MGMT20143 Assignment 1: Business Model Analysis of OFO

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Central Queensland University, Australia
Term – 2019
MGMT20143 ASSIGNMENT 1
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Executive summary
The concerned assignment is based on a business canvas model of OFO. It is an organisation
that is incorporated with an innovative idea. The company works in the business of sharing
bicycles. It works by helping the users in getting bicycle at anytime and anywhere they want
to. The technology used by the company helps them in unlocking the bicycle with the use of
their smartphones.
The company was founded in 2014 by a team of five members. The company was launched
in 2015. With the help of this assignment, the individuals will be able to analyse the policy
adopted by the firm for seeking growth in the market. The business model which is made in
the report is based on nine step business canvas model of Osterwalder &Pigneur.
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Table of Contents
Executive summary....................................................................................................................2
I. Introduction.........................................................................................................................5
II. Business model................................................................................................................5
i. Customer Segments.........................................................................................................5
ii. Key partners....................................................................................................................6
iii. Value proposition............................................................................................................6
iv. Key activities...................................................................................................................6
v. Channels..........................................................................................................................7
vi. Revenue stream...............................................................................................................7
vii. Cost Structure..............................................................................................................7
viii. Key resources..............................................................................................................7
ix. Customer relationship.....................................................................................................7
III. Interrelationship..............................................................................................................8
IV. Success factor..................................................................................................................8
V. Changes in business model.............................................................................................8
VI. Conclusion.......................................................................................................................9
VII. Recommendations.......................................................................................................9
References................................................................................................................................10
Appendix 1...............................................................................................................................11
Appendix 2...............................................................................................................................12
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I. Introduction
OFO is a private organisation founded by five partners. It helps in providing the facility of
sharing bicycles with the use of mobile applications. The business of the concerned company
is completely operated with the help of online platforms. The organisation facilitates
transportation to users for short distances. The company try to charge peoples on an hourly
basis, and the bicycles are unlocked with the use of latest technology. With the help of this
innovative idea the company has not only attracted a mass of consumers but also has
contributed to green revolution. The company has enhanced its profitability in last few years.
Currently, the company has connected with about 200 million bikes from all across the world
Lingqing, (2018).
II. Business model
Business model is a tool with the help of which the current operations of the company can be
evaluated. OFO is a renowned company that deals with the business of sharing a bicycle. The
operations of the company are controlled with the help of online mediums. The consumers
are charged on an hourly basis, and they are tracked with the help of the mobile application.
The company has likewise discovered a technology with the help of which they can lock their
bicycles with the help of a mobile application Lingqing, (2018).
The nine-step business canvas model is presented below:
i. Customer Segments
From 2017 OFO started to enter the international market. In 2017 it was initially launched in
Singapore in February. After that, the company expanded to the United Kingdom and the
United States. In October of 2017, the company was launched in Australia. The company
tries to coordinates with its consumers with the help of mobile applications. With the use of
mobile application, the consumers can locate the cycle available near to them Lingqing,
(2018). The consumers can unlock the cycles by scanning the QR code posted on all the
cycles of OFO. The payment is also made with the help of mobile application by the users.
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ii. Key partners
The company has about 23 investors who have invested a large number of shares in the
organisation. Among them, the leading investors of the company are Matrix partners
China, Shunwei capital, Alibaba Group, GSR Ventures and ZhenFund. Aside to this,
some organisation are connected with OFO such as APAC Asia-Pacific Transportation
Companies, Venture Capital Funding Companies, China late-stage companies, unicorn start-
ups and so forth. Figure 2 of Appendix 2 helps in identifying the key investors or partners of
OFO Lingqing, (2018).
iii. Value proposition
Some valuable services provided by OFO to its consumers are as follows:
 Assistance of transportation system short distances
 Contribution to the green revolution
 Helps in maintaining the health of the citizens
 The bicycles are provided for an hourly basis
 Use of latest technology
 Helps in detecting and locating the bicycles
 Online existence
 Easy and hassle-free method of payment
 Quality services Euchner & Ganguly, (2014)
iv. Key activities
The key activities undertaken by the respective organisation are as follows:
 Helps the users by providing them with a mode of transportation
 Make use of the latest technology for controlling their bicycle
 Make use of online platforms for all the operations of the business.
 Inviting and attracting investors
 Getting into collaboration with some firms to attract new consumers and stakeholders
Dijkman et. al., (2015).
