Case Study Description of E-Loan: The CarFinance.com Acquisition
E-Loan is an online mortgage lender that acquired an auto-lending arm in August of 1999. This case examines E-Loan's purchase of CarFinance.com and highlights E-Loan's strategy-setting process. In addition, the case explores business development as a strategic process in the fast-moving e-commerce environment.
Swot Analysis of "E-Loan: The CarFinance.com Acquisition" written by Morten T. Hansen, Jeffrey A. Berger includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Carfinance.com Loan's facing as an external strategic factors. Some of the topics covered in E-Loan: The CarFinance.com Acquisition case study are - Strategic Management Strategies, Change management, Mergers & acquisitions, Strategic planning and Strategy & Execution.
Some of the macro environment factors that can be used to understand the E-Loan: The CarFinance.com Acquisition casestudy better are - – there is increasing trade war between United States & China, geopolitical disruptions, there is backlash against globalization, increasing inequality as vast percentage of new income is going to the top 1%, central banks are concerned over increasing inflation, wage bills are increasing, challanges to central banks by blockchain based private currencies,
talent flight as more people leaving formal jobs, increasing household debt because of falling income levels, etc
Introduction to SWOT Analysis of E-Loan: The CarFinance.com Acquisition
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in E-Loan: The CarFinance.com Acquisition case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Carfinance.com Loan's, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Carfinance.com Loan's 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 E-Loan: The CarFinance.com Acquisition can be done for the following purposes –
1. Strategic planning using facts provided in E-Loan: The CarFinance.com Acquisition case study
2. Improving business portfolio management of Carfinance.com Loan's
3. Assessing feasibility of the new initiative in Strategy & Execution field.
4. Making a Strategy & Execution topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Carfinance.com Loan's
Strengths E-Loan: The CarFinance.com Acquisition | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Carfinance.com Loan's in E-Loan: The CarFinance.com Acquisition Harvard Business Review case study are -
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Carfinance.com Loan's digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Carfinance.com Loan's 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 recruit top talent
– Carfinance.com Loan's is one of the leading recruiters in the industry. Managers in the E-Loan: The CarFinance.com Acquisition are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Operational resilience
– The operational resilience strategy in the E-Loan: The CarFinance.com Acquisition Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Effective Research and Development (R&D)
– Carfinance.com Loan's has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study E-Loan: The CarFinance.com Acquisition - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Cross disciplinary teams
– Horizontal connected teams at the Carfinance.com Loan's are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Superior customer experience
– The customer experience strategy of Carfinance.com Loan's 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 Carfinance.com Loan's in the sector have low bargaining power. E-Loan: The CarFinance.com Acquisition has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Carfinance.com Loan's to manage not only supply disruptions but also source products at highly competitive prices.
Innovation driven organization
– Carfinance.com Loan's is one of the most innovative firm in sector. Manager in E-Loan: The CarFinance.com Acquisition Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Learning organization
- Carfinance.com Loan's 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 Carfinance.com Loan's is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in E-Loan: The CarFinance.com Acquisition Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
High switching costs
– The high switching costs that Carfinance.com Loan's has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Analytics focus
– Carfinance.com Loan's is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Morten T. Hansen, Jeffrey A. Berger can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Strong track record of project management
– Carfinance.com Loan's is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Weaknesses E-Loan: The CarFinance.com Acquisition | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of E-Loan: The CarFinance.com Acquisition are -
Capital Spending Reduction
– Even during the low interest decade, Carfinance.com Loan's has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Carfinance.com Loan's is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study E-Loan: The CarFinance.com Acquisition can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Low market penetration in new markets
– Outside its home market of Carfinance.com Loan's, firm in the HBR case study E-Loan: The CarFinance.com Acquisition needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Products dominated business model
– Even though Carfinance.com Loan's has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - E-Loan: The CarFinance.com Acquisition should strive to include more intangible value offerings along with its core products and services.
