Rent-A-Car Growth Plan: Financial Analysis and Scaling Objectives

This report provides a comprehensive analysis of growth opportunities for a Rent-A-Car company. It begins by evaluating key considerations such as SWOT and PESTLE analyses to understand the company's strengths, weaknesses, opportunities, and threats, as well as the political, economic, social, technological, environmental, and legal factors affecting the market. The report then applies Porter's Five Forces framework to assess competitive intensity. Ansoff's matrix is used to explore growth strategies like market penetration, product development, market development, and diversification, recommending product development as the most suitable option. The analysis includes a critical evaluation of financial growth, potential funding sources, and exit and succession options. Finally, the report outlines a business plan for growth, incorporating financial information and objectives for scaling up the venture, ultimately aiming to provide a strategic roadmap for the company's sustainable expansion.

PLANNING FOR GROWTH

TABLE OF CONTENT
INTRODUCTION ..........................................................................................................................3
MAIN BODY...................................................................................................................................3
Key consideration for evaluating the growth opportunities for the organization........................3
Application of Ansoff matrix for analysing the growth of the business......................................7
Critical evaluation of financial growth and source of funding....................................................8
Exit and succession options for business.....................................................................................9
Developing a business plan for growth of company including financial information and
objectives for scaling up venture...............................................................................................12
CONCLUSION..............................................................................................................................18
REFERENCES..............................................................................................................................20

INTRODUCTION
In a business growth is planned with the help of a systematic record of ambitions which
provides the business future for the establishment of goals and targets. Growth is very important
for an organization as it helps the business to reach its targets and reach the important steps
which are present for the growth of business. For the growth of a business it requires to make
some important decision which helps the business to differentiate with the rivals for the creation
of unique selling point. In this project the chose organization is Rent-A-Car company. For the
growth of this company the discussion of the different activities which help in the operations of
the market and also help the business understand the activities it needs to do for achieving
growth. The competitive advantages for the business is explained in the project. This project
discusses the available opportunities in the business. This project will also apply Ansoff's growth
vector matrix for assessing the risk. Evaluation on the financial sources and the current situation
of the business is also analysed for utilization of entrepreneurial strategies. This project provides
the discussion over the exit and succession option of the business.
MAIN BODY
Key consideration for evaluating the growth opportunities for the organization
Rent-A-Car business is business which provides its customers with cars on a rental. Their
responsibility is to give services of vehicle to the customers in order to make sure that they reach
their destination. As a medium-sized business which has a very easy business model it has to
face a lot of competition in the market. In order to over come the competition this business needs
to provide growth opportunities to itself so that it can successfully expand itself in a new or an
existing market. For achieving growth the business needs to analyse the following consideration
which will help it in providing the growth opportunities.
SWOT analysis :
Swot analysis is a framework which helps in the evaluation of the strength and weakness.
This framework also helps in the analysation of the opportunities and the threats which will help

the business to understand the different areas it can improve which will provide it opportunities
of growth.
Strength :
The market of the renting cars in UK has performed very well over the last five years
which is because of the increase in the international tourism. Despite being hit bad because of the
pandemic the market for Rental cars has been able to achieve stability. Firms in this industry
provides rent cars and other commercial vehicles to the private users for a short-term basis.
Weaknesses :
Major weaknesses of this market is regarding the fact it has runs the risk of damage to the
cars which are assets for these businesses (Knioui, 2020). These business does not provide
facilities of drivers due to which the risk of damages to the cars increases. A certain big
weakness of this market is that due to having a very simple business model there are many small
business which enter the market.
Opportunities :
The main opportunities this market has is that it has not limitations to the places in which
it can expand its business. Due to having a simple business model it is very easy for the business
to create innovation in the business which would allow it to grow.
Threat :
The post pandemic affects on the society which has made the mentality of the society
towards rental cars that it is unsafe and unhygienic to use the car which has been used by another
individual previously. Another threat to this business is that as the business model of this market
allows the customers to have the ownership of the car temporarily they do not worry about the
well-being of the car or think about the additional cost which it may have to incur in
maintenance and repairing.
The competitive analysis of the business is very essential for providing the business the
shape it desires for researching of the competitors. For Rent-A-Car business different
competitive frameworks can be utilized for understanding the competitive advantages it
possesses in the market.
Political :
The political factors do have a huge impact on this market. The market of UK has been
affected due to the Brexit agreement which led the certain businesses to move out from the

country (Seibitz, 2018). This has caused a decrease in the competition for the companies which
operate in this market. Despite having certain dis-balances in the economy the rental car business
model has benefit from the political environment of UK so far. However, any changes made by
the government which affects the rental policy or vehicles policies can effect the business of the
organization.
Economical :
The future of the car rental industry is very much dependent upon inbound of the
travellers at the airport. As per the UK car rental market the estimation of the CAGR of the
company has been over 3.65% in the year of 2017 (IBISWorld, 2021). Since then the economy
of UK is suffered a lot due to which the operations of rental car business has been affected. The
economic conditions in UK has been poor due to the pandemic due to which rental car market
has failed to find stability.
Social :
The customers of these business are mostly the immigrants as the customers which
affects the business of the rental cars. The attitude towards the immigrants in the society does
affect the business as the business model is very fragile and can be effected because of a
sensitive environment. Other social factors like gender composition and attitude towards society
also affects the business. There is a section in UK society which saves money for purchasing
cars, this affects the business of rental cars.
Technological :
The technological factors affect a lot to the rental car business as it helps it to improve its
operations. Latest technological improvements allows the business to locate the cars position.
Technological improvements helps with acceptance of online payments which is very useful for
businesses these days. Technological factors help businesses to make their services online for
reducing its operational cost and be effective in the pandemic (George, 2021).
Environmental :
As the business revolves around vehicles it is affected due to the affects made by the
vehicles on the environment. The laws and regulation which are made by the UK government are
needed to be followed for the companies in order to carry on their operations. Companies which
are able to ensure their effectiveness in the environmental sustainability does get an advantage
over its competitors.

