How Grab is Driving Social Impact and Economic Growth in Southeast Asia

About Grab

Grab is Southeast Asia’s leading mobile technology and transportation company that provides a range of on-demand everyday services including ride-hailing, food delivery, grocery delivery, mobile payments, and financial services. Grab (originally known as MyTeksi) was founded in 2012 in Malaysia, by Anthony Tan and Tan Hooi Ling, who both graduated from Harvard Business School. The company started with a taxi-hailing app designed to improve safety of taxi drivers and riders in Malaysia, but has since grown and established presence in 339 cities in 8 countries across Southeast Asia. By focusing on a hyperlocal business strategy and building strategic partnerships, Anthony and his team have successfully managed to transform Grab from a taxi booking app into a market leading company with a growing and diversified portfolio. The company’s distinctive super-app is a unique source of competitive advantage that offers on-demand everyday services for millions of consumers in Southeast Asia. Grab’s business model also places huge emphasis on social impact, inclusivity, increased access, convenience, safety, reliability in transportation, including financial services and its popular mobile payments platform (GrabPay).

The success of Grab over the years has been strongly supported by strategic venture capital investment funding from some of the leading financial institutions and strategic partners in Asia, that include examples such as Vertex Ventures, GGV Capital, Tiger Global, Hillhouse Capital, Softbank, Didi Chuxing, HSBC and Toyota. With an estimated population of over 660 million people, Southeast Asia is a huge and growing market poised to become the world’s fourth largest economy by 2030. However, Anthony Tan, the Group CEO and Co-founder of Grab, argued that not everyone has equal access to opportunities that come with the region’s fast economic growth. The company was established with a vision to ‘drive Southeast Asia forward by elevating the quality of life for everyone’, by creating economic opportunities at scale, enabling access to safer, high quality everyday services and creating financial inclusion for the underserved in the region.

By September 2019, Grab launched its unique ‘Grab for Good’ social impact programme in partnership with Microsoft to improve digital skills and literacy through training to empower millions of people, while creating inclusive opportunities for all consumers in a digital economic drive for the region. Leveraging on its distinctive technology platform and strategic partnerships in Southeast Asia, Grab has set ambitious goals to be achieved by 2025, driven by its two flagship initiatives, namely: Grab for Good social impact programme and the regional ‘Break the Silence’. Through its Grab for Good social impact programme goals, the company targets to bring digital literacy and greater inclusion to over 3 million people in Southeast Asia by 2025 in strategic partnerships with governments, private companies, and non-profit organizations in the region and beyond. Grab also aims to empower over 5 million microentrepreneurs and small businesses, which are the most realistic source of employment for majority of the people in Southeast Asia’s economies. It is estimated that over 6.6 million workers across the six major Association of Southeast Asian Nations (ASEAN) will require reskilling by 2028, and 16% of the ASEAN youth are more likely to work in the technology sector in the future. In response to this, Grab for Good programme is already helping in the drive to build future-ready workforce by training a target of 20,000 students by 2025 through its tech talent initiatives in partnership with educational institutions, non-profit organisations and leading technology companies. According to Andrea Della Mattea, Microsoft President in Asia Pacific, one of the major challenges still facing the region is democratization of education especially in the areas of technology and digital literacy. The Grab for Good programme is helping to open new opportunities for upskilling and digital literacy for millions of people in Southeas Asia.

Grab's Super-App and Business Model

In this way, the Grab for Good programme’s digital literacy campaign is making a huge impact by encouraging ingenuity, while developing computational thinking and problem-solving skills, which are all crucial in building a workforce that will transform families and communities to meet the new demands of the digital economies in the region. As evidence to its success so far, Grab is estimated to have contributed US$5.8 billion to the Southeast Asia’s economy in one year by March 2019, as verified by the KPMG consulting group, in Grab’s social impact report (2018–2019).

