Business Growth Plan: Enterprise Rent-A-Car Strategies & Analysis

This report critically assesses the growth opportunities available to Enterprise Rent-A-Car, utilizing tools such as the Ansoff matrix and PESTLE analysis to evaluate market penetration, product development, market development, and diversification strategies. It explores various sources of funding, including bank lending, crowdfunding, peer-to-peer lending, and angel investors, weighing the benefits and drawbacks of each. A comprehensive business plan is presented, focusing on digital transformation and growth objectives. The report also addresses exit and succession options for small businesses, providing insights into the competitive advantages and strategic decisions necessary for sustained success. Desklib offers a wealth of similar resources, including past papers and solved assignments, to aid students in their studies.

PLANNING FOR GROWTH

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
P1 Critical assessment of opportunities available for business...................................................3
P2 Ansoff matrix.........................................................................................................................5
New products and services..........................................................................................................7
P3 Sources of funding and benefits and drawbacks of sources..................................................7
P4 Business plan.......................................................................................................................10
P5 exit and succession options of small business.....................................................................16
CONCLUSION..............................................................................................................................19
REFERENCES..............................................................................................................................20

INTRODUCTION
The report is related to planning for growth of an organisation. Planning is done for SME and
growth for it has been discussed. The organisation taken for case study is Enterprise-Rent a Car.
Enterprise-Rent a Car is a car rental company started in USA and operates in Canada, UK,
Ireland and Germany. The considerations for evaluation of opportunities of growth and
considerations within context of organisation have been discussed. The opportunities for growth
in Ansoff matrix has been done. The methods through which organisation access funding sources
and the benefits and drawbacks of the funding have been done. Business plan has been made
which includes information and objectives for business scaling has been provided. The ways in
which a small business can exit or succeed in business and implications of each option have been
provided.
Competitive advantage
P1 Critical assessment of opportunities available for business
Car rental industry has been growing in recent years steadily. From 2015 to 2019, the market has
grown in Europe and USA from $41 billion to $49 billion which represents value of 4.6%
CAGR.
INDUSTRY TRENDS
Car rental industry has grown in steady way and the largest and markets which are developed are
Europe and USA. From a perspective on structure of car rental business, oligopoly features are
there with global operators who are limited (Busse, M., Swinkels, J. and Merkley, G., 2017).

Porter’s Generic strategies
Cost leadership
Cost leadership strategy has involvement of advantage that is competitive of cost lowering. The
target segment of Enterprise-Rent a Car is middle class. Thus, there is focus on affordability and
accessibility for them which has helped in brand awareness and competitive advantage.
Production cost being lowered and increasing efficiency of supply chain, organisation offer
coupons for achieving sale targets and handling of competitive pressure (Omsa, S., Abdullah,
I.H. and Jamali, H., 2017).
Differentiation
Apart from low-cost strategy, organisation differentiate through the core capabilities and
enterprise has fleet of vehicles of high quality which are cleanest and there are many models of
cars made according to demands of customers. The unique brand logo is also a strategy used by
company.
Focus strategy
The focus strategy is on the market segment of middle class and thus strategy is adopted of
emphasis on habits and design of product which can meet the requirements and needs of the
customers. Organisation does its branding and brings change in designing of product and
packaging for satisfying customer expectations and providing them the best value for the product
(Omsa, S., Abdullah, I.H. and Jamali, H., 2017).
PESTLE analysis
Political factors
An organisation policy of short and long-term depend on the places where the organisation is
operating. The stability of governments in countries influence the organisation. Enterprise-Rent a
Car operates in many countries and thus, there is difference of political situations and they may
help the business to prosper or limit the opportunities for the business (Perera, 2017).
Economic factors

Economic conditions prevalent like income, inflation and economic policies affect the
organisation. Providing well developed infrastructure facilitate business environment and
developed countries have this advantage for the organisation.
Social factors
There has been an increase in people taking cars at lease rather than owning them and this
preference of customers will surely help the organisation. This will be a competitive advantage
to compete against automobile selling industry.
Technological factors
With increase in technology of bookings done of car rentals online on smartphones, Enterprise
Rent a Car has to accordingly evolve and be ahead in competition. For gaining competitive
advantage, company has to give offers and discounts on the car bookings.
Environmental factors
Use of alternative fuel and running electric cars can reduce environmental pollution and can
prove to be a competitive advantage for the organisation which is taking environment-friendly
measures (Perera, 2017).
Legal factors
Following consumer protection laws and intellectual property rights registration can help the
organisation stay away from legal hassles.
P2 Ansoff matrix
The matrix involves these strategies:
a) Market penetration: This involves selling products which are established in markets that
are existing for the product. In 1957, when the concept of leasing cars was launched, it
was an altogether new concept. The company had the motto of taking care of customers
and profits shall follow. Customer service became important for the business. This helped
the markets to grow (Loredana, 2017).

