Capital taxi is facing competition from Uber in Ottawa and needs a new strategic plan. The business growth consultant will create two strategies: Strategy A focuses on economic and marketing approaches like finding new clients through better technology, building relationships, and client retention. Strategy B involves working with the government on issues like unfair competition and insurance requirements facing Uber. The consultant will evaluate the strategies based on the company's financial results and employee morale.

1. Capital taxi reborn
Giacomo Piazza
8461862
ADM 3318A
Presented to: Anthony Brown
24th
November 2015
Telfer School of Management

2. INDEX
1. Executive summary
2. Capital taxi company
3. Primary issue
-Unfair competition
-Privacy
-Insurance
4. The role of a business growth consultant
5. Strategy map
6. Strategy A
7. Strategy B
8. Implementation and contingency plan
9. Conclusions
10. References
1

3. 1.Executive summary
Uber is not just a service, but it represents a new meaning of transportation. Following the path of
globalization it was almost inevitable that such a new and technological app, available for all types
of smartphones, have spread around the globe. At the end of 2015 we have been witnessing the
growth of a concept, the sharing economy and, consequently, improvements of the technology in
order to make it available for people. This trend is developing around the world at a very high pace.
The advent of the internet, as an asset for companies had been exploited by Uber, that was able to
meet the needs of those millennials that prefer not to waste time and get things done very quickly.
As an example, at the beginning of the service, managers and young adults, with a high knowledge
of the web and its features have been the primary targets; and they had responded positively to this
new transportation trend. Thus increasing Uber's popularity and revenues.
Uber, that was born in 2009, has surfed the wave of smartphones development and has reached
those “tech-addicted” at first glance. The company system is based on that sharing principle that
gives the user the possibility to share Uber's driver records, give him feedback and even decide who
would be the next driver. On the other side, Uber's employees can do the same and being aware of
their clients' needs and preferences. This feature has been criticized around the globe, where this
new concept of transport has been exported and has led to one of the main drawbacks of the sharing
economy; that is the privacy. This issue has been brought to many consumer associations' attention
in different countries. As a consequence the service was suffering of bad publicity, as it happened to
other services, like Facebook, which is based on the same shared economy principle; in fact people
can freely post or look to others activities without purchasing any access and scrolling the news
feed freely. The privacy is one of the main issues that will be discussed in this strategic assignment.
However, I will focus better on another primary issue; that is the conflict with Capital taxi
company, based in Ottawa, Canada. At the beginning of 2010, it was hardly conceivable that a
company born online would have been able to reach remunerative results as it is doing today.
Consequently major taxi companies all over the world where not putting so much attention on it.
Although Uber was born in what can be defined a niche market, its todays success is overcoming
specific targets and portions of population; following that, traditional taxi drivers are facing an
incumber threat. Capital taxi is involved today in a hard competition against Uber, accused of
stealing customers, offering unfair and dumping tariffs and more important, Uber drivers do not
need certifications as a taxi driver license, allowing them to save around CAD$ 100000.
The recent global crisis and the following recession had represented the perfect environment for the
rise of a clever consumer (Steven Dale Soderlind, 2010) that mainly prefers to get the best, fastest
and cheapest service available. However taxi companies weren't able to adapt to the new consumer
needs and, following inflation, their prices increase while the demand for them drops significantly.
According to the Washington Post1
, in US the taxi industry is worth $11 billion while Uber, which
was able to adapt dynamically to the consumer demand has reach $18 billion in just 6 years
operating in 43 countries. But as the sociologist Robert E. Johnston (1966) said, the progress and
the innovation can not be stopped and the world is going to achieve a level of interconnection and
interdependence over and over again higher.
Capital taxi needs today a new strategic plan in order to face the competition that is eroding its
profit and stealing clients in the Canadian capital. The business growth manager role will be
focused on the creation and implementation of strategies and plans in order to keep the Capital taxi
niche safe and avoid further losses by creating connections with the local government and consumer
associations.
1 Taxi industry today, Washington Post, https://www.washingtonpost.com, july 2015, last review
Nov 1st
2

