PROPOSEDINNOVATIONFORGRABMALAYSIA

See discussions, stats, and author profiles for this publication at: https://www.researchgate.
net/publication/328916265
A PROPOSED INNOVATIVE CHANGE PROCESS FOR GRAB.
Research · November 2018

DOI: 10.13140/RG.2.2.14692.83841
CITATIONS READS
0 4,349
1 author:
Vivian Choy Mun Loke

Anglia Ruskin University
3 PUBLICATIONS 0 CITATIONS
SEE PROFILE
Some of the authors of this publication are also working on these related projects:
A PROPOSED INNOVATIVE CHANGE PROCESS FOR GRAB. View project
All content following this page was uploaded by Vivian Choy Mun Loke on 13 November 2018.
The user has requested enhancement of the downloaded file.

ENTREPRENEURSHIP & INNOVATION (MOD001093): REPORT OF PROPOSED
INNOVATIVE CHANGE PROCESS FOR GRAB (ARU ID: 1733499)

A PROPOSED INNOVATIVE CHANGE PROCESS FOR GRAB.
Center for Anglia Ruskin University Programs

HELP College of Arts and Technology
MASTERS OF BUSINESS ADMINISTRATION

Course: Entrepreneurship & Innovation
MOD001093

1


TABLE OF CONTENTS
1. Section (I): Executive Summary 3

2. Section (II): Introducing Grab Malaysia 3
2.1. Grab PESTLE Analysis 4
2.2. Grab Porter’s 5 Forces 5
3. Section (III): Innovative Change Process: Grab Freight 7
3.1. Proposed Intrapreneurship Idea 7
3.2. Plans for Innovative Change Process 8
4. Section (III): Critical Review of Theories & Paradigms 12
5. Section (IV): Conclusion 13
6. Section (V): References 14
2


EXECUTIVE SUMMARY
The revolutionary spark for Grab’s establishment was based on a visiting friend’s rant to
Anthony Tan, third heir to the Tan Chong Motors business in 2011. Complaining about the
known trend of local Malaysian taxis conning passengers up to triple the price of the ride,
Tan established GrabTaxi Holdings Pte. Ltd., (Grab MY, 2018). With headquarters in
Singapore, Grab posses present foothold in 8 Southeast Asian countries and 191 different
cities, managed and monitored by 2,252 employees. The company’s conception has created
jobs for more than 2.6 million drivers in the operating countries and has connected at least 36
million consumers to a whole new level of convenience, (Smith, 2018).
The objective of this report is to study the forces surrounding Grab Malaysia followed by a
proposed innovative process change. The proposed innovation is the introduction of B2B
services by Grab, known as Grab Freight: heavy duty/operational logistic services. The paper
will conclude with justification theories surrounding the exponential expansion of Grab in
Malaysia.
2.0. INTRODUCING GRAB MALAYSIA
The company began its humble beginnings under the name MyTeksi, officially rebranding
themselves as Grab in early 2016 to “reflect market dominance in Southeast Asia”, (Grab
MY, 2016). Grab’s ride-hailing service flow are summarized below:
Grab welcomed competitor, Uber Technologies Inc. into the Southeast Asian platform in
October 2013 (Millward, 2013). Uber was the luxurious ride-hailing provider in Kuala
Lumpur, shunning the homegrown Grab, then MyTeksi. However as years progressed, seeing
the increase of profit-appeal laying in the untapped mass market, Uber decided to strategize
as the affordable and convenient transportation option for everyone, increasing the
competition against Grab. In July 2017, “Malaysia made history when it became the first
3


country in the world to legalize ride-hailing services such as Uber and Grab”, (Malaysian
Digest, 2017). It was a cause of celebration after years of dissatisfaction lashed by local taxi
drivers. On 26 March 2018, Grab officially announced that it has “acquired Uber’s Southeast
Asia operations” (Grab MY, 2018). The merger allows Grab to monopolize the ride-hailing
industry in Southeast Asia while leveraging food delivery concepts. Grab Malaysia country
head Sean Goh assured that the merger would not affect prices or the experience of both
riders and drivers”, (Tariq, 2018). With one item check-marked off the list, Grab can now
aggressively progressed in digital innovation to introduce GrabFood, GrabPay, GrabRewards
and more Grab options to revolutionize the Malaysian market.
2.1. Situational Analysis: PESTLE Analysis of Grab Malaysia
To understand the current elements affecting Grab Malaysia, the table below will summarize
the forces from a PESTLE analysis.
There are three major forces that affect Grab at this stage; they are the Political, Economical
and Technological aspects.
Political
Based on the Malaysian Parliament, Grab and other ride-hailing providers were not
functioning under approved legal terms under the ministry of land transport. However, in late
2017, “Prime Minister Najib Razak’s Cabinet agreed to legalize ride-hailing services even as
taxi driver associations protested, arguing that their livelihoods were threatened by the private
hire services”, (Malaysian Digest, 2017). The legislation was followed by terms and
4


