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PESTLE Analysis

Discuss about the Grab Company for Legal and Environmental Factors.

Grab Company is a technology-based cab sharing company which is based in Singapore and it is founded in 2012.  They offer their services with the help of applications which offers their customers to avail the facilities like ride-hailing, and ride sharing etc.  The company has their branches opened in more than 168 cities across 8 different countries. Their services include GrabTaxi, GrabCar etc. among several other services.  More than 5000 employees are working in the different branches of the organization.  Their net income is more than 82.8 million US dollars in the recent years. Recently they are facing competition from other technology-based cab-hailing companies like Uber. The purpose of this paper is to discuss the factors of PESTLE analysis and their impacts on Grab Company. Moreover, the paper will also discuss Porter's five forces and their impacts on the company. Furthermore, the paper will also discuss how these two analyses can be used to increase the performance of the organization.

PESTLE analysis is an analytical tool used by the organization to analyze the macro-environmental factors which can affect the business volume of the organizations.  These factors include political, economic, social, technological, legal and environmental factors which are discussed below: 

Political factors are defined as a factor by which a government of a particular country can influence the economic growth of the country. Political factors include tax policies, labor laws and trade restrictions imposed by the government on the business organizations (Song et al., 2017). These factors are evaluated to determine how the government policies can influence the internal environment of the organization.   

Economic factors of a country are defined as the factors which have a direct effect on the profitability of an organization. Economic factors include interest rates, costs of raw materials and exchange rates between the countries (Lamas Leite et al., 2017).  These factors exert a significant effect on the operation of an organization.  Interest rates of a particular country can significantly affect the operational costs of an organization.

Social factors comprise of cultural aspects of a particular country and other factors like health consciousness, population growth rate, attitudes regarding career etc.  Changes in the demand of the customers can influence how an organization operates in a particular way (Dockalikova & Klozikova, 2014).  Higher satisfaction in the society can have a significant effect on the business operations of a firm.   

Impacts of PESTLE on Grab Company

Technological factors include factors like research and development and other technological advances of the country. These factors can be used to identify barriers to potential entry in the market and it also has a significant effect on the business decisions of the firm (Balasopoulou et al., 2016).    

Legal factors of a country include the rules and regulations of a country and how it impacts the business growth of an organization (Song et al., 2017).  These include discrimination laws, corporate laws and other regulations which can have a significant effect on the business decisions of a firm.  

Environmental factors include factors like climate, weather and other factors which can have a significant effect on the business operations of a firm (Islam & Pattak, 2017). These factors palsy a significant role in maintaining the sustainability of the organizations. 

Singapore is a democratic country and the political conditions of the country are stable. The government of the country is elected with the help of election (Song et al., 2017). These factors have a positive effect on the business decisions of Grab Company.       

The economy of Singapore is developing at a fast pace, which can create a positive effect on the business decisions of Grab Company. Per-capita income of the country is highest and the level of corruption in the country is low (Lamas Leite et al., 2017). The workers are motivated, thus it helps the Grab Company to increase their profitability in the market.   

Singapore follows a traditional culture, which also impacts the business performance of an organization.  The literacy rates among the citizens of Singapore is motivated to increase the productivity of the nation, thus increasing their purchasing power (Balasopoulou et al., 2016).  Increase in the purchasing power will allow Grab to increase the number of customers of the organization.  

The technological development in Singapore allows the organizations to increase their productivity. The younger generations of the country use the internet to interact with others and gain knowledge about the outside world (Dockalikova & Klozikova, 2014). Due to this, the business of Grab will flourish in Singapore, as it provides ride-sharing services using technology.   

The government of Singapore has established some rules and regulations to maintain transparency within the market of the country. They have established e-commerce programs to improve the business situations of the country (Islam & Pattak, 2017). These rules and regulations allow Grab to expand their business in Singapore.     

Porter’s Five Forces Analysis

The government of Singapore is trying to decrease the level of pollution and improve the air quality of the country.  They have successfully reduced the level of carbon-dioxide emissions and improve the environmental factors of the country. Grab can expand their business in the country by following the environmental regulations of the country.       

