Management 11: Evaluating Grab.com's International Trade Opportunities

This report, prepared by a student consultant, assesses the feasibility of Grab.com's expansion into the European market. It begins with an overview of Grab.com's business, followed by an analysis of the macro-environment using PESTEL factors, including political, economic, social, technological, environmental, and legal considerations. The micro-environment is then examined using Porter's Five Forces to evaluate competitive dynamics. The report then suggests market entry strategies, primarily focusing on acquisition and joint ventures, with a detailed discussion of the benefits and challenges associated with each approach, including licensing as a potential option. The report concludes with recommendations for Grab.com's entry strategy into the European market, considering the specific challenges and opportunities identified throughout the analysis. This report is designed to help students understand the complexities of international trade and market entry strategies.

Running Head: MANAGEMENT 0
Managing international trade

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Table of Contents
Overview2
Global Business.........................................................................................................................2
Macro Environment.................................................................................................................3
Micro Environment..................................................................................................................6
Strategy for Entry....................................................................................................................7
Recommendations..................................................................................................................11
Conclusion...............................................................................................................................13
References...............................................................................................................................14

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Overview
An organisation planning to expand internationally and before indulging into an
international supply contract, it is important for them to ensure that they are alert of
all global regulations that might impact their buying excluding export agreement in
the international marketplace and import controls in the native marketplace.
This report is based on an Asian firm Grab.com planning to expand into European
market. Being a consultant, I need to analyse both challenge and opportunities for
Grab.com with exploring general business environment so that to finalize the mode
of entry strategy. In last, several recommendations are also being suggested for
Grab.com relating to its entry strategy into the European market.
Global Business
Grab, previously known as Grabtaxi, is an automated location-based mobile booking
platform started in 2012 in Singapore. Today, the company has develop to become
Southeast Asia’s biggest taxi reservation service platform. Grab exclusively ruled the
taxi booking sector and has launched various other services such as GrabPay,
GrabFood, GrabFresh, GrabBike, GrabCar and many more with wider acquisitions
and takeovers. As of March 2018, Grab was valued at US$ 6 billion. In 2018, the net
revenue of Grab Taxi amounted to nearly 1.1 billion U.S. dollars and it is expected to
reach 2.3 billion U.S. dollars in 2019 (statista.com, 2019).
The vision of Grab is to be a daily app for customers and it fulfils Malaysian and
Southeast Asian customers’ wishlist for an everyday app where customers will be
able to eat, commute and deliver packages and pay for daily necessities through one
application. With the vision, Grab also execute on big partnership in 2019 expansion

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with expanding into businesses ranging from health care to insurance to video
content (Iwamoto, 2019). With adding new offering, Grab also trying to go beyond
the regional service and therefore, achieving economy of scale.
Macro Environment
Before expanding into the European market, it is important for Grab.com to discover
necessary factors in the external environment including political, economic, social,
technological, environmental and legal. This will benefit Grab to match its strategies
with the business environment in which the company plan to operate.
Political Factors  In relation with political
environment, Grab require to
research various policies and
changes due to Brexit, a
scheduled withdrawal of the
United Kingdom (UK) from the
European Union (Los et al,
2017).
 For instance, one of the change
can be stated as the higher
fluctuations in foreign exchange
rates which impact straightly the
price of product and raise the
competition pressure.

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Economic Factors
 It was found that eurozone
economies developed 0.2 per
cent last quarter and inflation
remains far underneath the
European Central Bank’s target
(Reed, 2019).
 Positive economy of Europe will
be beneficial for Grab.com as
rising economy will induce
customer to pay for the company
services.
Social Factors  Since the Renaissance, Europe
has had a key influence in culture
and social movements globally
(Dickson, 2017).
 Europe culture can be stated as
a sequence of overlapping
cultures and this makes common
value and common culture
complex.
 It can impact Grab.com internal
environment while making it
challenging for the company to
bring unity in various areas such

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as recruitment and teamwork.
Technological Factors
 Europe is well known for its
advancement in the field of
technology and German is known
as 5th most technologically
advanced nation.
 Grab.Com can adopt new
technologies such as IoT and AI
to increase customer
engagement and with the help of
machine learning, new areas can
also be covered which are not
tapped by native companies in
Europe.
Environmental Factors
 The EU is known to be the
country with having extensive
environment laws.
 It requires Grab.com to re-
consider its CSR activities and
policies to raise brand value in
the eye of both government and
community.
Legal Factors  The legal background of Europe
encourages the creation of
business ventures considering

