“Batman Vs. Superman” or “Justice League” — What’s your business strategy?
You must have heard the news already — Uber is selling their stock to their rivals in South East Asia called Grab, claims that it will double down their plans to grow. The idea to join hands with the competitors will help them gain leadership with better cost-efficiency in the region. Also, they can now invest profoundly in their products and technologies to provide better customer experience.
Better Customer Experience can improve profitability
Is the intent here to serve the customers better and thereby improve the sales and profitability? Is it more about getting a monopoly in the region? Governments have anti-trust laws to prevent the latter, and therefore let’s assume that the goals are better CX and profitability.
The competition has been fierce in the ride-hailing sector, and the companies were forced to provide discounts and incentives to both riders and drivers to stay alive at the cost of reduced profit margins. In Uber’s case, the company has lost over $10 billion since the incorporation.
Build a business relevant to the everyday lives of people
Grab’s CEO Anthony Tan, in an interview with BBC, mentioned that his vision is to increase the relevance of the company in daily lives of their users. The merger should help Grab to expand from two to four South East Asian countries.
Here’s the takeaway for all of us: No fight can help either Batman or Superman. It will never benefit the civilians anyways! So, if you are business owner bleeding due to the tight competition with your rivals in your domain, consolidation can help. It can be your Justice League.
Everybody has an opinion, including the media houses
Media already projects that it’s another retreat by the US firm from the Asian market. However, if the merger increases the profit margin of the company, it makes complete business sense to call it the perfect move.
Uber will have 27% stake in the company with their CEO joining the board. It’s more likely a cleanup operation in preparation for the IPO next year. The company is still committed to key markets such as Japan and India. So, they are not killing Uber but making relevant changes for the betterment of the firm no matter what the media suggests.
For any company, a merger can be an opportunity to lead
Grab, started off as a taxi-hailing app in Kuala Lumpur in 2012 raised $4 billion as an investment. It is valued at $6 billion at present. The merger will help Grab to be the leader in the region. It has 86 billion mobile app downloads, and have services in over 190 cities including Singapore, Indonesia, and Philippines.
If you are planning to grow, you have the option for consolidation, merger, and selling your shares or assets. A “merger” is more of an exit strategy, while “consolidation” is a growth strategy. See what your options are, know what your competition is capable of. Is there a possibility of joining the league and growing together? Are they willing to acquire you?
There’s another way around. If you have it in you to improve the CX of your products and services without having to spend a fortune, focus on your product strategy. Improve your user experience. And if you have any questions about that, you have companies like Domy Innovations Cafe.