SM Project Report Section-A Group-4
SM Project Report Section-A Group-4
Organization Analysis
Of
Submitted to
Prof. Nilesh Khare
By:
Section A
Group 4
Vaishnav K V 2023MBA073
On
25th February 2024
1
Executive Summary
India's burgeoning foodtech market, rife with competition, presents both challenges and opportunities
for Zomato. Leveraging its brand recognition and diverse offerings, Zomato must solidify its delivery
dominance through cost optimization and expansion to Tier-2/3 cities. However, growth lies beyond
traditional delivery. Zomato's acquisition of Blinkit unlocks the hyperlocal delivery potential, while
offering cloud kitchen solutions strengthens restaurant partnerships. Integrating fintech for seamless
transactions fosters user convenience and attracts investors. Prioritizing sustainability resonates with
environmentally conscious consumers and aligns with Zomato's social impact initiatives. Achieving
sustained profitability remains a key challenge, necessitating operational optimization and exploration
of new revenue streams, all while balancing growth with financial stability. By executing these
multi-pronged strategies, Zomato can solidify its leadership position, navigate the competitive
landscape, and achieve sustainable success in the evolving foodtech ecosystem.
Table of Contents
Executive Summary………………..…………….………………...…...…………..………....(i)
1. Introduction……………………….…………………………….………………………...4
1.1 Overview of the Indian Food Delivery Business………………………………………4
1.2 Brief History of Zomato…………….………………………………….……...……….4
1.3 Mission and Vision of Zomato…….……..……………….……………………...…….4
2. Industry Analysis…………………………………………………………………............4
2.1 Dominant Economic Indicators…………………………..………...………………….4
2.2 Market Size and Market Growth Rate…………………………………………………4
2.3 Scope of Competitive Rivalry…………..……………………………………...………5
2.4 Customers…..…………………………..………...…………………………………….5
2.5 Degree of Vertical Integration…………..……………………………………...……....5
2.6 Market Entry and Exit Analysis….……..……………………………………...………5
2.7 Technology and Innovation….…………..……………………………………...……...5
2.8 Product Characteristics…………..……………………………………………...……...5
2.9 Economies of Scale………….…………..……………………………………...………6
2.10 Experience Curve……….….…………..……………………………………...….......6
2.11 Relative Power of Other Stakeholders.…………..……………..……………...…......6
2.12 Key Success Factors in the Indian Food Delivery Industry.…………………...…......7
2.13 Porter’s Five Forces Analysis….…………..……...…………………………...……..8
3. Firm (Internal Analysis)…..………………………………………………………..……8
3.1 Zomato’s Strategy Analysis…………………………………………………….……..8
2
3.2 Assessing Zomato’s Strategy: A Nuanced Look………………………………….…9
3.3 Zomato’s Resource Base, Core Competencies, and Distinctive Competencies………9
3.4 Zomato: Challenges, Opportunities, Strengths & Weaknesses……..…………....…..10
3.5 Major Leadership and Management Issues Faced by Zomato…………………...…..10
3.6 VRIO Analysis………………………………………………………………….……11
3.7 Value Chain Analysis…………………………...……………………………….…...11
4. Strategic Recommendations……………………....……………………………………12
4.1 Major Problems Faced by Zomato………………………………..……………...…..12
4.2 Growth Strategies………………………………………………………………….…12
4.3 Strategic Acquisitions of Regional Players…………………..………………….…...12
4.4 Profitability Strategies…………………...………………………..……………...…..12
4.5 Competitive Differentiation Strategies………………………………..……………...12
4.6 Evaluation of Strategic Options………………………………..……………...………12
4.7 Recommendations…………………...………………………..……………...…...…...13
4.8 Strategic Analysis…………………...………………………..………....………...…..14
4.9 Financial Analysis…………………...…………………...………..……………...…..14
4.10 Risks and Mitigation…………………...………………………..………....………..14
4.11 Specific Recommendations for CEI…………………...……………….………...….14
5. Conclusion………………..………………………………………………………………14
6. Exhibits…………………………………………………………………………………...15
7. References…………………………………………………………….…………………..17
3
1. Introduction
● In 2023, the Indian food service market was worth $36.3 billion, and it's expected to grow at a
compound annual growth rate (CAGR) of 24.32% until 2032.
