Redbus Case Study

Situation Analysis:

The inter-bus city transportation in India is dominated by manual ticket booking process in which there is a dependency on travel agents on getting the tickets. The overall industry has a fragmented supply chain in which bus operators heavily rely on agents for getting customers. There is the lack of transparency for both bus operators and travellers.

From 2006 ,redBus Pioneered in the development of more transparent , Online bus ticket booking process which replaced the manual ticket booking process .redBus introduced a technology between platform which acted as a real-time interface between bus operators and travellers .It has also facilitated an alternate channel for ticket cancellation via call centres.

By 2012 redBus had 65 percent share in the overall online transport booking industry and is one of the most dominant players in India in all regards. The yearly income of redBus has increased from to 345 million INR in 2012 from 0.4 million INR in 2007.

Bus Travel industry in India is growing at a rate of 25% for each annum, with market size of US$2.5 billion with annual sale of 220 million tickets which shows the tremendous potential of growth that lies within this industry

Online travel ticketing industry has high undiscovered potential as seen by yearly development rate of 47% in 2011.

Problem Statement:

What short term strategy and action plan redBus should opt for to achieve a total turnover of 1 billion by 2015?

Option:

1) Vertical integration

2) go global

3) Increase service portfolio

4) Maintain core focus

Criteria for evaluation:

1) Turnover of 1 billion by 2015(Target Turnover).

2) Customer base

3) Capital Required

4) Competition

Evaluation of options:

• Vertical Integration –Target turnover difficult to achieve, Capital requirement high with moderate competition.

• Increase service portfolio – target turnover achievable ,Need to build customer base and competition from dominant players

• Go global – Cultural, socio-economic, political factors complicate the process of going global.

• Core business with value added services –Profit margins are very thin difficult to achieve target turnover in 3 years.

Recommendation: