TABLE OF CONTENT
Attributes of the entrepreneur (Personal characteristics) 4
Introduction
This paper mainly evaluates the entrepreneurial process of didi enterprises, which promotes the establishment and growth of didi enterprises. With the rapid development of information and communication technology, the popularization and application of ubiquitous technology, new enterprises of ICT platform enterprises based on information and communication technology continue to emerge, some enterprises develop and grow rapidly, some enterprises develop more tortuously, and some enterprises may disappear.
Didi travel is one of the most successful and developed internet car-hailing platforms based on ICT technology, which belongs to Beijing Xiaoju Technology Co., Ltd. The software app was launched in September 2012. It has expanded from a common taxi software to a one-stop travel platform with functions such as special cars and buses. It is a typical new enterprise, which effectively solves the problem of taxi difficulty and enriches people’s travel mode. This paper mainly evaluates Didi’s entrepreneurial process from micro level, meso level and micro level.
Micro-level dimensions
PEST model
When didi was founded, China supported taxi software. The Ministry of Transport issued a notice to regulate the development of taxi call service, promote the intelligent development of call service, and encourage people to book a taxi and drivers to answer the call. This requirement was more clearly reflected in the Trial Measures issued by Beijing Municipal Transportation Commission later, and Beijing will implement a mobile car-hailing service(Zhang & Zhang, 2017).
Before online car-hailing entering the market, there are many problems in taxi industry, which restrict the development of taxi industry. In order to ensure the monopoly position of taxi industry, local governments often impose strict quantity and price control on taxis(Ruixue, 2017).
Social environment
Consumer travel needs. According to the data of the Ministry of transport in 2012, the city’s passenger transport system transported 122.844 billion passengers in 2012, an increase of 5.4% over the previous year. Among them, 39.003 billion passengers have been transported by taxis, an increase of 3.5% over the previous year, and the demand for passenger travel has increased unabated.
At the same time, the no-load rate of taxis is as high as 29.7%, which makes the city’s transportation capacity not well-realized(Cheng, Fu & de Vreede, 2018). At the same time, China’s economic development is stable, residents’ income is increasing, and consumers’ requirements for travel services are also increasing. However, the taxi industry is subject to strict quantity control, and the number of taxi practitioners has not increased with the increase of market demand. The travel demand is far greater than the supply of taxi quantity, which paves the way for the rise of online car-hailing.
Economic environment
From the change trend of China’s GDP growth in the past 10 years, China’s economic growth shows a steady and slowing downtrend(Gu & Huang, 2018). While maintaining stable growth, China’s economy is also accompanied by the optimization of economic structure and the transformation of development mode. With the implementation of the “Internet +” strategy, new Internet companies including taxi software have been developing rapidly, and the proportion of the third industry has also been improved.
Technology environment
Technological innovation is the main driving force for the continuous development of enterprises. With the rapid development of Internet technology, the rapid development of wireless network technology and mobile Internet technology in China confirms the arrival of the era of Internet Web3.0(Gu & Huang, 2018). The technology innovation brought by Web3.0 is not only applied in the field of Internet, but also its terminal products are widely used in the field of transportation and travel services.
Solving a problem
With the development of economy and the improvement of people’s living standard, people have more and higher travel demand. Because the supply in the market is less than the demand, many passengers are difficult to take a taxi. In addition, because of information asymmetry, it is more difficult for passengers to get to the car, and the driver can not find the passengers. People need a solution that can deal with the problem of information asymmetry between the two sides, make it easier for users to get to the car, and make the taxi utilization rate higher.
With the development of mobile Internet technology and the popularization of intelligent terminals, the emergence of online car hailing has become possible. Didi travel came into being in this context. In the initial stage of business, the company mainly launched a taxi app for taxis and passengers in order to reduce the rate of empty driving and alleviate the difficulties of taxi taking. Because it can solve the problems of high rate of empty driving and passengers can’t reach the car, Didi taxi (the predecessor of didi travel) quickly covered 32 first-line and second-line cities in China(Jiang & Zhang, 2019). At this time, the travel market has a huge development potential, the development of didi travel has entered an expansion period.
Gaps in the marketplace
Most of the business involved in car Hailing on the market is very limited. Didi travel currently involves many business sectors such as taxi, special car, express car, tailwind car, business, public transportation, bus, enterprise version, etc., and didi travel recently announced to enter the field of the shared bicycle, to solve the problem of “last kilometer travel” of users, to meet the diversified travel needs of users. Product diversification will bring more users, and bring the enterprise to make more profits.
