An industry adage held that "there are two types of rental car companies: those that lose money and Enterprise." The company that would become Enterprise Rent-A-Car was started in 1957 in St. Louis, Missouri, by Jack Taylor. Taylor set up Enterprise offices in neighborhoods rather than at airports because he believed that Americans would welcome a local option for renting cars when their own vehicles were being repaired. In 2010 Enterprise had more than 6,000 rental locations in the United States and a fleet of 850,000 cars in service. Its parent, Enterprise Holdings (comprising Enterprise, National, and Alamo brands) accounted for nearly half of the car rental market and was more than twice the size of Hertz, the number two competitor. Enterprise's competitive advantage was the result of the combination of its practices in hiring, training, compensation, organization, customer service, IT, and fleet management, among others.
Swot Analysis of "Enterprise Rent-A-Car" written by Meghan Busse, Jeroen Swinkels, Greg Merkley includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Enterprise Car facing as an external strategic factors. Some of the topics covered in Enterprise Rent-A-Car case study are - Strategic Management Strategies, Customer service, Growth strategy, Leadership development, Marketing, Motivating people, Organizational culture, Organizational structure and Organizational Development.
Some of the macro environment factors that can be used to understand the Enterprise Rent-A-Car casestudy better are - – competitive advantages are harder to sustain because of technology dispersion, digital marketing is dominated by two big players Facebook and Google, banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing inequality as vast percentage of new income is going to the top 1%, increasing energy prices, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing transportation and logistics costs,
challanges to central banks by blockchain based private currencies, increasing commodity prices, etc
Introduction to SWOT Analysis of Enterprise Rent-A-Car
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Enterprise Rent-A-Car case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Enterprise Car, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Enterprise Car operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Enterprise Rent-A-Car can be done for the following purposes –
1. Strategic planning using facts provided in Enterprise Rent-A-Car case study
2. Improving business portfolio management of Enterprise Car
3. Assessing feasibility of the new initiative in Organizational Development field.
4. Making a Organizational Development topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Enterprise Car
Strengths Enterprise Rent-A-Car | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Enterprise Car in Enterprise Rent-A-Car Harvard Business Review case study are -
Strong track record of project management
– Enterprise Car is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Learning organization
- Enterprise Car is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Enterprise Car is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Enterprise Rent-A-Car Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Training and development
– Enterprise Car has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Enterprise Rent-A-Car Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Organizational Resilience of Enterprise Car
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Enterprise Car does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Diverse revenue streams
– Enterprise Car is present in almost all the verticals within the industry. This has provided firm in Enterprise Rent-A-Car case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Digital Transformation in Organizational Development segment
- digital transformation varies from industry to industry. For Enterprise Car digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Enterprise Car has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Ability to lead change in Organizational Development field
– Enterprise Car is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Enterprise Car in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Innovation driven organization
– Enterprise Car is one of the most innovative firm in sector. Manager in Enterprise Rent-A-Car Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Successful track record of launching new products
– Enterprise Car has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Enterprise Car has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Superior customer experience
– The customer experience strategy of Enterprise Car in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Low bargaining power of suppliers
– Suppliers of Enterprise Car in the sector have low bargaining power. Enterprise Rent-A-Car has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Enterprise Car to manage not only supply disruptions but also source products at highly competitive prices.
Sustainable margins compare to other players in Organizational Development industry
– Enterprise Rent-A-Car firm has clearly differentiated products in the market place. This has enabled Enterprise Car to fetch slight price premium compare to the competitors in the Organizational Development industry. The sustainable margins have also helped Enterprise Car to invest into research and development (R&D) and innovation.
Weaknesses Enterprise Rent-A-Car | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Enterprise Rent-A-Car are -
Lack of clear differentiation of Enterprise Car products
– To increase the profitability and margins on the products, Enterprise Car needs to provide more differentiated products than what it is currently offering in the marketplace.
Low market penetration in new markets
– Outside its home market of Enterprise Car, firm in the HBR case study Enterprise Rent-A-Car needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Enterprise Rent-A-Car, in the dynamic environment Enterprise Car has struggled to respond to the nimble upstart competition. Enterprise Car has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Enterprise Car supply chain. Even after few cautionary changes mentioned in the HBR case study - Enterprise Rent-A-Car, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Enterprise Car vulnerable to further global disruptions in South East Asia.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Enterprise Rent-A-Car HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Enterprise Car has relatively successful track record of launching new products.
Aligning sales with marketing
– It come across in the case study Enterprise Rent-A-Car that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Enterprise Rent-A-Car can leverage the sales team experience to cultivate customer relationships as Enterprise Car is planning to shift buying processes online.
Workers concerns about automation
– As automation is fast increasing in the segment, Enterprise Car needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Enterprise Car is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Enterprise Rent-A-Car can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Enterprise Rent-A-Car, is just above the industry average. Enterprise Car needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Interest costs
– Compare to the competition, Enterprise Car has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
High bargaining power of channel partners
– Because of the regulatory requirements, Meghan Busse, Jeroen Swinkels, Greg Merkley suggests that, Enterprise Car is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Opportunities Enterprise Rent-A-Car | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Enterprise Rent-A-Car are -
Redefining models of collaboration and team work
– As explained in the weaknesses section, Enterprise Car is facing challenges because of the dominance of functional experts in the organization. Enterprise Rent-A-Car case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Loyalty marketing
– Enterprise Car has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Organizational Development industry, but it has also influenced the consumer preferences. Enterprise Car can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Organizational Development industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Enterprise Car can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Enterprise Car can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Enterprise Car in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Organizational Development segment, and it will provide faster access to the consumers.
Building a culture of innovation
– managers at Enterprise Car can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Organizational Development segment.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Enterprise Car can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Enterprise Car in the consumer business. Now Enterprise Car can target international markets with far fewer capital restrictions requirements than the existing system.
Creating value in data economy
– The success of analytics program of Enterprise Car has opened avenues for new revenue streams for the organization in the industry. This can help Enterprise Car to build a more holistic ecosystem as suggested in the Enterprise Rent-A-Car case study. Enterprise Car can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Enterprise Car to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Leveraging digital technologies
– Enterprise Car can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Better consumer reach
– The expansion of the 5G network will help Enterprise Car to increase its market reach. Enterprise Car will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Enterprise Car to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Enterprise Car to hire the very best people irrespective of their geographical location.
Threats Enterprise Rent-A-Car External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Enterprise Rent-A-Car are -
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Enterprise Car in the Organizational Development sector and impact the bottomline of the organization.
Consumer confidence and its impact on Enterprise Car demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Increasing wage structure of Enterprise Car
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Enterprise Car.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Enterprise Car needs to understand the core reasons impacting the Organizational Development industry. This will help it in building a better workplace.
Environmental challenges
– Enterprise Car needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Enterprise Car can take advantage of this fund but it will also bring new competitors in the Organizational Development industry.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Enterprise Car will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Enterprise Car in the Organizational Development industry. The Organizational Development industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Shortening product life cycle
– it is one of the major threat that Enterprise Car is facing in Organizational Development sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Regulatory challenges
– Enterprise Car needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Organizational Development industry regulations.
Easy access to finance
– Easy access to finance in Organizational Development field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Enterprise Car can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Enterprise Rent-A-Car, Enterprise Car may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Organizational Development .
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Enterprise Car with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Weighted SWOT Analysis of Enterprise Rent-A-Car Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Enterprise Rent-A-Car needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Enterprise Rent-A-Car is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Enterprise Rent-A-Car is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Enterprise Rent-A-Car is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Enterprise Car needs to make to build a sustainable competitive advantage.