Planning for Growth: Opportunities, Funding, and Exit Options for Rent a Car Enterprises

This report analyses growth opportunities for Rent a Car Enterprises, including considerations for evaluating growth opportunities, Ansoff Growth Matrix, potential sources of funding, and exit options. It also includes a business plan for the company.

Planning for growth

Table of Contents
Introduction .....................................................................................................................................3
Main body........................................................................................................................................3
P1 Analyse considerations for evaluating growth opportunities.................................................3
P2 Determine opportunities for growth applying Ansoff Growth Matrix..................................5
M1 Analyse options for growth and describe understanding about competitive advantage.......6
P3 describe potential sources of funding along with their benefits and drawbacks....................7
M2 Evaluation of potential sources of funding and its benefits..................................................9
P4 Business plan for the company..............................................................................................9
P5 Exit and succession options along with advantages and disadvantages..............................12
M4 Recommendation for a valid exit option............................................................................13
Conclusion.....................................................................................................................................14
References......................................................................................................................................15

Introduction
Small and medium enterprises (SME) plays major role in the economy of a country. They
contribute a huge amount in the GDP of the country and are important in shaping the economy of
a particular country. SME helps in the economic growth of the country and plays a vital role in
the overall production of a country. The SME sector provides the most number of employment
opportunities to both skilled and unskilled workforce and contribute around 33% in the national
income of the country (Duque and et. al., 2019.). In context to rent a car enterprises, the
company was incorporated in the year 1957 by Jack Taylor. The company is the largest car rental
company in the America with more than 7000 office and presence in 5 countries. In this report,
the different growth opportunities that the company have is given along with the different
funding options. A business plan for the company with funding options as well as exit options
are provided in the given report.
Main body
P1 Analyse considerations for evaluating growth opportunities.
A company which is providing various products and services to its customers, it is
important for them to make sure that they are timely evaluating their product line so that the can
have an idea about the products which are providing profits, products which are at loss and
products which requires some modification. BCG Matrix refers to a portfolio planning tool
which helps the company in analysing their products on the basis of their growth and relative
market share. BCG matrix includes 4 categories which are given below:
 Cash cow: It refers to the category of products which has low growth rate and high
market share (Rauscher., 2021.). It refers to the products which has a matured market
which does not include innovation and growth but the products have significant amount
of return on investment (ROI) which helps the company in generating cash higher than
investment.
 Stars: It refers to the products which has high market share and high growth potential.
The high growth rate of the products have the potential to increase the cash inflow of the
company. As the time passes by and if the company fails to do any innovation in the
product then these products will become cash cows.

 Question mark: It refers to the product which has low market share but high growth
which makes the future potential of the product highly uncertain (Noble and et. al.,
2018.). These product can easily become cash cows and starts as the products is having
high growth potential.
 Dogs: These are the products that have low market share and low growth rate. These
products do not exist in real life as it is a complete waste of money and companies will
only suffer losses from this product line. However this category of products can be
included in the seasonal products of the company which are launched for experiments.
In context to Rent a car company, the company is falling into the category of stars as the
company is able to capture high market share and is having high growth potential as well.
The benefits of BCG matrix is that it helps the company in identifying the current portfolio of
competitors whereas the limitations is that it does not give much importance to synergies
between business units.
PESTEL Analysis
Political factors: These are the factors that tells the company about the degree up to
which the government can intervene in the workings of an industry or in free market. It includes
taxation policies, government policies, political stability, etc. In case of Rent a car, it is important
for the company to make sure that they are having a proper understanding and knowledge about
the government policies and its changes as it can have a major impact on the workings of the
company.
Economic factors: These are the factors that are determinants of the economic
performance and has a significant impact on the profitability of the company. It includes interest
rates, economic growth, exchange rates and most importantly the disposable income of the
consumers (Altes., 2019.). In case of Rent a car enterprises, due to Brexit the company may face
some issues as the economy may have a slight inflation which will decrease the purchasing
power of the customers.
Social factors: It refers to the factors that tells the company about the social norms and
customs that are prevailing in the society in which the company is operating. It is important for
the company to make sure that they are working according to the norms and culture of the
society as it will help them in surviving in the society and coping with the taste and preferences
of the society (Solly., 2021.). In reference to Rent a car enterprises, this factor can have a severe