conditions to be followed by Grab and its competitors. Such as periodical vehicle checks,
insurance covers and more to assure the safety of consumers.
Economical
With Grab providing employment to at least 2.6 million people across Southeast Asia (Smith,
2018), there is significant impact towards the driver’s countries. Unemployment will be
reduced, livelihoods are managed and insured; it will lead to the stability of the country’s
workforce. This will increase the buyer power of citizens and subsequently the revenue of the
country. Also, with Grab’s encouragement for ride sharing, there would potentially be lesser
requirement for cars, therefore reducing road congestion. “Road congestion already costs
Asian economies an estimated 2%–5% of gross domestic product (GDP) every year due to
lost time and higher transport costs”, (Asian Development bank, 2018).
Technological
Grab innovates Technological offering and weaves them into the simplest process of a
consumer requesting for a ride. With the immense 1.5 million of completed rides each day,
Grab will “track parameters such as frequency of trips and popular pick-up and drop-off
locations”, (EDB.SG, 2017). Also, with the help of artificial intelligence cooped with
machine learning, drivers will receive notification on popular pick up zones of the day. That’s
not all, the mass data collected over the number of trips, satisfactory rates and demographics
have helped to furnish third-parties partners in obtaining accurate drop off addresses,
marketing materials and more, all with the consent of the application users.
2.2. Industry Analysis: PORTER’S 5 FORCES of Grab Malaysia
This paper will first analyze Grab’s level of competition with Porter’s Five Forces
framework:
5


New Entrants
Grab’s threat of New Entrants is currently low, due to the strong brand establishment in the
local market of the operating countries. As Asian cultures are risk-adverse, consumers of
Grab’s market will more likely trust an established brand rather than a startup. Moreover,
new entrants would have to think twice in executing marketing or branding campaigns, as
they are costly.
Substitutes
The threat of substitute towards Grab is mediocre due to the low cost of substation to its
consumers and the availability of other transportation options. If the consumer decides to use
another transportation, there is little to no costs of switching. Also, if the consumer decides
not to utilize Grab anymore, they may still option for public transport means (example: LRT,
local taxi providers, cycling).
Buyers
The bargaining power of buyer for Grab is low because Grab is already providing the
cheapest rates in comparison to local taxis and suppliers. There is no haggling allowed as
well.
Suppliers
Suppliers are divided into two categories: Tech & IT supplier and the Partners in
collaborations or investment. For Tech & IT, Grab outsourced the management of their
mobile and desktop applications. Partners are those who are in an agreement to collaborate or
paid partnership. It shows that the partners would require Grab more than the other way
6


round, as Grab is an established trusted partner. Therefore, the supplier power is justified as
low.
Rivalry
This paper concludes that the threat of rivalry is high as there are many ride-hailing apps that
function in the same flow Grab has executed. However, consumers usually trust established
brands more than new brands. Therefore, it will boil back to price wars, shorter available
routes and more to help the company gain a constant merit standing.
INNOVATIVE CHANGE PROCESS: GRAB FREIGHT

Grab currently markets three integrated strategies to solidify their positioning as the “#1
online-to-offline (O2O) mobile platform in Southeast Asia and a major player in food
delivery” (Grab MY, 2018).
These offerings by Grab are observed to be Business-to-Consumer (B2C) skewed. To

innovate the business, this paper will propose that Grab explore on the possibilities of
reinstating a proper line of services for Business-to-business (B2B).
3.1. Proposed Intrapreneurship Idea

This paper would like to introduce GRAB FREIGHT.
The diagram below will show the role of Grab Freight in B2B concepts in providing
entrepreneurs, business owners almost any business to utilize logistic services: Container
space, Air cargo space and Land deliveries.
7