Porter's five forces are used to analyze the nature of competition within the markets of a particular industry.  It is also used to measure the potential profitability of a particular organization within the competitive market.  These five forces are described below:

These forces evaluate the nature of competitiveness of a particular market of an area. If the level of competition increases, then the organizations can decrease the price of their products and services to attract more customers (Dobbs, 2014).  On the other hand, a decrease in the competitive rivalry will allow the organizations to exercise great influence over the market and increase the level of profits of the organization.     

This force is used to evaluate the extent of power the suppliers have over the organization. More the number of suppliers with respect to organizations, lesser will be the level of power of suppliers over the organizations (Yunna & Yisheng, 2014).  On the other hand, if the number of suppliers is less, then they will able to exert influence over the firms.     

This force determines the level of power buyers have over the organization within a particular market. More the number of customers in the market, greater will be the power of the organizations over the buyers. If the number of organizations in the market increases, then the power of buyer increases over the market (Mathooko Zhao & Ogutu, 2015). They have the power to choose over the range of the organizations available in the market.  On the contrary, if the number of customer decreases in the market, the power of the firm will decrease too.     

This force evaluates how the products and services of a particular organization may face threat from substitute products.  If there is a number of substitute products available in the market, the buyers can choose from the available options in the market (Zhao et al., 2016).  The buyers will choose for a cost-effective option with same functionality if the number of substitute increases in the market.   

The position of an organization in the market can be affected by the number of new organizations able to enter a particular market. If the level of barriers is low, many organizations can enter the market with convenient ease.  Thus it can affect the profitability of the organization and weaken the position of the company in the market (Zhao et al., 2016).     

The level of competition in the market is high in the markets of Singapore due to the rules and regulations employed by the government of the country. This industry is growing at a rapid pace, thus the intensity of competitive rivalry is high in the market (Dobbs, 2014). The number of competitors operating in the market is relatively high, so the intensity of competition for Grab Company is also high in the market.        

The number of distributors in the market is less, thus the power of suppliers over the organization is high. These suppliers can choose to switch to another organization thus affecting the profitability of Grab Company in Singapore (Yunna & Yisheng, 2014).  Thus the power of Grab Company over their suppliers is low, which can affect the profitability of the organization.   

The number of customers using the ride-sharing facilities of Grab Company, in Singapore is high, thus increasing the power of the organization over them (Mathooko Zhao & Ogutu, 2015). Thus the buyers do not have any kind of leverage over Grab Company. So the power of grab Company over the buyers is high in the market.      

The level of substitution of the services provided by the Grab Company in Singapore is high, thus decreasing the profitability of the organization (Zhao et al., 2016).  Customers can choose to elect another service if the services of Grab Company fails to meet the demands of their customers.

The level of competition is high in the market, so are the level of barriers to new entrants in the market. The strong distribution channels and reputation of the organization makes it difficult for new organizations to enter the market (Zhao et al., 2016).  Thus the threat of new entrants to Grab Company in Singapore is low.

Grab Company in Singapore can use some strategies to increase their profitability in the market. They can expand their business both locally and on the international level. They can target a new market segment to sell their services in an effective way and increase their reputation in the country (Steinbach et al., 2017).  They can expand their business on the global scale to further increase their sales. It will help them to tap into untapped markets and increase the exposure of the company.  Greater exposure will increase the profitability of the organization as well as their reputation in the international market.  They can also expand their business with the help of mergers and acquisition strategy (Meyer et al., 2017).  They can merge with other organizations to increase the performance of the organization by acquiring quality staffs or by developing additional skills. They can also have access to a wider customer base with the help of merger and acquisition (Daspitet al., 2017).  It will help them to decrease the operational costs of the organization.  They can change their organizational structure to increase the profitability of the organization.  Changing the organizational structure will allow the organization to adapt to the demands of the customers and customize their services according to that.     