4. 2. Capital taxi company
Capital company represents the biggest market leader in the Ottawa taxi driver industry. It counts
almost 200 cars and drivers all over the Canadian capital and in its neighborhoods. During last years
it has been through a radical change due to an increase in competition. In fact, while in the '90s and
throughout the first years of '00s the service was manly reliant on a physical taxi request, that is the
client must have been present in the nearby, today it has adopted a satellite based technology in
order to offer to customers the fastest possible response. In addition this has allowed Capital taxi to
improve its efficiency and lower the fixed costs; the latter was possible by calculating precisely the
route without consuming any further petrol. Moreover, in order to respond to the facing competition
coming from Uber, it has adopted an approach based on technological improvements such as
creating an app and a website where it is possible to book the next ride.
3.Primary issue
“Taxis have moved on from the days of having to hail a horse-drawn carriage. This is
generally considered as progress.” (Duncan Middleton, Oct 6th
2015, BBCnews)
The taxi industry is not the first one to be overcome by what can be called progress. The progress
can be seen as one of the main driver of globalization (Smith) and is the key to innovation and
improvements. The internet has replaced postal delivery, music, travel, television and movie
industries and even gambling. Uber is growing in a relatively new environment, supported by the
new generation. This means also a social change, testified by the shift from “what is mine, it is
mine” towards “what it is mine, it is also yours”. Uber is indeed operating in a changing economic
world and in fact its success is related to the new generation of users and their own status symbols.
But as on one side there are gainings on the other side there are losses. The traditional taxi industry
is struggling against Uber and there have been protests against the company across the world.
Primary issue: unfair competition
The main issue is reliant in Uber's nature. That is first of all what can be considered as an unfair
competition. In fact Uber is operating against all sort of regulations across the city of Ottawa. More
precisely, though the meter Uber uses does not look like a traditional taxi meter that measures time
and distance as the ride progress, it still work like it and it calculates the tariffs under a city code. So
the system uses the same route tariffs, but the company is able to apply low tariffs since there are
low fixed costs. For example the car that the Uber driver uses is of its property. In addition the
driver does not need the taxi patent and consequently does not pay to the government the amount.
Microeconomic teaches us that keeping low fixed costs should be exploited as a strategy of
lowering the price. Doing so Uber is able to operate with low tariffs. During the legal action against
the company in June 2015 (Metro Ottawa) Uber was accused to use predatory pricing and dumping
tariffs. The latter is characterized by prices hardly below average that brings the competition to
decrease its prices and inevitably running in deficits and be pushed out of the market. Traditional
taxi companies are complaining about the way Uber drivers operates since the new company is
creating new barriers to entry the market. Barriers to market are all those obstacles that competition
face when operating in an economical environment. Nowadays Capital taxi is struggling in order to
increase its revenues, since it cannot follow the path of lowering fixed costs. A traditional taxi
3

5. driver in Canada pays CAD$ 250000 dollars in order to get a licence that allow him working
following rules. In Canada, among the principal cities, like Ottawa and Toronto, taxi drivers started
protesting as soon as the service came out. They, in fact, report Uber to steal customers using a not
legal service, since the Uber drivers, in first instance do not need a license to transport passengers.
During the summer, in Ottawa, taxi drivers blocked streets and protest against Uber which was
temporarily shut down.
Secondary issue: privacy
The second issue relies on one principle that with the advent of the internet has suddenly become
centre of multiple disputes; privacy. On November 2014 it was reported by the Globe and Mail of
Toronto that Uber was collecting tons of data on its passengers. The company did not have in fact a
clear privacy policy in place and called its data collection “Godview”. In other words the company
employees could see the riding patterns of any passenger and use those information for their own
purposes.
Secondary issue: insurance
Uber drivers do not have a real taxi license so if something happens they are protected, but clients
are not. Instead with traditional taxi service the customer is fully covered by assurance. The
company in fact don't have a proper accident coverage. By law, drivers must declare to their
insurance company if they’re driving passengers for hire so the insurer can provide the proper
policy and accident coverage.
4. The role of a business growth consultant
The role of a business growth consultant is aimed at improving an organization's market position
and consequently achieve a stable financial growth. Usually this job is based on a long term strategy
that allows the company to gain strategic goals, build customer relationships, identifying new
business opportunities and eventually increase sales opportunities. This job can be categorized in
the sales department. In fact a business growth consultant should have a persuasive approach in
order to convince potential new customers and provide them support in order to build long lasting
relationships. Creating new clients networking and advertising are two of the main strategies that
should be followed.2
They are also required to grow and retain existing accounts by presenting new
solutions and drive the organization to innovation and progress. Strategic planning is a key part of
this particular job and this requires a good knowledge of the market, the competition and the
solution that a company should adopt.
5.Strategy map
In this paragraph I would like to summarize what Capital taxi as a company is going to improve and
manage in order to face Uber competition. Here there are some steps based on lecture notes
(International business lecture notes, Nov 17th
)
First of all, goals and objectives. Since 2011 there has been a huge drop in taxi's revenues and that
is due not to an increasing of prices applied by taxi companies, but on the low and sometimes
dumping prices of Uber service (Economist, May 2013). The first objective for Capital taxi is to be
more attractive to clients, in order to boost its revenues and improve its image. The second objective
is to lower fixed costs, in order to put little reductions on fairs and allow clients to spend less
without the danger of a default for the company. Objectives should be SMART (lecture notes, Nov
17th
);thus they should be specific, measurable, achievable, realistic and finally time oriented).
2 http://www.businessdevelopmentmanagerjobdescription.com, last review 20th
Nov
4

