Mariam Zalumyan FTMBA 2

Digital commerce; Assignment #1

1. gg taxi launches an Uber- like service in Armenia. How is ggTaxi different from Uber?
Uber is sophisticated and big company operating in 72 countries and 425 cities, who had raised
$11 million initially, later by late 2015 $8 billion in total and was valued at $51 billion. Whereas
ggTaxi is a new established company in Armenia operating in 2 countries- Armenia and Georgia,
mostly in a few cities. gg had raised $200,000 and is now valued $4 million. Below are the
points showing the important differences of gg from Uber.
1. Uber is trying a strategy of subsidizing drivers to keep fares down, by rapidly expanding into
new cities, like Yandex Taxi in Armenia. Whereas applying low prices does not match ggs
strategy.
2. gg keeps 12 per cent of the gross fare as commission, not exceeding 5,000 AMD, while Uber
keeps from 20 to 30 per cent, depending on the city.
3. Uber uses credit cards, while gg takes fares on cash.
4. gg frequently organizes charity rides. For instance, it drives the families of RA defenders to
the boarders of Armenia, which is a unique customer caring service, different from Ubers
social responsibility. gg also organizes free rides in random days. In addition. The company
offers very low prices in less developed cities, for example, in Gyumri the minimal fare is 200
AMD. This unique social responsibility enables the company to attract and retain many
customers.
5. Uber is investing heavily in developing its own mapping capabilities by buying assets,
including the mapping startup deCarta, while gg is using Google map, because it is a costy
initiative, needing more investments.

Mariam Zalumyan FTMBA 2

Digital commerce; Assignment #1

6. Uber has more analytical tools, which are missing in ggs app. Uber riders can see their
earnings separating out the take home money; they can also see their daily, weekly totalized
earnings. It also has place to rate passengers as well, and allows writing feedback. Also it
shows a history about the drivers- the numbers of their total trips, rated trips and the 5star
trips. While gg is on its way of development.
7. Uber is launching new services, such as the delivery of goods and carpooling, whereas gg
does not have such services.
8. Uber uses the surge pricing model, where it raises its prices up to 7x its normal fares, in order
to meet the demand in occasions when demand exceeds the supply, for example, during rainy
weather or New Year eve.
2. How important is to be first in a market?
It is important to be a first-mover, because first mover has more time than coming entrants to
accumulate and master all needed knowledge, and thus maintain its competitive advantage. For
example, during years Uber developed algorithms to keep riding with highest efficiency. For a
new entrant it will take time and resources to develop such advantage. Secondly, it is important
to be the first-mover, as it can preempt the coming entrant access to scarce assets, for instance in
case of gg an example are its devoted, loyal and fair drivers. We could see that when Yandex
entered our market, people were complaining about the poor service received from Yandex
drivers. Meanwhile, first-movers build an early base of customers who can find inconvenient to
switch to the offerings of later entrants. For example, after the entrance of Yandex in Armenia,
many of gg customers stayed loyal to the company. It was for the quality of service they were
accustomed to.

Mariam Zalumyan FTMBA 2

Digital commerce; Assignment #1

2.1 How can the first player develop long- term competitive advantage?
In order to keep competitive advantage for a long time, companies need to reinvent their
strategy, for example by making new value propositions. For instance, in order to stay the market
leader gg offered new, different services, like ggXXL and more recently ggEconom.
3. In2016, Yandex enters the Armenian market. How does it try to compete?
Yandex taxis strategy was to enter with low prices in order to win loyalty and grab market
share. The company kept the prices low by subsidizing its rides. As a result, it entered the market
by a minimal fee of 100AMDs for a ride from 1KM up to 5KMs. On the other hand Yandex tried
to compete by offering customers to pay by credit cards. In addition, Yandex is engaging taxi
services to become Yandex partners as well, whereas gg was partnering only with individuals.
By this all ways it tries to position itself differently from gg and fight for market share.
How is this different from Ubers strategy to enter a market? The main difference is in the
special criteria, which drivers should met. Uber had very strict policy of background checks, but
it is missing in Yandex. On the other hand Yandexs constantly changing and not- united pricing
policy definitely distinguishes it from Ubers strategy (it had fixed cost, except the time using
surging pricing).
4. You are the CEO of GGTaxi- what do you do?
1. If I were the CEO of gg, I would definitely focus on finding further investments in order to
make improvements, thus increasing the companys value. This will create a huge barrier
towards the new entrants and existing competitors, and will enable the company to sustain its
existing market share. For example, gg can address these investments into improving its map,

Mariam Zalumyan FTMBA 2

Digital commerce; Assignment #1

because its competitor Yandex has more user- friendly and better map. By investing in its own
mapping, gg can gain a competitive advantage and benefit by providing better routes for drivers.
Or maybe gg can add more services, use price increasing models for reaching the demand, or it
can improve its app by adding passenger evaluation, as well as a driver feedback as Uber has,
etc.
2. I would also add ride- sharing to the companys services. This service would better match
Armenian market. That is because it will be more demanded service in Armenia, rather than
luxury car riding service or goods transportation service.