impact on the company as if the norms and culture of the society does not allow the customers to
take the services of the company or the attitude of people towards the services of the company
can severely impact the business and revenue of the company.
Technological factors: It refers to the factors that tells the company about the prevailing
technology in the market. It is considered to be one of the most important factors which can help
the company in getting competitors advantage in the market. In respect to enterprise Rent a car,
the company must focus on empowering supply chain partners with the help of technology as it
will make the supply chain flexible and will also promote transparency. The company must
digitalize its processes which will help in eradicating corruption from local economy.
Environmental factors: These factors came into light recently with the growing concern
about the environment. The increment in the scarcity of resources and to make sure that the
companies are doing business ethically and sustainably (Finio and et. al., 2021.). In reference to
Rent a car enterprises, the company is helping customers in reducing carbon footprint and in
reducing the usage of fuel. Fuel consumption is a big problem in today's world as it is very bad
for the environment. Renting a car will help the customers in reducing fuel consumption and will
also help in protecting the environment.
Legal factors: It refers to the that tells the company about the laws and regulations of a
particular country in which the company is operating. In order to promote fair trade and to
protect domestic companies as well as domestic markets, the government imposes these laws and
regulations. In case of Rent a car enterprises, the company must have to analyse how the
business law of one country is different from the laws of other countries. It is important for the
company to comply with these rules and regulations in order to avoid any penalties or
punishment.
P2 Determine opportunities for growth applying Ansoff Growth Matrix
Ansoff Matrix
Ansoff matrix is commonly known as product/market grid. It is a strategic marketing tool
that helps the company in having a correct direction which can lead them towards their goals and
objectives (Rode., 2018.). It helps the company in identifying what are the current products and
markets of the company and what are the potential product that the company can produce or the
market in which the company can enter. Their are 4 options for growth or growth strategies
which are given below:

 Market penetration: This strategy refers to selling more existing products of a company
in the existing market. In this strategy the company have to find new marketing strategies
or must create a customer base in order to increase the sales of their existing products. By
improving the processes of the company, they can improve the long term benefits of their
products which can help in attracting more customers. In case of Rent a car enterprises, it
is important for the company to make sure that they are able to retain their customers and
are having a good word of mouth about the services of the company as in that case the
company will be able to attract new customers for existing services.
 Market development: In this strategy the company tries to find new customers for their
existing products by entering in a new market (Sclar and et. al., 2019.). The company by
entering in a new market try to create a customer base for the product of the company. It
not only helps the company in expansion but also help them in improving sales and
revenues of the company. In case of Rent a car enterprises, they can situate their branches
as close as possible to its customer base which will provide convenience to the customers
and will help the company n getting competitors advantage in the market.
 Product development: It refers to a strategy where the company try to sell a new
product in their existing market. It is important for the company to bring new product in
the market according to the changing requirements of their customers. As the industry is
highly dynamic, it is important for the organisation to continuously innovate their
products and services through which they will be able to retain their customers. In case of
Rent a car enterprises, the company must develop services which can help the company
in increasing their revenues and will also help the company in increasing their customer
base.
 Diversification: It refers to the strategy where the company enters in a completely new
market with their new product. It is the most risky strategy with high chances of failure as
the company does not know about the market as well as the specifications of the product
through which the product can attract the potential customers of a particular market
(Hassan and et. al., 2019.). In case of Rent a car enterprises, the company was highly
successful in selling used cars to its customers and then the company tried to enter the
market of packaged product which leads to losses as the market and product both were

new to the comply. The current example states that if a company is successful in one
venture, it is not guaranteed that they will succeed in others as well.
Rent a Car company must opt for market penetration which will help the company in
capturing a bigger market share and the company will have a better reach towards potential
customers.
M1 Analyse options for growth and describe understanding about competitive advantage.
Their are several options for growth which the company can adopt. The options for
growth will help the company in capturing a big market segment of the company. In case of rent
a car enterprises, the company can adopt market penetration strategy as it will help the company
in increasing their customer base without spending or investing much cost. In order to get
competitors advantage in the market, the company may opt for additional features in their
services which will help them in attracting potential customers (Canelas., 2018.). The company
may include special pick up services through which the customers can set their schedules
beforehand on the website of the company and the car will reach on the he set day and time. It
will help the company in having competitors advantage in the market.
The advantage of ansoff matrix is that it is an extremely simple method of analysing the
strategy whereas extra attention must be provided to other factors as well. Another advantage is
that the matrix will help the company in analysing the risk factor but unfortunately the reward
factor is ignored by the matrix.
P3 describe potential sources of funding along with their benefits and drawbacks.
Investment decisions refer to the decision of the company regarding the investment in
different assets through which the company is able to provide highest possible return to its
investors. It is important for the company to make sure that the decision regarding investment is
taken with utmost care as these funds are committed for long term. Payback period refers to the
estimated time up to which the company will be able to recover the amount invested by them
(Silva and et. al., 2020, June.). NPV helps the company in comparing the present value of cash
inflow with present value of cash outflow and with the help of both the company will be able to
make decision regarding their capital and investment. Their are several sources of funds through
which the company can bring in cash for the workings of the company some of them are given
below:

