De La Salle University

Ramon V. del Rosario College of Business

Case #5:
Ride Hailing Service Grab

In partial fulfillment of the requirements for

BUS835M – Strategic Management
Term 1, AY 2019-2020

Submitted by:
Concepcion, Sheryll Anne
Cornejo, Melanie Ann
Estimada, Anna Gabriella
Infantado, Marvin Kristoff
Lopez, Jerrel

Submitted to:
Mr. Reynaldo Lugtu
October 29, 2019
 I. INDUSTRY

Grab operates in a transportation network vehicle service industry. Transportation network

companies (TNC) such as Grab provides pre-arranged transportation services for
compensation using an internet-based technology application or digital platform technology
to connect passengers with drivers using their personal vehicles.

Grab was launched as MyTeksi in 2012 by Anthony Tan and Tan Hooi Ling. The company now
offers services in Singapore, Philippines, Malaysia, Indonesia, Thailand, Vietnam, Cambodia
and Myanmar.

II. VISION & MISSION

VISION
Driving Southeast Asia Forward Together.

MISSION
Powered by heart and driven by technology, we aim to unlock the true potential of the
region by solving the problems that hinder progress for our communities.

III. CORPORATE OBJECTIVES

FUNCTIONAL
• To make transportation accessible to everyone in Southeast Asia
• To improve the lives of partners
• To provide the safest transport platform

FINANCIAL
• The company expects to double its revenues to $2Bn at the end of the year. The
acquisition of Uber Tehnologies Inc’s regional business will increase the financial
performance of the company. (Lee, Giles, & Asmin, 2019)

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IV. BUSINESS MODEL

Key Partners Key Activities Value Proposition Customer Customer

Relationships Segments

• Vehicle drivers/ • System Passengers • Customer Support Passengers

owners Maintenance • Safety and security • Customer’s rating • Young
• Taxi • Technology • Convenience / and feedback professionals
drivers/owners innovation or hustle-free ride system • Employees
• Internet service platform growth • Clean and • Businesses
providers • Understanding comfortable ride • People who do
• Partner Banks the local market • Save time not own a car
• Credit / Debit • Screening vehicle • On-time • Tourists
card companies drivers reservation, pickup
• E-payment • Manage daily and drop-off Drivers
providers operations • Speed • Taxi drivers
• Pay seamlessly • Car owners
Key Resources Drivers Distribution
Channels
• Flexible working
• Technology / hours
systems • Better earning from • Google Playstore
/platforms Incentives and and Apple
• Employees or bonuses Appstore
human resource • Access to more • Social media
(e.g. program customers • Website
developers)
• Brand
reputation

Cost Structure Revenue Structure

• System and platform development ● Ride commission

• Technology infrastructure ● Delivery service commission
• Sales & Marketing cost
• Employee Salaries

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V. VALUE CHAIN ANALYSIS

SUPPORT Firm Infrastructure

Financing: Raised $8.8Bn investments to date via 24 funding rounds from 40 investors,
with SoftBank Vision Fund and Central Group of Companies being the most recent
investors.

Financial Management: Ensuring that the Grab network of partner drivers remains at
a healthy number while also making sure that the sales and marketing budget is
balanced for client acquisition and retention, and increased repurchasing rate

Quality Management: All Grab services (except for GrabPay) have a rating system for
both partners and end users in the Grab app

Human Resources

For Grab Employees: Talent acquisition and retention of IT personnel for continuous
technology development of the app

For Grab services except for GrabPay: Extensive screening and assessment of every
driver before acceptance as a Driver Partner. Driver partners pay a commission fee of
25% to Grab for every successful trip. Other payment schemes are in place for driver
partners to boost per hour earnings. (Base fare of $5 per trip, $6 - $10.50 with
surcharges, depending on location and time incentives (if trip targets are met)

Technology Development

As a technology company, Grab is heavily reliant on its app, its automation and location
tracking software, data analysis and data storage, continuous iterations for product
and process improvements (i.e. bug fixes, app updates), and RnD. It also has Grab
Ventures, the company’s innovation arm that develops external technology start-ups
and partners with them in sectors such as transport, food services, logistics, and
financial services.

Procurement

As a service platform, Grab has no physical assets except for company branded items
and office equipment.

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PRIMARY Inbound Operations Outbound Marketing Service
ACTIVITIES Logistics Logistics and Sales

• Data • Operates in • Customers • Discounted • Customers are

servers 336 cities (as are offered or free prompted by
• Application of 2019) convenient booked rides Grab to rate
Software within 8 payment upon sign-up the Grab
• Other Southeast methods services availed
hardware Asian (cash, • Grab
and office countries credit/debit Rewards • Complaints can
equipment cards, Membership be reported
Services GrabPay) for riders, through the
• GrabCar - GrabAllstars app or through
Private car Program for a phone call
• GrabTaxi - driver with Grab
Taxi GrabBike partners Customer
- Motorcycle Representative
• GrabHitch - • Partnership for prompt
Social car/ with existing action
bikepooling merchants
• GrabShare - for Grab • Average rating
Carpool Rewards of driver
• GrabExpress- partner on
Last mile • Referral duty is
delivery Program displayed for
• GrabPay - (Discounted the rider to see
Payments rides when
• GrabFinancial referral takes
-Loans their first
• GrabFood- ride)
Food delivery
• GrabShuttle –
Bus seat
• GrabCycle -
Bicycle

