Beago ACCA SBL Preseen – September 2024

Preparing for the ACCA Strategic Business Leader (SBL) exam requires not only a solid understanding of strategic frameworks but also a deep comprehension of the pre-seen material provided before the exam. For the September 2024 sitting, the pre-seen material revolves around Beago, a significant player in the transport network company (TNC) industry in Bealand.

Understanding the pre-seen document is crucial for several reasons:

• Contextual Awareness: The pre-seen document sets the backdrop for exam scenarios, offering insights into Beago’s industry, competitive landscape, operational challenges, and strategic positioning. This context is essential for answering exam questions accurately and effectively.
• Strategic Application: The pre-seen material helps candidates apply theoretical knowledge to real-world situations. Analyzing the document allows students to practice linking strategic concepts to the specific circumstances of Beago, enhancing their critical thinking and strategic planning skills.
• Preparation and Familiarity: Familiarity with the pre-seen content allows students to manage their time more effectively during the exam. They can quickly recall relevant information, focusing on crafting well-structured answers rather than understanding the basics during the exam.
• Holistic Analysis: The pre-seen document is designed to test a wide range of competencies, including strategic analysis, risk management, financial performance assessment, and operational efficiency. Thorough understanding of the document enables students to address these competencies comprehensively in their responses.

Area 1 – Company Introduction 

What Does the Company Do?

Beago is a transport network company (TNC) operating in the country of Bealand, which has a population of over 200 million people. Established 12 years ago, Beago has grown to become the second-largest TNC in Bealand, based on revenue and customer numbers. The company connects customers with independent drivers through its platform, offering a range of services including ride sharing, ride hailing, micro mobility, and business services.

Location of the Company

Beago operates across 250 cities in Bealand, with a significant presence in urban areas. The company has expanded steadily over the years, responding to the increasing demand for convenient and cost-effective transportation options in the country’s densely populated urban centers.

Corporate Status and Ownership

Beago was listed on the Bealand stock market five years ago. Its shares are held primarily by large institutional investors (80%), with 10% held by the original founders, Ed Foss and Kim Lee, and the remaining 10% held by small private investors. The company’s public listing has provided it with the capital needed to expand its operations and invest in new technologies.

Capital Structure and Sources of Financing 

Beago’s capital structure is heavily equity-based, leveraging the capital raised from its public listing and earlier rounds of venture capital investment. This financial backing has enabled Beago to expand its services, invest in infrastructure like micro mobility, and remain competitive in the rapidly evolving TNC market.

Performance insights 

Overall Performance Overview

Beago has experienced significant growth in customer numbers and revenue over the past decade. However, like many in the TNC industry, it faces challenges related to competition, driver retention, and regulatory pressures.

Revenue 

The company has seen a steady increase in revenue, driven primarily by its ride hailing service, which accounts for 72% of its total income.

• Beago’s revenue has shown a strong upward trend, reflecting its successful expansion and the growing popularity of its services.
• In 20W9, the company generated $450 million in revenue. This figure increased to $520 million in 20X0 and continued to grow to $650 million in 20X1.
• By 20X2, Beago’s revenue had reached $750 million, and by 20X3, it had soared to $890 million. This consistent growth demonstrates Beago’s ability to capitalize on the increasing demand for TNC services in Bealand.
• The majority of Beago’s revenue comes from its ride hailing service, which accounts for 72% of total income. Ride sharing contributes 12%, while micro mobility services account for 11%, and business services make up the remaining 5%. 

Customer Base

Beago’s customer base has expanded rapidly since its inception. The number of active customers grew from 9 million in 20W9 to 11 million in 20X0, reflecting the growing demand for convenient transportation solutions in Bealand’s urban areas.

• By 20X1, the number of active customers had reached 12.5 million. The trend continued upward, with 14 million active customers in 20X2 and 16 million by the end of 20X3.
• The company projects that its active customer base will grow to 19 million by the end of 20X4, driven by ongoing urbanization, the expansion of its service offerings, and effective marketing strategies.
• This growth in customer numbers underscores Beago’s success in attracting a significant share of the TNC market in Bealand, positioning it as a key player in the industry.

Increase in active customers 

The steady increase in active customers reflects Beago’s strong market penetration and the growing reliance on transport network companies (TNCs) in Bealand, particularly in its urban areas where public transportation systems are often overcrowded and unreliable.

• One of the driving forces behind this growth is Beago’s ability to cater to a wide demographic, offering a variety of services that appeal to different customer segments. The popularity of ride hailing, which provides convenience and direct routes, has been a major contributor to this increase.
• Beago’s investment in micro mobility, particularly its acquisition and expansion of a bicycle-sharing service, has also played a crucial role. This service appeals to environmentally conscious customers and those looking for more active or cost-effective transportation options, further broadening Beago’s customer base.
• The company’s effective marketing strategies, including its strong digital presence and customer engagement through social media and other online platforms, have helped attract new customers and retain existing ones. The consistent emphasis on safety, affordability, and convenience in its marketing campaigns has resonated well with the urban population of Bealand.
• Another factor contributing to the increase in active customers is Beago’s focus on enhancing the customer experience. Features like real-time tracking, driver ratings, and seamless payment processes have improved customer satisfaction, leading to higher usage rates and stronger customer retention.
• Additionally, the ongoing urbanization in Bealand, coupled with the government’s support for innovative transportation solutions, has created an environment where TNCs like Beago can thrive. As more people move into urban areas, the demand for flexible, on-demand transportation services continues to grow, providing Beago with a robust customer base.

Looking forward, Beago’s challenge will be to sustain this growth by continuing to innovate and adapt to changing market conditions. As competition intensifies and customer expectations evolve, Beago will need to focus on further enhancing its service offerings, improving customer satisfaction, and exploring new growth opportunities.

Income Sources 

Beago’s revenue is generated from a diversified range of services, with each contributing differently to the overall income. As of 20X3, the distribution of revenue across its services was as follows:

The dominance of ride hailing in Beago’s revenue stream, accounting for 72% of total income, underscores its popularity among customers who prioritize convenience and direct transportation. Ride hailing’s significant share reflects the growing demand for quick and reliable point-to-point transport services, especially in urban areas where public transportation might not meet all commuter needs.

• However, while ride hailing is the largest contributor to Beago’s revenue, it is important to note the declining percentage over the years. In 20W9, ride hailing contributed 75% of revenue, which has decreased slightly as Beago has diversified its service offerings. This shift indicates that while ride hailing remains the core service, other segments like micro mobility and business services are becoming increasingly important to Beago’s overall business model.
• Ride sharing, which contributes 12% of revenue, was initially the focus of Beago’s business model, aimed at offering a more sustainable and cost-effective transportation option. Although its share of revenue has decreased from 21% in 20W9 to 12% in 20X3, it remains an essential service for specific customer segments, particularly students and lower-income customers who value affordability over exclusivity.
• Micro mobility, which includes bicycle-sharing services, has shown significant growth in its revenue contribution, rising from 4% in 20W9 to 11% in 20X3. This increase highlights Beago’s successful expansion into environmentally friendly transport options. The growing popularity of micro mobility services reflects changing consumer preferences, with more people opting for sustainable and cost-effective ways to navigate short distances in congested urban areas.
• Business services, although currently contributing only 5% of total revenue, represent an emerging growth area for Beago. This service caters to corporate clients who require reliable and efficient transportation solutions for their employees and clients. The introduction of business services indicates Beago’s strategic move to tap into the corporate market, providing an additional revenue stream with the potential for future growth as partnerships with national organizations expand.
• The diversification of revenue streams, while still centered around ride hailing, indicates Beago’s strategic approach to reducing dependency on a single service and its efforts to capture a broader market. By expanding into areas like micro mobility and business services, Beago not only mitigates risks associated with over-reliance on ride hailing but also positions itself to capitalize on emerging trends in urban mobility.