3.2. Plans for Innovation Change Process
The plan for the proposed innovation for Grab’s internal and external activation will be based
on McCarthy’s 4Ps of marketing (Martin, 2014) to identify the key areas of change
innovation and implementation for the service industry in the context of B2B models. Grab
Freight is considered a service because it is “a type of economic activity that is intangible, it
is not stored and does not result in ownership as it is consumed at the point of sale”, (Martin,
2014). Diagram of Grab Freight’s Process Activation:
8


Product Offering
The objective of Grab Freight is to provide small and medium businesses an affordable and
convenient logistics solution for importing and exporting by consolidating orders to optimize
container space. The information technology enabler for which Grab Freight is centered
around is a cloud-based platform based on Grab’s current proprietary algorithms and
software. On the freight forwarder’s side, Grab Freight provides a solution to an oversupply
of global container shipping volume (Glave, 2018) by creating a new market in small
businesses to fulfill the 5% gap of the industry’s average capacity utilization of 95% (DHL,
2018). As container ships evolve to accommodate more containers, the industry capacity
utilization of 95% means that for each shipment, an average of 400 containers have no cargo
(Kremer, 2013). The normal process flow of importing goods is as follows:
Source: (Miti.gov.my, 2018).
The average freight charges the Buyer incurs for a container (20 foot) from China to
Malaysia is RM 20,000 with an additional average of RM 5,000 for duty, transportation and
handling charges.
Grab Freight will rationalize the process above for the Buyer and Seller as it manages key
roles within the process flow to offer the Buyer the flexibility of purchasing smaller
quantities. New import process flow with Grab Freight:
9


The average freight charges the Buyer incurs is RM 2,000 per pallet used with an average of
25% of the total for duty, transportation and handling charges.
Methodology
Grab Freight studies the carriers of ports (i.e. Maersk, CMA CGM) to determine patterns in
average capacity utilization throughout the year and selects partner carriers based on the
following criteria:
• Average capacity utilization of shipments between China and Malaysia. Selected

carrier should have an average capacity utilization below industry average of 95%.
• Frequency of ships departing from China to Malaysia. Selected carrier should have a
ship departing once or twice a month.
Once suitable carriers have been identified, Grab Freight starts negotiating favorable rates for
shipping containers based on the assumption that carriers would be willing to offer discounts
to increase the capacity utilization of their shipments that would otherwise be unused.
Furthermore, due to the 5% average of unused container’s being equivalent to 400 containers
for a Post Panamax Plus ship with a total capacity of eight thousand containers, Grab Freight
could negotiate a partnership with carriers without having to pay any upfront fees prior to
securing interested customers.
10


Pricing Strategy
As Grab Freight has first mover advantage in this new market space with no direct
competition besides traditional means, a Price Skimming strategy should be employed to
maximize sales and profits in the introductory phase. Hence, the recommended price of each
pallet charged to Buyer’s should be as high as possible but lower than the average charges of
shipping via air freight (DHL, 2018).
Place
Grab Freight can offer its services on the following sales channels:
1. Mega Markets. Guangzhou Zhongda Fabric Market (Guangzhou) and Huaqiangbei
Electronics Market (Shenzhen) are examples of marketplaces that provide thousands
of options for specific types of item categories. There are numerous locations in China
with mega marketplaces that sell a wide variety of items from textile to corporate
premium gifts.
2. Online Stores. Alibaba and Lazada are two examples of platforms that consolidate a
variety of online stores for the convenience of potential buyers. As the growth of e-
commerce in recent years driven by improved payment options and security casts a
shadow on traditional brick and mortar stores, it is inevitable for businesses to explore
digital means.
Promotion
By leveraging GrabPay and GrabRewards, Grab has increased their chances of collaborations
and partnerships with well-known brands. The options for promotions with Grab Freight can
be done with the proposed programs below:
11


i. Buyer-Get-Buyer program: Allowing current users of Grab Freight to introduce
friends and partnering businesses to utilize Grab’s B2B services in exchange for a
free container space or even the next import.
ii. Grab Rewards B2B: Grab Freight users will have the opportunity to enjoy
discounted rates of business related services (i.e. B2C Postal services once their
imported goods are repackaged and ready to be delivered to buyers).
CRITICAL REVIEW OF THEORIES & PARADIGMS