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VI. STRENGTHS & WEAKNESSES

STRENGTHS

1. Stringent screening process of drivers. Grab has enhanced its process in screening
and assessing its applicants before they are accepted as a qualified driver-partner on
the Grab platform through a five-step program. This involves compulsory training, an
exam they must successfully pass, and extensive background checks to ensure that
the Driver Partner has no criminal record or traffic violation. They are also required to
have a vehicle that is not older than a 2008 model. This is also the same for other Grab
services like GrabFood, wherein merchant-partners should apply and submit
government-issued documents related to its business operations like permits and
licenses. (Inbound Logistics, Human Resources)

2. Accessibility and easier navigation of system application. With its rebranding from
GrabTaxi to Grab came the consolidation of all its services under one umbrella brand
and an updated and redesigned app full of new features intended to make using it as
easy and intuitive as possible. Some of these features are the automated retry feature
to further simply booking a ride again if your first try fails, and a live driver tracking
which offers better estimates of pick-up times. Friction in signing up was also
eliminated for Android users, and credit card integration was made seamless with
GrabPay. (Operations, Service)

3. Capability to understand the needs of driver partners and riders. Over the years and
during the rivalry for dominance over Southeast Asia with Uber, Grab had already set
the infrastructure, system, and incentives for drivers to stay exclusively with them
through the GrabAllStars Program. This allowed drivers to benefit from the GrabAuto
rewards for discounts and offers with car maintenance services through select service
partners. For the riders, Grab awards points for every completed transaction through
the GrabRewards Program, incentivizing frequent use by allowing riders to exchange
accumulated points for promo coupons for Grab rides, food, and other services.
(Marketing and Sales)

4. Capability to cater to a wide range of income of users and riders. Understanding that
different users have different needs, Grab offers different types of GrabCars
depending on the needs of the riders: GrabCar, GrabShare, GrabFamily, GrabCoach,
GrabXL, GrabPremium, and other local Grab variants like GrabTuktuk and GrabTrike.
(Operations)

5. Capability to venture into unrelated businesses. The company has ventured into
areas including payments and food delivery. According to Chris Yeo, head of Grab
Ventures, the company is interested in any tech which aligns with the company’s
vision in terms of becoming a complete O2O (online-to-offline) mobile venture in their

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 bid to become a SEA super app. Currently, Grab Ventures has the following portfolio:
GrabWheels, Kitchen by GrabFood, GrabFresh, DriveAI and Happy Fresh. (Technology
Development)

6. Capability to implement a hyper-local strategy. Grab has focused on a hyper-local

strategy to drive expansion across multiple markets and category verticals. Since the
company operates in 336 cities of 8 different SEA countries, Grab has to implement
different strategies for each country, taking into consideration differences in
infrastructure, regulations systems, and expectation from users. An example of which
is the introduction of local variants of Grab for each market, such as GrabTuktuk and
GrabRemorque in Cambodia, and the GrabTrike in the Philippines, which reflect locally
popular modes of transport. Another important strategy is accepting cash payments
since credit card penetration is still low in the region. According to Nikkei Asian
Review, credit card penetration remains at 10% or less in Thailand, Indonesia, and
Vietnam. (Technology Development, Operations)

WEAKNESSES

1. High incentives given to partner drivers. With Uber’s exit in the SEA region, driver
partners experienced a drop from their then-usual high incomes when big incentives
were still given if the target number of rides is hit. Currently, Grab introduced a variety
of schemes as to how driver partners could increase their per hour income. (Lower
commission charged for Auto Accept feature, Time Booster, Cancellation fee,
referrals, on-the-road billboards, GrabAllStars program, etc). This in turn resulted to
an increase in Grab’s costs to partially cover the expected earnings of its driver
partners. (Marketing and Sales, Operations)

2. Low compliance to some country-specific regulations. Grab was a subject of

investigation when it decided to buy out Uber in the SEA Region in 2018 as it allegedly
violated competition rules in various countries like Singapore, Malaysia, and the
Philippines. In Singapore, Grab and Uber were fined by the Competition and
Consumer Commission of Singapore (CCCS) with SG$6.4MM and SG$6.58MM,
respectively due to infringement of Section 54 of the Competition Act, which prohibits
mergers that could significantly reduce competition in any market in Singapore. This
may happen again in Malaysia and Philippines, especially as the Malaysian
Government monitors Grab for possible anti-competitive behavior, unfair practices,
or sudden fare increases. (Operations)

3. Limited service area. Grab does not operate in all key cities in the 8 SEA countries it is
operating, thus restricting revenue potential for the company. (Operations)

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VII. OPPORTUNITIES & THREATS (PESTEL ANALYSIS)

POLITICAL ❖ Increased harmonization of policies governing taxis and private-hire cars (in
Singapore) (The Straits Times, 2019) Threat
❖ Implementation of new regulations to fix the rates of ride-hailing services (in
Indonesia) (Reuters, 2019) Threat

ECONOMIC ❖ Increasing global traffic congestion (Forbes, 2019) Opportunity

❖ Global booming of non-bank financing services (Powell, 2019) Opportunity
❖ Erratic movement in fuel prices (Investopedia, 2019) Opportunity
❖ Increasing Urbanization (Globe Newswire, 2019) Opportunity

SOCIAL ❖ Increasing millenial support on Ride-hailing services (Statista, 2019) Opportunity

❖ Emergence of Middle-class Consumers throughout Southeast Asia (Bain &
Company, 2019) Opportunity