● Key reasons include more people having smartphones, more people living in cities, and people
who want convenience.
● Smaller companies like Domino's, KFC, and Deliveroo are also in the mix, but Zomato and
Swiggy are the big two.
● During the pandemic, cloud kitchens popped up, but they only did delivery and didn't offer
eat-in choices.
Mission: "To become the go-to platform for discovering great food and connecting people with
amazing restaurants."
Vision: "To empower local restaurants and contribute to creating a thriving food ecosystem."
2. Industry Analysis
Global e-commerce dinner delivery reached $136 billion in 2021 and will reach $200 billion by
2025.India was the top meal delivery market in 2021 with over 400 million online food orders.Market
leaders are Bangalore, Mumbai, and Hyderabad, with higher smartphone adoption and earnings.Apps
are growing in smaller cities and towns worldwide.
4
2.3 Scope of Competitive Rivalry
With over 80% market share since 2018, Zomato and Swiggy dominate.Swiggy and Zomato govern
Bengaluru, Mumbai, and Delhi NCR. Competition is higher in smaller cities.UberEats failed before
leaving India, while Foodpanda has less than 5% market share.Fleet, technology, and marketing costs
are high for new entrants. Zomato and Swiggy's networks block entry.However, app deployment
simplicity and minimal fixed assets encourage specialised players to disrupt specific regions.
2.4 Customers
2.4.1 Restaurants
Local and national eateries use delivery apps, like McDonald's and Domino's.Higher participation rates
are seen in casual dining, fast service, cafés, sweet shops, and bakeries, which can draw more
customers without providing seating. Restaurants profit from greater customer base, orders, and
targeted marketing. Platform commissions are excessive.
In the past 2-3 years, Zomato and Swiggy expanded their Indian delivery fleets.Once using Runnr and
Shadowfax, Zomato and Swiggy now distribute most orders through their own partners.Vertical
integration is motivated by customer experience, peak-hour reliability, delivery expense control, and
profit margins. Smaller companies still use third-party logistics to cut costs.
Food delivery company Zomato has both attractive and daunting e-commerce prospects and
challenges. Despite competing with established networks, it must invest heavily in distribution
infrastructure, technology, and brand recognition to establish itself. Managing licencing and customer
trust is complicated. Asset disposal, personnel responsibilities, and contractual commitments
complicate market exit. Regulatory compliance, especially user data privacy, is difficult. Market
circumstances and buyer interest determine exit feasibility and value. Zomato must consider these
aspects when joining or leaving the market.
Modern technologies that improve convenience, efficiency, and personalisation are revolutionising
food delivery. The possibilities are infinite, from AI-powered recommendations for your favourite
dishes to pizza drones flying above traffic. Restaurants use demand-based pricing, and AI chatbots
answer questions and handle problems.Biodegradable packaging and electric vehicles promote
sustainability.
5
options simplify ordering, and advanced filters help consumers choose restaurants that match their
interests. Group ordering, loyalty rewards, and Zomato Gold enhance user experience.
2.9 Economies of Scale
Several strategies make Zomato successful. First, its network effects generate growth when users and
restaurants join. AI investments decrease costs and streamline operations. In "Hypercity," Zomato uses
cloud kitchens and its own delivery infrastructure to boost delivery speed and reach. Restaurants and
users gain from Gold Membership customer loyalty. Zomato uses data analytics to forecast demand
and efficiently distribute resources, cutting costs and increasing sales. Such methods help Zomato
grow and profit.
2.10 Experience Curve
The experience curve, learning curve, or cost curve shows how a company's per-unit cost reduces as it
produces more. Experience boosts efficiency, saving money. This movement is driven by economies of
scale, learning by doing, and technology.The experience curve benefits Zomato through network
effects, data-driven optimisation, and technological innovation.