6. Second, internal evaluation. Capital taxi in the late semester of 2015 is actually loosing CAD$
400000 dollars due to competition (Ottawa metro, Sep 2015). The internal evaluation is not just
based on earnings and profit, but also on drivers and employees morale. As and example I had the
opportunity to ask to a Capital taxi driver some questions regarding salary reduction and how they
feel about that. The question was “How do you feel about your salary change since the introduction
of Uber?”. The answer of Adam Perrault was “Actually I start to see some changes in the last years.
I now that Uber service was introduced in 2009, but in Canada it has become a “status symbol” just
in the last months. I was earning around CAD$ 1700 per month, excluding tips and bonuses from
the company, but in August, for instance, which is the “tourism period” I just saw CAD$ 1300”.
Adam is a driver, but he is also a father of two children and the first question arises in his mind is
that how can he afford some services like university or more simply buy a new computer.
Third, environmental analysis. Capital taxi is a local company that operates just in the Canadian
capital and in its neighborhoods. As a consultant I would like to point out that is quite difficult for a
company that is struggling from competition to expand its business. Maybe this strategy can be
pursued on a long term bases. This can be seen as a trade barriers. In addition it is better to have a
bigger picture of Capital taxi's competitors. Uber is the main one, but there is also Blue city line and
other taxis companies coming from outside the city. As the Wall Street guru Warren Buffet said
(Warren Buffet: my story, 2002) its better to wait then run for profit. In addition the government
play a key role in the environmental analysis. In fact, in many countries the innovative service has
been considered illegal mainly because of unfair competition that could inevitably drive out of the
market others competitors. As more then one time it has been underlined in this essay, according to
economic theories and marketing principles, a competition based in lowering prices will came up
with the default of the company that does not have enough earnings to cover its fixed costs. The taxi
industry in fact says its business has dropped with the arrival of the new transportation service. In
the city cabs have a base fare of $4.15 while Uber $2.25 (The Canadian Press, 10/2015).
Fourth, stakeholder analysis. Capital taxi company is 60% owned by private stakeholders and 40%
owned by the local council (Council administration paper, 2014). Following the law, all taxi drivers
need a special license in order to be allowed to transport passengers. This license costs around
CAD$ 250000 in the city of Ottawa. Moreover this sum should be divided between the taxi
company and the local government, providing revenues from both parties.
Fifth, advantageous niche. Capital taxi was born as a service for middle income people. The market
niche is serving is characterized by tourists, workers and students that are searching fair tariffs in
order to get to their preferred destinations. In the last month the company is thinking to create an
additional added value based on new hybrid cars that allow the company to save money and reduce
carbon footprint.
Sixth, implementation and tactics. As a business growth manager I will describe two strategies. The
first one is based on an economical and marketing approach while the second one is based on
government improvements.
Seventh, measurement and evaluation. The last step is based on the feedback given both from the
company's economic results and from the employees morale.
6. Strategy A
The first strategy I would like to present is based on economical and marketing principles. The
purpose of this strategy comes from a good understanding of the growth consultant job description.
➔ Find potential new clients
The first step for Capital company is to increase its network of client. The first step is a
market research that allows the management of the company to be aware of possible future
5

