Octopus Limited Issue

Topics: Octopus card, MTR, Transport in Hong Kong Pages: 8 (2455 words) Published: November 25, 2010
Octopus Cards Limited is the operator of the Octopus System and the issuer of Octopus. The Octopus card was introduced in 1997 with the objective of providing a simple method to pay fares on public transport in Hong Kong. It then extended to be available to be used in some retail stores and for cardholders to gain access to schools or buildings in order to identify themselves. Nowadays, Octopus card is widely be used in Hong Kong and becomes a popular electronic payment method. More and more places are available to use Octopus card for making transaction. Moreover, on 6 November 2005, Octopus Cards Limited launched a program called Octopus Rewards that allows cardholders to earn reward points. However, in mid 2010, Octopus Cards Limited was involved in a scandal of selling personal data of millions of Octopus cardholders to its business partners for profit without the consent of data subjects in a period of eight years. This greatly erodes the reputation of Octopus Cards Limited. In this case study, SWOT analysis, alternative strategies, ethical issues, problems and recommendations will be discussed. 2.SWOT analysis

2.1.1Coin free strategy
The most significant strategic advantage of Octopus is that its focus on being a coin-free payment system. It provides users a convenient and hassle-free way to travel and dine around Hong Kong without taking too many coins in the purse by saving money electronically. 2.1.2Strong partnership and bonus program

Octopus as the monopoly in the industry has strong partnership with Hong Kong transport companies and fast food chains. Moreover, it also provides bonus programme to the users if they consume the goods by using Octopus each time. Through this program, Octopus can help the partners achieve speed to market and stimulate consumptions. Hence, the partners of Octopus become more and more. 2.1.3Market leader in smartcard transactions

Octopus is the monopoly of the smartcard transaction industry. Over 95% Hong Kong citizens use Octopus and over 7 million transactions are processed through octopus each day, amounting to a total of HK$29.3 billion a year. 1 2.1.4Outstanding customer relationship management

Uniquely numbered Octopus card, which can customer personal information, forms a database that allows Octopus Co. to targeted marketing for specific customer segments, to evaluate the market potential consumption and to develop better advertising and promotion. 2.2Weakness

2.2.1Limited technology
The limited technology made users have to carry the card everywhere in order to do any transactions. In nowadays e-commercial world, lacking Internet development becomes one of the significant weaknesses of Octopus. 2.2.2Limited venue to add cash and limited usage

The available venue to add value is limited in Hong Kong that only available in MTR terminals or 7-11 stores. The maximum amount on the Octopus card is only HK$1,000. Therefore, it not only causes a high frequency to add value, but also limits what type of transactions can be done with the octopus card. 2.2.3Lack of protection

Octopus do not have password, pin protection or enough personal identity information. So it is hard to be found if the user lost it in the public. And also because of this, anyone can pick the Octopus up and use it. 2.3Opportunities

2.3.1Increasing target market introduced by government
Octopus could leverage their existing technology and piggyback off the government’s project. 2.3.2Cross-selling opportunities
The widespread acceptance of Octopus provides credibility and an image of reliability to products carrying the octopus brand, giving them significant comprehensive advantage. The mainland potential market also provides big commercial opportunities. Although some cities, such as Guang Zhou, Beijing, also provide similar smartcard in transaction industry, compare to them, Octopus has wider acceptance, higher reputation and bigger attraction. 2.4...
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