Assignment #2

PADM-6310 – CRN 20186

STUDENT ID NO: 7540 NAME: Guliyeva Nazrin

Question 1: What strategies would you recommend for strengthening RAPPI’s competitive position and
promoting its sustainable growth?

RAPPI is a delivery and commerce company operating in Latin American countries. It provides various
services to its customers via a website or a mobile app. To strengthen its competitive position and
maintain its growth RAPPI should focus on cost optimization since its annual net loss is caused by increased
costs company is incurring. It can achieve cost-leadership by achieving economies of scale, decreasing input
costs or enforcing experience (learning curve effect). Achieving economies of scale for RAPPI can be done by
acquiring more business partners (commercial allies) and having costs spread over its high number of business
partners. This will not only help to spread costs but will also help RAPPI to strengthen its value proposition
and increase its market share by offering customers new options at optimal prices . The company can
increase it partnerships by reaching out particularly to medium- and small-size businesses because those are
the ones that need to expand their distribution channels and enlarge customer reach points the most to
increase their customer base and grow. To enforce experience the organization should increase technical
knowledge and skills of its employees by investing in employee training and development and encouraging a
customer-centric mindset. RAPPI can decrease its input costs by decreasing labour costs since labour costs are
the major cost driver of the company. Decrease in labour costs can be achieved in two ways: employing low-
cost workers or decreasing number of couriers. Since decrease in number of couriers may increase time to
customer and consequently decrease customer satisfaction, this option may not turn out to be beneficial for the
company. Therefore, to decrease labour costs it should employ low-cost workers.
Additionally, RAPPI may embody the concept of sustainability within the company by aligning Sustainable
Development Goals (SDGs) into its business activities. The SDGs provide a significant opportunity for
businesses to develop, communicate, and deliver their strategy, goals, and activities, enabling them to reap a
variety of advantages. Businesses should pursue social impact and participate in the SDGs for a variety of
compelling reasons. By focusing on sustainable development solutions and differentiating its product and
service offerings, it will be able to gain competitive advantage in the market and attract eco-sensitive
customers. For this purpose, RAPPI can practice green procurement by partnering with eco-sensitive shops,
restaurants, groceries, or other businesses and promoting their produce. This way the company will be able to
promote green growth and grow profits. Moreover, RAPPI may look for route optimization solutions to cut on
transportation costs, delivery time, and on CO2 emissions. This will allow the company to decrease input costs
and promote sustainability goals at the same time.
All in all, I suggest the following strategies for RAPPI to strengthen its competitive position and maintain
long-term growth:
 Increasing number of business partners or commercial allies (economies of scale): increased number
of business partners will enable the company to spread fixed costs over its high number of
commercial allies.
  Investing in employee training and development and encouraging a customer-centric mindset
(experience): RAPPI may be able to decrease its variable costs by having more skilled and
knowledgeable employees.
 Employing low-cost workers (input costs): low-cost workers will facilitate decrease in labour
costs while keeping the number of workers employed constant.
 Promoting sustainable development: partnering with eco-sensitive businesses (including small
shops, groceries, restaurants, etc.) and optimizing delivery routes to cut on costs and foster
sustainable development.

Question 2: How does RAPPI’s business model operate, how does it differ from traditional collaborative
economy models, and what role does trust play in this model?

