Careem Company’s Analysis

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Introduction

Information technology has helped create very innovative business ideas. According to Hilty (2008), new firms are emerging thanks to the advancements which have been made in the field of information technology. Convenience is very important in modern society where people are trying to do a lot within a very short time. Being able to shop online was a major break and more innovative ideas are still emerging in various parts of the world. In the city of Dubai, technology is redefining how people are purchasing their products. New firms have emerged which are using modern technologies to offer their clients very unique products. One such firm is Careem.

Headquartered in Dubai, this online taxi company offers its customers a rare opportunity to book taxis and limousines in an online platform. It has software that its users install on their phones or tablets. Whenever these customers need the services of a taxi or a limousine, they only need to use their smartphones to order for the services. It is a convenient, timely, and cheaper service compared with the process of accessing and traditionally using taxis. In this paper, the researcher will conduct a detailed analysis of Careem as an innovative company in Dubai that is taking advantage of information technology to create a viable business opportunity.

Evolution

This business concept has emerged from a very simple idea. Traditionally, people who needed the services of a taxi in Dubai had to visit the stations where these taxis often park waiting for clients. They would negotiate with the drivers about the price based on the distance to be covered, time, and the geographical factors in the area. This was a complex process both for the taxi drivers and their customers. Sometimes clients would be forced to sit by the road hoping that a taxi would pass by just in time. As a way of overcoming this challenge, some regular taxi users started by taking the phone numbers of the drivers they consider reliable.

It meant that instead of waiting for the taxis or going to the stations, these clients would just call their regular taxi drivers. This was a major improvement because it eliminated the frustration of having to wait for a passing taxi. However, there was one challenge that remained unresolved. A client couldn’t have the phone number of all the taxi drivers. As such, if the regular driver is not available, such a client would be forced to follow the frustrating process of waiting for a passing taxi or probably visit the station. On the side of the drivers, it was not easy knowing when a client would come. Sometimes a driver would miss a client just because of a lack of proper communication.

As technology in the field of communication improved, innovators started coming up with different ways of linking customers with service drivers. Careem is one of the products that emerged in the field of transport. It is special software that people are advised to install whether they are regular users of taxis or not. Installing this software is free and it works with any android phone. Once installed, one can easily have access to taxi services without having to visit the bus station.

Leadership

Careem has a team of highly dedicated and innovative leaders who are visionary and keen on dominating the market in the Middle East. Currently, Careem is operating not only in Dubai but also in many other cities in the Middle East. In each country, some leaders are fully responsible for the operations of this firm. At the top of the firm’s leadership are three co-founders of this company. They are Mudassir Sheikha who is responsible for growth and expansion, Magnus Olsson who is responsible for products and technology, and Abdullah Elyas who is in charge of the business in Saudi Arabia. Johan Persson is the firm’s chief operating officer. Ankur Shah is the chief finance and development officer while Christian Eid is the vice president and marketing director of the company.

The department of business development and government relations is headed by Bassel Al Nahlaoui while Ibrahim Manna is the general manager in the emerging markets. Operations of the firm in Egypt are headed by Hadeer Shalaby and Yousef Tuqan is the Marketing and Analytics in Saudi Arabia. There are also a host of other top employees heading operations in various countries within the Middle East and North Africa countries. This firm is keen on employing young talented individuals as evident in their top leadership structure. Most of those senior managers are young individuals who are specialists in technology and marketing. They are very innovative and have played a critical role in the success of this firm since its inception in the year 2012.

Products Offered

Careem offers a platform that enables drivers of taxis and people who use taxi services to meet and conduct business on an online platform. According to Naylor (2015), the advancement in the field of information technology has seen many firms emerge offering very unique products. Services offered by Careem are an example of how innovation can lead to a unique business idea that is very viable. The figure below shows how this product works.

