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Abstract

The case study discusses the failure of Ofo Inc (Ofo), the Chinese pioneering bike-sharing platform, which attracted investments from nearly two dozen significant investors, including Xiaomi, Alibaba, DiDi Chuxing Technology Co, Ant Financial, DST Global, and Digital Sky Technologies for its unique dockless system for operating bikes. Starting in 2014 as a cycling club, Ofo soon mushroomed into a multi-billion-dollar bike-sharing platform that handled over 25 million bike rides per day during the peak of its business activities. Having raised more than USD 2 billion from investors, the startup helped proliferate the dockless bike-sharing culture from China to Paris and, visualising the high growth opportunities of the Indian market, entered it by collaborating with civic bodies in Pune and Coimbatore in January of 2018. Within a short period, the company witnessed more than 1.1 million rides in the country. However, due to a severe cash crunch, Ofo announced plans to shut down its operations in India just seven months into launch and fired employees it had recently recruited. Ofo attributed the shutdown to its global strategy of reducing its footprint and sticking to the mature markets. But according to experts, growing competition, lack of product diversification, burning cash without the proper strategies, management failure, reckless expansion, and a haphazard selection of markets for expansion were critical reasons for the Chinese bike-sharing giant's collapse in India. According to industry experts, the brand also failed to address the infrastructure and operational challenges of the country. In November 2018, following the acquisition of Ofo's Indian assets by Bounce, a scooter-sharing platform in the country, observers debated whether the companies' Indian operations were a classic example of the Icarus Paradox?

Teaching and learning

This item is suitable for executive education courses.

Time period

The events covered by this case took place in 2014-2021.

Geographical setting

Region:
Asia
Country:
China

Featured company

Ofo Inc
Type:
Self-owned
Industry:
Bike-sharing startup

Featured protagonist

  • Rajarshi Sahai (male), The Former Director, Public Policy and Communication, Ofo India

About

Abstract

The case study discusses the failure of Ofo Inc (Ofo), the Chinese pioneering bike-sharing platform, which attracted investments from nearly two dozen significant investors, including Xiaomi, Alibaba, DiDi Chuxing Technology Co, Ant Financial, DST Global, and Digital Sky Technologies for its unique dockless system for operating bikes. Starting in 2014 as a cycling club, Ofo soon mushroomed into a multi-billion-dollar bike-sharing platform that handled over 25 million bike rides per day during the peak of its business activities. Having raised more than USD 2 billion from investors, the startup helped proliferate the dockless bike-sharing culture from China to Paris and, visualising the high growth opportunities of the Indian market, entered it by collaborating with civic bodies in Pune and Coimbatore in January of 2018. Within a short period, the company witnessed more than 1.1 million rides in the country. However, due to a severe cash crunch, Ofo announced plans to shut down its operations in India just seven months into launch and fired employees it had recently recruited. Ofo attributed the shutdown to its global strategy of reducing its footprint and sticking to the mature markets. But according to experts, growing competition, lack of product diversification, burning cash without the proper strategies, management failure, reckless expansion, and a haphazard selection of markets for expansion were critical reasons for the Chinese bike-sharing giant's collapse in India. According to industry experts, the brand also failed to address the infrastructure and operational challenges of the country. In November 2018, following the acquisition of Ofo's Indian assets by Bounce, a scooter-sharing platform in the country, observers debated whether the companies' Indian operations were a classic example of the Icarus Paradox?

Teaching and learning

This item is suitable for executive education courses.

Settings

Time period

The events covered by this case took place in 2014-2021.

Geographical setting

Region:
Asia
Country:
China

Featured company

Ofo Inc
Type:
Self-owned
Industry:
Bike-sharing startup

Featured protagonist

  • Rajarshi Sahai (male), The Former Director, Public Policy and Communication, Ofo India

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