On the basis of time period: The funds can be classified on the basis of time period as the
funds can be taken on the basis of long term and on the basis of short term. Long term funding
options includes term loans from financial institutions where as short term funding sources
includes working capital loans from commercial banks.
Term loans: It refers to the long term funding sources which includes capital
requirement of more than 5 years or 10 years. It is a part of debt financing and are obtained from
banks or financial institutions. They are secured loans and assets of the company serves as
collateral security.
Advantages: The first and foremost advantage of this type of term loans is that it provides
deduction to the borrower in taxation (Wang, Huang and Huang., 2018.). It reduces the tax
liability of the company and will provide benefit to the company. These are negotiable loans and
the borrower and lender can decide terms and conditions according to their suitability.
Disadvantages: Risk is a big factor in this type of loans. It increases the financial risk of the
company and will only be beneficial if the internal rate of return is greater than the cost of capital
of the company.
Working capital loans: It refers to the loans that are for a short duration of time as it is
taken in order to fulfil the day to day requirements of the business such as purchase of raw
material, etc. Some of advantages and disadvantages of funding source is given below:
Advantages: these loans can handle the immediate financial requirements of the company. It
make sure that the company is not suffering from lack of working capital as with the help of this
capital the company will be able to do their day to day operations without any interruptions.
Disadvantages: It includes higher interest rates as compared to other loans and as these are
unsecured loans the the qualification criteria is also very strict.
On the basis of ownership: As the company takes a loan, it includes two types of cost,
one is interest and the other one s ownership cost (Anjun., 2018.). While some entrepreneurs do
not want to share their ownership other believes in sharing the risk.
Equity share capital: It is one of the major source of funding for the company as the
company can generate a large amount of fund by delegating the ownership.
Advantages: The company do not have to pay the amount back to its investors. They will pay
the investors only if the company is earning profits.

Disadvantages: Major advantage of this option is that the company will have to share the
ownership and the decisions will be taken by the investors.
On the basis of generation: It refers to the internal and external sources of funding. It
includes retained profit equity, debts from banks, etc.
Sale of assets: It can be a major source of finance or the company and in order to get
liquid cash without sharing the ownership of the company, asset reduction is one of the most
effective method of financing.
Advantages: It helps the company in liquidating their assets which are no longer beneficial for
them. It helps in generating cash by reducing expenses.
Disadvantages: It is disadvantageous for the company as it will show in the balance sheet of the
company and it may also affect the reputation of the company.
M2 Evaluation of potential sources of funding and its benefits
There are several potential funding options that the company have and one of them are
term loans. These are secured loans and the company also does not have to share the ownership.
These are long term loans and on the basis of the interest that the company have to pay, they can
avail tax deduction which is another great benefit for the company (Tira and et. al., 2018.). The
repayment of the loan amount will be done in 5 to 10 years in instalments and the assets of the
company will be collateral security for the lender. If the company fails to pay back the loan
amount, the lender can sold the assets in order to recover the principle amount.
P4 Business plan for the company.
It refers to the document which states the goals and objectives of a company with the
strategies through which the company is going to attain those goals and objectives. It includes
the background and nature of the business which the company is doing (Adu-Gyamfi, A., 2020).
These document will generally help the company when they require bank loans or are trying to
avail financing through other ways or options.
Business overview
Rent a car enterprises was founded in the year 1957 by Jack Taylor. The company is the
largest renting company in North America and is headquartered in Clayton, USA. Enterprise
holding is the parent company and the company provide rental services to the customers. The
company has around 7000 locations and are having 419 airport locations which is helping the
company in providing effective services to its customers.

Mission
The company wants to provide the best transportation services in the world to its
customers. The aim of the company was also to provide a great place to work to the employees
of the company.
Vision
The mission of the company is to provide best services to its customers and to develop a
highly successful and profitable rental car service in united states of America. The company was
determined to become the most valuable rental car company.
Objectives
 To increase the revenues of the company by at least 5%.
 To capture one new market of any other country. To launch a new pick up service.
Swot analysis
 Strengths: The company has a strong relationship with its suppliers. It helps the
company in increasing their products and services anytime by leveraging the skills of
their suppliers (Arbogast and et, al., 2020). Along with this, the superior quality of
products and services that the company is providing to its customers helps the company
in attracting more customers and also in retaining customers.
 Weaknesses: Poor inventory management can be analysed with the case study given.
The company is unable to manage their inventory as well as cash flow effectively and
efficiently.
 Opportunities: The biggest opportunity that the company have right now is to expand
their business in other countries of the world. It will help the company in capturing
market and will also increase the revenue of the company. Threats: one of the major threat that the company is facing is the increase in the
bargaining power of buyers. The buyers are continuously pressurising the company to
reduce the prices which can have a direct impact on the profitability of the company.
Strategy and Implementation summary
It is important for the company to make sure that they are working in order to expand
their business. The strategy that the company can adopt is of market development strategy. With

