The president and founder of a premier luxury car rental agency located throughout Europe must decide on the composition of the fleet of cars for the upcoming summer season. She has to balance a desire for high utilization versus the possibility of having to turn away clients if they request a car that is not in stock. Can be used to introduce or reinforce a number of concepts, including break-even analysis, basic descriptive statistics, and the new vendor model.
Swot Analysis of "Elite Rent-a-Car" written by Gregory S. Zaric, Jordan Mitchell includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Car Descriptive facing as an external strategic factors. Some of the topics covered in Elite Rent-a-Car case study are - Strategic Management Strategies, Financial analysis, Operations management and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Elite Rent-a-Car casestudy better are - – increasing household debt because of falling income levels, wage bills are increasing, technology disruption, there is increasing trade war between United States & China, challanges to central banks by blockchain based private currencies, increasing government debt because of Covid-19 spendings, central banks are concerned over increasing inflation,
there is backlash against globalization, increasing inequality as vast percentage of new income is going to the top 1%, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Elite Rent-a-Car case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Car Descriptive, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Car Descriptive 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 Elite Rent-a-Car can be done for the following purposes –
1. Strategic planning using facts provided in Elite Rent-a-Car case study
2. Improving business portfolio management of Car Descriptive
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 Car Descriptive
Strengths Elite Rent-a-Car | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Car Descriptive in Elite Rent-a-Car Harvard Business Review case study are -
Diverse revenue streams
– Car Descriptive is present in almost all the verticals within the industry. This has provided firm in Elite 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.
High brand equity
– Car Descriptive has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Car Descriptive to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Successful track record of launching new products
– Car Descriptive has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Car Descriptive 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.
Ability to recruit top talent
– Car Descriptive is one of the leading recruiters in the industry. Managers in the Elite Rent-a-Car are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Learning organization
- Car Descriptive 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 Car Descriptive is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Elite Rent-a-Car Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Sustainable margins compare to other players in Strategy & Execution industry
– Elite Rent-a-Car firm has clearly differentiated products in the market place. This has enabled Car Descriptive to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Car Descriptive to invest into research and development (R&D) and innovation.
Organizational Resilience of Car Descriptive
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Car Descriptive does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
High switching costs
– The high switching costs that Car Descriptive 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.
Effective Research and Development (R&D)
– Car Descriptive 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 Elite Rent-a-Car - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Superior customer experience
– The customer experience strategy of Car Descriptive 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 Car Descriptive in the sector have low bargaining power. Elite Rent-a-Car has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Car Descriptive to manage not only supply disruptions but also source products at highly competitive prices.
Analytics focus
– Car Descriptive 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 Gregory S. Zaric, Jordan Mitchell 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.
Weaknesses Elite Rent-a-Car | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Elite Rent-a-Car are -
High bargaining power of channel partners
– Because of the regulatory requirements, Gregory S. Zaric, Jordan Mitchell suggests that, Car Descriptive 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.
Need for greater diversity
– Car Descriptive has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Elite 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 Car Descriptive has relatively successful track record of launching new products.
Skills based hiring
– The stress on hiring functional specialists at Car Descriptive 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.
Aligning sales with marketing
– It come across in the case study Elite 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 Elite Rent-a-Car can leverage the sales team experience to cultivate customer relationships as Car Descriptive is planning to shift buying processes online.
Interest costs
– Compare to the competition, Car Descriptive 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Car Descriptive is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Elite 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Elite Rent-a-Car, in the dynamic environment Car Descriptive has struggled to respond to the nimble upstart competition. Car Descriptive has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High operating costs
– Compare to the competitors, firm in the HBR case study Elite Rent-a-Car 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 Car Descriptive 's lucrative customers.
High cash cycle compare to competitors
Car Descriptive has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
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 Car Descriptive supply chain. Even after few cautionary changes mentioned in the HBR case study - Elite 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 Car Descriptive vulnerable to further global disruptions in South East Asia.
Opportunities Elite 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 Elite Rent-a-Car are -
Creating value in data economy
– The success of analytics program of Car Descriptive has opened avenues for new revenue streams for the organization in the industry. This can help Car Descriptive to build a more holistic ecosystem as suggested in the Elite Rent-a-Car case study. Car Descriptive can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Developing new processes and practices
– Car Descriptive 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.
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 Car Descriptive in the consumer business. Now Car Descriptive can target international markets with far fewer capital restrictions requirements than the existing system.
Buying journey improvements
– Car Descriptive can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Elite Rent-a-Car 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.
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 Car Descriptive 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.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Strategy & Execution industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Car Descriptive 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. Car Descriptive 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Car Descriptive can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Better consumer reach
– The expansion of the 5G network will help Car Descriptive to increase its market reach. Car Descriptive 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.
Learning at scale
– Online learning technologies has now opened space for Car Descriptive 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.
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. Car Descriptive can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Strategy & Execution industry, but it has also influenced the consumer preferences. Car Descriptive can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Leveraging digital technologies
– Car Descriptive 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.
Loyalty marketing
– Car Descriptive 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.
Threats Elite 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 Elite Rent-a-Car are -
Consumer confidence and its impact on Car Descriptive 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.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Car Descriptive business can come under increasing regulations regarding data privacy, data security, etc.
High dependence on third party suppliers
– Car Descriptive 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.
Shortening product life cycle
– it is one of the major threat that Car Descriptive is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Car Descriptive with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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. Car Descriptive 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.
Increasing wage structure of Car Descriptive
– 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 Car Descriptive.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Car Descriptive 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 Elite Rent-a-Car .
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 Car Descriptive in the Strategy & Execution sector and impact the bottomline of the organization.
Technology acceleration in Forth Industrial Revolution
– Car Descriptive has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Car Descriptive 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.
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. Car Descriptive needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Car Descriptive 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.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Weighted SWOT Analysis of Elite 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 Elite 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 Elite 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 Elite 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 Elite 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 Car Descriptive needs to make to build a sustainable competitive advantage.