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both foreign investors and
citizens.
 However, it is important for
Grab.com to assess necessary
laws related to employment and
workers.
Micro Environment
With the help of five forces model developed by Michael Porter, the
microenvironment of Grab.com can be identified exploring various competitive forces
having direct or indirect impact on the company.
 Rivalry among current competitors – The competition for Grab.com will be
high in Europe because of companies like Taxify and Mytaxi offering similar
sort of services like Grab.com. In addition, these companies are also
undertaking various innovations. For instance, Taxify announces plans to
release scooters in Europe in competition from Uber. Similarly, Mytaxi also
announced to launch an electric scooter pilot by the end of 2019 (Clark,
2018). Such innovative from the native companies of Europe can give tough
competition to Grab.com in Europe.
 Bargaining Power of Suppliers – As Grab.com will not be having any
vehicle among its fleets and its business model is highly based on partners
and drivers. It will be hard for Grab.com to substitute particular drivers and
this shows that suppliers will be having an upper hand in influencing the

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performance of Uber. Therefore, it can be said that bargaining power of
suppliers is moderate in Uber case.
 Bargaining Power of Buyers – It is clear that bargaining power of buyers will
be high when Grab.com plans to expand in Europe due to presence of a
significant number of ride hailing services such as Daimler, Mytaxi, Taxify and
Uber. This gives consumers an edge to choose over best company providing
quality services at lowest rate.
 Threat of Substitutes – There will be high threat of substitute due to
presence of the number of competitors as well as other means of transport
and food serving. Subway stations, metro services, train can be considered as
some of the few substitutes that can impact Grab.com to venture in its initial
offerings. Hence, it is important for the company to assess each aspect of
microenvironment where its plan to operate.
 Threat of New Entry – Threat of new entrants into internet-based ride hailing
industry is important as there is nothing secret about Uber business model. As
online services are cost effective and do not requires high capitalization, any
company can effectively replicate the business model of and also there will
also be not any big issues to access distribution channels (Knapp et al, 2013).
However, brand loyalty also plays an essential role that can impact Grab.com
to attract new customers. Therefore, it can be said that there is moderate
threat of new entry.
Strategy for Entry
Modes of entry into a global market are known to be as channels which a company
engage to attain entry to a new market (Nielsen and Nielsen, 2011). A company is

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required to undertake various factors before going into an international market.
Some of these factors are country specific and some of industry specific. Brouthers,
Brouthers and Werner (2008) stated some of the common ways of entry into the
foreign market and these include exporting, joint venture, franchising, outsourcing,
mergers and acquisitions and licensing.
Taking out further research in European market, the first best mode of entry strategy
will be acquisition that implies acquisition of controlling interest in an organisation by
another enterprise. Grab.com required to undertake friendly acquisition of Uber
operations in Europe as the company is facing tough competition from other taxi
companies and government regulators all over Europe. In various European cities
such as London, Paris, Berlin, Madrid taxi drivers have organised objections to
contest against Uber and their disruptive way of doing business (Harven, 2014). This
will be a viable option for Grab.com to take over Uber Europe business.
Some benefits of this entry mode will be higher access to capital as Grab can access
capital of a larger company without dipping into their own pockets. It will lead
Grab.com to organic growth with allowing broad range of experience. Acquiring
Europe business of Uber also allow Grab.com to access to higher knowledge and
experience allow company in its continuous growth. In addition, one of the biggest
benefits of this acquisition is reduced entry barriers and cost. For instance, Grab.com
did not need to invest much in market research amid other upfront expenditures and
it also requires years to develop an important customer base.
Acquisition entry mode will also help Grab.com to satisfy expectation of growth as
most of stakeholders of the company look for return on investment and acquisition
was proved by Gaughan (2010) as often yield results more speedily than other

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means for development. With regards to this, there is also a diversification of the
products, services and long term prospects of the business as Uber may be able to
offer those products and services to the company which can be provided through its
own distribution channel.
Apart from that, Grab.com can also found various challenges with this acquisition
and it is important for the management to assess those challenges priory before they
occur. One of the possible challenges can be integration issues and it can be caused
due to clash of company culture during forming the newly combined entity and
employees can also influence by resent the acquisition while making the respective
integration challenging.
The next barrier that can be confronted by Grab.com is the conflicting objective as
there may be high difference between the mission statement of Uber and Grab.com
bringing resistance within the acquisition that can undermine efforts being made. In
addition, employee can also resist to this acquisition as it creates distress within the
employees base of each organisation where people in both Uber and Grab can be
forced into higher level of uncertainty as they do not know what will happen to them.
Therefore, acquisition can be treated as a good way for Grab.com to attain huge
growth over a shorter period of time and Grab.com can choose this entry mode for
achieving synergies in their several operations and attain control of assets of Uber.
In comparison with other modes of entry, it is less expensive and risky with
comparison to traditional growth methods considering marketing and sales efforts.
In relation with mode of entry, the second viable option will be joint venture with
European firms such as Mytaxi or Taxify to pool their resources with attaining a
particular task. The joint venture with these firms allows Grab.com to gain new