Looking forward, Beago’s ability to balance and grow its revenue across these different services will be crucial for its long-term sustainability. As market dynamics change and customer preferences evolve, Beago will need to continue innovating within each service segment, particularly focusing on expanding its micro mobility and business services to ensure a diversified and resilient revenue model.

Key Observations and Implications

• Beago’s revenue growth highlights its successful market penetration and the increasing popularity of its services, particularly ride hailing.
• The expanding customer base is a testament to Beago’s strong brand presence and the effectiveness of its marketing and service strategies.
• However, maintaining this momentum will require Beago to continue innovating, addressing competitive pressures, and navigating regulatory challenges in the rapidly evolving TNC landscape

Business model 

Service-Centric Model

Beago operates a service-centric business model focused on providing a range of transport services that cater to various customer needs. The company offers ride hailing, ride sharing, micro mobility, and business services, each designed to address specific market segments and customer preferences.

Revenue Streams

Beago’s business model generates revenue primarily through its ride hailing service, which contributes around 72% of its total revenue. This is followed by ride sharing (12%), micro mobility (11%), and business services (5%). The diversification of services allows Beago to capture different customer segments, from individual commuters to corporate clients, thereby maximizing its revenue potential.

Technology-Driven Operations

A key aspect of Beago’s business model is its reliance on technology to facilitate operations and enhance customer experience. The company utilizes a sophisticated platform that integrates a website, mobile apps, GPS tracking, payment processing, and customer-driver databases. This technology not only streamlines the process of booking and completing rides but also provides valuable data that Beago uses to continuously improve its services.

The company’s technology platform is hosted by a Bealand-based cloud services provider, ensuring scalability and reliability as Beago continues to expand its operations. Machine learning capabilities are employed to analyze historical and real-time data, enabling Beago to predict future behavior and refine its service offerings accordingly.

Scalability and Flexibility

Beago’s business model is highly scalable, allowing the company to expand its services across multiple cities in Bealand. The use of independent contractors as drivers, rather than employing drivers directly, provides Beago with the flexibility to scale up or down in response to market demand. This approach also reduces fixed costs and operational risks associated with maintaining a large fleet of vehicles.

Customer-Centric Approach

The business model places a strong emphasis on customer convenience and satisfaction. Beago’s platform is designed to be user-friendly, with features like real-time tracking, easy payment processing, and personalized ride options (e.g., shared vs. private rides). The company also offers incentives for customers to choose more sustainable options, such as ride sharing and micro mobility.

Beago’s customer-centric approach is further reinforced by its commitment to safety and data privacy, which are integral to maintaining customer trust and loyalty. The company’s efforts to provide a safe and reliable service are reflected in its high net promoter score (NPS), which consistently outperforms the industry average.

Sustainability and Innovation

Innovation is a core component of Beago’s business model. The company continuously invests in new technologies and services, such as micro mobility and electric vehicle options, to stay ahead of competitors and meet evolving customer expectations. Sustainability is also a key focus, with initiatives aimed at reducing the environmental impact of its operations.

Strategic Partnerships

Beago’s business model includes strategic partnerships with car rental businesses, cloud service providers, and other organizations. These partnerships enable Beago to offer a broader range of services, enhance its technological infrastructure, and expand its customer base. For instance, the partnership with car rental businesses allows Beago to offer customer rentals as an alternative to car ownership, tapping into a growing market trend

Conclusion 

Beago’s business model is a well-rounded, technology-driven approach that prioritizes customer convenience, operational scalability, and service diversification. By leveraging technology and strategic partnerships, Beago has built a robust platform capable of supporting its growth ambitions and maintaining a competitive edge in the TNC industry.

The focus on sustainability and continuous innovation positions Beago to adapt to changing market dynamics and regulatory requirements, ensuring its long-term success in Bealand’s evolving transportation landscape.

Prospects of the company

Positive Prospects:

Growing Market Demand:

The transport network company (TNC) industry in Bealand is expected to continue growing, driven by urbanization, population growth, and increasing demand for convenient transportation options. With nearly 80% of Bealand’s population living in urban areas, the pressure on public transport systems is likely to sustain the demand for TNC services like those offered by Beago.

Expansion of Micro Mobility:

Beago’s micro mobility services, which include bicycle-sharing options, have shown strong growth in recent years. As cities in Bealand become more congested and environmental concerns rise, the demand for sustainable and efficient transportation solutions is expected to increase. Beago’s investment in expanding its micro mobility infrastructure positions it well to capitalize on this trend.

Adoption of Electric Vehicles (EVs):

Beago’s initiative to encourage the use of electric and hybrid vehicles among its drivers is in line with global trends towards reducing carbon emissions. As more cities in Bealand introduce clean air zones and implement environmental regulations, the shift to EVs will not only help Beago comply with regulations but also enhance its brand image as a sustainable transportation provider.

Technology and Data Utilisation:

Beago’s use of advanced technology, including machine learning and GPS tracking, enables it to optimize operations and improve the customer experience. The ability to analyze vast amounts of data and predict customer behavior gives Beago a competitive edge in tailoring services to meet customer needs and enhancing operational efficiency.

Potential for Service Diversification:

With its established platform and customer base, Beago has the potential to diversify further into related services, such as food delivery, which some global TNCs are already exploring. Expanding into new service areas could provide additional revenue streams and help mitigate risks associated with reliance on a single service line.

Areas of Concern:

Intense Competition:

The TNC industry in Bealand is highly competitive, with several players vying for market share. Zenbi, the largest TNC in Bealand, continues to be a formidable competitor. The presence of smaller TNCs and traditional taxi services also adds to the competitive pressure. To maintain and grow its market share, Beago will need to continue innovating and differentiating its services.

Regulatory Challenges:

Beago’s operations are heavily dependent on local authorities in each city to grant operating licenses. Any changes in regulations, particularly those related to environmental impact and driver safety, could increase operational costs or restrict Beago’s ability to operate in certain areas. Additionally, the lack of standardized regulations across Bealand introduces uncertainty and potential operational inefficiencies.

Driver Retention and Satisfaction:

Beago’s business model relies on independent contractors as drivers. However, maintaining a sufficient pool of drivers is becoming increasingly challenging due to competition from other TNCs and concerns about driver earnings and working conditions. The declining driver satisfaction rate (down from 72% in 20W9 to 63% in 20X3) indicates potential issues in retaining drivers, which could impact service quality and customer satisfaction.

Economic Sensitivity:

TNC operations are vulnerable to economic conditions, including fluctuations in fuel prices, changes in consumer spending power, and overall economic growth. In times of economic downturn, customers may reduce discretionary spending, leading to lower demand for TNC services. Additionally, rising fuel costs could erode profit margins if not effectively managed.

Technological Disruptions:

The rapid pace of technological advancements presents both opportunities and threats. While Beago has successfully leveraged technology to enhance its services, the company must remain vigilant and agile in adapting to new technologies. The potential for disruptions, such as the introduction of autonomous vehicles, could significantly alter the competitive landscape.

Conclusion

Beago is well-positioned to benefit from the growing demand for TNC services in Bealand, particularly with its strong foothold in the market and ongoing investments in micro mobility and sustainable transportation options. The company’s use of advanced technology and data analytics provides a solid foundation for continued growth and service innovation.

However, Beago faces significant challenges, including intense competition, regulatory uncertainties, and the need to maintain driver satisfaction. To secure its long-term prospects, Beago must focus on addressing these challenges while continuing to explore new growth opportunities and service diversification.