7. clients. In order to do so, the company need to meet customers needs. Suppose you're a
tourist coming from abroad and you need to get from the airport to the city centre. Capital
taxi should create an app that can allow the customer to know exactly where the nearest taxi
is and the fair that he or she should pay. This improvement is quite like the Uber strategy,
but the main difference is that the service is completely legal.
Marketing strategies such as advertisement based on flyers and brochures inside the plane
cabin and just outside the airport are crucial in order to attract the customer attention. From a
geographical point of view it is better to improve the communication in the Ottawa's
surroundings by creating stable relationships with local hotel and other recreational areas.
➔ Build a strong relationship with new clients
In this section it is important to create a network with new clients. The service that Capital
taxi gives should be unforgettable. For this reason the company will give cards and gifts that
allow the consumer to be pushed once again to use this service.
➔ Clients retention
The best way in order to retain clients and create long lasting relationships is to present new
products and services, strengthened the customer needs service and participate to clients
focus groups. There are some activities that Capital taxi can enhance. The first one is, as it
was previously mentioned, improve technological change. A company does not to be
afraid of progress. When the smartphones era started, Nokia was a market leader, but it was
losing terrain because it was planted in an old vision of mobile devices (Economist 2013).
After years of drops in sales it decided to change and improve its cellphones adopting, for
example the touch screen technology. What Capital taxi can do is to create an app, following
the Uber success that allow clients to know perfectly their final tariff, their driver and his
records. The second change is to buy electric or hybrid cars in order to reduce pollution and
be more environmentally friendly.
➔ Understand the market
Source: http://nipunaliyan.blogspot.ca/2013/12/silicon-valley-and-porters-diamond.html
I will use the Porter diamonds to have a better understanding of the cluster industry where Capital
taxi is currently operating (Michael Porter's Diamond Theory).
The first step is to understand which are the factor conditions. Capital taxi is a company
characterized by skilled employees since they have a license to transport people that can be
6

8. considered a primary asset. This gives the company a primary advantage against Uber, since they
do not have drivers with license and consequently they are operating against law. The second step is
the related industry. Taxi industry is mainly related to the transport in general, particularly in the
Canadian capital. Sometimes the success of transport brings to the success of companies. In Ottawa
there are companies such KPMG and Deloitte that needs taxis in order to get managers and
employees there for working. In addition tourism is reliant on transport. So Capital taxi need to be
efficient in that way to provide precise services and transparent tariffs to clients. The third box is the
demand side one. It is important to consider that Capital taxi is serving middle income tourists,
managers and employees. Finally the organization strategy. Capital taxi is characterized by an old
model based business. Innovation should be consider as the new driver in order to revitalize all the
company. Finally chance events and particularly government decisions can affect the Capital taxi
company operate.
If the strategy A does not work, as a consultant I will approach the matter in a more deeper and
diplomatic way with Uber.
7. Strategy B
The second strategy is mainly based on creating a coalition between the Capital taxi company and
Uber. This can be seen as the first step of the establishment of a lobbying strategy. Here the
coalition will have the purpose of creating an agreement between taxi drivers and Uber drivers.
Capital taxi company's coalition will be composed of several actors.
Media: they represent an important part of our coalition since Capital taxi needs more coverage.
Moreover it is important to have a strong and lasting relationships with media since they can
influence people's behavior. The medium is the message (Marshall McLuhan, 1964). Medias should
be composed by traditional one such as local newspaper and flyers, but also of online media like
social networks, blogs and well structured websites. As a consultant I suggest to create an ad
campaign in Ottawa to explain to people the concept of Capital taxi, including its new features
service and tariffs. Television is quite expensive even broadcasted in local channels the
advertisement will cost around CAD$ 4000 (Media express consultant, Nov 2015). Facebook,
twitter and other social media are free and hire a journalist in order to write an article on the Ottawa
city should be a good strategy.
Institutions: as we have more than one time pointed out, also in the main issue, Uber in set now in
several countries, but since the nature of the service overcome some rules, it is consider illegal in
some. Capital taxi should underline that the regulation of the Uber service will create a job losses
for the company and for others traditional taxi corporations. These institutions will give the
company support and the help in order to reach an agreement with Uber drivers and regulate prices
on the Ottawa's market.
Stakeholders: these people have quite an important power in the society and can have influence
over the local government decision. So having their support in the coalition can help the company
in the lobbying strategy.
Anti-trust Association: the anti-trust association has the aim of regulate the competition in markets.
According to Growlings anti-trust consultants, Uber is behave illegally for a main reason. That is
dumping tariffs. As seen before the company is applying below the market tariffs in order to attract
more clients. But doing so it is pushing out of the marker other taxi transport companies, like
Capital taxi. If only Uber drivers are present on the ride services market there will be created a
single offer to customers, or better said a monopoly. Thus, Uber will be a price maker as in a
monopolistic situation, situation that the anti-trust wants to avoid. Thus, having Capital taxi and
other companies that provide same kind of offer than Uber does, will create some competition in the
market and companies will be price taker according to supply and demand trends. That is the
7

