Soft System Methodology for Ofo Operations Management in Hong Kong

This article discusses the challenges faced by Ofo in Hong Kong and proposes the use of Soft System Methodology to address the issues. It explores the problem situation, analyzes the operations management components of Ofo, and suggests business models to tackle the problems. The article also explains the steps of Soft System Methodology and recommends the adoption of the fixed dock model for Ofo in Hong Kong.

Running head: SOFT SYSTEM METHODOLOGY
SOFT SYSTEM METHODOLOGY
Name of the Student:
Name of the University:
Author Note:

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Table of Contents
Introduction:................................................................................................................................2
PART ONE:.....................................................................................................................................3
Business Operations Management of OFO in Hong Kong. Analyze OFO Operations
Management Components:..............................................................................................................3
The Problems Situation:..................................................................................................................6
The selected business models to tackle/address the problems:.......................................................7
PART TWO.....................................................................................................................................9
Soft Systems Methodology:.............................................................................................................9
Step 1. Locating the problem:......................................................................................................9
Step 2. Expressing the problem issue:.......................................................................................10
Step 3. Deriving the root definition:..........................................................................................10
Step 4. Conceptual model:.........................................................................................................11
Step 5. Comparing conceptual model with real life situations:.................................................11
Step 6. Analysing feasible solutions developed and modifying the same:................................11
Step 7. Implementation:.............................................................................................................11
Rich Picture:..................................................................................................................................12
Root Definition:.............................................................................................................................14
CATWOE Table:...........................................................................................................................14
PART THREE:..............................................................................................................................15

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Performance Indicators and Operations Priorities according to solutions proposed:....................15
New Resources required:...............................................................................................................15
Principles of BSC:.........................................................................................................................16
Setting up Four perspectives of BSC for organization selected with brief discussions/
explanation.....................................................................................................................................16
Conclusion:....................................................................................................................................17
References:....................................................................................................................................18

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Introduction:
One of the biggest challenges which business organisations are facing is meeting the
requirements of multiple stakeholder groups. The multinational companies are coming under
greater amount of pressure to comply with the stakeholders’ requirements. The situation turns
out to be more challenging when the interests of different groups of stakeholders conflict.
Business organisations have to tackle challenging situations like this extremely strategically. The
challenge is escalated due to the fact that failure in meeting the demands of one of groups of
stakeholders on prolonged basis actually attracts negative movement from other groups of
stakeholders. The need to form strategies to meet the demands of stakeholders would provide the
context on which the entire research would stand. The backdrop of the research would be
provided by Ofo, a bike sharing company based in China and having its presence in more than 21
nations in the world (Ofo.com. 2019). The issue which the company is facing is government
actions in its own home country namely, China and in host countries like Malaysia. The second
issue which the case study would deal with is that large numbers of bikes are abandoned on the
biking ways by users after using which are vandalised, thus rendering them useless
(Dimsumdaily.hk. 2019). Moreover, the system of Ofo apps often malfunctions. Moreover, the
customers who suffered due to failure of the app were not given refunds. The issues culminated
due to the fact that the bike sharing companies do not provide proper parking instructions to
consumers about parking bikes post usage. The issues intensified to the extent the companies had
to cease operations in Hong Kong (Lee 2018). The consumers after using the bikes of the
company left them on the sidewalks which blocked the ways for the passers-by to walk. This
issue faced by the pedestrians led to several pedestrians lodging complains against the bike
sharing companies. The situation became serious for Ofo when the Hong Kong government

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started perceiving the increase numbers of bikes as a social challenge and even a security
challenges to the public. The Government of Hong Kong in response to the issues has moved to
place restrictions on the number of bikes which bike sharing companies would be able to make
available on road. The move is also aimed to check the business expansion of the bike sharing
companies (Forbes.com. 2018). Thus, Ofo is facing a challenging situation to operate in ways so
as to ensure satisfaction of the several groups of stakeholders involved in the situation namely,
government, consumers and passers-by which can be interpreted as society at large. The aim of
the paper would be analysing the situation which Ofo is facing to point out strategies which the
company can take to deal with the challenge.
PART ONE:
Business Operations Management of OFO in Hong Kong. Analyze OFO Operations
Management Components:
The operations management of Ofo in Hong Kong consists of 10 operations management
decisions. The ten decision making operations of Ofo are provided in the checklist below:
SL
no
Operational management
decisions
Application by Ofo
1 Designing of services Ofo operates in bike sharing sector and provides
services of bike sharing.
2 Quality management The quality management strategy of the company
consists of maintaining high quality of services. The
company makes a large number of bikes available to
consumers in order to serve maximum number of