Key Players and Market Structure

Key Players:

Zenbi

• Market share: 58%
• Overview: Zenbi is the largest transport network company (TNC) in Bealand and the main competitor to Beago. Established 14 years ago, Zenbi was the first TNC to operate in Bealand and has maintained its position as the market leader. Zenbi is not only the largest TNC in Bealand but also the world’s second-largest TNC, operating in over 50 countries. Its extensive experience, global reach, and established brand make Zenbi a formidable competitor.
• Zenbi’s market share in Bealand has gradually decreased from 100% when it first launched to 58% (approx.) by the end of 20X3, reflecting the growing competition from Beago and other smaller TNCs. However, Zenbi remains the dominant player, benefiting from economies of scale, a large customer base, and a well-established operational framework

Beago

• Market share: 32%
• Overview: Beago, established 12 years ago, is the second-largest TNC in Bealand. The company has steadily increased its market share, rising from 2% (approx.) in its early years to 32% (approx.) by the end of 20X3. Beago’s growth has been driven by its strong focus on service quality, technological innovation, and strategic marketing.
• Unlike Zenbi, which operates globally, Beago has concentrated its efforts solely on the Bealand market, allowing it to tailor its services to local needs and preferences. Beago’s success in capturing a significant portion of the market reflects its ability to compete effectively with Zenbi and other players, despite the competitive pressures.

Other TNCs

• Market share: 10%
• Several smaller TNCs have entered the Bealand market over the past decade, but none have achieved the scale or market presence of Zenbi or Beago. Together, these smaller TNCs hold about 10% of the market by the end of 20X3. While they primarily operate in limited geographic areas, these companies add to the competitive landscape by offering niche services or targeting specific customer segments.
• These smaller players often differentiate themselves through lower pricing, specialized services, or a focus on specific cities. However, their limited scale and resources make it challenging for them to compete with the larger players on a national level.

Market Share in the TNC Industry (Bealand):

Zenbi and Beago together dominate the TNC market in Bealand, holding a combined 90% market share by the end of 20X3. Zenbi leads with a 58% share, while Beago follows with 32%. The remaining 10% of the market is divided among several smaller TNCs.

This high level of concentration indicates a competitive duopoly, where Zenbi and Beago exert significant influence over market dynamics, pricing, and service standards. The presence of smaller TNCs, while not negligible, does not currently pose a significant threat to the dominance of Zenbi and Beago.

Competitive Dynamics:

The competitive landscape in Bealand’s TNC industry is characterized by intense rivalry between Zenbi and Beago. Both companies compete for market share through aggressive pricing strategies, service diversification, and continuous innovation. Zenbi, with its extensive global experience, leverages its scale to maintain its leadership position, while Beago focuses on local market expertise and customer-centric innovations to drive growth.

Traditional taxi services and public transportation also compete with TNCs for customers, particularly in urban areas where public transport is more accessible. However, the convenience, pricing, and technological advantages offered by TNCs have enabled them to capture a significant share of the transportation market.

The competition is further intensified by regulatory pressures and the need to continuously adapt to technological advancements. Both Zenbi and Beago must navigate complex regulatory environments, maintain high service standards, and invest in new technologies to remain competitive.

Main Customers and Demographics:

Urban Commuters

The majority of Beago’s customers are urban commuters who use the service for daily travel, including commuting to and from work. This segment values the convenience, reliability, and cost-effectiveness of TNC services compared to owning a car or using traditional taxis.

Environmentally Conscious Consumers

Beago’s micro mobility services, such as bicycle-sharing, appeal to environmentally conscious consumers who prefer sustainable transportation options. This demographic is typically younger, urban-based, and more likely to use technology-driven services.

Business Clients

Beago’s business services cater to corporate clients who require transportation solutions for employees, clients, and business partners. This segment includes large organizations looking for reliable and cost-effective transport for meetings, events, and daily commutes.

Lower-Income Customers

Ride sharing services are particularly popular among lower-income customers, including students, who seek affordable transportation options. This segment is price-sensitive and values the cost savings associated with shared rides.

Conclusion

Beago operates in a highly competitive market dominated by two major players, Zenbi and itself. The company’s ability to carve out a significant market share in Bealand despite the presence of a global giant like Zenbi is a testament to its strategic focus and operational excellence.

To sustain its position and continue growing, Beago must navigate the competitive dynamics carefully, focusing on service innovation, customer satisfaction, and strategic expansion. Understanding the needs and preferences of its diverse customer base will be crucial in maintaining its competitive edge in the evolving TNC market.

Sales and Distribution Channels

Direct Sales Channels

Mobile App:

The primary sales channel for Beago is its mobile application, which is available on both iOS and Android platforms. The mobile app serves as the main interface through which customers access Beago’s services, including ride hailing, ride sharing, micro mobility, and business services.

The app is designed to be user-friendly and includes features such as GPS tracking, real-time driver updates, payment processing, and customer support. The ease of use and accessibility of the mobile app are key factors in driving customer engagement and retention.

Website:

In addition to the mobile app, Beago’s website functions as an important sales channel, particularly for customers who prefer to book rides or manage their accounts via a desktop or laptop. The website offers the same functionality as the mobile app, allowing users to book rides, track drivers, and make payments.

The website also serves as a platform for new customers to sign up, for drivers to register, and for businesses to inquire about Beago’s corporate services.

Indirect Sales Channels

Business Partnerships:

Beago has established partnerships with various businesses, including car rental companies and large organizations, to offer tailored transportation solutions. These partnerships allow Beago to tap into corporate clients who require regular transportation services for their employees and clients.

For example, Beago’s partnership with car rental businesses enables customers to book rental cars directly through the Beago platform, expanding its service offerings and creating additional revenue streams.

Affiliate Marketing:

Beago engages in affiliate marketing by collaborating with various online platforms, bloggers, and influencers who promote its services in exchange for a commission on rides booked through their referral links. This channel helps Beago reach new audiences and drive customer acquisition, particularly among tech-savvy users who are likely to respond to online promotions.

Marketing and Promotion

Digital Marketing:

Beago leverages digital marketing strategies, including search engine optimization (SEO), pay-per-click (PPC) advertising, and social media marketing, to promote its services and attract new customers. Targeted online campaigns help Beago reach specific demographics, such as urban commuters or environmentally conscious consumers.

Email marketing is also a significant part of Beago’s strategy, with personalized promotions and updates sent directly to customers’ inboxes to encourage repeat usage and brand loyalty.

Traditional Advertising:

In addition to digital marketing, Beago utilizes traditional advertising methods such as television, radio, and outdoor billboards to increase brand visibility. These campaigns are particularly effective in raising awareness among broader audiences, including those who may not be as active online.

Beago’s marketing message focuses on convenience, affordability, safety, and sustainability, appealing to a wide range of potential customers.

Distribution Strategy

Technology-Driven Distribution:

Beago’s distribution strategy is primarily technology-driven, with the mobile app and website serving as the main distribution channels. The integration of GPS technology, real-time data analytics, and automated payment systems ensures that services are delivered efficiently and reliably.

The company’s use of cloud services to host its platform ensures scalability, allowing Beago to manage high volumes of transactions and expand its service offerings as needed.

Service Availability:

Beago operates in 250 cities across Bealand, making its services widely available to urban residents. The company has strategically expanded its geographic coverage over the years to maximize market penetration and meet the transportation needs of Bealand’s growing urban population.

Customer Support and Engagement

In-App Customer Support:

Beago offers customer support directly through its mobile app and website, providing users with access to FAQs, live chat, and support tickets. This ensures that customers can easily resolve issues related to booking, payments, or ride experiences.

The in-app support feature also includes emergency assistance, allowing customers to instantly connect with Beago’s security team if needed during a ride.

