SOE09601: Lyft was initially only a ride-hailing firm but has since expanded into offering vehicles for hire, a bicycle sharing system: Strategic Management in a Global Context Case Study, ENU

 Case Study 

In recent years, several tech start-ups have grown in size and scale to become dominant players in the modern global economy. Amongst these are Lyft Inc and Uber Inc, both American tech start-ups offering ridesharing services. Lyft was launched in 2012 under the name Zimride, changing the name to Lyft in May 2013, and it is viewed as a smaller rival to Uber.

Lyft was initially only a ridesharing/ride-hailing firm but has since expanded into offering vehicles for hire, a bicycle sharing system, motorized scooters, and more recently food delivery. In 2017, Lyft entered the food delivery service, initially partnering with Taco Bell for a short period. In 2020, the firm entered a partnership with another tech start-up, GrubHub to develop a takeout delivery service. This strategic move was chiefly undertaken in response to the outbreak of COVID-19 and reduced ridership.

The scooter services offered by Lyft are motorized scooters that can reach speeds of 15MPH; customers unlock them for a small charge and then pay additional fees per minute of usage. In 2019, Lyft partnered with Segway-Ninebot, in order to offer a more durable scooter. Lyft had previously partnered with Chinese multinational, Xiaomi, for its scooter service, yet this relationship ended in 2018. Lyft’s car rental service is offered in partnership with the German multinational car rental service, Sixt. This allows Lyft customers to rent a vehicle through the Rental tab of the app. Customers can get a Lyft ride to a Sixt location where they can pick up the rental vehicle.

Lyft holds around 30% of the market share in ridesharing services in the US, and in 2018 its revenues reached $2.2 billion. In 2018, there were 4.2 billion rides given by Lyft. Whereas Uber has an extensive global presence, as it pursued a rapid internationalization strategy, Lyft is restricted to North America. This presents Lyft with the opportunity to learn from Uber’s global activity and strategy. When comparing Lyft and Uber, Lyft has made several attempts to present itself as the more ethical alternative to Uber. Lyft has taken this approach as in recent years Uber has experienced a series of public relations failures, with allegations of systemic sexism, sexual harassment, and a disregard for regulation. Lyft has seized on this opportunity to present itself in a different light, with substantial donations to charity, and allowing customers to round up their fares to make a charity donation. However, these attempts to be viewed as a more ethical alternative have only been moderately successful

The outbreak of COVID-19 has presented challenges and opportunities to Lyft. Lyft has launched a program called “Essential Deliveries”, this service involves the delivery of medical supplies, test kits, and meals for vulnerable individuals (with a focus on children or seniors) that can be picked up from distribution centers for contract-free drop-off. However, COVID-19 has provided disruptions for the firm, not only has there been a decrease in ridesharing and ride-hailing activity, but it has also presented challenges for the Lyft Scooters segment of the business.

Questions

Lyft has appointed you as a consultant, once the current coronavirus pandemic is over, the company is considering investing overseas in Southeast Asia as global expansion is perceived at this time to be a potentially important element of the company’s long-term strategic goals.

The country that Lyft is considering is Vietnam.
1. Apply the PESTLE model to analyze the external environment facing that Lyft would face in Vietnam and identify the key external factors which would impact the company.
2. Using Porter’s five forces framework, analyze the attractiveness of the industry in which Lyft operates. Pay specific attention to the attractiveness of the industry in Vietnam.
3. Using the Integration–Responsiveness Grid, discuss which international strategy would be most appropriate for Lyft in Vietnam

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