Despite the general acceptance of innovation as a necessity for company growth, Schumpeter
(1949) hypothesizes that the process induces unfavorable instabilities in the economy.
According to Schumpeter, the opportunity cost of financing the research, development and
implementation process of innovation will eventually drive market prices down as
competitors follow suit to maintain their competitive advantage. This is due to the increased
supply in the market resulting from a more efficient and innovative process of production.
However, despite Schumpeter’s views, companies continually strive to innovate, as his theory
does not take into account the potential long-term incremental profits that may be derived
from the outcome of the innovation process. Furthermore, Schumpeter attributes the impact
of innovation on economic instability in isolation of other factors. Hence, the Grab Freight
innovation proposed above seems to remain critical for Grab to be a disruptor in the logistics
industry to potentially further increase profit for its shareholders and achieve sustainable
growth.
In the case of Grab’s recent acquisition of its biggest rival Uber in the region, Liebenstein’s
theory of X-Efficiency in 1949 is relevant. Liebenstein theorizes that in markets where
competition is low or non-existent, businesses tend to operate at lower efficiency levels. In
such situations, Liebenstein observed the lack of pressure to focus on optimizing costs if a
company has an extremely dominant position in the market with high barriers to entry. As
cost optimizing generally leads to a less comfortable working environment for employees,
productivity is maintained at a sub-optimal level that employees are contented with which
satisfies management and shareholders. Although Liebenstein’s views in this theory are
opposed by traditional academicians that believe businesses constantly strive to maximize
efficiency, individuals with actual work experience will concur that there is truth in
Liebenstein’s X-Efficiency theory to a certain degree if not entirely applicable to an entire
12


organization. Due to Grab being monopolistic post Uber acquisition and the unprecedented
‘Blue Ocean’ nature of the Grab Freight proposal, operational excellence post
implementation is the most important aspect to ensure the company capitalizes the most from
the first-mover-advantage. Cost optimization can only be a focus at a later stage due to the
absence of benchmarks based on industry best practices as Grab sets the standards of industry
best practice for future competition.
CONCLUSION
The speed of which competitors move and technology evolves within the tech
industry disallows any business to rest on its laurels as we have witnessed how the mighty
have fallen in the likes of Blackberry despite being a market leader in just a matter of years.
This proposal outlines how Grab Freight can further expand Grab’s dominance in the region
while leveraging on their strengths to carve out a new market space rendering their
competitors irrelevant. In seeking to provide a solution to allow small businesses to be more
cost effective and broaden product offerings through importing, Grab Freight also solves the
problem that carriers face in the underutilization of container carrying capacity of transport
ships due to an oversupply of freight services globally. Consequently, the challenge for Grab
is to learn and develop industry best practices to further ensure that the company remains
profitable and sustainable in the years to come.
13


REFERENCES
Asian Development Bank. (2018). Urban Transport. [online] Available at:
https://www.adb.org/sectors/transport/key-priorities/urban-transport [Accessed 28 Jul. 2018].
DHL. (2018). Global trade. [online] Available at: https://www.dpdhl.com/en/trends-in-
logistics/global-trade.html [Accessed 4 Aug. 2018].
EDB SG.gov. (2017). Grab pushes digital innovation to stay ahead of the game. [online]
Available at: https://www.edb.gov.sg/en/news-and-resources/insights/innovation/grab-
pushes-digital-innovation-to-stay-ahead-of-the-game.html [Accessed 28 Jul. 2018].
Gaskell, A. (2017). Study Explores The Impact Of Uber On The Taxi Industry. [online]
Forbes.com. Available at: https://www.forbes.com/sites/adigaskell/2017/01/26/study-
explores-the-impact-of-uber-on-the-taxi-industry/#54b6be4916b0 [Accessed 27 Jul. 2018].
Glave, T. (2018). The hidden opportunity in container shipping. [online] McKinsey &
Company. Available at: https://www.mckinsey.com/business-functions/strategy-and-
corporate-finance/our-insights/the-hidden-opportunity-in-container-shipping [Accessed 4
Aug. 2018].
Grab MY. (2018). About Grab | Grab MY. [online] Available at:
https://www.grab.com/my/about/ [Accessed 28 Jul. 2018].
Grab MY. (2016). GrabTaxi Rebrands To Grab To Reflect Market Dominance in Southeast
Asia | Grab MY. [online] Available at: https://www.grab.com/my/press/business/grabtaxi-
rebrands-to-grab-to-reflect-market-dominance-in-southeast-asia/ [Accessed 28 Jul. 2018].
Kremer, W. (2013). Are container ships getting too big?. [online] BBC News. Available at:
https://www.bbc.com/news/magazine-21432226 [Accessed 4 Aug. 2018].
Malaysian Digest. (2017). Here Is What You Should Know About The New Laws To Be
Enforced On Uber And Grab Drivers. [online] Available at:
http://www.malaysiandigest.com/features/691350-here-is-what-you-should-know-about-the-
new-laws-to-be-enforced-on-uber-and-grab-drivers.html [Accessed 27 Jul. 2018].
Martin, S. (2014). 7Ps of Marketing | Additional Elements of Marketing mix. [online]
Cleverism. Available at: https://www.cleverism.com/7ps-additional-aspects-marketing-mix/
[Accessed 29 Jul. 2018].
Millward, S. (2013). Uber hits yet another Asian city, launches today in Kuala Lumpur.
[online] Techinasia.com. Available at: https://www.techinasia.com/uber-launches-kuala-
lumpur-malaysia [Accessed 27 Jul. 2018].
Miti.gov.my. (2018). NATIONAL SINGLE WINDOW FOR MALAYSIA. [online]
Available at:
http://www.miti.gov.my/miti/resources/fileupload/Lesser%20Container%20Load%20Process
%20Flows.pdf [Accessed 4 Aug. 2018].
14