9. general principles of free market3
.
This second strategy is mainly focused on the findings of an agreement with Capital taxi, Uber
company and the local government of Ottawa. One of the possible subject that can be brought to the
attention is the Uber's lack of safety in its service. Moreover it is important to have a free and easy
access to drivers' database.
8. Implementation
Implementation or business development plan is the most crucial part for facing Uber competition
and allow Capital taxi company to be safe in the transportation market of Ottawa. The first point is
to attend associations events and conferences. Moreover it is important to provide feedback and
information on the market to the stakeholders. Here is an example on how a meeting should be
entertained. The first thing to do is to determine the date and notify potential participants. This is
the first step to take in order to put the settlement date in all the participants agenda, so they can
plan ahead all their expenses and travels. The second step is to determine the format of the meeting.
The most traditional technique is to organize members of the organization to go to the offices of the
officials. However, organizations have been known to have receptions or forums, at which they
invite members of the coalition to speak on particular issues and take questions. Third step is to
determine a location for the meeting that needs to be suitable both for Capital taxi, Uber and the
government council. The fourth and most important step is to determine the issue and the content of
the meeting. The first rule is to not discuss too many issues. Trying to discuss too many issues will
only result in confusion and no commitment from the elected official. Information on the issue will
be sent before the meeting in order to have a better understanding on what will going on. In addition
there will be a summary at the end of the discussion in order to recap all the issues discussed during
the meeting.
1st issue: the first issue is that Uber should be legally approved by the local government otherwise it
will be consider by Capital taxi companies and other competitors as an illegal service.
2nd
issue: build a strong business plan in order to demonstrate that Capital taxi has been hugely
negatively affected by unfair competition and dumping tariffs.
3rd
issue: regulate the market for transportation.
Contingency plan
Capital taxi's objectives are many and sometimes are hard to be pursued. In order to improve sales
and revenues it is important to build an accurate and precise business plan. Thus it will be possible
to calculate exactly the costs of improve the company and the service. If this does not work it is
better to go down to the strategy B, where a dialog with government and competition should be
more easily to get done. As I growth consultant manager I will consider three main corporate level
strategies in order to have a wider choice if one of them wont work (lecture notes, Nov 17th
).
Growth: this strategy is related to the strategy A written before. It is designed to increase the
business scale of corporate activities.
Retrenchment: this strategy can be use only if there will be huge losses and deficit in the balance of
payment of Capital taxi, since it is mainly focus on the reduction of a business.
Stability: the final one is characterized by the behaviour of guarding against the change. This
strategy is the one that is being used since now by taxi companies. The main objective here is to
maintain the current position into the market. If strategy A and B won't work, as a growth
consultant manager I will suggest to maintain the local position. That is continuing to offer the
service waiting for a government intervention for regulating transport across Ottawa.
3 Principles of marketing 15th
edition by Philip Kotler and Gary Armstrong, Jan 2013
8

