Case Study Description of Car2go Montreal: The Electrification Opportunity
In 2015, the City of Montreal issued an international request for interest for the implementation of an all-electric carsharing service. This situation represented both a threat and an opportunity for car2go, a carsharing service company and a subsidiary of Daimler that had successfully operated 29 carsharing systems across Europe and North America. Would it be worthwhile for car2go to respond to the request for interest and, in doing so, adapt its successful business model to fit the needs of the local market? If so, what would be the implications for the overall competitiveness of the firm? Would it be worth the cost to develop a new four-seat vehicle to meet the City of Montreal's requirements? Yves Plourde is affiliated with HEC Montreal.
Swot Analysis of "Car2go Montreal: The Electrification Opportunity" written by Yves Plourde, Felipe Helfer includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Car2go Carsharing facing as an external strategic factors. Some of the topics covered in Car2go Montreal: The Electrification Opportunity case study are - Strategic Management Strategies, Government and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the Car2go Montreal: The Electrification Opportunity casestudy better are - – banking and financial system is disrupted by Bitcoin and other crypto currencies, cloud computing is disrupting traditional business models, increasing commodity prices, central banks are concerned over increasing inflation, wage bills are increasing, talent flight as more people leaving formal jobs, digital marketing is dominated by two big players Facebook and Google,
challanges to central banks by blockchain based private currencies, there is backlash against globalization, etc
Introduction to SWOT Analysis of Car2go Montreal: The Electrification Opportunity
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Car2go Montreal: The Electrification Opportunity case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Car2go Carsharing, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Car2go Carsharing 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 Car2go Montreal: The Electrification Opportunity can be done for the following purposes –
1. Strategic planning using facts provided in Car2go Montreal: The Electrification Opportunity case study
2. Improving business portfolio management of Car2go Carsharing
3. Assessing feasibility of the new initiative in Leadership & Managing People field.
4. Making a Leadership & Managing People topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Car2go Carsharing
Strengths Car2go Montreal: The Electrification Opportunity | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Car2go Carsharing in Car2go Montreal: The Electrification Opportunity Harvard Business Review case study are -
Superior customer experience
– The customer experience strategy of Car2go Carsharing in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
High switching costs
– The high switching costs that Car2go Carsharing 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.
Training and development
– Car2go Carsharing has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Car2go Montreal: The Electrification Opportunity 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.
Digital Transformation in Leadership & Managing People segment
- digital transformation varies from industry to industry. For Car2go Carsharing digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Car2go Carsharing 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.
Cross disciplinary teams
– Horizontal connected teams at the Car2go Carsharing 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.
Low bargaining power of suppliers
– Suppliers of Car2go Carsharing in the sector have low bargaining power. Car2go Montreal: The Electrification Opportunity has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Car2go Carsharing to manage not only supply disruptions but also source products at highly competitive prices.
Ability to lead change in Leadership & Managing People field
– Car2go Carsharing 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 Car2go Carsharing in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
High brand equity
– Car2go Carsharing has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Car2go Carsharing to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Organizational Resilience of Car2go Carsharing
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Car2go Carsharing does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Sustainable margins compare to other players in Leadership & Managing People industry
– Car2go Montreal: The Electrification Opportunity firm has clearly differentiated products in the market place. This has enabled Car2go Carsharing to fetch slight price premium compare to the competitors in the Leadership & Managing People industry. The sustainable margins have also helped Car2go Carsharing to invest into research and development (R&D) and innovation.
Learning organization
- Car2go Carsharing 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 Car2go Carsharing is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Car2go Montreal: The Electrification Opportunity Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Ability to recruit top talent
– Car2go Carsharing is one of the leading recruiters in the industry. Managers in the Car2go Montreal: The Electrification Opportunity are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Weaknesses Car2go Montreal: The Electrification Opportunity | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Car2go Montreal: The Electrification Opportunity are -
Capital Spending Reduction
– Even during the low interest decade, Car2go Carsharing 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Car2go Carsharing 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.
Increasing silos among functional specialists
– The organizational structure of Car2go Carsharing is dominated by functional specialists. It is not different from other players in the Leadership & Managing People segment. Car2go Carsharing needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Car2go Carsharing to focus more on services rather than just following the product oriented approach.