TECHNOLOGICAL ❖ Acceleration of mobile and broadband internet around the world (World
Economic Forum, 2019) Opportunity
❖ Growing market of Internet of Things (The Social Media Monthly, 2019)
Opportunity
❖ Emergence of self-driving cars (CIO, 2019) Threat

ENVIRONMENTAL ❖ Emergence of EV taxi operations in Indonesia (Bloomberg, 2019) Threat

LEGAL ❖ Increasing limitation on number of TNVS units Threat

POLITICAL

1. Increased harmonization of policies governing taxis and private-hire cars in

Singapore (The Strait Times, 2019)
The Public Transport Council (PTC) of Singapore passed a new bill that will authorize
them to regulate the pricing policy of ride-hailing operators. Once approved, the
operators may need to identify each component of the ride-hail fares and how it is
calculated. Further, the rules of how the operators are currently set the fares like
surge pricing, depending on the peak of operations, is unclear. The new bill is expected
to create a more balanced competition among the ride-hailing players.

2. Implementation of new regulations to fix the rates of ride-hailing services in

Indonesia (Reuters, 2019)
Indonesia is preparing to launch regulations to fix the rates of drivers and riders for
ride-hailing services, which are expected to threaten potential expansion of affected
companies such as Grab and Go-Jek. The provision would include implementing

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 minimum and maximum tariffs for cars and motorbike ride-hailing that will be higher
than the current standard rates, impose limitations on promo discounts and driver-
incentive payments.

ECONOMIC

1. Global booming of non-bank financing services (Financial Times, 2019)

The popularity of alternative financing is becoming global and is not showing any signs
of decline. Small business and startup entrepreneurs are eyeing on non-bank sources
for their capital requirement due to most rejections being experienced in traditional
banks. According to Organization for Economic Cooperation and Development, with
the significant growth of alternative lending from 2017, no wonder that these small
businesses will tend to enter the same field, who’s willing to overtake traditional
lenders as key funders for small companies in the long run. In the study conducted by
KPMG, about 43 million investors worldwide are participating in alternative financing
businesses.

2. Increasing global traffic congestion (Forbes, 2019)

Tomtom, a Dutch navigation technology company, has provided statistics and
information about the growing traffic congestion levels in 403 cities across 56
countries. In 2018, Mumbai in India was posted as the worst city with a traffic crisis
with spending of an extra 65% travel time on the road due to congestion. While
congestion is being considered as a crisis, its existence is still an indication of a robust
global economy. Ralf-Peter Schafer, Tomtom’s VP of traffic information, said that their
company “is working towards a future where vehicles are electric, shared and
autonomous so that our future is free of congestion and emissions.” Further, he
reiterated that utilizing technology combined with a collaborative effort from road
authorities, governments, carmakers to car drivers will make this happen.

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 3. Erratic movement in fuel prices (Investopedia, 2019)
The decrease in fuel prices would encourage automobile owners to use their cars in
traveling for work or leisure. For some that don’t, it would mean they have more
disposable income available for other purchases. For a while, vehicle ownership
becomes appealing.

On the contrary, a hike in fuel prices may tend to affect demands for automobile
purchases and use; thus, ride-hailing and private car services become better options
for some commuters.

4. Increasing urbanization (Global Newswire, 2019)

According to Globe Newswire (2019), the ride sharing market is estimated to be
$61.3Bn in 2018 and is projected to reach $218Bn in 2025 with an average CAGR of
19.87%. The growing need for personal mobility in the wake of rising urbanization and
fall in car ownership is driving the demand for an alternative transport system like
ride-sharing.

SOCIAL

1. Emergence of middle-class consumers throughout Southeast Asia (Bain & Company,

2019)
With people's accessibility to the booming of the digital economy, combined with hard
work and pay rise, about 50 million new consumers will join the middle-class rank in
Indonesia, Malaysia, Philippines, Thailand, and Vietnam by 2020. The increase is
expected to contribute to the region's $300B middle-class disposable income.
According to the survey conducted by Bain in collaboration with Facebook, the
incoming group of middle-class consumers will have different profiles, consumption
habits, and media behaviors. They’re embracing the online world and taking full
advantage of opportunities that come along with digital exposure.

2. Increasing m9illennial support on ride-hailing services (Statista, 2019)

According to Statista, “Ride-hailing is by far the fastest-growing of all the segments of
the online mobility service market. The companies providing hailing services are
moving from providing traditional taxi services to services that are bookable via an
app, which makes it more transparent to consumers”. The number of users of ride-
hailing services is expected to grow to up to 12.4m by 2023. In Statista’s Global
Consumer Survey for 2017, most users are millennials at 35.4%.

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Source: Statista Global Consumer Survey, July 2018

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TECHNOLOGICAL

1. Acceleration of mobile and broadband internet around the world (World Economic
Forum, 2019)
Internet usage has been continuously growing nowadays. We use the internet for
school or work-related research, for paying bills online, for working remotely, for
posting on social media, and/or avail various kinds of online services. Internet World
Stats has released the latest report of internet usage and population statistics, where
Asia topped as the region with the highest distribution of internet users in the world.

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2. Growing market of Internet of Things (The Social Media Monthly, 2019)
Internet of Things would simply mean “taking all the things in the world and
connecting them to the internet. It’s about extending powers beyond computers and
smartphones to a whole range of other things, processes and environment”
(McClelland, 2019).

