[[STRATEGY SELECTED: BUSINESS EXPANSION IN MIDDLE EAST]]

OUTLOOK:
BlaBlaCar is the world's largest long-distance ridesharing community. Conceived in December 2003 by Frdric
Mazzella, and founded in 2006, BlaBlaCar connects drivers and passengers willing to travel together between
cities and share the cost of the journey. BlaBlaCar has more than 20 million members across 20 countries.
As of April 2015, the company had raised USD$100 million from blue-chip venture-capital firms including ISAI,
Index and Accel, plus earlier rounds of 1.2 million from ISAI and 600,000 from founders, friends, and
family.[1]
On September 17, BlaBlaCar announced it had raised another US $200 million "primarily from US investors"
in a round that valued the company at USD$1.6 billion. [2]
The service is accessible via the web, mobile and also via apps for iOS and Android.
Before the on-line payment, BlaBlaCar (ex-covoiturage.fr) has made his living with web ads and selling custom
ride sharing platforms for companies (e.g. Ikea, Carrefour) and cities.
The revenue (Business Model) was generated basically as below;

Most of BlaBlaCars revenue is derived from commission fee that averages at 10-15%

Rest of the revenue is coming from ad monetization (not sure but read somewhere) plus
partnerships (like the one with AXA insurance)

It usually doesn't charge any commission in the new markets like India and Mexico, so as to build a sizable
customer base and then slowly starts to monetize a market. As of now France, Spain, UK, Italy, Portugal &
Netherlands are the markets being monetized.
Backed by strong investors, BlaBlaCar aims to grow its customer base and eat away competition (through
acquisition) so that it can charge a commission fee which would be supported by a strong customer base
Since mid-2012, they deployed a booking system and then charge a few fees when people book a ride through
their site. Since the introduction of such system, BlaBlaCar's revenue has been increasing each year and the
company has developed to become a European market leader in ride sharing (current leader is carpooling in
Europe).

STRATEGY INTRODUCTION:
BlaBlaCar is serving 19 countries around the globe. It has grown significantly in the recent year facing a
competition from similar-concept companies like Uber, Lyft and Drivey.
For the next move, which strategy should it pursue in the future? Should it enter more countries? Add products
and services in existing countries? What would your recommend?
Since the company is facing a tough competition with similar-concept companies, it is noticeable that there is
still an untapped markets that might potentially be BlaBlaCar next move. As BlaBlaCar is showing a clear
interest in operating and developing its business in emerging markets e.g.: India, Mexico. Next step for
BlaBlaCar is to expand in Middle East countries where people usually struggle to have a good taxi service as
well as a crowded-cities would create a hassle for individuals to get a taxi.

Aboud George Khederchah

For: Strategic Management & Innovation Course Capstone Project Phase l
Coursera & Copenhagen Business School

WHY MIDDLE EAST?

Over the last few decades, the Middle East and North Africa region witnessed rapid population growth, with its
population swelling from 97 million in 1960 to 441 million [3] in 2015. The region also witnessed a process of
rapid urbanization during the same period. While only 30% of the regions population lived in cities and
towns in 1960 -compared to 32% globally- the urban proportion of the Middle East has almost doubled to 57%
and exceeded the world average which currently stands at 50%.
Case study of Dubai, United Arab Emirates suggested that though Dubai have invested heavily in developing
the Public Transport System introducing Dubai Metro the worlds longest fully automated metro system and an
operating 1,500 buses, still only 11% of population use it. The Taxi services available by the Road
Transportation Authority contains of 3,000 Taxi car of 35 million [4] trips in one year which still way behind
fulfilling market demand especially on weekends.

STRATEGY FORMULATION:
In order to achieve the selected strategy, prior study of below points should be intensively researched and
investigated;

PUBLIC POLICY UNDERSTANDING AND ADAPTATION: Looking at the current situation, Dubai has its
own government related taxi companies. Entry to this market would be quit hard to do as will impact on
governmental revenue and government budgets. Unlike in Cairo, for instance, Uber start to function covering
larger areas of Egypt itself. Suggestion that to carry discussion with
RTA (Road & Transportation Authorities) to tackle the idea of
partnering together. E.g.: some % will go to the RTA, and/or
taxies under governments company would be using BlaBlaCar
software as well.
Making use of Uber difficulty as a case-study and its [5] struggle in
Dubai, some points can be taken and discussed thoroughly with the
Coverage Network of Uber in Cairo
RTA. The opportunity that UAE is the only country in Middle East
that doesnt allow taxi-freelancing, which gives BlaBlaCar a potential
opportunity to establish a government relationship and operates in
this highly-consumer-demanding market. Chances that other countries potentially intergraded by Uber,
however, the competition is still fresh which also gives BlaBlaCar a good chance to entre as the Public Policy of
those countries are not yet formalized to allow/disallow concepts like Uber and BlaBlaCar.
CULTURE UNDERSTANDING AND PUBLIC SERVICES ACCEPTANCE LEVEL: While Middle East
countries fall under different types of cultures, behavior and social-relation aspects, majorly there is a wide
shared cultural practices where BlaBlaCar need to understand and adapt with. Following are some examples;
1.

Arab Culture is so about Family, unlike some European countries where individualism is taking over,
family loyalty is the greatest lesson taught in Arab families. BlaBlaCar should be expecting a miss-use
of the service in a sense of many-people will use one car. E.g.: A family. Since Arabs have
comparatively large-sized families, an option should be considered to notify the drivers about the
number of passengers.

2.

The Arab world is very influenced by Islam and it practices even if though not all Arabs are Muslims.
However, in that context, some of the family members, in particular, females would rather to have a
female taxi driver. That option can strength the use of BlaBlaCar if offered.

