Discuss about the Grab Taxi Innovation for Taxi Industry Revolutionization.
Grab is profit social start-up company with a mission for taxi industry revolutionization. The firm core product is taxi dispatch with GPS enhancement, which allows passengers to hall taxi that is near to them with an extreme ease. Grab is a technology company that is based in Singapore which offers logistic services and rail hailing amenities over its mobile app in Singapore and Southeast Asia countries. The firm operates a mobile technology platform which integrates the city transportation for the driver customers and partners in the south-east Asia .The organization offer products such as, GrabHitch,Grab share, Grab Coach, Grab shuttle, Grab Family, Just grab and GrabRental.The firm offer its services in Malaysia,Philippines,Thailand,Vietnam and Myanmar (Tetzeli, 2013).
The organization allows the customers to find the taxis near their location and get in contact with the driver get price quotation ahead of time. The app is more advantageous to the driver as it allows them to have a plan of all their routes in a more efficient way. The company has a lower cut per every booking from the driver than other operators of a taxi in Singapore.
The firm started the taxi so as to counter the problem of poor taxi experience. Taxi driver hated their jobs for the poor pay and women did not feel safe to use a taxi. On the first day of the app launch, the company had 11000 downloads. The application has now millions of downloads. The firm has not gained popularity due to marketing but due to the real problem, it solves. The firm has strongly believed that social value and business can be achieved in parallel.
Grab taxi mobile app idea was generated by Anthony tan, he youngest brother of a family that operates the Tan Chong Motors, which are the Nissan authorized distributors in Malaysia. This idea was generated due to the poor taxi experienced that one of his friends had while riding a taxi in the country of Malaysia. The client was not sure whether the fare was fair to the client or if the taxi had taken the right route. Anthony tan took this problem as his project back in school and his professor comments were that the project was hard to implement. The application was selected and it received the funding award.
In the year 2012, Anthony tan quit his position at the family business as the head of marketing and launched the app “my teksi” in Malaysia in collaboration with his classmate, Tan Hooi Lang.Tan Hooi drew a business plan for the mobile app promotion. Anthony was the CO of the company, he went from door to door in search of customers. Grab relocated its headquarters to Singapore. The company had its expansion to Philippines and Thailand. The organization later launched Grab car which made use of the private cars instead of the use of taxi partner that was licensed in order to overcome the problem of lack of public transportation during the peak business hours. The organization rebranded into Grab, a company name that incorporated all the products under one roof: Grab Bike, Grab Car, Grab Hitch, and Grab Express.
The grab app uses the location sharing systems to assign the nearby commutators taxis. Whenever the company venture into the new market, they would purchase a smartphone for the drivers which would be paid back in daily installments. The company generates revenue through taking a cut of the booking fees (Pisano, 2013). Despite the fact that some businesses tried to discontinue their chauffeurs from using the app, grab made a decision to reach out to the taxi drivers directly through signing them at the hawker centers, airport, and depots. The firm takes an initiative of educating the drivers on how to use their mobile app and the smartphone. Grab has tried small market penetration apart from the big cities.
Luxury. It is a much tedious job to travel in public transport. Most people will opt for traveling through private vehicles. But not all people can afford a private car so they will opt for a taxi. Therefore they will opt for luxurious rides. However, the companies in the taxi industry are in constant pursuit of luxurious rides at the cheapest price (Shipag.com, 2015).
Innovation complexity. There is a negative impact on the relationship between certain technology and adoption of its innovation. Many people have the perception of technology is difficult to understand and use. The adoption of taxi mobile app to pick up customers can be perceived by the taxi driver as a difficult to operate which will affect their decision on adoption of the app.
Customer’s pressures. Powerful and dominant clients can exact pressure on the organization to adopt new technology innovation in the transport industry. The firm will have to adopt the technology innovation without assessing all the pros and the cons so that they may not appear illegitimate to their customers (Shead, 2014).
Competitors.Orgainsation in the transport industry are likely to adopt the technology used by their competitors perceived to be similar. The organization will imitate the technology innovation used by the competitors so as not to appear as if they have lagged behind to its stakeholders. This can have a positive or negative impact on the organization.
Unstable fuel prices. The unstable fuel prices, fixed labor cost, and large fixed assets have led to unique industry competitive structure with the governance corresponding issues. Secondly, the issue of the client’s safety and the driver safety. The issue of safety varies from various angles, this includes the passenger safety for the industries involved in people transport and worker safety for the employees involved in the operation and manufacturing (Rogers, 2012). Lastly, the ever-changing energy regulation is a driving force. Innovation opportunities have been created by the energy regulations that are ever changing.
The innovation in the taxi industry has been of success owed to the smartphone accessibility increase. The expectation of the consumer has been highly held by the mobile app for a taxi. The innovation of the digital solution has helped in the building of a trust and loyalty between the consumers and the business. The consumer satisfaction is an imperative feature for the running of a successful business, specifically in modern-day whereby consumer are connected via the social web profiles, whereby a single negative comment can tarnish the business long life reputation (Freischlad, 2014).
On-demand marketplace for transport is changing. To begin with, the innovation that is used in car hires and taxis is evolving such that the process of booking and paying for travel is increasing efficiency. The recent business models used in transportation which have been linked closely to the innovation of the digital technology are also emerging rapidly outside the traditional business of transportation. An example is a ridesharing, which through innovation and use of the smartphone app has the ability to match perfect passengers with drivers in the private cars and there is the provision of trip fee.