Skills based hiring
– The stress on hiring functional specialists at Carfinance.com Loan's has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Slow to strategic competitive environment developments
– As E-Loan: The CarFinance.com Acquisition HBR case study mentions - Carfinance.com Loan's takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
High bargaining power of channel partners
– Because of the regulatory requirements, Morten T. Hansen, Jeffrey A. Berger suggests that, Carfinance.com Loan's 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.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the E-Loan: The CarFinance.com Acquisition 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 Carfinance.com Loan's has relatively successful track record of launching new products.
Increasing silos among functional specialists
– The organizational structure of Carfinance.com Loan's is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Carfinance.com Loan's needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Carfinance.com Loan's to focus more on services rather than just following the product oriented approach.
Aligning sales with marketing
– It come across in the case study E-Loan: The CarFinance.com Acquisition 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 E-Loan: The CarFinance.com Acquisition can leverage the sales team experience to cultivate customer relationships as Carfinance.com Loan's is planning to shift buying processes online.
High operating costs
– Compare to the competitors, firm in the HBR case study E-Loan: The CarFinance.com Acquisition has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Carfinance.com Loan's 's lucrative customers.
Opportunities E-Loan: The CarFinance.com Acquisition | 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 E-Loan: The CarFinance.com Acquisition are -
Loyalty marketing
– Carfinance.com Loan's 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.
Learning at scale
– Online learning technologies has now opened space for Carfinance.com Loan's to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
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 Carfinance.com Loan's 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Carfinance.com Loan's can use these opportunities to build new business models that can help the communities that Carfinance.com Loan's operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Buying journey improvements
– Carfinance.com Loan's can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. E-Loan: The CarFinance.com Acquisition suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
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 Carfinance.com Loan's in the consumer business. Now Carfinance.com Loan's can target international markets with far fewer capital restrictions requirements than the existing system.
Manufacturing automation
– Carfinance.com Loan's can use the latest technology developments to improve its manufacturing and designing process in Strategy & Execution segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Carfinance.com Loan's can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Developing new processes and practices
– Carfinance.com Loan's can develop new processes and procedures in Strategy & Execution industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Using analytics as competitive advantage
– Carfinance.com Loan's has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study E-Loan: The CarFinance.com Acquisition - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Carfinance.com Loan's to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Better consumer reach
– The expansion of the 5G network will help Carfinance.com Loan's to increase its market reach. Carfinance.com Loan's 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.
Building a culture of innovation
– managers at Carfinance.com Loan's 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 Strategy & Execution segment.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Carfinance.com Loan's 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 Carfinance.com Loan's to hire the very best people irrespective of their geographical location.
Threats E-Loan: The CarFinance.com Acquisition External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study E-Loan: The CarFinance.com Acquisition are -
Technology acceleration in Forth Industrial Revolution
– Carfinance.com Loan's has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Carfinance.com Loan's needs to keep up with the evolution of technology in the Strategy & Execution sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Shortening product life cycle
– it is one of the major threat that Carfinance.com Loan's is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Carfinance.com Loan's can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study E-Loan: The CarFinance.com Acquisition .
Consumer confidence and its impact on Carfinance.com Loan's 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.
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 Carfinance.com Loan's in the Strategy & Execution sector and impact the bottomline of the organization.
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. Carfinance.com Loan's 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 Carfinance.com Loan's in the Strategy & Execution industry. The Strategy & Execution 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.
High dependence on third party suppliers
– Carfinance.com Loan's high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Regulatory challenges
– Carfinance.com Loan's 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 Strategy & Execution industry regulations.
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. Carfinance.com Loan's needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
Stagnating economy with rate increase
– Carfinance.com Loan's can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study E-Loan: The CarFinance.com Acquisition, Carfinance.com Loan's may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Strategy & Execution .
Weighted SWOT Analysis of E-Loan: The CarFinance.com Acquisition 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 E-Loan: The CarFinance.com Acquisition 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 E-Loan: The CarFinance.com Acquisition 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 E-Loan: The CarFinance.com Acquisition 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 E-Loan: The CarFinance.com Acquisition 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 Carfinance.com Loan's needs to make to build a sustainable competitive advantage.