Over 9 million micro-entrepreneurs, which represents 1 in 70 people in Southeast Asia, have earned some income through the Grab platform as driver-partners, delivery partners, merchants or agentpartners. Grab has also helped over 1.7 million micro-entrepreneurs to open their first bank accounts, and with cashless usage increasing up to 9 times higher on the Grab platform compared to overall country cashless usage, the company continues to strong commitment to supporting the moves for a cashless future in the region. Grab is empowering driver-partners and their families to thrive in the digital economy through the development of digital skills, including a pathway for driver-partners to pursue tech-enabled careers with support from Microsoft and a global non-profit Generation. The Grab for Good social impact programme shows the company’s continued commitment to ensuring that everyone, regardless of background or ability, can benefit from the rise of the digital economy. The ‘Break the Silence’ initiative launched in the Southeast Asian countries including Malaysia, Thailand, Indonesia, and Singapore has enabled over 500 deaf driver-partners to access services on the Grab platform, and the number expected to double in the next few years. The inclusive programme has also enabled the company to roll out the GrabGerak, which is a transport service dedicated to passengers with disabilities in Indonesia, Singapore, and Thailand.

Grab’s main competitor in the super-app industry in Southeast Asia is Go-Jek, which was founded in Indonesia by Nadiem Makarim, a fellow Harvard Business School classmate of Grab’s Anthony Tan and Hooi Ling Tan. The two rival companies are in a fierce battle for dominance in the region. They are constantly competing for both investors and customers in areas ranging from transportation, grocery delivery, financial services, and medical advice. Go-Jek tends to prefer partnerships through acquisitions, which allow tighter control. On the other, Grab generally prefers partnerships and joint ventures which have allowed it to reach out to more markets much faster, including a more competitive advantage outside Indonesia. Another key player, Uber, which had invested over $700 million in Southeast Asia was acquired by Grab in March 2018. Grab acquired all Uber’s assets and operations including UberEats in Cambodia, Indonesia, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam. Uber gained a 27.5% stake in Grab from the acquisition deal, when the company had already been valued at several billions of dollars. Uber was pushed out of the Southeast Asia market and announced increased investment in research and technology development in its core markets including India where it holds majority control.

However, Grab’s acquisition of Uber in Singapore sparked outrage from drivers who complained that the combined companies revoked their incentives, while passengers protested higher prices combined with what they perceived to be a lower quality of service. That also triggered more scrutiny on the industry players from the regulators, Singapore’s competition watchdog imposed fine of up to $9.5 million on Grab and Uber, ruling that their deal had eroded competition and driven fares up by as much as 15%. The Singapore regulator ordered Grab to restore its pre-merger pricing and told the service to remove exclusivity obligations on drivers and taxi fleets. The ruling against Grab created opportunities for Go-Jek, which has committed over $500 million to expanding in Singapore and other regional markets. As the rivalry continues, Southeast Asia super-app industry is creating a marketplace in which competitive advantage will increasingly depend significantly on each player’s distinctive resources and capabilities including the choice of competitive strategies.

1.Provide a brief introduction for your case study analysis report. (200 words)

2.Using appropriate frameworks and any appropriate tools such as mind maps, identify and evaluate the key drivers of innovation contributing to the success of Grab (i.e. you may present your work in the format of a self-designed diagram, a mind-map or a ‘mini-poster’ which you include in your report). (700 words)

3.Using appropriate strategy frameworks, critically analyse the different approaches undertaken by Grab to help shape its entrepreneurial vision and business model. Your analysis in this task may include, but is not limited to, examples drawn from Grab’s competitive strategies at both the business unit level and corporate level. (900 words)

4.Critically evaluate the following statement: Grab’s success can be attributed to the successful application of the “Blue Ocean strategy.” In your response, apply appropriate Blue Ocean frameworks and tools such as Strategy canvas and value curves to compare Grab and its competitors based on the critical success factors for the industry. (900 words)

5.Write a clear conclusion that succinctly highlights the key aspects covered in your report in answers to the tasks above. (300 words)