Interest costs
– Compare to the competition, Car2go Carsharing 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 cash cycle compare to competitors
Car2go Carsharing 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.
Skills based hiring
– The stress on hiring functional specialists at Car2go Carsharing 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.
Lack of clear differentiation of Car2go Carsharing products
– To increase the profitability and margins on the products, Car2go Carsharing needs to provide more differentiated products than what it is currently offering in the marketplace.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Car2go Carsharing is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Car2go Montreal: The Electrification Opportunity 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 Car2go Montreal: The Electrification Opportunity, is just above the industry average. Car2go Carsharing 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.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Car2go Montreal: The Electrification Opportunity 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 Car2go Carsharing has relatively successful track record of launching new products.
High bargaining power of channel partners
– Because of the regulatory requirements, Yves Plourde, Felipe Helfer suggests that, Car2go Carsharing 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 Car2go Montreal: The Electrification Opportunity | 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 Car2go Montreal: The Electrification Opportunity are -
Using analytics as competitive advantage
– Car2go Carsharing 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 Car2go Montreal: The Electrification Opportunity - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Car2go Carsharing to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Building a culture of innovation
– managers at Car2go Carsharing 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 Leadership & Managing People segment.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Car2go Carsharing can use these opportunities to build new business models that can help the communities that Car2go Carsharing operates in. Secondly it can use opportunities from government spending in Leadership & Managing People sector.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Leadership & Managing People industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Car2go Carsharing 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. Car2go Carsharing 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.
Buying journey improvements
– Car2go Carsharing can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Car2go Montreal: The Electrification Opportunity 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Car2go Carsharing 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, Car2go Montreal: The Electrification Opportunity, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Loyalty marketing
– Car2go Carsharing 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
– Car2go Carsharing can develop new processes and procedures in Leadership & Managing People 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Car2go Carsharing 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 Car2go Carsharing to hire the very best people irrespective of their geographical location.
Creating value in data economy
– The success of analytics program of Car2go Carsharing has opened avenues for new revenue streams for the organization in the industry. This can help Car2go Carsharing to build a more holistic ecosystem as suggested in the Car2go Montreal: The Electrification Opportunity case study. Car2go Carsharing can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Leveraging digital technologies
– Car2go Carsharing 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 Car2go Carsharing 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 Leadership & Managing People industry, but it has also influenced the consumer preferences. Car2go Carsharing can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Threats Car2go Montreal: The Electrification Opportunity External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Car2go Montreal: The Electrification Opportunity are -
Technology acceleration in Forth Industrial Revolution
– Car2go Carsharing has witnessed rapid integration of technology during Covid-19 in the Leadership & Managing People industry. As one of the leading players in the industry, Car2go Carsharing needs to keep up with the evolution of technology in the Leadership & Managing People 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.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Car2go Carsharing.
Stagnating economy with rate increase
– Car2go Carsharing 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.
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. Car2go Carsharing needs to understand the core reasons impacting the Leadership & Managing People industry. This will help it in building a better workplace.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Car2go Carsharing 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 Car2go Montreal: The Electrification Opportunity .
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. Car2go Carsharing 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.
Regulatory challenges
– Car2go Carsharing 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 Leadership & Managing People industry regulations.
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 Car2go Carsharing business can come under increasing regulations regarding data privacy, data security, etc.
Easy access to finance
– Easy access to finance in Leadership & Managing People field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Car2go Carsharing can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Consumer confidence and its impact on Car2go Carsharing 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Car2go Carsharing in the Leadership & Managing People industry. The Leadership & Managing People 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 Car2go Carsharing is facing in Leadership & Managing People sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Weighted SWOT Analysis of Car2go Montreal: The Electrification Opportunity 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 Car2go Montreal: The Electrification Opportunity 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 Car2go Montreal: The Electrification Opportunity 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 Car2go Montreal: The Electrification Opportunity 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 Car2go Montreal: The Electrification Opportunity 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 Car2go Carsharing needs to make to build a sustainable competitive advantage.