As shown in the figure above, once the client gets details of the nearest taxi driver, a communication is initiated. The client is informed about the location where the taxi driver will pick him or her, the time that it will take, and the cost of the service. This fully prepares the taxi driver and the client for the service to be offered and the cost associated with the service. The software links the client to the Careem driver in the nearest location. The client will be informed of the location of the driver and the time that the driver will possibly take to reach him or her. The driver will also be informed of the location of the client and the nearest route that can be taken. The client will be informed of the cost that the trip will take. As such, unnecessary bargaining and taking advantage of naïve customers are practices that are eliminated. The prices are determined by the software and the client will be assured of fair pricing. According to Aksoy and Denardis (2008), this technology also improves the security of clients using these services. They will be assured that a driver is a person certified by the company and his identity known.

The Uniqueness in the Model

Reynolds (2014) says that creativity is important when coming up with a business idea. An innovative entrepreneur should always try to solve problems that other existing products have ignored. In this case, the need to have taxis at the convenience of the clients has been a big issue not only in the developing economies but also in developed nations. Careem is a unique product that seeks to address this problem. One of the most unique factors about this product is that Careem as a company does not own any cars or limousines that clients use in the market. They only have a platform that connects clients with taxi drivers.

The drivers, often known as captains, are employees of the owners of the cars. The owners of these cars have a collaborative agreement with Careem where they release a certain percentage of the fees that are paid by the clients. Careem charges the owners of these taxis this fee for offering them a platform that makes it easy for them to reach their customers. This service makes the process of using taxis to be unique compared with what used to happen in the past. People now know how much the service will cost, instead of being subjected to exploitation as was the case in the past. It is also unique that the service is brought to the doorsteps of the clients unlike in the cases where the clients had to go to the stations to get taxis. It has taken full advantage of technology to offer superior products to clients.

The Stakeholders

It is important to look at the stakeholders in this business and their different roles and responsibilities. The shareholders form the first category of stakeholders in this business. As discussed above, they include Mudassir Sheikha, Magnus Olsson, and Abdullah Elyas. These are the people who came up with the idea and funded the project to make it what it is currently. The team worked very hard to transform the idea into a solid business project that has remained very successful to this day. They are still playing a critical role in enhancing creativity and expanding the market share for this company. The top managers of this firm form the second category of the stakeholders at this firm. The team is led by Junaid Iqbal who is the current managing director of the firm.

These top managers are responsible for formulating policies and ensuring that they are effectively implemented within the desirable period. They have to protect the interest of the shareholders of this company. The taxi drivers- who in this company are referred to as captains- play a critical role in ensuring that this firm is successful. They are the people responsible for picking the customers and ensuring that they are taken to their desired destinations. They also deliver the earnings to their employers on a daily, weekly, or monthly basis as per the agreement. Customers are important stakeholders because they are the primary target of the other stakeholders discussed. The fee they pay to the services offered to them makes this firm function normally. The government is also important for regulatory stakeholders.

Competitive Advantage

To determine the competitiveness of Careem in the market, it will be necessary to use Porter’s 5 forces analysis. The figure below shows the model.

As shown in the figure, one of the biggest factors that should be considered when analyzing the competitiveness of a business environment is the threat of new entrants. In an environment where new entrants can emerge with ease, Meiselwitz (2015) says that competition can become so high that a company may find it challenging to protect its market share. Naylor (2015) says that the city of Dubai is one of the strategic cities for firms planning to expand their operations to the Middle East from other parts of the world hence this threat is high.

The bargaining power of the suppliers is a major factor that may affect the normal operations of a company. Suppliers provide needed materials that are processed by a given firm before being handed over to clients in the market. Naylor (2015) says that when the suppliers have strong bargaining power, a firm can find itself in a situation were forced to give in to the demands it sets. Suppliers of the cars used in this company have relatively low power because of the choices that can be made in the global market. Fuel vendors also have low bargaining power.

The bargaining power of buyers is a critical factor that must always be put into consideration when analyzing the business environment. When dealing with organizational buyers, a firm may sometimes be forced to give in to their terms because of the purchasing power (Olsson & Rignér 2013). The services offered by Careem can be faced with this problem. The main customers are individuals, but sometimes it may be a force to deal with organizational clients that have strong purchasing power. Its services are also offered by other companies in the market.