2.11.3 Customers
Customers held significant power as they drive demand and dictate the success of Zomato's platform.
Zomato needs to prioritize customer experience, address feedback, and offer incentives.
6
2.11.6 Competitor Analysis
7
2.13 Porter’s Five Forces Analysis
8
3.1.3 International Strategy
● Selective Expansion: Prioritize cautious expansion into markets with similar demographics
and food cultures, considering regulatory and operational hurdles.
● Localized Approach: Deeply adapt platform features, partnerships, marketing strategies, and
content to each new market, prioritizing local language, preferences, and culinary trends.
● Leverage Global Learnings: Utilize successful approaches and technology developed in the
Indian market to accelerate growth in new markets.
● Compliance & Regulatory Focus: Prioritize compliance with local regulations and build
strong relationships with local authorities to facilitate smooth operations.
3.2.1 Positives
● They recently announced their first quarterly profit in Q3 FY24, and revenue has increased
dramatically year over year.
● Additionally, the Gross Order Value (GOV) is increasing steadily.
● They've effectively entered new markets with Blinkit (rapid commerce) and Hyperpure
(grocery delivery).
3.2.2 Negatives/Concerns
● The business continues to lose a lot of money overall and has substantial cumulative losses
● Profitability stays low, indicating difficulties in attaining long-term financial success.
● The stock price has fluctuated and is now trading below the initial public offering (IPO)
price.
3.2.3 Overall
● The approach is making progress, especially in terms of diversification and revenue
development.
● Profitability is still a major concern, though, and maintaining sustainable margins and
enhancing financial performance are necessary for the plan to succeed in the long run.
9
3.4 Zomato: Challenges, Opportunities, and Strengths & Weaknesses
Challenges Opportunities
● Diversification of services
● Profitability concern
Strengths Weaknesses
10
3.6 VRIO Analysis
11
4. Strategic Recommendations
● Expand to Tier 2/3 cities by tapping into the large untapped customer base
● Invest in vernacular language support for better engagement
● Hyperlocal delivery model for smaller regions
● Zomato should forecast demand, incentivize delivery partners, scale up delivery fleet capacity
through temporary staffing and partnerships to meet heightened order volumes during
upcoming festive seasons
● Innovative Marketing: Emphasize convenience, joy and aspirational aspects of food delivery
in communication.
● Vertical Integration: Vertical integration, such as owning its own delivery fleet or investing
in food production facilities, can help Zomato streamline its operations and reduce its
dependence on third parties.
● Growth in Tier 2/3 cities provides large addressable market but higher acquisition costs
● Profitability levers offer steady gains but don't address competitive threats
● Building an integrated platform differentiated on experience aligns with long-term vision
12
4.7 Recommendations
13
● Food Waste Reduction Programmes: Work with restaurants and NGOs to set up donation
programmes and programmes that reduce food waste.
● Carbon Offset Programmes: Help carbon offset programmes make up for the pollution that
delivery activities cause.
● The Indian food delivery market is projected to grow rapidly from $7.5B currently to $12.5B
by 2025 based on rising incomes, urbanization and smartphone penetration.
● Zomato is well positioned to capture a significant share of this growth by leveraging its strong
branding, platform capabilities and data-driven insights.
● The recommendations for growth, profitability and competitive differentiation strategies will
enable Zomato to tap into underpenetrated markets, enhance customer experience and build a
differentiated platform.
● Strategic acquisitions of hyperlocal players will accelerate growth in Tier 2/3 cities in line with
the overall expansion strategy.
● Revenue can grow by 30% over next 2 years by increasing orders from metro markets and new
Tier 2/3 city expansion.
● Profitability improvements driven by commission renegotiation, cross-selling and operational
efficiency will help achieve breakeven.
● Pursuing selective growth balanced with profitability focus will ensure steady gains in revenue
and market share while maintaining positive unit economics.