The following are the ways how IoT is affecting ride-sharing services:

• Monitors Drivers in Real-time – Using GPS, performance metrics, data analytics and
other programs, behaviors of drivers can be observed in real-time. It can track
passenger cancellations and its reasons and even its working hours on the roads.

• Better Vehicle Maintenance – Onboard diagnostic ports installed in cars and other
applications will help in managing fleet performance and addressing vehicle issues.

• Travel Efficiency – Electronic logging devices will allow automatic input of vehicle
hours and routes manually. Further, the GPS systems and software apps like Waze
can prompt drivers to avoid areas with severe traffic congestion, roadworks,
accidents and the likes thus, resulting in savings of fuel cost and more-efficient
travel routes.

• Partnership Opportunities – IoT helps in offering value-added services and

enjoyable experience to customers. For instance, Uber partnered with Spotify.

• Competitive Advantage - Companies who are embracing IoT will have a competitive
advantage as it helps bring down the cost, speed up operations and offer better-
quality products and services, which in return results in higher margins and better
cash flow.

3. Emergence of Self-Driving Cars (CIO, 2019)

Singapore
According to KPMG’s latest Autonomous Vehicle Readiness Index, Singapore is still
part of the top countries to take-up Autonomous Vehicles. nuTonomy, a spin-off
technology start-up company that makes software for self-driving cars and
autonomous robots, has been working with the government to make driverless
vehicles readily available soon. Its first milestone was the robo-taxi, which was
launched in the country last August 2016. It is expected that by 2020, autonomous
buses will operate scheduled services in collaboration with Car manufacturer Volvo.

Indonesia
In August 2018, Association of Indonesian Automotive Manufacturers held a 10-day
to show off new automotive innovations, which helped them introduced the latest

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 advancements of the country when it comes to AV technology. However, Indonesia
must prepare their road infrastructures to ensure fit with these advancements.

Malaysia
REKA, Malaysian research, and development company had started to embark on self-
driving technology when they began developing a chip, with built-in sensors, GPS, and
webcams, that can be inserted into a car. Their research and development program
on AV technology will run until 2025.

The ride-sharing app, which originated in Malaysia, is also working with nuTonomy to
develop and test autonomous technology. It expects its self-driving taxis to be
operational in Southeast Asia before 2022.

Vietnam
Vietnamese Ministry of Transports signals FTP Software to run a driverless car pilot
scheme in Vietnam’s hi-tech zones and software parks. FTP featured that the cars can
travel 25 km per hour and will have built-in technology such as Radar, GPS, Computer
Vision for auto-breaks.

ENVIRONMENTAL

1. Emergence of EV Taxis (Bloomberg, 2019)

Noni Purnomo, President Director of PT Blue Bird Tbk, an Indonesia-based company
primarily engaged in provisioning taxi services, is banking on technology to transform
the cab business by acquiring 2,000 zero-emission taxis from Tesla Inc and BYD Co to
cut fleet ownership costs and improved operational efficiency.

LEGAL

1. Increasing limitation on the number of TNVS units (ABS-CBN News, 2018)

With the significant increase in private-hire and ride-hailing cars in the streets, the
regulatory agencies took action steps to impose a cap on the number of for-hire
vehicles that will be allowed to operate within the cities. In 2018, LTFRB of the
Philippines had put a supply cap of 45,000 TNVS units within Metro Manila, which
resulted in the loss of jobs of other TNVS drivers (ABS-CBN News, 2018). As of 2018,
total registered TNVS units have reached 125,000. Moreover, some cities in the United
States have done the same to control traffic congestion (The economist, 2018).

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VIII. INDUSTRY ANALYSIS (PORTER’S FIVE FORCES)

THREAT OF RIVALRY AMONG COMPETITORS: HIGH

There are several players in the transport network vehicle service industry across the world.
Competition is high as they offer similar services. Major players include Didi, GoJek, Grab,
Lyft, Ola, and Uber. All of them basically offer ride-hailing and ride-sharing services.

Didi was initially concentrated in China and acquired Uber China. With the merging, Uber
owned around 15% stake in Didi. It expanded to Japan, Taiwan, Australia and select Latin
American countries such as Brazil, Colombia and Chile.

Ola Cabs dominated in India and offers ride-hailing, ride-sharing, taxi and food delivery
services. It also expanded and opened its operations in the United Kingdom and Australia.

Go-Jek which started as a call center to connect consumers to courier delivery is a multi-
service platform and digital payment technology group in Indonesia which also offers ride-
hailing service. It is also available in Vietnam, Singapore and Thailand.

Grab, established in 2012, is present in eight Southeast Asian countries and was the main
reason for Uber’s pull-out in Asia in 2018. Uber merged partnership in Grab.

Lyft which operated in 2012 is popular in the USA and Canada similar with Uber though Uber
is in 63 countries across the globe.

THREAT OF NEW ENTRANTS: LOW

While there are several players in the transport network vehicle service industry and that
transportation service is considered as a vital service and necessity in every country, the
presence of high entry barrier for companies who intend to set up similar ride-hailing/ride-
sharing service is a hindrance and a challenge.

The necessary capital investment needed to develop the platform and become a technology
leader seems expensive. Accreditation approval in each country varies and may require a
specific law for accreditation. There is also a substantial amount of money needed to apply
for a country accreditation and may require lobbying.

Each country has its own regulatory requirements that should be strictly followed and are
being monitored by the government agencies in-charge of the transportation industry. It is
not easy to enter such similar business with the requirements and policies in place and with
the industry that is regulated by the country where the transport network companies
operate.