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customers and to maintain minimum number of
consumers waiting in queue to avail bike sharing
services.
3 Price capacity and design The company maintains highly advanced technology
which enables the system receive and process large
numbers of bookings for bike sharing.
4 Location The location strategy of Ofo consists of presence in
over twenty one host countries like Hong Kong. The
company enjoys strong presence on the digital space
which enables customers book bike sharing slots
without any hassle.
5 Layout strategy The layout strategy of Ofo is aligned to its
operational needs. The operations of the company
which mainly consist of receiving orders for bike
sharing from consumers and making bikes available
to them for hire runs on the technologically
advanced digital platform of the company. The
company makes booking services available to
consumers on the apps supported on both smart
phones and laptops which enable the consumers
book slots as per their convenience. The consumers
in order to enjoy the services have to open account
with the company by paying an initial payment. The

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entire process of receiving payments from
consumers and accepting booking for slots is
integrated with the internal accounting procedure of
the company. Thus, it is evident that the layout of
the customer service system of the company is
integrated with its internal operations procedures.
6 Human resources and job
design
The human resources and job design of the company
is aligned to meet its business requirements. Ofo,
being an unlisted company, does not make its
financial performance information which includes
salary paid to employees available to the public.
However, considering the fact the company has
established its business strongly in more than 22
countries including Hong Kong, it can be pointed
out that the company followed a strong human
resource management strategy.
7 Supply chain management Ofo follows a strong supply chain management
strategy. The supply chain of Ofo consists of
suppliers of several categories like firms providing
bikes and bike spare parts to the company.
8 Inventory management Ofo maintains large stocks of bikes which enables it
to serve a large numbers of orders.
9 Schedule The company schedules its operations according to

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the customers’ requirements. It can be assumed
taking the proliferation of consumers the company
serves in as many as 22 countries that the company
schedules its operations strategically. For example,
the marketing department of the company estimates
the orders which Ofo may receive in the future. The
company makes sufficient amount of bikes to meet
this requirements. Thus, it can be inferred from the
company schedules its operations as per the
requirements of the customers.
10 Maintenance The company maintains its assets strategically.
The Problems Situation:
The problem situation which the research would delve into is challenges which
multinational companies face in serving multiple stakeholders group. Ofo based in China
operates in as many as 21 foreign markets in addition to its home country. The company in order
to serve maximum numbers of consumers make a large number of available in the market. The
company does not issue any parking instructions to consumers who ended up parking the bikes
on the footpaths. This resulted in blocking of footpaths prevented the walkers, who can be
interpreted as the society in from the stakeholders view from using the footpaths freely to walk
along. The passers-by lodged complaints with the local government authorities in countries like
Hong Kong. The local government bodies view these proliferation of bikes parked on the
pedestrian ways as a serious societal and security threat. The government in order to curb this