Attributes of the entrepreneur (Personal characteristics)
Cognitive Factors
Cognitive factors means that entrepreneurs have a keen sense of the market. Cheng Wei, the founder of didi taxi, has the cognitive ability. Born in an ordinary family in Jiangxi Province, Cheng Wei is no different from all of us in his childhood and on his way to school. After graduating from University, the track of life began to change slowly. In 2005, Cheng Wei entered the Alibaba to engage in sales work. This work lasted six years. His long-term diligence and accumulation led him to be promoted to the regional manager of Ali, and then to the deputy general manager of Alipay business department.
In 2012, Cheng Wei found that China’s consumer goods market has been changed by the Internet, and there is only room for high-frequency demand of travel, so he chose the travel field as the entrepreneurial direction. At that time, it was generally difficult to take a taxi. Especially in the rush hour of traffic in the first-tier cities, Cheng Wei decided to start with taxis and founded Beijing Xiaoju Technology Co., Ltd. on June 6 2012(Ma, 2019).
Cheng Wei decides to develop a new taxi app. Didi’s trip is based on the following reasons: first, it’s difficult to taxi in China, which is the rigid demand of the mainstream of Volkswagen; second, there are successful precedents in Europe and the United States, hailo has just obtained a large amount of financial support in London, which shows that it can be implemented; third, in the network era, people generally need to use the GPS function in mobile phones.
The team
Entrepreneurial teams have both advantages and disadvantages for venture enterprises. For didi taxi, their initial entrepreneurial team is called “dream team”, which means that people with dreams can start businesses together. At the beginning of Didi’s entrepreneurial team, due to the shortage of talents, except for the R & D Manager, most of the other personnel came from colleagues and friends who worked together in Alibaba to explore the market, including Cheng Weiwei, Wu Rui and Li Xiang.
On the one hand, the previous association of entrepreneurial team members has a positive effect on the growth of enterprises. Because most of the entrepreneurial team members have had such a connection before, it makes them achieve remarkable results in reaching consensus and rapid action. However, in the practice of didi company’s entrepreneurial team, in the early stage of its establishment, it has a significant effect on goal recognition and team cohesion.
In the later stage of work, the former association of personnel also causes the formation of informal organizations, and plays a role of personnel differentiation. This leads to the shortcomings of entrepreneurial teams in building diverse connections with the outside world.
Travel industry is a technology and knowledge-intensive industry, so the key to success is to have excellent talents. There are many executives and technical talents in Didi’s founder team who are the top elites in the industry. They are highly educated, intelligent, and experienced. For example, Zhang Bo, who is responsible for software development, was once Baidu’s R & D manager. Such excellent talents laid a solid foundation for Didi’s later development.
Didi travel’s Cheng Wei and its investor Wang Gang have been responsible for market development in other Internet companies, and have made brilliant achievements. In 2012, they left Ali to start their own business. After the start-up, Wang Gang contributed 700000 yuan and Cheng Wei contributed 100000 yuan, so didi got the first investment by relying on Cheng Wei’s friends.
Meso-level dimensions
According to the important events and characteristics of the didi travel development process, the development process of didi travel can be divided into four stages: market establishment stage, growth stage, multi-product development stage, and product optimization stage. The division time and detailed analysis of these four stages are as follows.
Business Models
Market establishment stage (June 2012 April 2013): This is the period when didi travel enterprises have just been established.
| Core Strategy | Resources | ||
| Business Mission Make travel better Survival first | Basis of Differentiation Didi taxi app focuses on solving problems such as poor communication between passengers and drivers, and travel difficulties of passengers | Core Competencies The emergence of didi Travel software, in response to the call of the Chinese government for intelligent development of travel services, solves the long-standing complaints caused by information asymmetry. | Key Assets Convenient travel app Network platform |
| Target Customer(s) Ordinary consumers | Product/Market scope Didi taxi Didi Express | ||
| Financial
| Operations
| ||
| Revenue Streams Taxi and express cooperate with didi platform, and didi earns 15% commission | Product (or Service)Production App produced by the outsourcing company | Channels Didi website promotion app WeChat public number promotes APP Cooperate with enterprises to promote the app Key Partners Jinshan Tencent | |
| Cost Structure 1. advertising fees 2. Give drivers a large subsidy 3. Employee salary 4. Staff training 5. Software development and maintenance 6. Other | Financing/Funding 1. Founder investment 2. When the company was registered and established in July 2012, it obtained millions of angel investment (the specific amount is unknown) from Wang Gang, vice president of Alibaba. 3. Investment of USD 3 million of Jinshan venture capital Tencent invested $15 million | ||
During the growth stage
During the growth stage (May 2013 — February 2015), with the growth of didi, its products were gradually recognized by users, and its goal at this time was to maximize its own interests.