RAPPI operates as an intermediary between consumers and suppliers (buyers and sellers). The company
connects users with businesses via couriers to deliver various kinds of products and services such as food,
medicine, financial services, travel services, etc. The business model is concentrated on a mobile app or
website (online platform), where users can place an order or a request and RAPPI couriers will receive
that order and fulfill it. It is, therefore, an on-demand sharing economy model, where buyers and sellers
transact via intermediaries (in RAPPI’s case, couriers) unlike traditional collaborative economy models,
where buyers and sellers directly exchange their own resources. Examples of traditional collaborative
economy models could be house rental services, e-commerce (online sales of goods/services via social
media or any other web platforms), etc. These businesses are based on collaborative economy model due
to emergence and expansion of Internet and new technologies that have given rise to new convenient and
cost-effective consumption models.
Trust plays a crucial role in RAPPI’s business model since buyers have to rely on couriers with their food,
cash, travel services and other needs. They rely not only on the delivery accuracy but also timeliness of
the couriers. If requested service is delivered inaccurately or untimely or if there are payment issues when
using the app, customers’ trust on RAPPI’s services will be damaged, which can deter customer
satisfaction and cause customer loss. Therefore, trust is one of the main building blocks of RAPPI’s
business model, which is focused on becoming intermediary between buyers and sellers as opposed to
traditional economy model, where parties directly exchange their resources. RAPPI could establish trust
through listening to customer reviews and concerns and fulfilling their needs as soon as possible, and
constantly innovating the app/web platform in a way that it is user-friendly and safe to use. This way
customers realize that their voice is heard and that they can express their concerns about the service and
RAPPI is going to respond and try to solve any service-related issue. Moreover, RAPPI provides secure
payment transactions enhancing trust with online payments. If trust is not established between customers
and couriers RAPPI may experience customer loss and gradually lose its market share especially in the
industry, where there is high competition and customers always look for and switch to more reliable and
low-cost solutions.

Question 3: What network characteristics will or will not allow RAPPI to consolidate as Latin America’s
leading super app?

To consolidate as Latin America’s leading super app RAPPI needs to leverage some of its network
characteristics including its user base, service offerings, commercial allies network, user experience (on
the app/website and during delivery), trust and safety provisions, logistics and market specifications.
Now, let’s deep dive into each network characteristic and understand how they can strengthen RAPPI’s
position in the market:
- User base: RAPPI needs to extend its user base and acquire more customers in existing markets.
It may also expand its operations into the new markets not only across Latin American countries
but also North America and other regions. Increased customer base will strengthen RAPPI’s
network and help to attract more business partners.
- Service offerings: Wide range of service offerings beyond food delivery service RAPPI presents
to its customers scales up its competitive advantage in the market and helps to attract more
customers.
- Commercial allies network: Partnering with well-known and established businesses as well as
medium and small-size businesses gives RAPPI an opportunity to offer its customers not only
branded and reliable options but also low-cost and diversified ones.
- User experience: RAPPI should constantly improve its app and website to maintain user-friendly
and convenient platform for its users. Additionally, the company should facilitate high
satisfaction levels of its delivery services by training couriers and increasing their technical skills.
This will allow RAPPI to strengthen its network and increase customer retention.
- Trust and safety: As mentioned above trust plays a crucial role in RAPPI’s business model
therefore maintaining trust will not only strengthen RAPPI’s market position but also facilitate its
growth.
- Logistics: Establishing strong and reliable delivery infrastructure will increase customer
satisfaction and help the company to grow and expand. Strong and reliable delivery infrastructure
includes ensuring accuracy in order fulfillment, providing real-time request status tracking, and
efficient management of courier network.
- Market specifications: RAPPI should adapt its offerings to market specifications like culture,
language, preferences, etc. This will enhance RAPPI’s offerings and help it build strong customer
relationship, and eventually evolve into one of the Latin America’s leading apps.

Along with network specifications that help the company to grow and strengthen its market position,
there are ones that pose challenges for its growth such as competitors, limited market reach, and negative
experiences.
- Competition: Growing local competitors and well-established global delivery apps/platforms
create challenges for RAPPI to consolidate as Latin America’s leading super app.
- Limited market reach: Since RAPPI is already suffering from high costs expanding into new
markets and adapting to new legislations, cultures, and customer preferences will be costly for
RAPPI. Therefore, limited market reach poses another challenge for the company to grow.
- Negative experiences: Increased number of negative experiences and reviews will discourage
customers from using the app, which in turn will prevent new customers from using the app as
well. Such a situation may damage RAPPI’s reputation and market share.

All in all, to consolidate as Latin America’s leading super app RAPPI should identify and enhance
beneficial network characteristics while addressing disadvantageous ones.