Social Media Engagement:

Beago actively engages with customers on social media platforms such as Facebook, Twitter, and Instagram. Social media serves as both a marketing tool and a customer service channel, where Beago can address customer queries, share updates, and promote new services.

Engaging with customers on social media also helps Beago gather feedback and insights that can be used to improve services and enhance the customer experience.

Conclusion

Beago’s sales and distribution channels are centered around its technology platform, with the mobile app and website playing pivotal roles in service delivery and customer interaction. The company’s ability to effectively leverage digital and traditional marketing strategies ensures broad market reach and customer engagement.

By combining direct sales channels with strategic partnerships and affiliate marketing, Beago has built a robust distribution network that supports its growth and service diversification. The focus on customer support and engagement further strengthens its brand and fosters customer loyalty.

Area 2 – Governing Body and Ownership of the Company

Beago is governed by a board of directors that includes a non-executive chairperson, six non-executive directors, and six executive directors. The executive directors include the Chief Executive Officer (CEO), Chief Finance Officer (CFO), Chief Technical Officer (CTO), Chief Commercial Officer (CCO), Chief People Officer (CPO), and Chief Marketing Officer (CMO). This structure reflects a robust and diverse leadership team capable of overseeing the various aspects of Beago’s operations.

Governing Body: Board of Directors

Board Composition:

1. Non-Executive Chair: The non-executive chairperson leads the board, ensuring that the board operates effectively and that Beago’s strategic direction aligns with its long-term goals.
2. Non-Executive Directors: The six non-executive directors provide independent oversight, bringing external perspectives to the company’s governance. Their role is crucial in challenging and advising the executive team, ensuring that decisions are made in the best interests of all stakeholders.
3. Executive Directors: The executive directors are responsible for the day-to-day management of Beago, each overseeing a specific functional area. Their roles are critical in executing the company’s strategy, driving innovation, and ensuring operational efficiency. These include – Chief executive officer, Chief finance officer, Chief technical officer, Chief commercial officer, Chief people officer & Chief marketing officer.

Governance Practices

Beago employs a centralized decision-making process, particularly in areas such as pricing, service rollouts, and technology investments. This approach helps maintain consistency across its operations and ensures alignment with the company’s strategic objectives.

The company’s governance is also supported by a strong internal audit function, which reports to the CFO. This function is responsible for evaluating and improving the effectiveness of risk management, control, and governance processes. Regular audits ensure financial integrity and operational efficiency, contributing to Beago’s overall stability.

Despite its robust governance structure, Beago has not established separate audit, nomination, or remuneration committees. While this simplifies the governance process, it also places a greater onus on the board and internal audit function to maintain rigorous oversight and accountability.

Effectiveness of the Governing Body

• The composition of Beago’s board, with a mix of executive and non-executive directors, provides a balance of internal expertise and external oversight. This structure supports effective governance and strategic decision-making.
• The presence of institutional investors as the majority shareholders aligns the company’s interests with those of long-term investors, promoting stability and a focus on sustainable growth.
• However, the absence of dedicated committees for audit, nomination, and remuneration could be seen as a limitation in terms of specialised oversight (as no reference has been made of these in the pre-seen). Expanding the board to include additional independent non-executive directors or establishing these committees could enhance governance and provide more checks and balances.

Conclusion

The governing body of Beago is composed of experienced and committed directors who are well-equipped to steer the company through the challenges of the TNC industry. The centralized decision-making and strong internal audit function are strengths that contribute to Beago’s operational consistency and financial integrity.

However, to further strengthen governance, Beago could consider enhancing its oversight mechanisms by introducing additional non-executive directors or establishing specialized committees. This would ensure that the company remains agile and responsive to the evolving market and regulatory environment.

Area 3 – Ethics and Corporate Social Responsibility

Main ethical threats 

Data Privacy and Security

Beago collects and processes a significant amount of personal data from both customers and drivers, including payment information, location data, and personal identification details. The main ethical threat in this area is the potential for data breaches or misuse of sensitive information. As cyber threats evolve, Beago must continually update its security measures to protect against unauthorized access and ensure compliance with data protection regulations in Bealand.

Driver Treatment and Fair Compensation

Beago relies on independent contractors as drivers, which raises ethical concerns regarding fair compensation, job security, and working conditions. Drivers are not classified as employees, which means they do not receive benefits such as health insurance, paid leave, or job security. The ethical challenge for Beago is to balance cost efficiency with fair treatment of drivers, ensuring they are adequately compensated and supported.

Customer Safety

Ensuring the safety of customers is a critical ethical responsibility for Beago. Incidents involving driver misconduct, accidents, or unsafe driving practices could severely damage the company’s reputation. Beago has implemented safety measures, such as background checks, driver ratings, and emergency support, but the ongoing challenge is to maintain and enhance these measures to prevent incidents and protect customer welfare.

Regulatory Compliance

Beago operates in a highly regulated industry, with different cities in Bealand setting their own criteria for licensing TNCs and drivers. Ethical threats arise if Beago fails to comply with these regulations or if it attempts to circumvent local laws to reduce operational costs. Compliance with environmental, safety, and labor regulations is not only a legal requirement but also an ethical obligation to the communities in which Beago operates.

Environmental, Social, and Technological risks 

Environmental Risks

Beago’s operations, particularly ride hailing and ride sharing, contribute to urban traffic congestion and air pollution. Although the company promotes ride sharing and micro mobility as more sustainable options, the overall environmental impact of its services remains a concern. The introduction of clean air zones and other environmental regulations in Bealand poses a risk to Beago’s operations, as it may require investment in greener technologies or result in restricted service areas.

The company’s strategy to encourage the use of electric vehicles (EVs) among drivers is a step towards mitigating its environmental impact. However, the transition to EVs involves technological and financial challenges, both for Beago and its drivers, which must be addressed to ensure long-term sustainability.

Social Risks

Beago’s social responsibility extends beyond providing safe and reliable transportation services. The company must also consider its impact on the communities it serves. This includes ensuring that its operations do not contribute to social issues such as traffic congestion, unequal access to services, or the displacement of traditional taxi drivers. Beago’s ability to contribute positively to society, through initiatives like supporting local economies or reducing carbon emissions, is crucial to its corporate social responsibility (CSR) efforts.

Technological Risks

Beago’s business model is heavily dependent on technology, from the mobile app and website to GPS tracking and data analytics. This reliance introduces risks related to system failures, cyberattacks, and data breaches. Technological disruptions could not only impact service delivery but also erode customer trust and damage Beago’s reputation. The ongoing need to protect customer and driver data from evolving cybersecurity threats is a key challenge.

Conclusion 

Beago faces a variety of ethical threats and environmental, social, and technological risks that could impact its long-term sustainability and reputation. The company’s ability to navigate these challenges will depend on its commitment to ethical practices, its proactive approach to CSR, and its capacity to innovate while maintaining high standards of safety, security, and fairness.

Addressing these risks requires ongoing investment in technology, continuous improvement of safety and data protection measures, and a strong focus on CSR initiatives that benefit both the company and the broader community. By doing so, Beago can reinforce its position as a responsible and ethical leader in the TNC industry.

Area 4 – PEST analysis

Political Factors

Regulatory Environment:

Beago operates in a highly regulated environment where local authorities in each city control the licensing of TNC operations. The regulatory landscape can be complex and inconsistent across different regions in Bealand, posing challenges for Beago in maintaining compliance. Any changes in transportation regulations, particularly those related to environmental standards, driver safety, and data privacy, could impact Beago’s operations and cost structure.

Government Support for Innovation:

The government of Bealand has shown support for innovative transportation solutions to address the challenges of overcrowded and unreliable public transportation. This support is beneficial for Beago, as it aligns with the government’s goals of reducing congestion and promoting alternative transport options. However, this support may also attract more competitors into the market, increasing the level of competition.