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Most of the transport network companies who cannot outperform competition and those
who cannot enter another country normally prefer to invest capital in the market leader.

THREAT OF SUBSTITUTES: LOW

The closest substitute for this industry and its closest rival is the taxi service, which in most
cases are readily available across the Southeast Asian countries and in the world.

Looking at the benefits that passengers will get from the transport network vehicle service
industry in terms of convenience, comfort, time management (saves time from waiting or
from queueing to wait for taxi service) and safety aspects, the advantages it provides
outperform the benefits available from the taxi service, and thus is considered a weak force.

BARGAINING POWER OF BUYERS: LOW

The customers are end-users of these transport network service. This type of service offers
and provides standard services with equivalent policies and rates. End-users have to follow
and abide with the rules developed and implemented by these ride-hailing/ ride-sharing
service companies to ensure uninterrupted service by these providers. Their respective prices
vary with time and location and the type of vehicle the customers intend to use.

In addition, according to Techcrunch (2018), lack of competition as there are existing

partnerships in transport network companies has already led to raising prices.

BARGAINING POWER OF SUPPLIERS: MODERATE

The suppliers are the partner operators who privately-own their vehicles. Suppliers apply for
accreditation with the country’s respective transportation regulatory departments or offices
and they abide with the government policies together with the policies of the ride-sharing
companies. The government may impose stricter rules and regulations that are also in line
with the country’s transport regulations. In addition, the transport network service players
also abide with government regulations and may impose stricter sanction for non-confirming
partners or operators which may lead to the cancellation or suspension of their transport
franchise. In this case, bargaining power of suppliers is low.

On the other hand, suppliers may at anytime pull-out from the ride-sharing service if their
earnings are not sufficient and if they are not in accordance with the company’s policies and
benefits. They may also pose their grievances and complaints and may opt to find another
source of income which will lessen the number of partners and thus ride-sharing services may
be halted or affected.

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IX. STRATEGY MAP

In terms of geographic market, both GoJek and Grab are centralized in the Southeast Asian
market. GoJek, established in 2015, is the dominant player in Indonesia. It has expanded in
Vietnam, Thailand and Singapore while Grab, established in 2012, is present in eight countries
namely Singapore, Malaysia, Philippines, Thailand, Vietnam, Indonesia, Cambodia, and
Myanmar.

Ola, the major player in India which was established in 2011, has set up its operations in the
United Kingdom and Australia while Didi, China-based ride-sharing company is also present
in other Southeast Asian markets such as Japan and Taiwan. It has also set up its operations
in Australia and some parts of Latin America such as Brazil, Colombia, and Chile.

Lyft and Uber established in 2012 and 2019, respectively are close competitors and are the
well-known ride-hailing companies in the United States of America. In terms of geographic
market, they both have wide coverage and are present in many countries. Lyft is present in
51 states in the U.S.A. and in Canada while Uber is present in 63 countries specifically in the
U.S.A. Canada, Africa, Asia, Australia, New Zealand, Central and South America.

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 In terms of specialization, four of the transport network companies namely Didi, Grab, Ola,
and Uber offer similar services such as ride-hailing, ride-sharing, delivery, micromobility
(bike) 2 and 3 wheel-hailing, mobile payment, and autonomous vehicles (Bloomberg). Go Jek
offers the same services except bike, care-sharing, delivery, and taxi-hailing while Lyft offers
the fewest product offering only ride-hailing, ride-sharing, micromobility and autonomous
vehicles.

In line with this, Grab should take effort to expand and intensify its geographic market to
cover more countries (as designated with the right arrow) within Southeast Asia and
outside Southeast Asia. Latin America has high growth potential and is second fastest mobile
market with 200 million smartphone users (Techcrunch, 2019). Also, with Grab’s
technological leadership and currently its cloud partnership with Microsoft, they can
develop various products through their platform and diversify to other businesses (as
designated with the arrow going up) whether related or not to transportation.

X. CURRENT CORPORATE AND BUSINESS STRATEGIES

Grab is applying a hyper-local approach in designing products and services for its customers.
Grab’s philosophy is to understand what customers in each Southeast Asian city prefer. It is
about listening to customers and solving what their needs are. Considering the diversity, the
company would like to understand the similarities and differences of each Southeast Asian
country in order to provide the right solution. The company would evaluate and determine
the preferences of consumers including language, payment options, application experience
and everyday needs.

The company implements updates and enhancements in its Grab application in order to
ensure that the application is user-friendly for the consumers. Grab App features allow users
to book a ride as simple as two clicks, automated-retry for rebooking, live driver tracking and
allowing seamless communication through Grabchat. The company offers multiple services
such as ride-hailing, taxi-hailing, ride sharing, car sharing, Grab bus and etc. Grab services are
offered in Singapore, Philippines, Malaysia, Indonesia, Thailand, Vietnam, Cambodia and
Myanmar.

Grab also expanded its business from ride hailing to food delivery and digital payments. Grab
is strengthening its position when it comes to Digital Payments. The company would like to
leverage its big customer based to offer GrabPay as the payment solution choice for
Southeast Asia. Users can use Grab to pay for food and services even outside of
transportation – making businesses go cashless and providing convenience for consumers.
According to Jason Thompson, Managing Director of GrabPay Southeast Asia, Grab is aiming
to be the #1 payment platform in Southeast Asia. GrabPay will offer a safe, accessible and
instant commerce to everyone resulting to new income opportunities and higher online
spending.