Owler. (2018). Grab Group Competitors, Revenue and Employees - Owler Company Profile.
[online] Available at: https://www.owler.com/company/grab [Accessed 29 Jul. 2018].
Smith, C. (2018). 20 Interesting Grab Facts and Statistics. [online] DMR Business Statistics.
Available at: https://expandedramblings.com/index.php/grab-facts-statistics/ [Accessed 28
Jul. 2018].
Tariq, Q. (2018). End of the road for Uber app in Malaysia - Tech News | The Star Online.
[online] Thestar.com.my. Available at: https://www.thestar.com.my/tech/tech-
news/2018/04/09/uber-ends-in-malaysia-continues-elsewhere/ [Accessed 28 Jul. 2018].
Uber. (2018). Uber - Get a Ride Near You - Earn Money by Driving | Uber. [online]
Available at: https://www.uber.com/en-MY/ [Accessed 27 Jul. 2018].
Uber Newsroom. (2018). Company Information | Uber Newsroom US. [online] Available at:
https://www.uber.com/newsroom/company-info/ [Accessed 27 Jul. 2018].

15

View publication stats

PROPOSEDINNOVATIONFORGRABMALAYSIA

Transféré par

Informations du document

Copyright

Formats disponibles

Partager ce document

Partager ou intégrer le document

Options de partage

Avez-vous trouvé ce document utile ?

Ce contenu est-il inapproprié ?

Droits d'auteur :

Formats disponibles

PROPOSEDINNOVATIONFORGRABMALAYSIA

Transféré par

Droits d'auteur :

Formats disponibles

See discussions, stats, and author profiles for this publication at: https://www.researchgate.

A PROPOSED INNOVATIVE CHANGE PROCESS FOR GRAB.

Research · November 2018

Vivian Choy Mun Loke

A PROPOSED INNOVATIVE CHANGE PROCESS FOR GRAB. View project

The user has requested enhancement of the downloaded file.

A PROPOSED INNOVATIVE CHANGE PROCESS FOR GRAB.

Center for Anglia Ruskin University Programs

MASTERS OF BUSINESS ADMINISTRATION

1. Section (I): Executive Summary 3

2.0. INTRODUCING GRAB MALAYSIA

2.1. Situational Analysis: PESTLE Analysis of Grab Malaysia

2.2. Industry Analysis: PORTER’S 5 FORCES of Grab Malaysia

INNOVATIVE CHANGE PROCESS: GRAB FREIGHT

These offerings by Grab are observed to be Business-to-Consumer (B2C) skewed. To

3.1. Proposed Intrapreneurship Idea

3.2. Plans for Innovation Change Process

Source: (Miti.gov.my, 2018).

• Average capacity utilization of shipments between China and Malaysia. Selected

CRITICAL REVIEW OF THEORIES & PARADIGMS

View publication stats

Vous aimerez peut-être aussi