● Building an integrated food + grocery + medicine delivery platform will provide revenue
diversification and increase customer lifetime value.
5. Conclusion
To stay ahead in India's booming foodtech race, Zomato must leverage its delivery dominance while
expanding into hyperlocal services like Blinkit. Partnering deeper with restaurants, offering cloud
kitchen solutions, and integrating fintech for seamless transactions can further diversify its offerings.
Prioritizing sustainability and social impact alongside profitability will resonate with customers and
investors alike. By executing these strategies effectively, Zomato can solidify its leadership position
and navigate the competitive landscape towards sustainable success.
14
6. Exhibits
Exhibit 2: Gross order value of Zomato from the second quarter of financial year 2021 to second
quarter of financial year 2022(in billion Indian rupees)
15
Exhibit 3: Extract of P&L account of Zomato(in Rs Crores): The table highlights the fact that
though the revenue increased year on year from March 2019 - March 2023, profitability still remains a
major concern for Zomato. (Data source: www.moneycontrol.com)
Exhibit
Exhibit 4:Size of the online food delivery market across India from 2020 to 2023, with estimates
until 2026 ( in billion U.S. dollars)
Exhibit 5: Most popular food delivery companies across India as of April 2023(Source:
statista.com)
16
7. References
1. M. (2024, September 2). Zomato Profit & Loss account, Zomato Financial Statement &
Accounts. Zomato Profit & Loss Account, Zomato Financial Statement & Accounts.
2. Analysis of Zomato’s Business Model, Strategies, Growth and Expansion in Multiple Countries
| PDF | Strategic Management | Economies. (n.d.). Scribd.
https://www.scribd.com/document/430614513/GROUP-2-ZOMATO-pdf
3. Shastri, A. (2022, November 25). In-Depth Business Model of Zomato - Updated in 2024 |
IIDE. IIDE. https://iide.co/case-studies/business-model-of-zomato/
4. Dagale, N. (2020, October 7). Porter’s 5 Force Analysis: Indian Online Food Delivery
Business. Medium.
https://medium.com/@nikhildagalemet/porters-5-force-analysis-indian-online-food-delivery-b
usiness-445d600b43b8
5. Top 7 zomato.com Alternatives & Competitors. (2024, February 14). Semrush.
https://www.semrush.com/website/zomato.com/competitors/
6. P., & P. (2023, June 30). Zomato Introduces Open Food Trends Data Analysis Platform To Aid
Restaurant Partners. Outlook Business & Money.
https://business.outlookindia.com/news/zomato-introduces-open-food-trends-data-analysis-pla
tform-to-aid-restaurant-partners-news-299304
7. Foodservice in India. (2020, March 1). Marketline.
https://store.marketline.com/report/foodservice-in-india-4/
8. Introducing Zomato Food Trends: Data Insights for All. (n.d.).
https://blog.zomato.com/introducing-zomato-food-trends-data
9. Statista. (2023, September 12). Online food delivery market size in India.
https://www.statista.com/statistics/744350/online-food-delivery-market-size-india/
10. ICICI Direct. (n.d.). Zomato IPO Review.
https://www.icicidirect.com/mailimages/IDirect_Zomato_IPOReview.pdf
11. Companies Market Cap. (n.d.). Zomato market cap.
https://companiesmarketcap.com/zomato/marketcap/
12. Feedough. (2023, September 27). Zomato statistics & facts: User counts, market share,
financials & more. [invalid URL removed]
13. Wikipedia. (2024, February 24). Zomato. https://en.wikipedia.org/wiki/Zomato
14. Hilden, M. (n.d.). Key success factors in the food and beverage industry.
https://www.hilden.in/key-success-factors-in-food-and-beverage-industry/
17
Contribution of Each Group Member
1) Sakshi Maheshwari
a) Introduction: Drafted the introductory section of the project, likely providing
context and background information.
b) Data Collection: Did research using Marketline and Statista to gather relevant data
and insights for the project.
c) Content Creation: Ensured the originality of the content through plagiarism checks
and potentially utilized AI tools for further refinement.
d) Presentation Development: Played a key role in crafting slides 2, 4 (Along with
Robert Panda), and 14 ( Along with Vaishnav KV), likely contributing to the
structure, content, and visual elements of these slides.