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XI. INTERNAL FACTOR EVALUATION MATRIX

Weighted
IFE Matrix Weight Rating Score
Strengths
1 Stringent screening process of partners/ drivers 10% 3 0.30
2 Accessibility and easier navigation of system application 10% 3 0.30
3 Capability to understand the needs of driver partners and riders 12% 3 0.36
4 Capability to cater to a wide range of income of users and riders 10% 4 0.40
5 Capability to venture into unrelated businesses 12% 3 0.36
6 Capability to implement a hyper-local strategy 14% 4 0.56
Weaknesses
1 High subsidies given to partner drivers 10% 2 0.20
2 Low compliance to some country-specific regulations 12% 2 0.24
3 Limited service area 10% 1 0.10
Total 100% 2.82
With a total weighted score of 2.82, this indicates that Grab has a strong internal position.

XII. EXTERNAL FACTOR EVALUATION MATRIX

Weighted
EFE Matrix
Weight Rating Score
Opportunities
1 Increasing global traffic congestion 10% 3 0.30
2 Global booming of non-bank financing services 8% 3 0.24
3 Increasing millenial support on ride-hailing services 11% 4 0.44
4 Emergence of middle-class consumers throughout SEA 11% 3 0.33
5 Acceleration of mobile and broadband internet 11% 4 0.44
6 Growing market of Internet of Things (IoTs) 11% 4 0.44
7 Erratic movements in fuel prices 8% 2 0.16
8 Increasing urbanization 8% 2 0.16
Threats
Increased harmonization of policies governing taxis and private
1 hire cars (in Singapore) 5% 4 0.20
Implementation of new regulations to fix the rates of ride-
2 hailing services (in Indonesia) 5% 4 0.20
3 Emergence of EV Taxi and Self-driving cars 6% 3 0.18
4 Increasing limitation on number of TNVS units 6% 4 0.24
Total 100% 3.33
With an EFE score of 3.33, which is already on the high side, this indicates that Grab is able to
take advantage of its existing opportunities.

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XIII. IE MATRIX

THE IFE TOTAL WEIGHTED SCORES

IFE Score 2.82 Strong Average Weak
EFE Score 3.33 3.0 to 4.0 2.0 to 2.99 1.0 to 1.99

4.0 3.0 2.0 1.0

High
THE EFE TOTAL WEIGHTED SCORES

3.0 to I II III
4.0
3.0
Medium
2.0 to IV V VI
2.99
2.0
Low
1.0 to VII VIII IX
1.99
1.0

Using the initially computed IFE score of 2.82 and EFE score of 3.33, the company belongs to
Quadrant II with the following recommended grow and build strategies: Backward, forward
or horizontal Integration, market penetration, market development and product
development

19
 XIV. SWOT MATRIX

Strengths Weaknesses
1 Stringent screening process of 1 High subsidies given to partner
partners/ drivers drivers
2 Accessibility and easier navigation 2 Low compliance to some country-
of system application specific regulations
3 Capability to understand the needs 3 Limited service area
SWOT Matrix of driver partners and riders
4 Capability to cater to a wide range
of income of users and riders
5 Capability to venture into unrelated
businesses
6 Capability to implement a hyper-
local strategy
Opportunities SO STRATEGIES WO STRATEGIES
1 Increasing global traffic congestion Expansion outside of SE Asia (Market Expansion to key cities not covered by
2 Global booming of non-bank Development) Grab (Market Development) (S4, S5,
financing services (S3, S4, S5, S6,O1, O2, O3, O5, O6, O7, S6,W3)
3 Increasing millenial support on ride- O8)
hailing services Invest in own fleet of vehicle
4 Emergence of middle-class Partnership with e-commerce platform (Backward Integration) (W1, W2, O3,
consumers throughout Southeast (Related Diversification) O5, O6, O8)
Asia (S1, S2, S5, S6, O4, O5, O6)
5 Acceleration of mobile and
broadband internet around the
world
6 Growing market of Internet of Things
(IoTs)
7 Erratic movements in fuel prices
8 Increasing urbanization
Threats ST STRATEGIES WT STRATEGIES
1 Increased harmonization of policies Development of additional services Invest in other transportation
governing taxis and private hire cars outside of ride-hailing services network companies (Horizontal
(in Singapore) (Product Development) (S1, S2, S4, S5, Integration) (W3, T2, T3,T4)
2 Implementation of new regulations S6, T1, T2, T3, T4)
to fix the rates of ride-hailing
services (in Indonesia)
3 Emergence of EV Taxi and Self-
driving cars
4 Increasing limitation on number of
TNVS units

20
XV. SPACE MATRIX

Financial Strength

1. Revenue multiple
“Based on its most recent valuation and expected revenues for 2018, Grab commands
an estimated revenue multiple of around 10x. This is higher than Uber’s revenue
multiple of about 5x based on its most recent valuation of $76Bn in August 2018 and
Didi Chuxing’s valuation multiple of around 7.5x. If the company is able to achieve net
revenues of around $2Bn in 2019 (per its own target), its valuation could potentially
reach $16Bn with a lower revenue multiple of around 7x (lower than its current
multiple as growth is likely to slow down in future years)” (Forbes, 2019)

2. Extent of funds raised

Based on figure below, Grab is one of the top players in terms of raising funds. As
highlighted in the value chain, Grab was able to raise $8.8Bn investments to date via
24 funding rounds from 40 investors, with SoftBank Vision Fund and Central Group of
Companies being the most recent investors.