10. 9. Conclusions
Capital taxi is facing today a huge and hard competition coming from Uber. Here I have presented
two strategies that should be follow. The first one was based on marketing and economical
principles, while the second one was a more lobbyist approach in order to reach a common solution
between Capital taxi and Uber through the intervention of the local government. What it is
important to underline is that the Uber case is in a continuous evolutionary process that lead many
companies to constantly change their strategies. As a consequence Uber challenge has become one
of the main transportation concerning around economies. Taxi drivers are struggling to gain the past
prestigious and earnings. It seams that legal problems are playing in favour of Capital taxi, since
Uber drivers do not need the same requirements to do the job; but Uber does not stop here. The
introduction of Uber service was almost inevitable since the technology of smartphones and sharing
is increasing, particularly in the last decay. People are happy to spend less, gaining in time and in
the quality of the service. Governments and institutions are trying to find a middle path way in order
to create enough room in the transportation business. A successful business plan now it is necessary
for the company. In 2015 the technological progress is inevitable and having a “tech” company
based can lead to a competitive advantage against other taxi companies. Uber was the first to adopt
the smartphone devices in order to reach the maximum number of clients, but what Capital taxi
believes in is the it will not be the last. The solution becomes even more clear and it is to follow the
innovation.
9

11. 10. References
Bibliography:
• The competitive advantage of nations, 1990 by Michael Porter;
• Technical Progress and Innovation, Robert E. Johnston, Oxford Economic Papers, New
Series, Vol. 18, No. 2 (Jul., 1966), pp. 158-176;
• The Sharing Economy: Solidarity Networks Transforming Globalization Hardcover – Aug
2004 by Lorna Gold;
• International Business: Competing in the Global Marketplace Hardcover – Feb 10 2014 by
Charles W. L. Hill;
• The Business of Sharing: Making it in the New Sharing Economy Hardcover – Apr 7 2015
by Alex Stephany;
• Consumer Economics: A Practical Overview – Gen 2010 by Steven Dale Soderlind;
• Business Development: the manager job description – Feb 2014 by David Managat;
• Understanding media: the extensions of man – 1964 by Marshall McLuhan;
Web sites:
• Taxi industry today, Washington Post, https://www.washingtonpost.com, july 2015, last
review Nov 1st;
• www.capitaltaxi.com, last review 18th
Nov;
• I n s u r a n c e i n d u s t r y i s s u e s w a r n i n g o v e r U b e r , T h e T o r o n t o S u n ,
http://www.torontosun.com/2015/07/30/insurance-industry-issues-warning-over-uber, july
2015, last review 15th
Nov;
• Uber v. taxi [https://thewalrus.ca/uber-v-taxi/], last review 1st
Nov;
• Uber will appeal order to shut Brussels service using non-professional drivers
[http://www.reuters.com/article/2015/09/24/us-uber-brussels-
idUSKCN0RO1PW20150924], last review 2nd
Nov;
• Legal status of Uber's service [https://en.wikipedia.org/wiki/Legal_status_of_Uber
10

12. %27s_service], last review 13th
Nov;
• Uber [http://www.thecanadianpress.com], last review 5th
Nov ;
• The rise of the sharing economy [http://www.economist.com/news/leaders/21573104-
internet-everything-hire-rise-sharing-economy], last review 14th
Nov;
• The Uber effect: how the “sharing economy” has shaken Ottawa's taxi industry
[http://ottawacitizen.com/news/local-news/the-uber-effect-how-the-sharing-economy-has-
shaken-ottawas-taxi-industry], 19th
Nov;
• Anti-trust consultant, http://www.gowlings.com, last review 19th
Nov;
• Uber evaluation and problems, http://techcrunch.com/2014/12/16/an-uber-valuation-comes-
with-uber-problems/, last review 15th
Nov;
• Uber treats, http://www.ilpost.it/2014/01/27/problemi-uber/, last review 21st
Nov;
• Campaign against Uber, http://us8.campaign-archive2.com/, last review 16th
Nov;
• How to arrange a meeting,
http://www.ena.org/government/EN_411/Documents/InPersonMeetings.pdf, last review 19th
Nov;
• Uber website, https://www.uber.com/legal/privacy, last review 6th
Nov;
11