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encroaching of footpaths enforced limitations on the bike sharing service providing companies in
terms of numbers of bikes which they could make available to consumers. The malfunctioning of
the Ofo app and the company refusing to give refunds to suffering consumers worsened the
situation. It can pointed out that this reduced numbers of bikes would result in consumer
resentment which would lead Ofo losing its consumers to its competitors. The company on the
other hand is obliged to follow the orders issued by the local government bodies. Thus, it can be
inferred from the description that the problem situation which Ofo is facing is the outcome of the
conflicting interests of two groups of stakeholders namely, government and society on one side
and consumers on the other.
The selected business models to tackle/address the problems:
Ofo Hong Kong operates according to the model which allows the users to hire bikes by
booking for the same on official website and app. The users could leave the bikes after use which
resulted in large number of bikes being parked out in the streets of Hong Kong, thus causing
traffic congestion (Ng 2018). The company in order to deal with this issue has a second model of
bike operation. The company employs personnel who check and if required repair, the bikes after
being left by the users. The third model proposed which can adopt to deal with the issue of traffic
congestion after bikes are left on the roads is fixed dock model. The fixed dock model would
require the users to return bikes to specific docks after use. The model which Ofo implemented
to operate in Hong Kong was very closely associated with its business model. The company
entered Hong Kong in 2017 and faced stiff competition from the already existing bike sharing
companies. Ofo in order to give the existing bike sharing companies competition adopted a low
pricing model. The company charged HK$ 3 an hour while its competitors charged HK$ average
HK$ 5 to 6 per hour (Hui and Wan, 2018). This low pricing model enabled Ofo to attract high

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number of consumers and emerge as a leading bike sharing company in Hong Kong. It can be
also be pointed out that bike sharing companies like Ofo are facing issues due to competition
from improved public transport systems and lack of bike tracks in the hilly roads of Hong Kong
(Lee 2018). Thus, it can be recommended on the basis the analysis of the bike sharing market
should implement the fixed dock model (Hui and Wan, 2018). The fixed dock model would
require the users of bikers park their bikes at specific docks. This would ensure that no bike
owned by Ofo are parked on the streets and footpaths of Hong Kong, thus preventing attracting
of public resentment. Secondly, parking bikes in specific docks would ensure that the bikes are
not tempered. This means they would require less maintenance, thus reducing the maintenance
expenditure which the company would be required to maintain bikes. Thirdly, the company
would be able to control the hiring of bikes according to the demands. It can make appropriate
numbers of bikes to the customers. Thus, it can be pointed out that the adopting of fixed dock
model would solve the issues which Ofo is facing in Hong Kong due to traffic congestion created
by its bikes after users leave them on the walkways.
PART TWO
Soft Systems Methodology:
The discussion on soft system methodology can be initiated by taking a leaf out from the
work of Wang, Liu and Mingers (2015) called ‘A systemic method for organisational
stakeholder identification and analysis using Soft Systems Methodology (SSM)’ The authors
define soft system methodology as the approach which management bodies of business
organisations use to deal with challenges which they face in the course of their operations. The
authors also mention that the companies use SSM to manage organisational changes. The
discussion above clearly points out that Ofo is caught in a challenging situation to ensure

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satisfaction of government and the consumers simultaneously. The following are the steps of soft
systems methodology:
Step 1. Locating the problem:
The business organisations facing challenges locate the problems and the factors which
are leading to the problem. The management of the companies view the problems in terms of the
different types of stakeholders like customers and the government. For example, the company in
question namely, Ofo should take into account the challenge it is facing. The company does not
provide any instructions to its users on parking bikes after use at appropriate spots. The
consumers of the company after using the bikes left them on footpaths which created problems
for the walkers. The walkers lodged complaints with the local government against the company.
The local government bodies in Hong Kong perceived these irresponsibly parked bikes as a
societal and security threats. The government in order to deal with the issue, imposed restrictions
on the bike sharing companies regarding the numbers of bikes which they could operate on the
road to serve customers. It can also be pointed out the company, if reduces the numbers of bikes
available to consumers to comply with the government norms would end up causing
dissatisfaction among consumers. Thus, it is clear that problem which Ofo is facing stem due to
the conflicting positions of the two stakeholders namely, government as well as the society on
one side and consumers on the other.
Step 2. Expressing the problem issue:
The companies after locating the issues or problems, obtain a large body of information
or ‘rich’ data. The company at this stage obtain information from different stakeholder groups
like government and consumers. For example, Ofo gains information from different stakeholder
groups like government and consumers. The company hold surveys to gain feedbacks from the

