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 - – geopolitical disruptions, supply chains are disrupted by pandemic , increasing energy prices, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing transportation and logistics costs, wage bills are increasing, there is backlash against globalization,
talent flight as more people leaving formal jobs, cloud computing is disrupting traditional business models, 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 -
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.
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.
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.
Ability to lead change in Strategy & Execution field
– Carfinance.com Loan's 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 Carfinance.com Loan's in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
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.
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.
Diverse revenue streams
– Carfinance.com Loan's is present in almost all the verticals within the industry. This has provided firm in E-Loan: The CarFinance.com Acquisition 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.
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.
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.
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.
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.
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.
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 -
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study E-Loan: The CarFinance.com Acquisition, in the dynamic environment Carfinance.com Loan's has struggled to respond to the nimble upstart competition. Carfinance.com Loan's 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 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.
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.
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.
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.
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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study E-Loan: The CarFinance.com Acquisition, is just above the industry average. Carfinance.com Loan's 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.
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.
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.
No frontier risks strategy
– After analyzing the HBR case study E-Loan: The CarFinance.com Acquisition, it seems that company is thinking about the frontier risks that can impact Strategy & Execution strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Lack of clear differentiation of Carfinance.com Loan's products
– To increase the profitability and margins on the products, Carfinance.com Loan's needs to provide more differentiated products than what it is currently offering in the marketplace.
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 -
Redefining models of collaboration and team work
– As explained in the weaknesses section, Carfinance.com Loan's is facing challenges because of the dominance of functional experts in the organization. E-Loan: The CarFinance.com Acquisition 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.
Creating value in data economy
– The success of analytics program of Carfinance.com Loan's has opened avenues for new revenue streams for the organization in the industry. This can help Carfinance.com Loan's to build a more holistic ecosystem as suggested in the E-Loan: The CarFinance.com Acquisition case study. Carfinance.com Loan's can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Low interest rates
– Even though inflation is raising its head in most developed economies, Carfinance.com Loan's 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.
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.
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.
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.
Leveraging digital technologies
– Carfinance.com Loan's 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.
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.
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. Carfinance.com Loan's can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Carfinance.com Loan's can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, E-Loan: The CarFinance.com Acquisition, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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.
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.
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 -
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.
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.
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.
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 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.
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 .
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.
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.
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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Carfinance.com Loan's with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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.
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 .
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.
