Redbus: The Next Step for Growth Case Analysis

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redBus could encounter many threats while they attempt to scale and grow into new markets. There could be substitutes to the technology that redBus has come up with for example if a company like Greyhound were to operate in India they would be a substitute. Another threat redBus could encounter could be competitors in expanding markets. It could be harder for redBus to break into a market where there was already an established trendsetter in the market.

Porter’s Five Forces

Porter’s Five Forces focuses on the external environment and helps to understand the strength of your current position and the strength you have to break into another market. This Porter’s five forces will be focused on the transportation industry as a whole. partner with could prove to be a more difficult. With a clear understanding of where the power lies, we are able to decide whether this would be an industry a company would want to enter into.

- Bargaining power of suppliers- High: Transportations systems could stop running which is highly unlikely or stop using a certain company for their operational needs. This doesn’t happen that often but in this situation, they hold all the power. Without the suppliers the industry becomes non-existent.

- Bargaining power of buyers- High: The industry is completely dependent on the fact that buyers are buying transportation tickets. If they stopped buying the tickets, the companies in the industry would find themselves in financial trouble. It ultimately costs nothing for buyers to switch to another supplying company or stop traveling completely.

- Intensity of rivalry among established firms- High: I believe that there is a high intensity of rivalry among established firms. In India, “the industry grew from 62.5 billion in 2007 to 378.9 billion in 2011 (pg.2).” That is over six times revenue than it was in 2007. Competition within the industry is very lucrative.

- Threat of substitution- High: I believe there is a high threat of substitution because these days it is possible for anyone to make a website and create their own app. It could be possible for another company to imitate what companies like redBus are doing and change in a tiny way to appeal to the customers in the market.

- Risk of entry by potential competitors- Medium: I believe that there is a medium risk of entry by potential competitors. The technology in other markets isn’t that different so it would be easy to get the technology but finding companies to

Recommendation

For redBus, I would recommend that they scale up and break into the air, hotel, cab and package tour part of the industry. They already have an application that works with buses which at the end of the day provides seats just like a plane does or like a hotel has rooms. It’s all about whether or not that specific space is occupied and if it’s not this is how much it is and you can occupy this space at this time. All we are talking about here is changing the program ever so slightly for every part of the industry. I think this is the best option for redBus moving forward because “the online travel industry had grown from 62.5 billion in 2007 to 378.9 billion in 2011” alone. This industry is growing so rapidly that redBus would be smart to expand in India first and then if that works out then expand into other countries. I also believe that the fact that they are able to receive so much feedback from the communities they operate in can help them in this transition. redBus will be able to move into these other parts of the industry quicker and smoother with this feedback that they are getting from the public.

Conclusion

redBus is already running to online ticket booking market for the bus system in India. My recommendation to redBus would be to break into those other segments of the industry since they have public support already. This will help them to bring in more revenue and get closer to the one-billion-dollar revenue goal they have set for 2015. I think that by penetrating the market even further they will be able to reach this goal. The next step in the expansion after that would be expanding into other countries.