The threat of substitutes sometimes becomes a major issue, especially when the market is highly competitive. When there are numerous substitute products, the level of competition will be high (Meiselwitz 2015). This problem is real for Careem because clients can use buses or trains instead of taxis. The level of competitive rivalry is always determined by the number of competitors operating in the same market and the approach they use to win customers. In an environment where there are many players, competitive rivalry can be very high (Naylor 2015). Uber is currently the main competitor of this firm.

Value to Stakeholders

This company offers the above-mentioned stakeholders value in different ways. The shareholders who have invested in this project earn dividends from the firm’s operations. They decide to reinvest such a profit or to use it in private needs. It is the responsibility of the top managers to ensure that these investors get their dividends regularly. The top managers and junior employees get value in the form of salaries and wages. These salaries and wages may be paid on a weekly or monthly basis based on the agreement between the employer and the employee. According to Meiselwitz (2015), in some cases, the top managers may be offered shares in the firm to ensure that they focus on increasing the value of investors.

At Careem, some of the top managers also have shares in this firm, making them part of the owners of this company. The customers who use these services get better value because the cost they are often charged is lower compared with conventional taxi services. They do not have to negotiate for lower charges because they are assured that the cost set is the best and is non-exploitative. It is also beneficial because it is delivered to their doorsteps or place of their convenience. They do not have to go to the bus stations to get these services. To the government, there is the tax earned from Careem as a registered company operating within the country. The firm also creates employment locally which reduces the unemployment rate in the country.

Revenue Stream and Growth

According to Meiselwitz (2015), the revenue stream and growth of a firm largely relies on the creativity of its top management in promoting new product development and expanding the market share. Careem has witnessed massive growth over the past few decades that it has been in operation. This growth is primarily attributed to market expansion projects that this firm has initiated over the recent past. The firm was founded in 2012 in the city of Dubai, but it has since expanded its operations beyond this city. Although its headquarters are in Dubai, this firm has its services available all over the Middle East’s major cities. Careem services are available in Abu Dhabi, Riyadh, Jeddah, Cairo, Muscat, and many other cities in the region.

Revenues for this firm have also been growing significantly over the recent past. According to Naylor (2015), Careem made a profit of over $ 72 million in the financial year that ended in 2015. The operations of this firm were affected in 2016 following several arrests of Careem drivers by the Dubai police. It forced this company to suspend its operations in Dubai, which is its main market. However, the misunderstanding was addressed and the firm is once again operational. It is expected that the revenues will go up. The decision by the management of this firm to expand its market share beyond the city of Dubai has helped in increasing the revenue stream. It is not only relying on the income from the United Arab Emirates but the wide Middle East and North Africa region.

Conclusion

Careem is a company that emerged out of an innovative idea based on information technology. The founders of this company identified a need in the market. They realized that users of taxis were struggling to get these services conveniently. The market lacked a way in which customers and taxi drivers could easily communicate. Being a team of young innovative and techno-savvy individuals, they used information technology to meet this need. They came up with software that easily facilitates communication between taxi drivers and those who need taxi services.

The company offers a platform where taxi drivers can easily reach out to their customers and offer them the products they need. Clients who need services of taxi only need to install the software on their smartphones. They will then have information about taxis nearest to them. This product is very innovative and has changed the transport sector in the Middle East and the Arab world where this firm is operating. It has benefitted all the stakeholders in different ways as discussed in this paper. The team of highly innovative leaders at this firm has worked very hard to ensure that this firm achieves success despite the competition from foreign firms such as Uber.

List of References

Aksoy, P & Denardis, L 2008, Introduction to information technology in theory, Thomson Course Technology, Boston.

Hilty, L 2008, Information technology and sustainability: Essays on the relationship between ICT and sustainable development, Books on Demand GmbH, Norderstedt.

Meiselwitz, G 2015, Social computing and social media: 8th International Conference, held as part of HCI International, Springer, Toronto.

Naylor, C 2015, Postcards from the Middle East, John Wiley & Sons Publishers, Hoboken.

Olsson, J & Rignér, E 2013, Careem: A car within 15 minutes: an investigation of the demand supply relationship of the ground transportation industry in Dubai, Lund University, Lund.

Reynolds, G 2014, Ethics in information technology, John Wiley & Sons Publishers, Hoboken.

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