Aboud George Khederchah

For: Strategic Management & Innovation Course Capstone Project Phase l
Coursera & Copenhagen Business School

3.

The widely used official language in Arabic. However, Arabic might vary based on the spoken accent
of each country e.g.: Lebanese, Syrian, Iraqi, Saudi accents might vary to understand. By BlaBlaCar
understanding of this point, a customized lingual services can be offered through customized
marketing activities and campaigns, would be a very strong point for BlaBlaCar to have.

COST OF INTERNATIONALIZATION/EXPANSION: Starting to invest in Middle East requires full attention

to the details, ease-of-business, regulations and laws to help and protect businesses to grow. However, The
Free Zone of Dubai, known as Jebel Ali Free Zone (JAFZA) have been widely attracting investors to operate on
regional level. It offers a wide variety of services as we as a very minimal taxation. Needless to say, in the case
of BlaBlaCar, it also might be a potential decision to go to the Media City Free Zone where most of the hightech companies are based, e.g.: Google, Microsoft, Oracle, etc... The cost majorly will be running around
establishing a trade license, office operations and human resource. Following to that, an additional approvals
and permits should be taken from the DED (Dubai Economical Departments) so the company can operates
directly in the market.
Better understanding of the cost can be taken from the competition side. Uber have recently announced [6] an
investment of 250 Million Dollars to operate and grow business in Middle East UAE, Qatar, KSA, LEBANON,
EGYPT and BAHRAIN.
The cost of establishing a Fee Zone company can go around 6,800 USD for approvals and trade license issuing,
also, will be another 6,000 USD for DED permits. To operate a business, you need an office, majorly around
300 sq-m would cost of 40,000 USD. Aside to the Human Resource and other variable costs.

COMPETITION ANALYSIS: BlaBlaCar will majorly face a competition from the solo player Uber in Middle
East market. Ofc, some local similar businesses are starting to grow. E.g: Careem.
Uber Middle East is an office of maximum 20 employees, majorly, into business development and marketing.
Though normal people cannt feel Uber presence via local marketing activation, however, since UAE is majorly a
multicultural city, people carry the concept of Uber from Europe to Dubai.
Currant available data on Uber finances are not made for public, however, some leaks suggested that Uber is
not doing fine as a company. However, a leaked [7] document suggest that Uber was able to generate around
34,000 USD in Dubai and Abu Dhabi (probably, before the regional expansion) which obviously a loss making
business for Uber. Since then, Uber planned to invest 250 million to enhance and improve operation and
profitability in Middle East [6]

Aboud George Khederchah

For: Strategic Management & Innovation Course Capstone Project Phase l
Coursera & Copenhagen Business School

FORECASTING: Forecasting business in Middle East, especially for online business is a tough task. However,
taking UAE for example and setting a worst case scenario forecasting plan, we can look at below numbers [8];

Dubai Taxi - Owned by GOV. Sample Simulation

# Taxies
Trips Per year
Fair/Starting
Fair/KM
Average Trip/KM

$
$

3000
35,000,000
2.72
0.82

15

Yearly Revenue

$ 1,857,648,340

%Target Share via Government Partnership

BlaBla Revenue in UAE / Year
GP (Uber Estimation)*

0.35%
$ 6,501,769.19
20%

Profit
Net Profit

1,300,354
#N/A

Looking at the above simulated profit model, it has clearly missing the operating cost and other marketing and
variable costs. Needless to say, this model is highly dependent on government partnership of 0.35% targeted
trips shares and solely for one city in Middle East. It shows how potential is the Middle East market for a startup company like BlaBlaCar.

CONCLUSION:
To make an expansion strategy in Middle East, there is a highly points to seriously consider. Mostly related to
government policies and other traditions and cultural aspects. However, Middle East market is continuing to
prove the potential it has for start-ups. Though some countries are not highly operative via clear business and
investments laws, needless to say, the risk taken would be overcome by the highly consumer needs for similar
services.
Public Policy of Transportation, the cost of globalization of the company and the need for it, the cultural
barriers and product localization is a major points in the strategy formulation that will lead to a successful
understanding of the implementation techniques that need to be considered in later stages.

__________________________________________________________________________________________________________________
1* Cowan, Matt (14 April 2015). "BlaBlaCar has turned ride-sharing into a multi-million-euro business.". Wired Magazine UK. Retrieved 21
July 2015 via web.
2* Scott, Mark (16 September 2015). "BlaBlaCar, a French Ride-Sharing Start-Up, Is Valued at $1.6 Billion". New York Times. Retrieved 17
September 2015
3* According to Wikipedia: https://en.wikipedia.org/wiki/List_of_Middle_East_countries_by_population
4* 2011 Figures by RTA Official Report, Pg:24: http://www.rta.ae/wpsv5/links/stats/RTA_stats_2011.pdf
5* According to Khaleej News, Local UAE Media: http://www.khaleejtimes.com/nation/transport/uber-taxis-in-dubai-facing-crackdown
6* According to Bloomberg: http://www.bloomberg.com/news/articles/2015-11-03/uber-invests-250-million-for-expansion-in-the-middle-east
7* Uber's numbers seem ugly either way you look at them: http://www.businessinsider.com/uber-leaked-financials-look-ugly-2015-6
8* Uber's Blog. A Deeper Look at Ubers Dynamic Pricing Model: https://newsroom.uber.com/guest-post-a-deeper-look-at-ubers-dynamicpricing-model/

Aboud George Khederchah

For: Strategic Management & Innovation Course Capstone Project Phase l
Coursera & Copenhagen Business School