They can also introduce new products and services to increase the customer base of the organization. It will enable them to attract more customers and appeal to the nature of their demands (Bettis et al., 2016). All these methods will allow Grab Company to increase their performance level and the level of their profitability in the market. These strategies can be used to increase the exposure of the organization and appeal to the demands of the mass of the customers of the organization. They will be able to increase the number of customers and increase their sales in the market.  Greater exposure will allow them to increase the level of profitability as well their productivity (Michael et al., 2017). They can also identify their strengths and weaknesses and they will be able to work on t6his strengths and weaknesses.
Conclusion

Grab Company is able to generate a substantial amount of revenue in Singapore in the recent years. They are able to create a net income of more than 828. 8 million US dollars in these recent years. Using PESTLE analysis, they can develop better business plans in the future and improve their strengths and decrease their weaknesses. They can gather information about the PESTLE factors and use them to analyze the business plans of the organization. It can be sued to make correct and informed decisions while developing the strategy of the organization.  Grab Company can use Porter's five forces analysis to understand the market situation of Singapore.  It can use to develop the business plans of the organization.  They can take appropriate measures to increase the power of the organization over their buyers and suppliers. They can develop better quality products and services so that their customers do not switch to other companies for better quality services.  

References 

Balasopoulou, A., Latsou, D., Kousoulakou, H., Michael, N., Mc Kenzie, D., Mair, A., ... & Geitona, M. (2016). The use of PESTEL as a change management tool to inform change management of polypharmacy and adherence within SIMPATHY program. International Journal of Integrated Care, 16(6).

Bettis, R. A., Ethiraj, S., Gambardella, A., Helfat, C., & Mitchell, W. (2016). Creating repeatable cumulative knowledge in strategic management. Strategic Management Journal, 37(2), 257-261.

Daspit, J. J., Chrisman, J. J., Sharma, P., Pearson, A. W., & Long, R. G. (2017). A strategic management perspective of the family firm: Past trends, new insights, and future directions. Journal of Managerial Issues, 29(1), 6.

Dockalikova, I., & Klozikova, J. (2014, November). MCDM Methods in Practice: Determining the Significance of PESTEL Analysis Criteria. In European Conference on Management, Leadership & Governance (p. 418). Academic Conferences International Limited.

  1. Dobbs, M. (2014). Guidelines for applying Porter's five forces framework: a set of industry analysis templates. Competitiveness Review, 24(1), 32-45.

Islam, M., & Pattak, D. C. (2017). Impact of Macro Environmental Factors on Garments Industry That Drives Export in Bangladesh. Studies in Business and Economics, 12(2), 100-111.

Lamas Leite, J. G., de Brito Mello, L. C. B., Longo, O. C., & Cruz, E. P. (2017). Using Analytic Hierarchy Process to Optimize PESTEL Scenario Analysis Tool in Huge Construction Projects. In Applied Mechanics and Materials(Vol. 865, pp. 707-712). Trans Tech Publications.

Mathooko, F. M., & Ogutu, M. (2015). Porter’s five competitive forces framework and other factors that influence the choice of response strategies adopted by public universities in Kenya. International Journal of Educational Management, 29(3), 334-354.

Meyer, G. D., Neck, H. M., & Meeks, M. D. (2017). The entrepreneurship?strategic management interface. Strategic Entrepreneurship: Creating a new mindset, 17-44.

Michael, S., Storey, D., & Thomas, H. (2017). Discovery and coordination in strategic management and entrepreneurship. Strategic Entrepreneurship: Creating a new mindset, 45-65.

Song, J., Sun, Y., & Jin, L. (2017). PESTEL analysis of the development of the waste-to-energy incineration industry in China. Renewable and Sustainable Energy Reviews, 80, 276-289.

Steinbach, A. L., Holcomb, T. R., Holmes, R. M., Devers, C. E., & Cannella, A. A. (2017). Top management team incentive heterogeneity, strategic investment behavior, and performance: A contingency theory of incentive alignment. Strategic Management Journal, 38(8), 1701-1720.

Yunna, W., & Yisheng, Y. (2014). The competition situation analysis of shale gas industry in China: Applying Porter’s five forces and scenario model. Renewable and Sustainable Energy Reviews, 40, 798-805.

Zhao, Z. Y., Zuo, J., Wu, P. H., Yan, H., & Zillante, G. (2016). Competitiveness assessment of the biomass power generation industry in China: A five forces model study. Renewable Energy, 89, 144-153.

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My Assignment Help. Legal And Environmental Factors Impacting Grab Company: PESTLE And Porter’s Five Forces Analysis Essay. [Internet]. My Assignment Help. 2019 [cited 20 April 2024]. Available from: https://myassignmenthelp.com/free-samples/grab-company-legal-and-environmental-factors.

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