Environmental Legislation:

As environmental concerns become more prominent, Bealand’s government is likely to introduce stricter environmental regulations, such as emissions caps and clean air zones (CAZ). These regulations could increase operational costs for Beago, especially if drivers are required to switch to electric or hybrid vehicles to comply with these standards.

Economic Factors

Economic Growth and Consumer Spending:

Beago’s revenue is closely tied to the economic conditions in Bealand. Economic growth leads to higher disposable income and increased spending on transportation services, which benefits Beago. Conversely, an economic downturn could reduce consumer spending, leading to lower demand for Beago’s services.

Fuel Prices:

Fluctuations in fuel prices can significantly impact Beago’s cost structure and pricing strategy. Higher fuel costs could lead to increased ride prices, potentially reducing demand. Conversely, lower fuel prices could increase profitability but might also encourage more personal car usage, reducing the need for TNC services.

Urbanisation and Infrastructure Development:

The rapid urbanization in Bealand has led to increased demand for efficient transportation solutions, benefiting Beago. However, the pace of infrastructure development, such as road networks and public transportation systems, will influence the long-term sustainability of TNCs. Improved public transport infrastructure could reduce the reliance on TNCs, impacting Beago’s market share.

Social Factors

Changing Consumer Preferences:

There is a growing trend towards convenience and on-demand services, which is favorable for Beago. Consumers are increasingly valuing the flexibility and efficiency offered by TNCs over traditional transportation options. However, there is also a rising awareness of environmental issues, with more consumers preferring sustainable transportation options, such as ride sharing and micro mobility.

Demographic Shifts:

Beago’s customer base is largely urban, and as urban populations continue to grow, so too does the potential market for TNC services. Younger consumers, in particular, are more inclined to use app-based services for their transportation needs. Beago’s ability to appeal to this demographic through user-friendly technology and innovative services is crucial for its continued growth.

Social Responsibility and Ethics:

There is increasing public scrutiny on the ethical practices of companies, particularly in areas such as worker rights and environmental impact. Beago’s treatment of its drivers, data privacy practices, and environmental initiatives are likely to be under the spotlight. The company must balance profitability with ethical responsibilities to maintain public trust and brand loyalty.

Technological Factors

Advancements in Mobile Technology:

Beago’s business model is heavily reliant on mobile technology, including the use of apps for booking rides and GPS for tracking. Advances in mobile technology, such as faster networks and improved app functionalities, will enhance the customer experience and operational efficiency. Staying at the forefront of technological innovation is essential for Beago to remain competitive.

Data Analytics and Machine Learning:

The ability to analyze large datasets and leverage machine learning for predictive analytics gives Beago a competitive edge. These technologies allow Beago to optimize routes, improve customer service, and tailor marketing efforts. Continued investment in these areas will be crucial for driving operational improvements and maintaining a competitive advantage.

Cybersecurity Threats:

As Beago relies on digital platforms for its operations, the risk of cyberattacks and data breaches is a significant concern. Protecting customer and driver data from cyber threats is paramount. Any security breaches could lead to financial losses, legal penalties, and damage to Beago’s reputation. The company must continuously invest in cybersecurity measures to safeguard its operations.

Summary – PEST

The PEST analysis highlights the various external factors that could influence Beago’s operations and strategic decisions. Politically, Beago must navigate a complex regulatory environment while leveraging government support for innovation. Economically, the company’s success is tied to consumer spending patterns and urbanization trends. Socially, shifting consumer preferences towards convenience and sustainability present both opportunities and challenges, while technologically, staying ahead of advancements and protecting against cybersecurity threats is critical.

Understanding and responding to these external factors will be crucial for Beago’s long-term success in the competitive and rapidly evolving TNC market in Bealand.

Area 5 – Ansoff’s Matrix 

Market Penetration

Market penetration involves increasing market share within existing markets with current products or services. For Beago, this strategy could focus on enhancing its presence in the existing cities where it operates by increasing the usage of its services among current customers and attracting new customers within these markets

Strategy: 

• Increase promotional activities and incentives to encourage more frequent use of ride hailing, ride sharing, and micro mobility services.
• Enhance customer loyalty programs to retain existing customers and increase their lifetime value.
• Optimize pricing strategies, such as offering discounts during off-peak hours, to boost demand.
• Improve service quality and customer satisfaction to reduce churn and increase customer referrals.

Risks:

• Intensified competition from Zenbi and other TNCs could lead to a price war, impacting profitability.
• Over-reliance on the current customer base without expanding into new markets could limit long-term growth

Market Development

Market development involves expanding into new markets with existing products or services. For Beago, this could mean entering new cities in Bealand where it does not yet operate or targeting different customer segments within its current cities.

Strategy: 

• Expand operations to smaller cities or suburban areas in Bealand, where demand for TNC services is growing but competition may be less intense.
• Develop targeted marketing campaigns to attract new customer segments, such as elderly populations who may benefit from reliable transportation services.
• Explore partnerships with local businesses or governments in new regions to facilitate entry and build brand awareness

Risks:

• Entering new geographic markets may require significant investment in infrastructure and marketing, with no guarantee of immediate returns.
• Regulatory challenges in new cities could complicate market entry and increase operational costs

Product Development

Product development involves creating new products or services for existing markets. Beago can pursue this strategy by introducing new service offerings or enhancing its current services to better meet customer needs.

Strategy: 

• Introduce new services such as food delivery, a sector that some TNCs are already exploring, to diversify revenue streams.
• Develop premium ride services, offering luxury vehicles or additional amenities for higher-paying customers.
• Enhance the existing micro mobility services by introducing new types of vehicles, such as electric scooters or e-bikes, to attract a broader customer base.
• Implement technology enhancements, such as improved app features, personalized ride options, or AI-driven customer support, to differentiate Beago’s offerings from competitors.

Risks:

• Developing new products or services can be costly and time-consuming, with the risk that they may not resonate with customers or generate sufficient demand.
• Failure to properly align new products with customer needs could lead to poor adoption and wasted resources.

Diversification

Diversification involves entering new markets with new products or services. This is the most risky strategy in Ansoff’s Matrix, as it involves moving beyond Beago’s current scope of operations. However, it also offers the potential for significant growth and new revenue streams.

Strategy: 

• Explore international expansion opportunities by entering new markets outside of Bealand. Beago could leverage its experience in the TNC industry to compete in other emerging markets with similar transportation challenges.
• Diversify into related industries, such as logistics or last-mile delivery services, where Beago can leverage its existing infrastructure and technology.
• Develop a new brand or subsidiary focused on a different sector, such as green energy solutions or smart city technologies, that align with Beago’s commitment to sustainability.

Risks:

• Entering entirely new markets or industries involves significant uncertainty and requires a deep understanding of local conditions, customer behavior, and regulatory environments.
• Diversification efforts could stretch Beago’s resources and management attention, potentially impacting the performance of its core TNC business

Recommendation: Market Penetration OR Product Development 

Market Penetration:

Rationale:

Market penetration is the safest and most immediate strategy for Beago to enhance its market share within the cities it already operates. Given the intense competition from Zenbi and other smaller TNCs, focusing on increasing the frequency of use among existing customers and attracting new customers within these markets is crucial.

Beago can leverage its existing technological infrastructure and customer base to boost usage without the need for significant additional investments. Enhancing customer loyalty programs, offering targeted promotions, and optimizing pricing strategies can drive more frequent usage and attract price-sensitive customers.

Benefits:

• Increased market share and revenue in existing markets with relatively lower risk.
• Improved customer retention and brand loyalty through enhanced service offerings and customer engagement.
• Optimized resource allocation by focusing on markets where Beago already has a strong presence and brand recognition.