| Core Strategy | Resources | ||
| Business Mission Make travel better Profit maximization | Basis of Differentiation Didi app solves problems such as poor communication between passengers and drivers | Core Competencies After the introduction of didi app, it eased the problem of users’ difficulty in taking a taxi, reduced the empty driving rate of drivers, and increased the operating income of drivers. It was welcomed by passengers and drivers and established a very good reputation for the enterprise. | Key Assets Convenient travel app Network platform |
| Target Customer(s) Ordinary consumers Middle and high-level consumers
| Product/Market scope Didi taxi Didi special car Didi Express | ||
| Financial
| Operations
| ||
| Revenue Streams Taxi and express, special car cooperate with didi platform, and didi earns 22% commission | Product (or Service)Production Didi enterprise’s own R & D team develops independently | Channels Didi website promotion app WeChat public number promotes APP Cooperate with real estate and tourism enterprises to promote app Cooperation with map Enterprises Key Partners Jinshan Tencent Gaode map and baidu map leju real estate
| |
| Cost Structure 1. advertising fees 2. Give drivers a large subsidy 3. Employee salary 4. Staff training 5. Software development and maintenance 6. Other | Financing/Funding US $100 million led by CITIC Industrial Fund and Tencent | ||
Multi-product development
In the stage of multi-product development (March 2015 to July 2016), through merger and acquisition, capital operation enterprise-scale expansion, the enterprise continuously launched many business lines, increased stakeholders, significantly enhanced the market competitiveness of the enterprise, and rapidly expanded in the market. At the same time, the goal of enterprises in this period is to improve product awareness, so as to obtain and cultivate core user groups
| Core Strategy | Resources | ||
| Business Mission Make travel better Improve product awareness, Obtain and cultivate core user groups
| Basis of Differentiation Didi app solves problems such as poor communication between passengers and drivers | Core Competencies Didi app’s diversified products meet consumers’ demand for differentiated travel services. It enriches people’s travel mode and improves travel efficiency. High brand awareness | Key Assets Convenient travel app Network platform |
| Target Customer(s) Ordinary consumers Middle and high level consumers Office worker Need someone to drive instead People who need to buy new cars | Product/Market scope Didi taxi Didi special car Didi Express Didi driving Didi bus Didi test drive | ||
| Financial
| Operations
| ||
| Revenue Streams Didi taxi, Didi special car,Didi Express,Didi driving,Didi bus,Didi test drive cooperate with didi platform, and didi earns 22% commission | Product (or Service)Production Didi enterprise’s own R & D team develops independently | Channels Didi website promotion app WeChat public number promotes APP Cooperate with real estate and tourism enterprises to promote app Cooperation with map Enterprises Key Partners Jinshan.Tencent.Gaode map and baidu map leju real estate BAIC group, Lenovo Group, hungry, China Merchants Bank, Shanghai Haibo. Government departments. Colleges and Universities | |
| Cost Structure 1. advertising fees 2. Give drivers a large subsidy 3. Employee salary 4. Staff training 5.Software development and maintenance 6. Other | Financing/Funding Sina Weibo, CIC and Ping An, apple, China life, ant financial services, poly capital and other investors have invested a total of 8.042 billion US dollars in Didi. | ||
Product optimization
In the stage of product optimization (August 2016 to now), with the gradual development and maturity of the enterprise system, its shareholders, investment institutions, consumers and other groups have further grown. With the support and recognition of the government, the operation of the system has become more and more benign, and the expansion ability has been greatly enhanced. The close ties established with a wide range of stakeholder groups have made the system has strong competitiveness and the ability to resist external risks.
| Core Strategy | Resources | ||
| Business Mission Make travel better Product optimization | Basis of Differentiation Didi app solves problems such as poor communication between passengers and drivers. | Core Competencies Didi app’s diversified products meet consumers’ demand for differentiated travel services. It enriches people’s travel mode and improves travel efficiency. High brand awareness | Key Assets Convenient travel app Network platform |
| Target Customer(s) Ordinary consumers Middle and high-level consumers Office worker Need someone to drive instead People who need to buy new cars | Product/Market scope Taxi, special car, express car, tailwind car, business, public transportation, bus, the enterprise version | ||
| Financial
| Operations
| ||
| Revenue Streams Didi taxi, special car, express car, tailwind car, business, public transportation, bus, enterprise version cooperate with didi platform, and didi earns 28% commission | Product (or Service)Production Didi enterprise’s own R & D team develops independently | Channels Didi website promotion app WeChat public number promotes APP Cooperate with real estate and tourism enterprises to promote app Cooperation with map Enterprises Key Partners 1. Enterprises
2.Government departments.