In car rental, the product is the same of renting cars however, here the quality of service
is the factor which differentiates from the other competitors. The company has taken
feedback of its customers and provided quality service which helped in gaining market
share.
Product development: This has involvement of services and products and launching them
in markets that are existing. Organisation has developed service in market where there are
established and profitable business. For instance, product development includes the
‘Pick-up’ service. This has assisted in leading the market in the offering of product.
Flex-E Rent service of Enterprise which is a rental solution of long-term for meeting
growing needs of business and the Business Rental Programme offers customers a special
pricing bespoke programme being instance of product development. This has brought
improvement in customer experience and made its brand identity strong. Enterprise
allows employees for making decisions at responding quickly to the external environment
(Loredana, 2017).
Market development: It involves taking the existing services and products in new markets
for selling. Enterprise have taken their rental service to new countries and created market
for its product. For providing better customer service, the organisation has located its
branches in proximity with the customers’ residential areas which has given a
competitive advantage to the company. In response to needs of customers, company
opened its airport location too, which increased to 200 on-airport locations in 2000s.
Diversification: The strategies involving widening of the organisation’s scope across
products that are different and different market sectors is known as diversification. It gets
associated with having a new experience of a new market with requirement of additional
investment. Enterprise has made strategies of diversification including:
A) Car sales was introduced by the company. It involved selling of used cars to both
public and businesses. It is one of the largest sellers of used cars now.

B) In 1970s Enterprise acquired Keefe Coffee Company which then became as the
Centric Group.
C) Enterprise organisation invested in Mexican Inn Chilli products in 1977, however it
did not work out and company learned from the experience.
Judging from the Ansoff matrix, it can be said that the market development and
product development strategies have worked out mostly for the company.
New products and services
Digital platform: Enterprise putting its services on digital mode like online services of internet on
smartphones for instance will help in gaining a competitive advantage for the company. The
mobile apps are also a new way of booking digitally. Enterprise have chosen the organisation
Determine-Inc for its digital transformation which provides industry leading solutions to
Business Rentals Group.
P3 Sources of funding and benefits and drawbacks of sources
Investment decision-making
Methods for calculating financial appraisal are NPV, Payback and IRR.
NPV or Net Present value is the method through which cash flows are discounted by a discount
rate assumed to get estimations for finding the present value of future cash flows. If Enterprise
Rent a car has to do investment in projects, then it can make use of this method for finding the
profitability of the project it is going to undertake. For instance, diversification in a new project
for business can be done with the project being judged by the NPV method. However, NPV
discount rate is made on assumptions which may not hold true (Fombang, M.S. and Adjasi, C.K.,
2018).
Payback period means the period in which the initial investment on a project can be repaid. It is
denoted in years and months. This method is easy to understand and calculate for managers.
However, it does not take in account time value of money and thus cannot be considered as a
suitable method for finding profitability for long-term investments.

Internal rate of return is the rate of return received on investment and is used for checking rate of
return on projects. However, there are some assumptions for this calculation, which may not
prove accurate all times. Thus, a modified internal rate of return is recommended for project
assessment. Also, it is recommended that more than one method be used for assessment of
project’s profitability. Modified Internal rate of return is recommended with NPV to calculate
profitability of project.
Different sources of funding and their benefits and drawbacks
Bank lending: Companies can borrow from the banks who provide commercial loans at less rate
of interest and thus complete their needs of working capital and business expansion
requirements. Bank lending requires collateral which the companies can provide in some asset
form and also can get credit limits for annual business purposes from the banks.
Advantages of bank lending:
a) Companies can get loans at less rate of interest.
b) Credit limits can be extended if company pays dues on time (Fombang, M.S. and Adjasi,
C.K., 2018).
Disadvantages of bank lending:
a) Collateral is required for the loans.
b) Credit ratings have to be in positive to get loan from bank.
Crowdfunding: This means when the public gets to invest in public or private limited companies.
This is done through IPOs and FPOs. People buy the shares of the company and sell them later at
a profitable price. This provides capital for the company through which it can continue its
operations. This type of funding is done through being listed in stock market and market
operations.
Advantages:
a) It can get good money for the company.
b) It can do a promotion for the company through IPO launch (Boschmans, K. and
Pissareva, L., 2018).
Disadvantages:
a) Company may suffer loss if IPO is unsuccessful.