3. Operating Losses
Grab, together with the other ride-sharing companies around the world — Didi in
China, Ola in India, and Uber and Lyft in the USA are still not profitable largely due to
high ride subsidies and driver incentives which has been undermining their improving
toplines (The Verge, 2019).

Competitive Advantage

1. Market Share
In March 2018 Grab acquired Uber’s operations in Southeast Asia and Uber now holds
a 28% stake in Grab. This deal is likely to drive significant growth for Grab – which

21
 already dominates the Southeast Asian ride hailing market – with reportedly more
than 60% market share in the region. (Forbes, 2019)

2. Number of users
Grab is also a middle of the pack player in this aspect worldwide although has higher
demand when compared to its Southeast Asian counterparts.

3. Control over suppliers

Bargaining power over suppliers appears to be moderate on the back of the stricter
rules implemented among countries covered and depending on the country, the
suppliers can transfer anytime to Grab’s competitors. Based also on data below,
Grab’s network of drivers is one of the lowest although not captured here is the churn
rate of drivers.

22
 4. Presence in number of countries in the world
As highlighted in the strategy map, both GoJek and Grab are centralized in the
Southeast Asian market. GoJek covers 4 countries while Grab caters to 8 sovereigns.
Ola has set up its operations in the UK and Australia while Didi is also present in other
Southeast Asian markets such as Japan and Taiwan, Australia and some parts of Latin
America such as Brazil, Colombia, and Chile. Lyft is present in 51 states in the U.S.A.
and in Canada while Uber is present in 63 countries.

Environmental Stability

1. Technological Changes
The ride hailing services has evolved from booking rides to rendering of other services
using only one technology platform. Didi, Grab, Ola, Uber offer ride-hailing, ride-
sharing, delivery, micromobility, mobile payment and autonomous vehicles. Go Jek
offers the same services except bike, care-sharing, delivery, and taxi-hailing while Lyft
offers the fewest product offering only ride-hailing, ride-sharing, micromobility and
autonomous vehicles. Updates and enhancements are also implemented constantly
to ensure that the application is user-friendly for the consumers.

2. Price elasticity of demand

The ride-hailing companies can adjust their prices depending on the demand of the
services which is made possible due to the logarithm of their system platform which
enables them to implement dynamic pricing.

3. Price range of competing products

TNVS companies compete in terms of ride subsidies and driver incentives.

Industry Strength

1. Growth in industry and profit potential

The main theme of a TNVS’ business model is the positive network effects. With more
drivers, the value for riders go up — lower wait times, cheaper prices. The more riders,
the higher the value for drivers — or more work, and less wait time. The combination
of the two can cause the firm’s costs to go down and revenues to increase and
eventually the profit potential. However, none of the TNVS companies have posted
profitable performance mainly due to high operating expenses.

2. Ease of entry
Threat of entry was evaluated to be low given that the necessary capital investment
needed to develop the platform and become a technology leader seems expensive.
Accreditation approval in each country varies and may require a specific law for
accreditation. There is also a substantial amount of money needed to apply for a
country accreditation and may require lobbying.

23
 INTERNAL STRATEGIC POSITION EXTERNAL STRATEGIC POSITION
Financial Strength (FS) Rating Environmental Stability (ES) Rating
Revenue Multiple 7.0 Technological changes -2.0
Extent of funds raised 5.0 Price elasticity of demand -2.0
Operating Losses 1.0 Price range of competing products -2.0
Total 13.0 Total -6.0
Average 4.33 Average -2.00

Competitive Advantage (CA) Rating Industry Strength (IS) Rating

Market share of 60% in SEA -2.0 Growth in industry 4.0
Number of users -3.0 Profit potential 4.0
Control over suppliers -3.0 Ease of entry 6.0
Presence in the world -5.0
Total -13.0 Total 14.0
Average -3.25 Average 4.67

Based on Y-axis (FS of 4.33- ES of 2) of 2.33 and X-axis (CA of -3.25+IS of 4.67) of 1.42, the
company belongs to the Aggressive quadrant hence can pursue the following strategies:
integration, market penetration, market and product development and diversification.

FS
Conservative Aggressive

1. Market Development 1. Market Development

2. Market Penetration 2. Market Penetration
3. Product Development 3. Product Development
4. Related diversification 4. Forward/ Backward/
Horizontal Integration
5. Diversification (related or
unrelated)
CA IS

1. Retrenchment 1. Forward/ Backward/

2.Divestiture Horizontal Integration
3. Liquidation 2. Market Development
3. Market Penetration
4. Product Development

Defensive Competitive

ES

24
XVI. GRAND STRATEGY MATRIX

Rapid Market Growth

Quadrant II Quadrant I

1. Market Development 1. Market Development

2. Market Penetration 2. Market Penetration
3. Product Development 3. Product Development
4. Horizontal Integration 4. Forward/ Backward/
5. Divestiture Horizontal Integration
Weak 6. Liquidation Strong
Competitive Competitive
Position Position
1. Retrenchment 1. Related diversification
2. Related diversification 2. Unrelated diversification
3. Unrelated diversification 3. Joint Ventures
4.Divestiture
5. Liquidation

Quadrant III Quadrant IV

Slow Market Growth

Being considered as a business disruptor in the transportation industry owing to its strong
capability to venture into different services coupled by the rapid changes and growth in the
market, Grab appears to belong in Quadrant I.

