Grab is a part of the technology industry in Singapore, with operations in Thailand, Malaysia, and Vietnam etc. The company is mainly operating in 3 domains which include delivery, mobility and financial services. The PESTLE analysis of Grab would examine the different environmental factors and elaborate the influence of these factors on the company operations.
Political Factors
Political stability determines the degree of uncertainty a business would face in a country. Technology companies like Grab have to respond to the threat in the environment in the form of violent conflicts and may limit the operations to maintain safety. Furthermore, geo-political instability effects on fuel price which can become challenging for companies like Grab.
Government regulations that are in place to run the technology platforms that handle ride sharing and deliveries are another important political factor. Regulations such as interest rate adjustment effect the cost of operations of Grab. Furthermore, exchange rate and the level of control of the government in this domain effects the financial output of the business.
Decisions such acquisition, setting up terms and conditions of service and dealing with customers are developed within the government’s regulations. For instance, the acquisition of Uber’s Southeast Asian operations by Grab need to be handled within the regulations imposed by the government (Daga & Aravindan, 2018).
Economic Factors
The economic strength of a country can helps technology-based businesses to flourish and grow. The management at Grab decided to lay off some employees and reducing its cost of operations as a means of managing the impact of declining economic condition. The decision was taken as a means of countering the effect of continued loss being faced by the company (Poh & Lee, 2022).
Inflation effects the cost incurred by merchant-partner which effects the cost of running its different services. For instance, increasing price of fuel effects the cost of operations of the mobility segment, which leads to a higher fare being charged from the service users (Grab Holdings Limited, 2021).
A downfall of the increase fuel price and the resultant increase in fare is the decreasing demand of such service in the market. Due to inflation, people struggle to handle their expenses and the higher fares could be viewed as a challenge. Therefore, people could consider using alternatives, resulting in a decline in demand.
Social Factors
The pandemic had a negative impact on the revenues generated by Grab, specifically its mobility segment. Social distancing guidelines and travel restrictions limited the number of people using the mobility services, thus leading to lower profitability (Grab Holdings Limited, 2021). However, the food delivery aspect of the services gained an increase in the users.
This rise of online deliveries was attributed to the work from home and staying home precautions being followed by the public. Individuals were avoiding going out of home and showed a preference for home delivery, which was a positive outcome of COVID for Grab delivery.
Some countries have indicated a higher demand for motorcycle for mobility services while other regions have shown a comparatively higher user of cars. These changes in the use of vehicles and mode of transportation are linked to the level of development of a country. For instance, in Vietnam, people prefer to use motorcycle option in Grab due to ease of travel and affordability.
Technological Factors
The increase in technological innovation has opened up opportunities for app based ventures to enter the market. Grab as a part of the technology sector has gained immense benefit from the developments in technology. The company has been able to include different everyday services as a part of its operations through use of relevant technology.
Another one of the examples where technology has helped in improving safety is through inclusion of selfie feature for drivers and passengers in Malaysia. Facial recognition became more complicated during the pandemic as the drivers and riders were required to wear face masks.
However, availability of advanced AI has helped Grab in managing facial recognition even when the people were wearing face masks, maintaining safety (Tan, 2020). The company is also using technology to strengthen its cyber security and ensuring that the data of its customers remains safe. AI has been particularly helpful in tackling the issues in the domain of cyber security.
Legal Factors
The legal factors include the laws that govern each aspect of the company’s business operations. Since Grab is dealing with technology and app based services, it has to make sure that there are no fraud cases linked with its platform. Fraudulent activities through Grab were a key challenge for the company.
In order to deal with this issue, the management provides its customers with guidance about identifying potential scams. It also focuses on providing them insight into managing their account safety. Moreover, the company also has to follow anti-corruption laws, and has recently carried out an investigation about its internal anti-corruption situation.
In addition to this, app companies have to follow competition law and refrain from manipulative business practices. However Grab has not been fully complying with the competition law which has resulted in the legal penalty and fine on the company. The management was a part of application of restrictive clauses on the driver partners which was deemed as a violation of law (Lee, 2019).
Environmental Factors
The company has taken some steps to indicate its commitment to protecting the environment. Grab focuses on double bottom line, environmental performance being one of the aspects of its positive initiatives. The business operations are developed around the goal of decreasing the environmental footprint of the company.
One of the examples in this regard is the JustGrab Green option for ride booking. It allows the people to select eco-friendly vehicles for traveling, which is aiming to reduce the transportation related carbon emissions linked with the delivery segment of the business (Grab Holdings Limited, 2021).
Conclusion
Grab has greatly benefited from the technological advancements. However political issues such as geo-political disturbances, increasing fuel price, pandemic relates changes in consumer demand are some of the factors that have negatively affected the company’s revenues.
References
- Daga, A., & Aravindan, A. (2018). Grab’s Uber deal still has some obstacles to navigate. Reuters. Retrieved from: https://www.reuters.com/article/uk-grab-uber-analysis-idUKKCN1HD0QJ
- Grab Holdings Limited (2021). Form 20-F. Retrieved from https://investors.grab.com/static-files/37b91750-2014-4f50-b24d-60b89559d5d7
Lee, L. (2019). Malaysia proposes $20 million fine on Grab for abusive practices. Reuters. Retrieved from: https://www.reuters.com/article/ctech-us-grab-competition-malaysia-fine-idCAKBN1WI06D-OCATC - Poh, O., & Lee, Y. (2022). Grab’s Cost Cuts Help Ride-Hailing Company Weather Tough Times. Bloomberg. Retrieved from: https://www.bloomberg.com/news/articles/2022-11-16/grab-posts-smaller-than-expected-loss-as-cost-cuts-kick-in#xj4y7vzkg
- Tan, A. (2020). How Grab is using technology to improve trust and safety. Computer Weekly. Retrieved from: https://www.computerweekly.com/news/252492780/How-Grab-is-using-technology-to-improve-trust-and-safety