industry has gained immense popularity in the past decade, some reasons for this rate of
customer adoption include - ease on the pocket, reduces car congestion, sustainability, etc., The Covid-19
pandemic created an immense backlog in the global supply chain industry which affected car
manufacturing, adding to this are the government bills under discussion to reduce emissions plus the
spike in gasoline prices - these disruptions have pushed consumers to look for other reliable alternatives.
This industry in the U.S is worth $61B and is projected to grow by 30% in the next three years. In North
America, over 99% of this market is controlled by two major players - Uber and Lyft.
1.2 Mobility as a Service and Lyft’s adoption strategies
Currently, all car manufacturers are working on building an alternate product portfolio apart from their
legacy ICE cars. Once they catch up to that trend, Autonomous / Self-driving cars are the future of this
industry.
First movers can derive lower COGS by removing the human component from the digital-cab-
hailing services. The Maas market is estimated to grow by $80B between 2025 - 2030.
Earlier this year, GM invested $500M in Lyft. With this additional capital and their resources,
Lyft is testing electric Chevrolet Bolts with self-driving hardware in San Francisco.
They have also introduced a new program called “Express Drive” that allows Lyft drivers to rent
cars from GM at a subsidized rate.
They have also introduced a new program called “Express Drive” that allows Lyft drivers to rent
cars from GM at a subsidized rate.
1.3 Who is our customer?
Recent studies suggest that the Millennial and GenZ demographic between the ages of 15 and 30 and the most receptive to technological advances and as a result, they consist of almost 50% of the customer base,
followed by middle-aged Americans and senior citizens.
1.4 Changes facing the firm
Lack of global reach - Operation is limited to the U.S.A (United States) and Canada
Cash flow comes from one source - Ride-hailing
Losing customers and drivers to uber as it provides attractive compensation and deals
The recent spike in gas prices has further lowered the profit margin, this has forced them to increase the prices for the rides which is not a welcome move by the consumers
Lyft Pink is not as popular as Uber One and is struggling to compete
1.5 Driving Forces that affect the strategic landscape
There are many disruptions that are affecting the changing market and Lyft needs to adapt as quickly as possible to capture the majority market share. Based on our analysis of several factors we have identified the primary change drivers who will disrupt the landscape. To identify them we will be using the STEEP framework.
Team 6: Akash Kathavate, Manish Saunshi, Nivedita Ratna Senthil Narayanan, Shri Desai, Subha Mohan Sundar Raj,
FACTORS
REASONING
CHANGE
DRIVERS
Societal
Sky high increase in fuel prices
Rising prices of cars and insurance
Slow adoption of public transport in the post-pandemic
world
Time spent in congestion, parking issues, and rising population in metropolitan cities, make it hard to own a
vehicle
Customer safety, privacy, how will you handle accidents Consumer Trends, lifestyles
Technological
Electric and Hybrid vehicles
Autonomous / Self Driving cars
E-ride hailing services
– Application
Emergency IoT, tracking vehicles – speed variation, safety, etc., Transportation Tech,
Information Tech
Economic
Impending recession that is raising the unemployment rates
Inflation is driving prices and interest rates up
Economic Growth
Environmental
Sustainability and green movements to reduce emissions
Slowing down of the travel and transportation industry due to the global pandemic
Reducing Levels of Fossil fuels
Natural Resources, Climate change / Warning
Political
Government approval to operate self-driving cars
Regulations to the taxi industry in terms of employee pay and benefits
Consumer safety
Climate bill to create a more sustainable society
Rule of Law / Regulations, Trade Policy
Table 1: STEEP Analysis for Lyft
Based on the factors here we want to identify the critical uncertainties; we measure them against their
level of impact and the probability of the scenario happening in the real world. We have put down a wide
range of aspects that will act as catalysts and change the whole industry landscape. We want to narrow it
down to a couple of important factors that will play a big part in shaping the roadmap.
Team 6: Akash Kathavate, Manish Saunshi, Nivedita Ratna Senthil Narayanan, Shri Desai, Subha Mohan Sundar Raj,
Fig 1: Identifying the Driving forces We had two components in our high impact and probability quadrant, they were Societal and Political hifactors. We believe that consumer trends, lifestyle and law/regulations are factors that are beyond our
control, but they play a vital role in shaping the strategic landscape. Fig 2: Possible Scenarios using Driving forces
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Related Questions
The case study is based on an article about Pataka Tea Co., Ltd. (PT) - Reassessing the External Environment.
Other parts of the case study were already posted with the same qustions
Assignment Questions
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2 Southwest Airlines and Jet Blue Air
3 UPS and FedEx
4 Patagonia Outdoor Clothing and Columbia Sportswear
5 Bank of America and Wells Fargo
6 Google and Yahoo
7 Hilton Hotels and Marriott Hotels
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Note: details of the business is in the photo attached
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The case study is based on an article about Pataka Tea Co., Ltd. (PT) - Reassessing the External Environment.
The first two pics of the case study were posted in another question
Assignment Questions
As of May 2018, what challenges had PT faced in recent years? Assess the factors in the internal and external environment that led to those challenges?
Analyze the industry competition conditions that PT faced. Identify the key external factors that affected PT’s strategic decision.
Develop a SWOT Analysis for PT to help King develop his strategy. Indicate how each of elements from the four (4)components from your SWOT, can be used to enhance PT’s competitive advantage. Each component of your SWO must have at least three (3) elements
If you were Phillip King, chairman of PT, what recommendations – at least four (4), would you make to improve company performance and address the challenges you outlined in question 1. Provide clear justifications for your reasons.
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