Case Assignment Of Lyft Program

Lyft is a ridesharing program that provides on-demand transportation service through their mobile app. As they look to expand internationally, they hope their value propositions that have made them successful to this point will resonate with new markets. As an outside consultant, I will be focusing on external factors such as opportunities and threats. I will be basing my ranking off of factors such as economic prosperity, population, smartphone/car penetration, bordering countries, and cultural/legal barriers. I have ranked Australia as the country that Lyft would be able to obtain the most market share and revenue in, followed by the United Arab Emirates, then South Korea, and lastly, Germany and I have created a decision criteria table to exemplify my ranking.

Out of the four listed countries, I believe Australia would be the prime location to expand to due to the fact that they have the 11th largest economy based on GDP per capita of $55,707. Additionally, the car penetration in the country is quite high at 726.5 cars on the road for every 1000 people which a ratio that equates to the 6th highest in the world. This is a tremendous opportunity for Lyft since ride-sharing is essentially influenced by the desire to reduce emissions, fuel consumption, and traffic while also reducing the need for personal car ownership. Functioning under a federal parliamentary constitutional monarchy can hint at the fact that the country’s market reception and adoption will be in similar lines of Canada where ride-sharing has already expanded to most areas. Since Uber has already taken the first mover’s advantage, Lyft will not have major issues with regulations and this will undoubtedly assist in having a competitive edge over taxis when it comes to pricing. Only having to pay 84.51% of the price of a taxi for Lyft will be extremely attractive to prospective customers of the service who may not a high discretionary income. I believe the United Arab Emirates would be the second best location to expand to as a result of various reasons. As a member of The Organization of the Petroleum Exporting Countries, the UAE’s economy is dominated by oil but has recently diversified into other fields such as construction and tourism. This definitely makes for an attractive market since the country also has averaged an economic growth rate of 4.5% over the last 17 years which means that consumers can certainty afford to pay for a Lyft ride. As the UAE aims to rely on tourism more for economic growth, this will attract a lot of consumers from their bordering countries such as Saudi Arabia, Oman, and Qatar. When tourists visit, a portion of them might not be travelling by car so a Lyft would be extremely convenient in situations like these. Furthermore, when the temperature averages 45 degrees Celsius in the months of July and August, which is a peak time for tourists to visit, most transporters would probably prefer an air-conditioned vehicle to get them quicker to their destination rather than commuting on a bus packed with other passengers. In regards to cultural barriers, the population of the country is predominantly Muslim at 76%. This can prove to be a disadvantage since a lot of customers typically use Lyft after spending a night out at the bar or club drinking. Conspicuously, consuming alcohol in this country can lead to punishment so the need for a Lyft would be less prevalent. Additionally, in Dubai, “regulations have required ride-sharing programs to be 30% higher than taxi fares.”

However, since UAE’s economy is so prosperous, this should not be a huge disadvantage since Lyft would be a relatively new technological advancement in the UAE and there will be consumers with high discretionary income that will not mind paying a premium for novelty services. South Korea is third in my rankings and this is due to a variety of factors. Located on the southern half of the Korean Peninsula, the country only shares a border with North Korea and unlike UAE, South Korea does not have many touristic attractions that would entice a plethora of visitors. Despite having a population of 51.3 people, the fact that there is a declining working age population can indicate that a lot of their workforce is going into retirement which means they are over 65 years old and presumably not too familiar with modern technology. This is crucial since customers would not only have to have a smartphone, but would also need to download the app and set up their credit card in conjunction in order to utilize the service. Moreover, Uber has been banned from South Korea due to strong opposition from local authorities and taxi drivers.

Lyft can potentially experience the same fate if they were to expand there as well.

Germany is the last country in my rankings and this mainly due to the legal implications. When looking at it from a legal perspective, it is essential to realize what laws are being enforced and how this can detrimentally affect the nature of the company. With the implementation of a civil law legal system, laws are inevitably more rigid which means Lyft would be experiencing fierce competition from regular taxi companies. Furthermore, Germany is one of the founding countries of the European Union, which in 2017 ruled that ride-sharing apps are going to be regulated like taxi companies which would mean increased expenses and significantly eroded potential profitability.

Although it was not one of the attributes I used in my scoring method rankings, I do believe that safety is a huge component in regards to Germany simply due to the fact that there are issues of pickpocketing in tourist heavy areas. This would undoubtedly make commuters and tourists more apprehensive about getting into a Lyft vehicle with a non-professional driver who uses their own vehicle as opposed to a conventional regulated taxi service. The factors I used in my criteria were influenced by the fact that ride-sharing is a viable alternative to public transport and can be regarded as a social interaction platform. Not only can it reduce the carbon footprint in major areas of the world but it can also reduce traffic congestions. Although some countries have more attractive attributes than others, the two most important components are unquestionably smartphone penetration since a phone is required to use the app and legal/cultural barriers since regulations can negatively impact the company’s market share and this is why I gave those two attributes the highest weight. In the final analysis, Australia was the country that had the highest score in both of those areas and as a result, Lyft should expand to Australia as it would be the best fit.