2) Sruthi Suresh
a) Firm (Internal Analysis) : Did thorough research and analysis of Zomato on the
following topics : Zomato’s Strategy Analysis - Business-Level, Corporate-Level, and
International Strategy, and Assessing Zomato's Strategy: A Nuanced Look.
b) Report Formatting : Formatted and compiled the entire report - numbered the
different sections and looked after line spacing, font type and size, highlighted and
underlined headings and important points, and converted the references in APA
format.
c) Table of Contents : Made a detailed table of contents with page numbers and
sections.
d) Presentation Development : Played a major role in crafting, designing, and
structuring slides, including slides 9 and 10 - Zomato's Strategy Analysis and
Zomato's Resource Base, Core Competencies, and Distinctive Competencies.
3) Janhvi Singh
a) Firm Analysis: Researched, brainstormed and worked on the following topics: Resources
base, core competencies and distinctive competencies; Challenges, Opportunities, and
Strengths & Weaknesses of Zomato, Leadership & Management issues, VRIO analysis and
Value chain analysis.
b) Research and analysis: Analyzed several websites and sources such as moneycontrol.com,
statista.com to find data related to profitability, future prospects for Zomato
c) Presentation development: Played a leading role in presentation designing and making
specifically making the slides 11, 12 and 13.
d) Conclusion and executive summary: Designed and prepared the conclusion and the
executive summary for the report
18
4) Manasvi Bhatnagar
a) Industry Analysis - Relative power of other stakeholders, Competitor Analysis and Key
success factors in Indian Food Industry.
b) Research and analysis: Analyzed several websites and sources to find data related to Zomato
and all the competitor brands ( Swiggy, Dunzo, Rebel foods, Dominos).
c) Presentation - Completely made the slides of - Competitor Analysis, Relative power of other
stakeholders, Key success factors in Indian Food Industry and also did the complete
Ideation and Creation of front page.
5) Dolly Parmar
a) Industry Analysis:Analyzing Zomato through Porter's Five Forces framework provides
insights into the competitive dynamics of the online food delivery industry through
diagrammatic representation.
b) Data collection: Marketline and Statista were used in the research process to collect
pertinent data and insights for the industry study project.
c) Research and analysis: found information about industry profitability and capacity utilization
by analyzing a number of websites and other sources, including moneycontrol.com and
statista.com. These topics were also covered in the powerpoint presentation slides.
d) PPT Contribution: Made slides of Porter five analysis and also in other slides and also
explained capacity utilization and industry profitability analysis.
6) Ramanjit Sahoo:
a) Firm Analysis : Worked on the industry Analysis Part of the project on market exit and entry
analysis,Technological innovations, Economies of scale, product Characteristics, and
experience curve
b) Presentation: Helped in content creation for industry Analysis part in Presentation
Analysised different websites and data bases ,and helped in data collection and analysis.
7) Vaishnav KV
a) Industry Analysis: Industry analysis considering various factors influencing the industry as a
whole.
b) Recommendation: Developed strategic recommendations and ensured cohesive integration of
team findings.
c) Presentation Development: Played a key role in crafting slides 14 ( Along with
Sakshi Maheshwari), likely contributing to the structure, content, and visual elements
of these slides.
19
8) Uvais binu usman pm
a) Industry Analysis: Industry analysis considering various factors influencing the industry as a
whole.
b) Recommendation: Developed strategic recommendations and ensured cohesive integration of
team findings.
c) Analysised different websites and data bases ,and helped in data collection and analysis
9) Robert Panda
a) Presentation Development: Played a key role in crafting slides 4
b) Presentation: Helped in content creation for industry Analysis part in Presentation
c) Analysised different websites and data bases ,and helped in data collection and analysis.
20