Grab organization uses, disruptive type of innovation. This is an innovation that aids the firm creates a value network and new market which will ultimately go on to dislocate the present market and the value network which will result in earlier technology displacement. This type of innovation brings to the market a new value proposition that was not available earlier (Blog, 2011). Disruptive technology has displayed how the digital technology has enabled the customers and the business owners to be more independent from the already established market structure. Grab uses this type of innovation as it offers a double-edged sword benefits. First, it liberates the clients and the business form the market structures that are rigid, as it poses a threat and challenges to disrupt the structure itself (Wibisono, 2014). This leaves the market with no choice other than changing and adapting.
The emergence of the grab car mobile app transportation based services not only did it provide a platform between the for communication between the consumer and the service provider, but it also provided centralized delivery service for the goods and food. The innovation facilitated the clients in getting the taxi easier. The mobile app was able to show how far the designated cab is from the pickup station and enabled a pickup away from the fixed line addresses. This technology innovation has had numerous positive impact on the consumer and the service providers.
The value brand is in a constant increase in their superiority and moving into the mid-market area. The consumer is increasingly buying the value brands as a way of saving money (Stephen Shapiro, 2015). The premium brands are reducing the prices while the offering the low-cost product (Stephen Shapiro, 2015). The result is pressured on the mid-market brands that are squeezing majority of these companies out of the business (Stephen Shapiro, 2015)..
Grab uses data analytics to stay ahead of the technology innovation competitiveness. The organization utilizes the data analytics so that it can transform the customer services. Grab uses a vast amount of data on its customers so as to have a better understanding of their needs. With the application of the machine learning to the platform, it creates a platform that allows Grab driver to be routed to the area that may have the highest demand at particular times during the day. For instance in Singapore, when the ferries dock, Grab will direct taxis to the Tanah Merah ferry terminal so that it can address the surge in bookings. The wealth of information acquired through data analytics help Grab in augmenting third party addresses with more information. On the locations that clients commute more often, suppose a rider makes an error in entering the address at first, the grab platform will recognize the incorrect address and the systems will adjust the map to the exact location that the rider intends to go to, then adapts and learn this information (McKissen, 2013).
Grab lead an environment that supports innovation. The organization has been in the constant search for the supportive ecosystem innovation. Singapore is the organization technology global hub. Grab hopes to use the promise of working in a changing business in a city that is ranked very high on the living indicators quality, to attract IT talent and engineering from all over the world.
Grab innovation has brought a lot of significance to the company.to begin with, grab make use of technology so as to drive down the labor cost by substituting controlled class workers that are protected by the no protected workers. The low-cost labor that was originally replaced by the regulated, protected class of workers become angered that they may become expendable due to the company continuous quest to drive down the labor cost.
Porters five forces analysis helps in the understanding of the network channels, the potential growth and the companies attractiveness in the transportation industry .grab is one of the rapidly growing company in the in the rideshare industry.
Placing itself in the technological industry, Grab Taxi targets to provide the bridge between the consumers and providers of transport. This market requires a higher amount of start-up capital. The upcoming competitors are making use of less capital to jumpstart their operations thereby penetrating the market quickly. Being a technology-based company, Grab is not able to stop other companies from militating its operations. That implies that it is possible for the innovation to be copied by other companies and have an operation in similar ways and charge for similar mileage coverage (Knowledge Grab, 2015).
Substitutes are the greatest fear in the in the competitive commerce environment. In the taxi industry, there are various companies that can offer a quick standby for grab. With the quality of service provided by the grab, the closest substitute is the traditional transportation industry. Other public transport services offer a great threat to the existence of Grab and its operations.
Supplier bargaining power refers to the ability of the supplier to drive up the company’s input prices.availabilty of drivers is regrade as the most leading suppliers in the transportation industry. Grab does not win any vehicle among its fleets but it depends on the drivers owning the cars. Drivers often talk for improved thoughtfulness at the company’s expense. Therefore it is undisputable that the contractors have a strong power in affecting the performance of Grab Company.
The clients of grab are very sensitive to the performance of the firm as there is the existence of the business rivals. With the growth of the market, the rival’s number also increase bringing in to the customers more choice resulting in the customers switching cost comparatively low. This is because the grab mobile app requires client registration. Consumers can, therefore, choose between grab and its rivals in the market.
The degree of rivalry refers to the strength of the competition in the industry. There is an increase in the trend concentration in the industry as opposed to the previous years. The existing taxi businesses in the market compete with both the drivers and the clienteles. Uber is the considered the principal competitor of grab (Demystify Asia, 2016). Grab is the dominant force in the taxi industry, there is need to improve its technology innovation strategy so as to gain a competitive edge.
The strong network effects presented by grab makes it hard for the new entrants in the market. Grab customers and drivers have to be present on the platform in significant numbers. This network building is very costly and has proved impossible for the new entrants to catch up. This platform has attracted new users and widens the gap between the new competitors. Grab brand has also been a source of competitive advantage. Due to its brand, the grab has been able to easily attract new passengers and drivers in the new locations.
Grab taxi reported to have had 1.2 million downloads in the year 2014 .By June 2017, the number of the registered drivers in the network was more than one million and Grab Taxi mobile app downloaded by more than 45 million mobile devices across Singapore. By November 2017, the Grab taxi download had reached 1 billion rides with 666 simultaneous rides acquiring market share of 97% in third-party taxi hailing market and 72 % in the private hailing market. The organization claims to have 3.5 million rides daily on average.
Conclusion
Technology innovation offers the variety of significance to the business that has adopted It.Grab Company has taken advantage of the technology innovation and has used it as a double-edged sword. The organization has used the disruptive innovation. This is an innovation that helps the firm creates a new market and value network which will eventually go on to disrupt the existing market and the value network which will result in earlier technology displacement. Grab has been able to gain a competitive advantage in the market in which it operates in through its brand and through the adoption of the mobile app which forms a strong network. The company has rivals in the business and it takes advantage of technology so that it can gain a competitive edge and stay ahead of the market.
References
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