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v. Channels
All the major operations of OFO are handled with the help of mobile applications. With the
help of mobile application, the users can locate their nearby cycle and unlock it by scanning
the QR code presented on all the cycles. The payment is also made with the help of the
mobile application. The company try to make use of the latest technology to reach to its
potential consumers. Aside to this company likewise adopts the method of collaborating with
some firms like Mobike’s and so forth. By the mode of collaboration, the company can reach
a large segment of the market.
vi. Revenue stream
OFO was initially launched in 2015. From 2017 OFO started to enter the international
market. In 2017 it was initially launched in Singapore in February. After that, the company
expanded to the United Kingdom and the United States. In October of 2017, the company
was launched in Australia. With the help of this, it can be ascertained that with the increase in
market the profits or revenues of the firm are also rising. Figure 1 of Appendix 2 helps in
conjecturing that the revenues of the firm are increased extraordinarily in comparison to
2017.
vii. Cost Structure
The organisation initially started their business with lower profit margins to expand their
business. But with the increasing number of investors and capital structure, the price of
renting a bicycle has increased over time. The capital structure of OFO is shown with the
help of Figure 4 in Appendix 2.
viii. Key resources
The key resources of the company are its investors and the online application handled by the
company. The operations of the firm depended upon the capital provided to it by the
investors. All the activities of the firm are undertaken with the help of a mobile application.
ix. Customer relationship
The communication system used by OFO for interacting and forming a relationship with
consumers is not considered stable. With the effect of extraordinary growth, the company has
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ignored the feedbacks of the consumers. The consumers are not satisfied with the policies of
the company Keju., (2018). The refund policy of the company is not effective. In 2018 the
company received about 11 million applications regarding the refund of their payment. The
total amount of refund was raised to about 1 billion Yuan daxueconsulting. (2017).
III. Interrelationship
OFO is a company that operates the business of providing bicycles on rents and charging the
consumers on an hourly basis. The operations of the company have increased from 2017 as
from then it started to enter into the international market.
The company tries to make use of the online application to reach to its consumers. With the
use of mobile application the consumers can easily locate the nearby cycles and can also
make payments. The cycles are unlocked with the help of latest technology. Users can unlock
the cycle with the use of mobile phones. All the major operations of the firm are controlled
with the help of a mobile application.
The company also follows the policy of collaborating withsome companies like Mobike and
so forth. With the help of this policy, the company can expand its market area.
The communication technology used by the company for communicating with its consumers
is not sound. The consumers are somehow unsatisfied with the policy of the company Keju.,
(2018).
IV. Success factor
The major success factor of the company is its new and innovative concepts for renting bikes
for travelling short distances. The company has likewise contributed to the green revolution.
Aside to this the use of latest technology likewise helped the company in getting success in
the market.
V. Changes in business model
Some changes can be made in the business model of OFO. These are as follows:
 The company need to maintain a sound relationship with the consumers
 A sound refund policy should be made in order to satisfy the consumers
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 The company should try to conduct a market survey to analyse the demands of the
consumers regarding the policies of the company.
VI. Conclusion
The assignment is based on nine step business canvas model in regards to OFO. OFO is an
international bike sharing company, in which the consumers are provided with Bicycles to
cover short distances. With the help of the assignment, the operations of the company can be
analysed ineffectively. The assignment will help the users in understanding the activities
takes place in a Startup programme. The assignment likewise helps in featuring the success
factor behind the growth of the organisation craft. (2019).
VII. Recommendations
 Conducting market research
 Constructing a sound refund policy
 Better communication channels
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References
 craft.co. (2019). Ofo stock price, revenue, funding rounds, financials and metrics.
Retrieved from https://craft.co/ofo/metrics#income-statement
 Daxueconsulting. (2017) Mobike and Ofo: Reinventing the Bike-Sharing Business
Model in China. Retrieved from https://daxueconsulting.com/mobike-and-ofo-bike-
sharing/
 Dijkman, R. M., Sprenkels, B., Peeters, T., & Janssen, A. (2015). Business models for
the Internet of Things. International Journal of Information Management, 35(6), 672-
678.
 Euchner, J., & Ganguly, A. (2014). Business model innovation in practice. Research-
Technology Management, 57(6), 33-39.
 Joyce, A., & Paquin, R. L. (2016). The triple-layered business model canvas: A tool
to design more sustainable business models. Journal of Cleaner Production, 135,
1474-1486.8
 Keju, W. (2018). Ofo customers still wait for refunds. Retrieved from
http://www.chinadaily.com.cn/a/201812/22/WS5c1d7ad4a3107d4c3a002323.html
 Lingqing, Z. (2018). Ofo to raise hundreds of millions in new financing round, report
claims. Retrieved from
http://www.chinadaily.com.cn/a/201809/06/WS5b90bac1a31033b4f46549ca.html
 Owler (2019). Ofo Competitors, Revenue and Employees Retrieved from
https://www.owler.com/company/beijingbikelocktechnologycoltd
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Appendix 1
Table 1Business canvas model
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Appendix 2
Figure 1 OFO Revenue Stream
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Figure 2 Investor or Key partners of OFO
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