Product Development

Rationale:

While market penetration strengthens Beago’s current position, product development allows the company to differentiate itself from competitors and meet evolving customer needs. Introducing new services, such as premium ride options or expanding micro mobility offerings, can attract a broader customer base and increase revenue streams.

Developing new products and services also aligns with Beago’s commitment to innovation and sustainability. For example, expanding the electric vehicle (EV) fleet or introducing new micro mobility options like e-scooters can appeal to environmentally conscious customers and position Beago as a leader in sustainable transportation.

Benefits:

• Diversification of revenue streams by offering new and enhanced services to existing customers.
• Increased customer satisfaction and market differentiation through innovative and tailored service offerings.
• Alignment with sustainability trends and consumer preferences for environmentally friendly transportation options.

Integrated Strategy

Market Penetration as the Foundation:

Use market penetration strategies to solidify Beago’s presence in existing markets, ensuring a strong revenue base and customer loyalty.

Product Development for Growth:

Leverage the stable revenue and market share gained through market penetration to fund and support product development initiatives. By carefully introducing new services and enhancing existing ones, Beago can grow its customer base and expand its market share further.

Risks and Mitigation:

While these strategies are generally lower in risk compared to diversification or entering new markets, Beago must be mindful of overextending its resources, particularly in product development. Careful market research, pilot testing of new services, and phased rollouts can help mitigate risks associated with product development.

Conclusion:

The combination of market penetration and product development offers Beago the best balance of risk and reward. By deepening its presence in existing markets and introducing new, innovative services, Beago can strengthen its competitive position, increase customer satisfaction, and drive sustainable growth.

Area 6 – Porter’s Diamond 

Porter’s Diamond is a framework that analyzes the competitive advantage of nations or regions, which can be adapted to assess how Beago’s operating environment in Bealand influences its ability to compete effectively in the TNC industry.

Factor Conditions

Skilled Labor Force:

Beago benefits from a skilled labor force in Bealand, particularly in urban areas where the company operates. The availability of tech-savvy individuals capable of developing and maintaining Beago’s advanced technology platform is a critical factor. Additionally, the presence of a large pool of potential drivers, including students and part-time workers, supports the company’s operational needs.

Technological Infrastructure:

While Bealand’s transportation infrastructure faces challenges, such as overcrowded public transport systems, these issues create opportunities for TNCs like Beago. The need for alternative transportation solutions is a key factor driving demand for Beago’s services.

Transportation Infrastructure:

Equity Financing: PVS is entirely equity-financed, which provides financial stability and independence from external creditors. However, this also limits the availability of additional capital for expansion and technological investments.

Demand Conditions

Urbanisation and Population Growth:

Bealand’s high rate of urbanization and large population provide a significant and growing customer base for Beago. The increasing concentration of people in urban areas, coupled with the pressures on public transport, creates strong demand for convenient, on-demand transportation services.

Consumer Preferences:

There is a strong consumer preference for convenience, flexibility, and technology-driven services in Bealand. This aligns well with Beago’s offerings, particularly its mobile app and on-demand ride services. Additionally, there is growing interest in environmentally sustainable options, such as ride sharing and micro mobility, which Beago is well-positioned to capitalise on.

Price Sensitivity: 

While there is strong demand for TNC services, price sensitivity remains a key factor, particularly among lower-income segments of the population. Beago must carefully manage its pricing strategies to balance affordability with profitability.

Related and Supporting Industries

Technology and Data Services:

Beago benefits from a robust tech ecosystem in Bealand, including partnerships with cloud service providers, payment processing companies, and data analytics firms. These supporting industries enable Beago to offer a seamless and reliable service, underpinned by advanced technology and data-driven insights.

Automotive and Mobility Industries:

The automotive industry in Bealand, including car rental companies and vehicle leasing options, supports Beago’s operations by providing the necessary vehicles for its drivers. Additionally, the growing micro mobility sector, including bicycle and scooter providers, complements Beago’s efforts to offer diverse transportation options.

Financial Services:

Bealand’s well-developed financial sector supports Beago’s operations by providing access to capital markets, payment processing services, and financial management tools. This infrastructure enables Beago to efficiently manage its finances and invest in growth opportunities.

Firm Strategy, Structure, and Rivalry

Competitive Strategy:

Beago’s strategy focuses on differentiation through technological innovation, customer experience, and sustainability. The company has positioned itself as a leading TNC in Bealand by leveraging its local market expertise and commitment to meeting the specific needs of Bealand’s urban population.

Rivalry:

Intense rivalry exists within the TNC industry in Bealand, particularly with Zenbi, the market leader. This competition drives Beago to continuously innovate, improve service quality, and explore new market opportunities to maintain and grow its market share.

Adaptive Structure:

Beago’s organizational structure is designed to be agile, allowing it to quickly respond to market changes and customer demands. The company’s ability to adapt its operations, marketing strategies, and service offerings in response to competitive pressures is a key factor in its success.

Government

Supportive Regulations:

The government of Bealand supports innovative transportation solutions as part of its strategy to address urban congestion and reduce environmental impact. This support creates a favorable environment for Beago to operate and expand its services. However, the lack of standardized regulations across cities in Bealand also presents challenges that require careful navigation.

Incentives for Sustainability:

Government incentives for the adoption of electric vehicles and other sustainable practices align with Beago’s strategic goals. These incentives can help reduce operational costs and encourage the use of eco-friendly transportation options, further enhancing Beago’s competitive position.

Chance

Emerging Trends:

The rise of urbanization, technological advancements, and environmental awareness presents opportunities for Beago to capitalize on these trends. However, unforeseen events such as economic downturns, regulatory changes, or technological disruptions could also pose risks to Beago’s operations.

Summary – Porter’s Diamond 

Porter’s Diamond highlights the key factors that contribute to Beago’s competitive advantage in Bealand. The company benefits from strong factor conditions, such as skilled labor and technological infrastructure, as well as favorable demand conditions driven by urbanization and environmental awareness.

Beago’s strategy of differentiation, supported by a robust network of related industries and government incentives, positions it well in the competitive landscape. However, the intense rivalry and potential regulatory challenges underscore the need for Beago to remain agile and innovative to sustain its competitive edge.

Area 7 – Porter’s Generic Strategies

Porter’s Generic Strategies framework outlines three primary strategies that companies can use to achieve a competitive advantage: Cost Leadership, Differentiation, and Focus.

1. Cost Leadership

Strategy: Cost leadership involves becoming the lowest-cost producer in the industry, which allows a company to offer lower prices than its competitors or maintain higher profit margins.

Applicability to Beago:

Beago has not primarily pursued a cost leadership strategy. Given the competitive pressures in the TNC market, particularly from Zenbi, it would be challenging for Beago to compete solely on price, especially without compromising on service quality or technology investments.

However, Beago does implement some elements of cost leadership by optimizing its operations, such as using technology to streamline processes and reduce overhead costs. The use of independent contractors as drivers also helps keep fixed costs low, providing some flexibility in pricing strategies.

Challenges:

Pursuing a pure cost leadership strategy could lead to a race to the bottom in pricing, which may erode profit margins and impact the quality of service. Additionally, cost leadership may not align with Beago’s current brand positioning, which emphasizes quality, safety, and sustainability.

2. Differentiation

Strategy: Differentiation involves offering unique products or services that are perceived as superior by customers, allowing a company to charge a premium price.

Applicability to Beago:

Differentiation is Beago’s primary strategy. The company differentiates itself through its strong focus on technology, customer experience, and sustainability. Beago’s commitment to safety, as evidenced by its rigorous driver vetting processes and in-app safety features, sets it apart from competitors.