b) Company’s reputation suffers if IPO goes unsuccessful.
Peer to Peer lending
This refers to organisation getting seed money from their close associated ones like family,
friends and relatives. These people can also be made members of the company in shareholding
although there is limit kept as per the regulations.
Advantages:
a) Seed funding does not hold any type of interest if got from family and close friends, thus
removing some monetary burden over company owner.
b) There are no formalities required like documentation and signing of bond and can help in
owner getting quick money.
Disadvantages:
a) The credit is given as per the financial status of the peer, it cannot be got in large amount.
b) For working capital operations, seed money may not prove enough as per other finance
options (Boschmans, K. and Pissareva, L., 2018).
Angel investors
These are people in possession of great financial wealth and can support an organisation
monetarily if they find the prospects of it being bright. The finance is provided in terms of large
amounts that can help an organisation in business expansion and working capital requirements.
Angel investors can be wealthy businessmen who see investing as a bright prospect in the
organisation.
Advantages:
a) Company gets major help financially and can improve its speed of operations.
b) Company does not have to approach the investors, they invest on their own decisions.
Disadvantages:
a) There is no certainty in the investment form.
For Enterprise-Rent a car, the best suitable option shall be taking loans from banks, as it is the
most reliable source and the company can also get its credit limit extended as time passes.

P4 Business plan
Purpose: To make Enterprise Rent a Car succeed in its digital transformation.
Objectives: To make company a successful name in digital transformation.
To increase the growth of the organisation.
Company description: Enterprise Rent a Car has been in car rental business since 1957 operating
in USA and many other countries. It has a diversified business and a loyal customer range.
STP Analysis
Segmentation: This involves customising the target segment of the organisation. The segment
has to be targeted according to the demography, geographical and behavioural characteristics.
Speaking of the organisation, Enterprise Rent a Car has segmented the customer segment as
middle class as per income group. The age of people using the facility is between 18-35,
generally the youth segment (Gabler, C.B., Panagopoulos, N., Vlachos, P.A. and Rapp, A.,
2017). However, there may be some deviation as to when people are travelling and need to lease
vehicle, they can come from an elder age group also. Company has kept affordability
accordingly in its cost structure. There is deviation in income group when tourists also travel
from its airport location base as they can be of higher income group. Geographically, company
has set up its segment locations near its customers’ residences for quick service.

Targeting: Company targets the middle-class youth with lucrative offer and discounts like giving
a ride free a month or a family package for the urban youth. The organisation accordingly, makes
schemes for the target segment. There are also offers given on outstation rides, at the time of
festive season to gain hold on the market.
Positioning: Enterprise Rent a Car positions itself in the manner of providing best of value and
service to its customers and positioning itself as an affordable ride. Also, it differentiates itself as
one being closer to your residences for booking and when one needs a quick go. This has
positioned the company as a reliable brand of service (Busse, M., Swinkels, J. and Merkley, G.,
2017).
SWOT Analysis
Strengths
Customer service
The ‘Pick Up’ service has gained momentum for the company. The loyalty benefits are
present for the customers and there are corporate discounts and the rewards program is
there for the organisation (Gabler, C.B., Panagopoulos, N., Vlachos, P.A. and Rapp, A.,
2017).
Volume of locations
There are number of locations where customer can take the service like near residential
areas, airports etc.
Employees
The advancement of the employees is there in the organisation for growth opportunities.
Recent graduates are hired who are willing to lend their services for the organisation.

Versatility
There are diversified businesses under the brand name. There are many locations of the
company across the nation.
Weaknesses
Website
The website used by the organisation is outdated and clarity is not present thus making it
lag behind in digital transformation.
Architecture
There is not any franchise unity which is making it lag in providing brand value at all
places.
International Expansion
Competitors have higher presence in other countries, it has less presence in the top Asian
countries.
Partnerships
Less of travel packages being offered with competitors providing variety of options and
insurance partnerships not being present.
Opportunities
Expansion of Car share
It has less than 160 locations in current. They are profitable extremely who have more
locations as competitors and there is also possibility of one-way operation (Barrow, C.,
Barrow, P. and Brown, R., 2018).
Increasing profits
There are opportunities for high price and long returns of investment with alternative to
resale prices that are low.