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consumers. Similarly, the company also gains information from passers-by. The management of
the company would proceed to the next step by integrating the information obtained.
Step 3. Deriving the root definition:
The third step of SSM consist of using the root definition. Nair (2015) defines the root
definition as the perception which assumes that decisions of the human beings are driven by
several intensions or motives. The experts use software to analyse these different motives which
drive human decision making. For example, in case of Ofo, consumers leave bikes on the
footpaths after using them. An analysis of the situation brings into light two main reasons which
can be held responsible. First, the consumers are unaware that bikes should not be parked on
footpaths. Secondly, the consumers deliberately do it in spite of knowing that it is irresponsible
to park bikes on the footpaths. The management of the company would analyse these different
reasons which can be utilised by the company to bring about a change in the behaviour of the
consumers.
Step 4. Conceptual model:
The management of the companies at this stage develop the conceptual models which can
be developed to deal with the issue. For example, the management of Ofo takes into account the
different factor which are responsible for the issues discussed above.
Step 5. Comparing conceptual model with real life situations:
The fifth step which should be taken into account would be comparing conceptual models
developed against the real life situations. Mabin (2015) puts forward that concept that the
management bodies of the companies dealing with challenges have to test the conceptual models
developed against the real life situations. For example, as far as Ofo is concerned, the company

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should compare the conceptual model it would develop against the real life situations in host
countries like Hong Kong.
Step 6. Analysing feasible solutions developed and modifying the same:
The companies at this stage make changes in the conceptual models developed after
comparing the same against the real life situations. In fact this step can be interpreted as the
direct outcome of the previous two steps.
Step 7. Implementation:
Companies at this phase implement the models developed to deal with the situations. For
example, as far as Ofo is concerned, the company implements the models it has developed in the
market to deal with the challenge it is facing.

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Rich Picture:

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Ofo users leave bikes on
footpaths (Issue 1)
Walkers face problems in
using footpaths
Walkers lodge
complaint with govt.
of hong Kong
Customers cannot enjoy
rides due to malfunctioning
of website and app(Issue 2)
Customers demand
refund from Ofo
Ofo declines
Customers file cases
against company
Bikers after using
Ofo bikes leave them
on the road(Issue 3)
Bikes get
damaged
Increase in
maintenance
costs
Management of Ofo has to take steps
Adopts fixed dock
system in Hong Kong
Bikers leave bikes in
docks
No jamming of footpaths Lower maintenance
costs
More revenue generation
in hong Kong

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Root Definition:
Nair (2015) defines that term root definition as defining or identifying aspects which
impacts the decision making actions of the stakeholder groups. The concept stands on the
assumptions that decisions which stakeholders like consumers take are outcomes of different
motives and interests. For example, as far the situation under discussion is concerned, the
decision by the government to limit numbers of bikes commuting on the roads can be considered
as the outcome of three different motives. The first motive is that the government wants to
minimise the blocking of footpaths by parked bikes. Secondly, the government more than trying
to help people is actually trying to strengthen its image politically. The third objective is that by
restricting the bike hire service providing companies like Ofo, the government is aiming to
exhibit its control on the corporate sector. The fourth intension of the government which
transpires from the analysis of these three motives is that the government may be motivated by
all the three motives in varying proportions. The company should adopt the solution of using
fixed dock to operate in Hong Kong. This would enable Ofo to ensure that its bikes are not
deserted on walkways and do not cause congestion. The outcome of this reduced congestion
would be fall in the resentment of public resentment. Secondly, docking the bikes would ensure
reduced damage to the bikes and their GPS parts. Thirdly, it the bikes would be able to transmit
proper online messages thus, enabling the company make them available to more customers.
This would reduce the complaints customers lodged against the company due to unavailability of
bikes. Thus, docking model would enable the company make more bikes available to customers
as per market demands, thus creating customer satisfaction. This would as a result boost revenue
generation.