Beago also differentiates through its diverse service offerings, including ride hailing, ride sharing, micro mobility, and business services. This range of services caters to different customer segments, from environmentally conscious users to corporate clients, enhancing Beago’s appeal and market reach.

The company’s emphasis on using data analytics and machine learning to improve service delivery and customer satisfaction further strengthens its differentiation strategy.

Benefits:

Differentiation allows Beago to build brand loyalty, attract a diverse customer base, and command premium pricing. By offering a superior customer experience and innovative services, Beago can maintain a competitive edge despite the presence of strong competitors like Zenbi.

Challenges:

Differentiation requires continuous investment in technology, innovation, and customer service. Beago must consistently deliver on its brand promise to justify premium pricing and maintain customer loyalty. Additionally, competitors may attempt to imitate Beago’s differentiators, necessitating ongoing innovation.

3. Focus Strategy

Strategy: Focus involves targeting a specific niche or segment of the market, either through cost leadership (Cost Focus) or differentiation (Differentiation Focus).

Applicability to Beago:

While Beago’s primary strategy is differentiation, it also employs elements of focus by tailoring its services to specific market segments. For example, Beago’s micro mobility services appeal to environmentally conscious consumers, while its business services are designed for corporate clients.

Beago’s focus on the Bealand market, rather than expanding internationally like Zenbi, also represents a strategic focus. This localized approach allows Beago to better understand and meet the specific needs of Bealand’s urban population.

Benefits:

A focused strategy enables Beago to build strong brand recognition and customer loyalty within its target segments. By concentrating on the Bealand market, Beago can allocate resources more efficiently and respond more effectively to local market dynamics.

Challenges:

The primary challenge with a focus strategy is the risk of over-reliance on a specific market or segment. If market conditions in Bealand change or if competitors target the same niches, Beago may face increased pressure. Additionally, the company may miss out on growth opportunities in other markets by focusing too narrowly.

Recommendation: Differentiation

Based on the analysis of Porter’s Generic Strategies, Differentiation is the strategy that best aligns with Beago’s strengths and market position. Here’s why this strategy is the most suitable recommendation.

Rationale

1. Market Position: Beago operates in a highly competitive market dominated by a major player, Zenbi. To effectively compete, Beago must continue to distinguish itself by offering unique and superior services. Differentiation allows Beago to stand out in the crowded TNC market by focusing on what it does best: providing high-quality, reliable, and innovative transportation solutions.
2. Customer Experience: Beago has already established a strong reputation for safety, customer service, and technological innovation. By continuing to differentiate itself in these areas, Beago can enhance customer loyalty and attract new users who value premium service. This approach also allows Beago to justify premium pricing, which can help maintain healthy profit margins.
3. Innovation and Technology: Differentiation aligns with Beago’s commitment to leveraging technology for service improvement. By continuously innovating—whether through enhanced app features, better data analytics, or the introduction of new services—Beago can stay ahead of competitors and meet the evolving needs of its customers.
4. Sustainability and Ethics: The growing demand for environmentally friendly and socially responsible business practices presents a significant opportunity for Beago. Differentiation through sustainability initiatives, such as promoting electric vehicles and expanding micro mobility services, can strengthen Beago’s brand and appeal to the increasingly eco-conscious consumer base in Bealand.

Implementation

Enhance Existing Services – Continue to invest in the quality and reliability of core services like ride hailing and ride sharing. Introduce features that further enhance the customer experience, such as real-time driver ratings, personalized ride options, and seamless payment integration.

Innovate and Expand Offerings – Develop new services that align with emerging customer needs, such as premium ride options or subscription-based services for frequent users. Expanding micro mobility options with new vehicle types, such as e-scooters or electric bikes, can attract additional customer segments.

Sustainability Initiatives – Accelerate the adoption of electric and hybrid vehicles among drivers by offering incentives or partnerships with EV providers. Continue to promote ride sharing and micro mobility as eco-friendly alternatives, which can help reduce Beago’s overall environmental impact.

Customer Engagement and Loyalty – Strengthen customer loyalty programs by offering rewards for frequent use and referrals. Use data analytics to personalize marketing and promotions, ensuring that customers receive relevant offers that enhance their experience with Beago.

Conclusion 

Therefore, differentiation is the recommended strategy for Beago, as it builds on the company’s existing strengths and market position. By focusing on delivering superior customer experiences, leveraging technology, and promoting sustainability, Beago can solidify its competitive edge and achieve long-term success in the Bealand TNC market

Area 8 – Porter’s Five Forces 

Porter’s Five Forces framework helps analyze the competitive dynamics within an industry by examining five key factors: the threat of new entrants, the bargaining power of suppliers, the bargaining power of buyers, the threat of substitute products or services, and the intensity of competitive rivalry.

For Beago, operating in the transport network company (TNC) industry in Bealand, the following analysis applies:

1. Threat of New Entrants

• Barriers to Entry: The TNC industry in Bealand has moderate barriers to entry. While starting a TNC business requires significant investment in technology and marketing, the relatively low capital requirements for vehicle ownership (since drivers provide their own cars) and the growing demand for on-demand transportation services could attract new entrants.
• Regulatory Challenges: New entrants face challenges related to regulatory compliance, including obtaining operating licenses in different cities and adhering to local laws concerning driver vetting and safety. Beago’s established relationships with local authorities and its experience in navigating these regulations provide a competitive advantage over potential new entrants.
• Brand Loyalty and Network Effects: Beago and Zenbi, the dominant players in the market, benefit from strong brand loyalty and network effects, where the value of their services increases with the number of users. This creates a significant barrier for new entrants, who would need to invest heavily in marketing and customer acquisition to compete effectively.

Overall Threat Level – The threat of new entrants is moderate. While the industry is attractive, the presence of strong incumbents like Beago and Zenbi, along with regulatory and brand loyalty barriers, makes it difficult for new players to gain a foothold.

2. Bargaining Power of Suppliers

• Driver Dependence: Beago’s primary suppliers are its drivers, who work as independent contractors. The bargaining power of drivers is moderate; while they can choose to work for other TNCs or switch between platforms, Beago’s scale and customer base provide drivers with ample ride opportunities, which can reduce their willingness to leave.
• Technological Suppliers: Beago relies on third-party technology providers, including cloud services and payment processing systems. These suppliers have some bargaining power due to the critical nature of the services they provide. However, Beago’s size and established contracts likely give it some leverage in negotiations.
• Vehicle Leasing: Some drivers lease vehicles through arrangements facilitated by Beago. The suppliers of these vehicles could exert bargaining power, particularly if demand for leased vehicles increases or if Beago pushes for more electric vehicles to meet environmental targets.

Overall Threat Level – The bargaining power of suppliers is moderate. While drivers and technology providers are crucial to Beago’s operations, the company’s scale and ability to offer consistent work for drivers help mitigate some of the risks.

3. Bargaining Power of Buyers

• Customer Choice: Customers in Bealand have several transportation options, including other TNCs, traditional taxis, and public transportation. This gives them considerable bargaining power, especially in urban areas where competition is fierce. Customers can easily switch between TNCs based on pricing, service quality, or convenience, which puts pressure on Beago to maintain high standards and competitive pricing.
• Price Sensitivity: Many of Beago’s customers are price-sensitive, particularly those using ride sharing or micro mobility services. The ease of comparing prices across different TNC platforms further enhances buyer power.
• Loyalty Programs and Differentiation: Beago can reduce the bargaining power of buyers by enhancing its loyalty programs and differentiating its services. By offering superior customer experiences and incentivizing repeat usage, Beago can build stronger customer loyalty, reducing the likelihood of customers switching to competitors.

Overall Threat Level – The bargaining power of buyers is high, driven by the availability of alternatives and the ease of switching. Beago must continuously innovate and offer competitive pricing to retain its customer base.

