The case study in question is part of the online travel industry in India. RedBus is an online bus ticketing company that uses a real time and web-based portal that connects bus operators with potential customers. As a company, RedBus has an organizational structure in place under the leadership of three partners.
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The previous manual bus ticketing system inconvenienced customers who considered it tedious. The bus operators also faced transparency issues with ticket dealers who were tasked with selling bus tickets. RedBus has introduced a web-based technology that allows customers to book tickets online and for bus operators to sell their tickets using the RedBus system.
The key issues are the need to provide efficient bus ticketing services to bus operators as well as the provision of convenience to customers in need of bus ticketing services.
The decision makers are the partners, Phanindra Sama, Charan Padmaraju and Sudhakar Pasupunuri.
RedBus operates an online web portal that allows bus operators to sell bus tickets directly to potential customers. In addition, customers can buy their bus tickets online, thereby creating convenience to clients.
RedBus can establish a bus company that takes advantage of its software. In addition, the company can also develop online software for use in other industries.
The assumptions are based on socio-economic, political and technological trends. In this case, it is projected that a global bus manufacturing unit will be established in India. In addition, the country will experience a mass migration of skilled labor to cities, as well as register an increase in mobile and technology penetration. As a result, the demand for bus ticketing services is likely, thereby translating to increased business for RedBus.
Porter’s Five Forces analysis is the most applicable model in Redbus’ case. The model will assess the threat of new entrants as well as the availability of substitute products or services, the bargaining power of suppliers and customers and competitive rivalry in the industry.
RedBus has a partnership form of business ownership. As a result, the partners are the key decision makers in the company.
RedBus is a successful company. The company uses the parameters of customer satisfaction and technology as success indicators. The company has the largest online bus booking portal and the convenience provided to customers has been instrumental in the firm’s success.
RedBus has a stable financial status. The company has three main revenue streams that have contributed to the steady rise of the firm’s financial growth from INR 0.4 million in 2007 to INR 345 million in 2012. The company also projected a profit of INR 10 milllion in 2012 as well as a cumulative profit in the following years.
RedBus has three main revenue streams: The sale of the Bus Operators Software System (BOSS) to bus operators, the sale of the Seat Seller system to Online Travel Agencies as well as commission sales of bus tickets through the RedBus’ website.
The online travel industry in India has experienced tremendous growth. The industry is segregated into rail travel taking up 20% of online travel bookings and air travel securing 60% of the market share. The remaining 20% is comprised of online bookings in travel, hotels, buses and cabs.
RedBus’ competitive threats are the national and multinational entrants in the online travel industry.
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The company strives to become the best online bus ticketing company in India. Therefore, RedBus should ensure that the technological standards of its online system are at par with developments in the travel industry. This approach will ensure customer needs are addressed; the stakeholders are able to get value for their time and money and the company achieves its goal of being the best online company in the industry. In addition, the company should introduce different service offerings in its portfolio. This diversification will ensure the company stays ahead of the competition, thereby maintaining the lead in the industry, as per Porter’s Five Forces. RedBus should also ensure efficiency and effectiveness of its online value chain system. The incorporation of user friendly controls will improve comprehension and ease of use of the system by stakeholders.
RedBus has adopted a partnership form of business. In this case, partners are involved in the company’s growth plans and participate in the decision- making process.
The company’s technological resources provide a competitive advantage in the market. In this case, the company has invested in different software that has created convenience for bus operators and customers
Challenges and diversification
RedBus is struggling with the numerous growth challenges presented by the availability of different strategies. The company’s impressive performance has advocated for the need for the company to transition from a small firm to a large and recognized company.
Diversification is not a driver for RedBus. The company only considers it as a growth option as it believes the focus on its core business will ensure the company’s sustainability in the changing business landscape.
RedBus’ strengths and weaknesses
The company has a proper data management system. As a result, it is able to advise bus operators on the most profitable routes and hence improve their business relationships. In addition, the firm’s technological advances have created convenience to both customers and bus operators.
However the firm lacks a proper growth strategy in place. As a result, the firm could lose out on growth opportunities as it lacks a proper company growth structure and process.
RedBus’ growth options
Vertical integration- In this case, RedBus will invest in its own private buses, thereby taking advantage of the increase in demand for bus services.
Global expansion- Most countries do not have an online bus ticketing system, thereby providing an opportunity for RedBus to venture into such markets.
Portfolio offerings- RedBus will provide services such as online booking of hotels, cabs, air travel and vacation bookings.
Core business- RedBus will focus on online bus ticketing and improve on systems that will enable the company grow in this direction.
The next step for growth should be vertical integration. The company has a lot of data and the software to support its application thereby providing an additional revenue stream.
The firm should hire a management consultancy firm to guide the company in the transition process from a small firm to a large enterprise company.
Future of RedBus
In the next 3 years, the company will proceed with its upward-growth trajectory as a result of an increase in demand for bus ticketing services. In the next 5 years, the entry of multinational companies as a result of market liberalization will not affect the company’s operations as it holds a relatively stable position in the market. In the next 7 years, the effects of competition will be felt by the firm if it fails to adopt the growth strategies as discussed in the paper. The next 10 years will see the development of a bus manufacturing unit in India. As a result, the potential for growth is tremendous.