XVII. QUANTITATIVE STRATEGY PLANNING MATRIX (QSPM)

The following is the outcome of techniques in matching stage with recommended strategies
to be pursued as highlighted below.

GRAND
IE SWOT SPACE STRATEGY TOTAL
Forward Integration X X X 3
Backward Integration X X X X 4
Horizontal Integration X X X X 4
Market Penetration X X X 3
Market Development X X X X 4
Product Development X X X X 4
Related Diversification X X 2
Unrelated Diversification X 1
Retrenchment 0
Divestiture 0
Liquidation 0

25
XVIII. ALTERNATIVE CORPORATE STRATEGIES (ACA’s)

Based on the outcomes in the matching stage, the proposed ACAs will gear towards:
backward integration, horizontal integration, market development and product
development.

ACA 1: Expansion outside of Southeast Asia by investing in other transportation network

companies. (Market Development / Horizontal Diversification)
Basis of Strategy: SWOT, Strategy Map

Given difficulty in entering foreign markets, Grab can build a global network of minority
investments and partnerships with ride-hailing businesses in the countries that they want to
enter using their capital, technology, products or experience. This will also help them win
support of regulators particularly when regulatory tension is high.

Among the possible expansion is in the Middle East via partnership or minority stake with
Careem, Ola in India and Taxify in Eastern Europe.

Creating a domestic partnership will be a good strategic move for the company especially that
their growth has been anchored on implementation of a hyper-local strategy. Expanding
abroad would not be that easy especially in adapting to unfamiliar foreign customers and
navigating complex regulatory systems.

ACA 2: Further development of additional services outside of ride-hailing services by

capitalizing on its capability to implement a hyper-local strategy. (Product Development)
Basis of Strategy: SWOT, Strategy Map

Since Grab has been moving towards becoming a super app and given the fact that the
transportation network business is an unprofitable business, it would be beneficial for the
company to further develop products outside of the ride-hailing services. Some of these
services that they may venture into are remittance services, booking of tour packages, long-
haul delivery services, booking of airline tickets, mobile grooming for pets, liquor delivery,
party needs, laundry pick-up and delivery and cleaning services.

ACA 3: Invest in own fleet of vehicle to lower operating cost. (Backward Integration)
Basis of Strategy: SWOT, Porters, Strategy Map

In order to decrease bargaining power of suppliers, Grab may opt to purchase their own
vehicles which can be supported by their increasing capital support from investors. They may
also consider venturing into self-driving vehicles in order to lessen operating expenses in
terms of driver subsidies.

26
XIX. RESULTS OF QSPM AND RECOMMENDATION

Based on the results of the QSPM, the recommended ACAs are : (1) Expansion outside of
Southeast Asia by investing in other transportation network companies and (2) further
development of additional services outside of ride-hailing services by capitalizing on its
capability to implement a hyper-local strategy.

ACA 1 ACA 2 ACA 3

KEY FACTORS Weight AS TAS AS TAS AS TAS
Key External Factors
Opportunities
1 Increasing global traffic congestion 10% 4 0.40 0 0.00 0 0.00
Global booming of non-bank
2 financing services 8% 3 0.24 4 0.32 0 0.00
Increasing millenial support on ride-
3 hailing services 11% 4 0.44 4 0.44 4 0.44
Emergence of middle-class
consumers throughout Southeast
4 Asia 11% 0 0.00 4 0.44 0 0.00
Acceleration of mobile and
broadband internet around the
5 world 11% 3 0.33 4 0.44 3 0.33
Growing market of Internet of
6 Things (IoTs) 11% 4 0.44 4 0.44 2 0.22
7 Erratic movements in fuel prices 8% 3 0.24 2 0.16 0 0.00
8 Increasing urbanization 8% 2 0.16 2 0.16 2 0.16
Threats
Increased harmonization of policies
governing taxis and private hire cars
1 (in Singapore) 5% 0 0.00 4 0.20 1 0.05
Implementation of new regulations
to fix the rates of ride-hailing
2 services (in Indonesia) 5% 3 0.15 3 0.15 1 0.05
Emergence of EV Taxi and Self-
3 driving cars 6% 3 0.18 4 0.24 4 0.24
Increasing limitation on number of
4 TNVS units 6% 4 0.24 4 0.24 1 0.06
OPPORTUNITIES + THREATS 2.82 3.23 1.55

27
 ACA 1 ACA 2 ACA 3
KEY FACTORS Weight AS TAS AS TAS AS TAS
Key Internal Factors
Strengths
Stringent screening process of
1 partners/ drivers 10% 0 0.00 3 0.30 4 0.40
Accessibility and easier navigation of
2 system application 10% 0 0.00 3 0.30 3 0.30
Capability to understand the needs
3 of driver partners and riders 12% 3 0.36 0 0.00 2 0.24
Capability to cater to a wide range
4 of income of users and riders 10% 4 0.40 4 0.40 2 0.20
Capability to venture into unrelated
5 businesses 12% 2 0.24 4 0.48 0 0.00
Capability to implement a hyper-
6 local strategy 14% 4 0.56 4 0.56 2 0.28
Weaknesses
High subsidies given to partner
1 drivers 10% 0 0.00 2 0.20 4 0.40
Low compliance to some country-
2 specific regulations 12% 0 0.00 1 0.12 1 0.12
3 Limited service area 10% 4 0.40 4 0.40 1 0.10
STRENGTHS + WEAKNESES 3.16 2.76 2.04
Sum Total Attractiveness Score 5.98 5.99 5.14

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