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CATWOE Table:
The CATWOE table of Ofo would take into account six factors. They are customers,
actors, transformation, world view, owner and environmental constraints. The table below would
illustrate the CATWOE in terms of Ofo.
Terms of CATWOE Meaning Interpretation in terms of Ofo
Customers Expectations of the customers
keep on changing. However,
companies have to meet
customer expectations in order
to hold their positions in the
market.
The customers of Ofo expect the
company to make more bicycles
available for their use
Actors Stakeholders Internal and external
stakeholders of Ofo.
Transformation Changes The company should train the
employees to enable them to
embrace the changes described
in stage 4 of SSM model.
World view Macroeconomic analysis The company should judge
whether its decisions are aligned
with the market conditions.
owner Stakeholders Customers and governments
Environmental constraints Challenges Situations described above,

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PART THREE:
Performance Indicators and Operations Priorities according to solutions proposed:
The performance indicators and operational priorities of business organisations should be
aligned. As far as Ofo is concerned, it can be pointed out that the performance indicators of the
company consist of items like profits shown in profits and loss statements. Operational priorities
consists of generating higher revenue and ensuring higher level of satisfaction to stakeholders.
Thus, it is evident that the company should aim to align to the criteria by taking appropriate
strategies.
New Resources required:
Ofo should acquire new resources to operate in new ways to align its operations with the
requirements of both the conflicting groups of stakeholders namely, consumers and government.
The new resources which Ofo would be required to acquire would consist of technological
resources, manpower and financial resources.
Principles of BSC:
The balance scorecard of a business organisation stands on four perspectives namely,
financial, customers, internal processes and organisational capacity. The BSC of the Ofo is
shown below.

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Setting up Four perspectives of BSC for organization selected with brief discussions/
explanation.
As shown above, the balance score card has four components or perspectives namely,
customers, internal processes, organisational capacity and financial aspects, all of which revolve
around the vision and strategies of the company namely, Ofo. The customers are the generators
of revenue and primary stakeholders of Ofo. The company offers bike sharing services to
customers which generate revenue. The revenue fuels the financial strength of the company. The
management channelizes this financial strength to acquire manpower and technology which
boost the internal process of Ofo. The internal processes consists of receiving orders for bike
hiring and making bikes available to customers. The internal processes stand on the

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organisational capacity to receive and process customer orders. The entire operations of Ofo rest
on the vision and strategy made the management of the company.
Figure 1. Cycle showing relatedness of components of balance score card.
(Source: Author)
Conclusion:
It can be concluded from Ofo should form strategies to deal with the conflicting situation
shown above. The company should utilise the SSM to form strategies to deal with the
challenging situation. Ofo should improve its app and refund the money of consumers who have
suffered losses due to malfunctioning of the app in the past. The company should fix specific
points where users would leave the bikes in Hong Kong. This would prevent large numbers of
bikes being vandalised.
Custpmers
Generates
revenue
Strengthens
financial base
Coma[pany
acquires
resources
(internal
capacities)
Boosts
organisational
capacity

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References:
Dimsumdaily.hk. 2019. Dimsumdaily.hk. [online] Available at:
https://www.dimsumdaily.hk/share-more-waste-more-hundreds-of-dockless-bikes-dumped-at-
hiking-trails-in-hong-kong/ [Accessed 7 Jun. 2019].
Forbes.com. 2018. Forbes.com. [online] Available at:
https://www.forbes.com/sites/ywang/2018/01/26/after-bike-sharing-explodes-in-china-local-
authorities-now-move-to-clamp-down/#5c343d9f712e [Accessed 4 Jun. 2019].
Lee, C. 2018. ZDNet.com. [online] ZDNet.com. Available at:
https://www.zdnet.com/article/hong-kongs-first-bike-sharing-startup-to-end-services-this-week/
[Accessed 7 Jun. 2019].
Mabin, V., 2015. Goldratt's" Theory of Constraints" thinking processes: A systems methodology
linking soft with hard.
Nair, U., 2015. Soft systems methodology for personalized learning environment. E-Learning
and Digital Media, 12(1), pp.34-56.
Nair, U., 2015. Soft systems methodology for personalized learning environment. E-Learning
and Digital Media, 12(1), pp.34-56.
Ofo.com. 2019. Ofo.com. [online] Available at: http://www.ofo.com/#/ [Accessed 4 Jun. 2019].
Wang, W., Liu, W. and Mingers, J., 2015. A systemic method for organisational stakeholder
identification and analysis using Soft Systems Methodology (SSM). European Journal of
Operational Research, 246(2), pp.562-574.

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