3.colleges and Universities
4. Scientific research institutions | |
| Cost Structure 1. advertising fees 2. Give drivers a large subsidy 3. Employee salary 4. Staff training 5.Software development and maintenance 6. Other | Financing/Funding On September 8, 2016, Foxconn subsidiary hongzhun had invested $119.9 million in exchange for 0.355% of didi travel’s shares. In April 2017, the company received another investment, with Bank of communications, China Merchants Bank, etc. investing 5.5 billion US dollars together | ||
Macro-level dimensions:
Contextual backdrop, including national and international setting, industry, and culture.
Industry analysis
1. The threat of substitutes: the profit margin of an enterprise is first determined by the threat of substitutes. Alternatives to mobile travel refer to traditional travel tools such as taxis, buses, and private cars. Although these traditional travel tools can replace online car-hailing, their convenience is far less than online car-hailing. From an economic point of view, online car-hailing is more in line with consumer preferences, so the threat of alternatives is less.
2. Entry threat: the survival and development of didi travel company has also been in a rapidly changing industry competition environment, and is also constantly threatened by the entry of other enterprises. How to compete with new entrants and determine the entry barriers of the industry. The sources of entry barriers include: first, high capital cost. Second, scale economy and absolute cost advantage can form another kind of entry barrier. Didi travel does not form an absolute cost difference, the threat of new entrants is greater. Third, customer and driver loyalty to the brand can form barriers to entry. Finally, product differences also constitute barriers to entry. If customers think that product differences are actually difficult to imitate, then product differences will form an effective barrier.
3. Bargaining power of the buyer: the profit margin of the online car-hailing industry is partly determined by the bargaining power of the buyer. The buyer may be highly centralized or extremely decentralized. Compared with the highly centralized buyer, the decentralized buyer has little bargaining power. The buyer of didi travel is the customer with taxi demand. It is very sensitive to price and medium sensitive to quality. However, with the occurrence of safety incidents, the customer’s requirements for quality are becoming higher and higher. However, due to the wide coverage of Didi’s travel and the lack of substitutes, there is less choice for the buyer to buy online car-hailing, and the consumers of online car-hailing are scattered, so the buyer’s bargaining power is low.
4. Bargaining power of the seller: the seller of didi travel is the driver of the vast number of taxis, special vehicles, and other means of transportation. The cost of their registration on each platform is low, so the possibility of platform conversion is greater. And the market price is controllable for drivers. After comparing the wages, it is easy to change the platform. Therefore, the seller’s bargaining power is high. It is because of the better bargaining power of suppliers that the profit margin of online car-hailing enterprises declines.
5. Competition among existing competitors: before 2016, the biggest competitors of didi travel were fast and Uber China. After the merger with fast and Uber China, Didi travel seems to occupy the largest market share, and there are no competitors on the same ladder
Marketing analysis
4PS
Product strategy. Good products are based on the market, obtain the most basic brand reputation, and win the value recognition of consumers. Didi travel has always adhered to the product differentiation strategy and built its own competitive advantage. In a short period of time, it has developed express, hitchhiker, bus and substitute driving, and continuously extended its product line according to customers’ business level and application scenarios.
Price strategy. The starting price of the didi special car is two free tickets per day. The starting price is 15 yuan, 2.9 yuan per kilometer, a low-speed fee of 0.3-0.9 yuan per minute, over 15 kilometers, 1.5 yuan more cost per kilometer, and 1 yuan more cost per kilometer at night(Jiaojiao, 2019).
Promotion strategy. Most of the promotion activities are money burning. Many white-collar people experienced the fun of burning money in an Internet company in the early days of didi travel crazy. Because the car software is still a relatively new thing, the market is not trained, and users also need education, which will inevitably need to attract users to experience this new thing through a large number of discounts. From the beginning of didi express, Didi used a series of free promotion activities such as “orange Monday to guide users to use the software(Cheng, Fu & Yin,2016). Didi travel is mainly guided by the penetration promotion model competition and has accumulated a large number of loyal users and drivers
Channel strategy. The channel construction of didi travel in the Chinese market is becoming more and more perfect. Before didi travel, it mainly used the mobile payment promoted by Tencent and Alibaba; the strong support of the two platforms can not only obtain more potential customers, but also share more resources with each other for new online businesses.
Reference
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