the help of this strategy the company can enter a new market on the basis of their existing
products ad services.
Personnel and Management
The company is a privately owned business which is owned and managed by three
generations of Taylor family (Liu and et, al. 2021). The enterprise has decentralised form of
management which means that managers have the authority to make decisions which promotes
quick decision making in the organisation. The company is currently employing 68000
employees in the organisations.
Financial Plan
Particulars Amount
Licenses £500
Incorporation £300
Permits £500
Internet set up £300
Lease Deposit £1,500
Accounting £500
Legal £300
Security £2,000
Transportation £4,500
Payroll services £3,000
Website domain registration £400
TOTAL £13,800
Scaling Options
The company is providing rental services to its customers and it is important for the
company to make sure that they are capturing new markets. As the services of the company is
best in class and customers are appreciating the products and services of the company, it will be

beneficial for the company to attract new market segment and to reach out to the potential market
segment so that the company will be be able to capture new markets and will be able to increase
their revenues. The company can also provide innovative pick up facilities to its customers
which will help the company in providing better and variety of services to its customers.
As the markets of the company is highly price sensitive so it will be helpful for the company to
keep the prices of the services low and and in this way they will not only be able to capture
market segment but will also be able to have a competitors advantage in the market which is
extremely beneficial for the company and its business.
P5 Exit and succession options along with advantages and disadvantages.
Merger
A merger is a combination of two firms which can be operate as a single legal entity.
Mergers are mostly done to gain market share, reducing the cost of operations, unite common
products etc. Companies look for mergers to gain access to larger market and customer base,
lessen the competition and achieve economies of scale (Reinberger., 2019.). A merger between
companies will remove competition which tends to reduce the advertising cost of products and
this reduction in prices will reward the customers which leads to the increment in sales. This will
result in excellent planning and proper use of financial assets.
Advantages of Merger-
The main advantage of merger is its economies of scale which occurs when a large
organisation with increased result can reduce average costs. Decrement in average costs allow
lower costs for consumers. It will help in the increment in market share when companies merge,
new company gains larger market share and gets forward in the competition. Merger also helps
in facing the competition at both national as well as international markets by providing goods
and services at competitive price and also by merging the competitors in the company. It also
helps the company to improve its goodwill in market by creating good image and increasing
confidence of investor. It may allow special investment in R & D because of new firm which can
have more profit.
Disadvantages of Merger-
A merger results in less competition and a larger market share which means the rising in
prices of all products and services (Motieyan and Mesgari., 2018.). Sometimes merger may

create space in the communication which will directly impact the employees performance. The
new organisations may face diseconomies of scale from the increment in dimensions.
Acquisition
An acquisition means to acquire or to purchase that is when a company buys another
business. In this a larger firm will purchase the share and assets of the smaller firm. A company
may be created either to begin a complete new business or to gain an existing business. With an
acquisition exit strategy, someone can surrender the proprietorship of business to that company
who is buying from this company. Here are two types included of acquisition: friendly and
B64967hostile. A friendly acquisition means to be achieved by a larger business. And a hostile
acquisition means someone is not agree and it purchase support to complete the acquisition.
Advantages
Acquisition can help to grow the market share of any company rapidly. When small
businesses are combined with larger businesses, they are capable to access financial
specialists,legal specialists etc. It helps in the cost reduction process as acquiring companies
provide profit from more remarkable economies of scale and economies of scope. It also
provides the opportunity to create leverage through its strategies that is cutting costs and
balancing revenues (Smith and et. al., 2019.). Taking over the firms minimizes the risk related to
new organisations like synchronization, targeting of market etc. It avoid retribution from existing
companies and provide quick access to resources and skills which the business needs.
Disadvantages-
Acquisition strategy may don't go as planned because the cost of this can go up rapidly
and accurately. When that market becomes confused, then power of a brand will definitely suffer
and it may hinder the strength of a brand. Through this it may face difficulty in integration due to
the activities of new and old organisations. Also company can face the issue of redundancy when
employees who photocopy each other's functions which cause excess amount of payroll spending
where two employees are paid to do the work of one.
M4 Recommendation for a valid exit option.
According to the company, merger can be a suitable option for the company as the
company is successful in their workings. Merger will help the company in collaboration and will
create a single legal entity. Merger will also help in attaining economies of scale which will
reduce the cos of services that the company is providing. Reduction in cost will help the

company in attracting customers and will also make sure that the company is having competitors
advantage in the market.

Conclusion
From the above report it is concluded that, SME plays a major role in the growth of an
economy. It is important for the economy to have SME as they contribute not only in the growth
of the economy but also provide perfect competition situation to the market. In order to have
growth it is important for an organisation to have clear set of vision and mission which will help
the company in achieving their goals as well as objectives.

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