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insights and expertise which can be a competitive advantage for the company. For
instance, Taxify is one of the most recent companies to come out with plans to bring
scooters in Europe and at the same time, Mytaxi, the Daimler owned Uber
competitor state that it would launch an electric scooter pilot in Southern Europe.
This can benefit Grab.com to embrace of new technology and resources and attain
the first mover advantage in highly dynamic business environment. Forming this joint
venture will also benefit Grab.com to access better resource like specialised
technology and employees and there will be a less risk due to sharing of costs and
risks with a partner. The competition will also be less intense while reducing barriers
in communications unlike in acquisition as Grab.com will not have to compete with
these domestic firms in the European market.
Grab.com is already having various business under its umbrella brand such as
GrabFood, GrabFood and so on. In the same way, Uber also has its food delivery
arm named as Just Eat which can also be acquired by GrabFood and Pay. It will
provide double benefit to the Grab.com with achieving economy of scale and
potentially creating the company operation at more scale.
The next mode of entry which Grab.com can pursue is licensing which is one of the
key modes of entry of firms considering international expansion. This mode of entry
is growing as various retailers and manufacturers develop their core businesses
while creating an opportunity for passive income. Grab.com can also get easier entry
into international market by getting their services much easier than if they were doing
the work on their own. In Europe, Grab.com can also allow for the intellectual
property to jump border requirements and also have an opportunity to gain a
monopoly over a product or service in a particular region at a lower investment rate
than going into isolation.

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However, in comparison with joint venture and acquisition, licensing may be less
profitable as return needs to be shared between two parties.
While an acquisition, joint venture and licensing can be the root of rapid and
substantial growth for Grab.com, it can also lead to various challenging issues to the
company. Grab.com is required to asses well as several things can go wrong even
when there is a well-laid plan.
Recommendations
With the economic prospects looking up, Grab.com can be in a great position in
relation with acquisition to led successful business turnarounds and integrated
majorly acquisition with the Uber. At the first step, it is necessary for Grab.com to
secure the value of the acquisition by reasonable decision on staff. In other words,
Grab.com needs to ensure that each and every employee in the department
coordinate with the acquisition laid down by the senior executives of the
organisation. In order for synergies to take effect there is the precondition of changes
(new customers and clients, processes, structures and products) to take place which
states that requirements on staff change as well. Training and conducting seminars
is the best way for Grab.com to engage each and every employee of the company
and with appropriate communication channel and strategy.
After employee’s engagement, Grab.com needs to re-assess the market scenario of
Europe through the help of an agency situated in the country as it will help brand to
plan better in dynamic business environment. The information that has been
researched can be anything related to the targeted company in the host country such
as competitors of Uber and Just Eats, brand goodwill and value in the industry, level

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of employee satisfaction within the culture of Uber and other relevant data. Such
information will help Grab.com in post-acquisition.

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Conclusion
In the limelight of above discussion, the best mode of entry for Grab.com will be
acquisition that help the company to take over the business of Uber in Europe
including its resources and key competencies. The macro business environment was
assessed to be highly challenging and uncertain require Grab.com to undertake tight
plan and policies matching to macro and general environment. The micro
environment in Europe is not much very positive as per the analysis done by Porter
Five Forces. For instance, the threat of competitors is high due to presence of
various substitute. It requires Grab.com to plan strategies at root and operational
level.
At last, the best mode of entry as per the market scenario in Europe is acquisition as
it will help Grab.com to take full potential of the Uber business which is already
settled including its distribution network and market share. However, extensive
planning is required to be carried out by all functional departments of Grab.com to
facilitate such big change as failure to acquisition can also cause big loss to the
company in terms of costs and resources.

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References
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entry mode choice and performance. Journal of Management Studies, 45(5), pp.936-
960.
Clark, K. (2018) Europe most popular ride-hailing service is launching e-scooters
[ONLINE] Available from: https://techcrunch.com/2018/10/29/europes-most-popular-
ride-hailing-service-is-launching-e-scooters/ [Accessed 07/10/2019].
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York: John Wiley & Sons.
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[ONLINE] Available from: https://www.pri.org/stories/2014-06-11/taxi-drivers-across-
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network approach. In Knowledge, networks and power (pp. 111-132). London:
Palgrave Macmillan.

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Knapp, M., Patel, A., Curran, C., Latimer, E., Catty, J., Becker, T., Drake, R.E.,
Fioritti, A., Kilian, R., Lauber, C. and Rossler, W. (2013) Supported employment:
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