4. Threat of Substitute Products or Services

• Public Transportation: Public transportation, including buses and trains, represents a significant substitute for TNC services. While public transit is often less convenient, it is generally more affordable, particularly for daily commuters. The quality and reliability of public transportation in Bealand can impact the demand for TNC services.
• Car Ownership: Private car ownership is another substitute, particularly for individuals who value the convenience of having their own vehicle. However, the costs associated with car ownership, including maintenance, insurance, and fuel, may deter some consumers, especially in urban areas where parking can be challenging.
• Other TNCs and Micro Mobility Options: Competing TNCs and alternative transportation options like bike-sharing or e-scooters are direct substitutes that offer similar services. The availability and popularity of these alternatives can affect Beago’s market share.

Overall Threat Level – The threat of substitutes is moderate to high. Beago must focus on offering a differentiated service that provides more convenience, safety, or value than these alternatives to mitigate this threat.

5. Rivalry Among Existing Competitors

• Major Competitors: The TNC market in Bealand is characterized by intense rivalry, primarily between Beago and Zenbi. These two companies dominate the market, and their competition is fierce, particularly in terms of pricing, service quality, and technological innovation.
• Price Wars: The competition can lead to price wars, which may erode profit margins for both companies. Beago needs to balance competitive pricing with maintaining profitability, particularly as it continues to invest in technology and service enhancements.
• Service Differentiation: Beago’s focus on differentiation—through superior technology, safety measures, and sustainability initiatives—helps it stand out in a competitive market. However, it must continually innovate to maintain this competitive edge as rivals attempt to close the gap.

Overall Threat Level – The intensity of competitive rivalry is high. Beago must navigate this rivalry carefully by focusing on differentiation and customer loyalty while avoiding a detrimental race to the bottom in pricing.

Conclusion

Porter’s Five Forces analysis highlights the competitive dynamics within the TNC industry in Bealand. Beago faces significant challenges from intense competitive rivalry and the high bargaining power of buyers. The threat of substitutes and the moderate bargaining power of suppliers add to the complexity of the market.

To succeed, Beago should continue to focus on differentiation, leveraging its technological strengths, customer loyalty programs, and commitment to sustainability to mitigate the impact of these competitive forces. Additionally, maintaining operational efficiency and avoiding destructive price competition will be key to sustaining profitability in this highly competitive environment.

Area 10 – SWOT

The SWOT analysis provides a comprehensive overview of Beago’s internal strengths and weaknesses, as well as the external opportunities and threats that the company faces in the TNC industry.

Strengths

Strong Brand and Market Presence:

Beago is the second-largest TNC in Bealand, with a significant market share and a strong brand reputation. The company’s focus on customer service, safety, and technology has earned it a loyal customer base and a competitive edge in the market.

Technological Innovation:

Beago’s use of advanced technology, including machine learning, GPS tracking, and a robust mobile platform, is a key strength. This technology not only enhances the customer experience but also improves operational efficiency, helping Beago to maintain its competitive position.

Diverse Service Offerings:

Beago’s range of services, including ride hailing, ride sharing, micro mobility, and business services, allows it to cater to a wide variety of customer needs. This diversification reduces reliance on a single revenue stream and helps Beago capture different segments of the market.

Commitment to Sustainability:

Beago’s focus on promoting environmentally friendly transportation options, such as ride sharing and the use of electric vehicles, aligns with growing consumer demand for sustainable solutions. This commitment enhances Beago’s brand image and appeals to eco-conscious customers.

Weaknesses

Dependence on the Bealand Market:

Beago’s operations are currently confined to Bealand, making it highly dependent on the economic and regulatory environment of a single market. This lack of geographic diversification exposes Beago to significant risk if market conditions in Bealand change unfavorably.

Driver Retention Challenges:

As Beago relies on independent contractors for its driver base, maintaining driver satisfaction is crucial. The declining driver satisfaction rate indicates potential issues in this area, which could lead to driver shortages, higher turnover, and a negative impact on service quality.

Intense Competitive Pressure:

Beago faces intense competition from Zenbi and other TNCs in Bealand. The need to constantly innovate and differentiate itself from competitors requires substantial investment in technology and marketing, which can strain resources.

Regulatory and Compliance Risks:

Navigating the complex regulatory landscape in Bealand, where different cities have varying requirements for TNC operations, poses a challenge. Compliance costs and the risk of regulatory changes could impact Beago’s operations and profitability.

Opportunities

Expansion into New Markets:

There is a significant opportunity for Beago to expand its operations beyond Bealand. Entering new geographic markets, particularly in other emerging economies, could diversify revenue streams and reduce dependence on the Bealand market.

Growth in Micro Mobility Services:

The increasing demand for sustainable and cost-effective transportation options presents an opportunity to expand Beago’s micro mobility services. By introducing new types of vehicles, such as electric scooters or e-bikes, Beago can capture a larger share of the urban mobility market.

Partnerships and Strategic Alliances:

Forming partnerships with other companies, such as car rental businesses, technology firms, or even other TNCs, can open up new revenue streams and enhance service offerings. These alliances can also help Beago improve its operational capabilities and market reach.

Adoption of Electric Vehicles (EVs):

As governments and consumers increasingly prioritize sustainability, there is a growing opportunity for Beago to lead in the adoption of electric vehicles. Incentivizing drivers to switch to EVs and promoting eco-friendly ride options could enhance Beago’s market position and attract environmentally conscious customers.

Threats

Regulatory Changes:

The TNC industry is subject to regulatory scrutiny, and any changes in regulations—such as stricter environmental laws, labor regulations, or data protection rules—could increase operational costs or limit Beago’s ability to operate in certain areas.

Economic Downturns:

Beago’s revenue is closely tied to consumer spending, which can be affected by economic downturns. In times of recession or economic instability, customers may reduce their use of TNC services, leading to a decline in revenue.

Cybersecurity Risks:

As Beago relies heavily on digital platforms for its operations, the risk of cyberattacks and data breaches is significant. A security breach could not only result in financial losses but also damage Beago’s reputation and erode customer trust.

Competitive Rivalry:

The competitive rivalry in the TNC industry is intense, with Zenbi being a formidable competitor. Price wars, technological advancements by rivals, and aggressive marketing strategies could threaten Beago’s market share and profitability.

Conclusion 

Beago’s strengths in technological innovation, diverse service offerings, and commitment to sustainability position it well in the TNC market. However, the company must address its weaknesses, particularly its reliance on the Bealand market and the challenges in driver retention.

By capitalising on opportunities such as market expansion, partnerships, and the growth of micro mobility services, Beago can strengthen its competitive position. However, the company must also remain vigilant to external threats, including regulatory changes, economic downturns, and cybersecurity risks, to ensure long-term success.

Area 11 – Mendelow’s Matrix 

Mendelow’s Matrix is a tool used to analyze stakeholder power and interest, helping companies prioritize their efforts in managing stakeholder relationships. For Beago, the following analysis applies to key stakeholders in the TNC industry in Bealand:

A: Minimal Effort

B: Keep Informed

C: Keep Satisfied

D: Key Players

Summary 

Mendelow’s Matrix helps Beago prioritize its stakeholder management efforts, focusing on key players such as government authorities, drivers, and institutional investors. By effectively engaging with these stakeholders, Beago can navigate regulatory challenges, improve operational efficiency, and ensure long-term success.

For stakeholders with high interest but lower power, such as customers and environmental groups, Beago should maintain regular communication and involvement to keep them informed and supportive of the company’s initiatives. Meanwhile, minimal effort should be directed towards stakeholders with low power and interest, ensuring that resources are allocated efficiently to areas of greatest impact.