Legal :
There are laws which the business has to follow in which affects it business operations.
Changes in these laws makes the market of the rental cars change its operations. Damages to the
assets of the business which are the cars which is a very common procedure for these
organizations do affect the claim settlement policies due to which the business needs to be
prepared for these intuitions (Beynon-Davies, 2021).
Porter's five forces is a framework is one of the most effective framework that can be
used for the analysis of the competition. The business of Rent-A-Car will have to consider these
forces of competition for availing the growth that is required.
Existing competition :
The existing competition of Rent-A-Car like Enterprise car which has the similar
business model to that of Rent-A-Car is a competitive threat to the business of the organization.
The organization can try to reduce its prices for gaining the customers of its competition for
growth.
New entrants :
As the business model of this company is very simple and cheap there is always the threat
of new entrants in the market which do not hesitate to earn less profit for stealing the customers
of Rent-A-Car. By keeping the prices lower than the what the new entrant business can afford
company can stop the entry of new business (BENFRATELLO and DESAI, 2020).
Bargaining power of suppliers :
The suppliers of the organization are the car manufacturing companies which have strong
bargaining power due to which rent-a-car cannot negotiate with them for gaining any
competitive advantages. For additional growth the company can try to develop good relationship
with the suppliers so that they can get some additional discounts.
Threat of substitute :
There is a huge threat of substitute for a business model of Rent-A-Car as there are
multiple cheaper options available in UK for transportation. This company should invest in
increasing its customers services for having some competitive advantages against the substitutes
(Ranjbari, Esfandabadi and Scagnelli, 2019).
Bargaining power of buyers :

The buyers of the company are its customers which have a lot of power because of
having so many options in the same market as well as other transportation. Limitations of the
prices and increasing the sustainability of the business is also an effective option of the business.
Application of Ansoff matrix for analysing the growth of the business
For the growth of a business the marketing strategy is very essential to be implemented.
Ansoff matrix is very beneficial for deciding the growth strategy which can help the business
with opportunities of offering existing and new products inside an existing new market and help
the business with analysation of risks.
Market penetration :
This strategy involves the sale of more established products into the market by increasing
the promotion of price reduction or providing better solutions for the routes of the market
(Khalik and Sum, 2020).
Product development :
In this strategy the business develops a new product or services for implementing them
into the existing market in which it is operating.
Market development :
This strategy suggests the business to sell the existing products and services into the new
markets.
Diversification :
In this strategy the business has to develop new products and services and then place
them in the new markets by providing diversification as the most risky strategy the business has
much more room for development.
The focus of Rent-A-Car business should be on choosing the best strategy out of the
given options. The best strategy which will provide the business the most scope of development
is in Product development (Gaile, 2017). This strategy will be the most beneficial for the
business as the business is already established and is profitable to a great extent. This strategy is
of medium risk to the organization as introduction of a new product and services will be an
innovation for the firm but will not stop its main business operations. New services that this
business will provide is going to be the unique “pick-up truck” services. Product development
strategy help the business to provide its customer a wider range of services through which they

can fulfil the needs of the customers. It does not just improve the customer's experience but also
is very helpful for strengthening the identity of the brand. Some factors which affects the
decision-making in the organization are involvement of the government and the trend of looking
for a new mobility option to reduce the emission in the environment. This company will benefit a
lot from this strategy as it will provide the business to offer more to the customers. Utilization of
this strategy will provide the following to the business (Hanif and Fafurida, 2018).
 It helps the business to develop a culture of innovation which will be beneficial for the
creation of revenues which can be utilized for the encouragement of new ideas which
can encourage the business.
 This method is best for driving a higher value proposition which can create a need of
demographics of the brand and business.
 This helps the business to grow professional network which attracts the business within
the industry of the brand and provides the business with a cutting edge in the competition
(Syarafina and Wibowo, 2021).
Critical evaluation of financial growth and source of funding
The business finances which the Rent-A-Car can utilize for its business plan can be
divided in two categories internal and external source of funding. Internal sources of funding are
sources which the business utilize in a given period are,
Equity share capital :
This source is the sale of shares for raising capital, by selling the shares the ownership of
the company is sold. Advantages of equity share capital as finance source are,
 There are no obligations to the company to repay the money which is acquired.
 Can be issued without creating charges over the assets of the company.
Disadvantages of equity share capital are,
 The fear of capitalization is present as the business cannot redeem the equity shares.
 The equity shareholders place obstacles in the management by manipulation of
organization.
Retained Earning :
Retained earnings are long-term source of finance for the company as there are no
compulsory maturity of the loans and debentures. This is earning which company developed as

profit to be divided in among the shareholders as dividend. The advantages of retained earning
are,
 Use of this source decreases the cost of issuing the external equity and eliminates the
losses which are incurred.
 The earnings are readily available which the firm does not need to seek for help from
shareholders or lenders (Kundu and Matthews, 2019).
Disadvantages of using this source of finance are,
 The opportunity cost of such earnings are very high due to which they are not preferred.
 Companies avoid using these earning as using them can effect the NPV negatively.
External sources of funding are sources which the business utilize in a given period are,
Financial institution :
The use of financial institution include central banks, retail and commercial banks,
internet banks. In this source the finance is raised from these financial institutions other than
commercial banks.
Loan from Banks :
One of the most common source of finance for business enterprises. These are considered
to be the straight forwards methods for securing the funding which are required. This source has
a term which depends on the purpose of loan (Leachman, Masterson and Figueroa, 2017).
Preference shares :
These are sources of finance which a company used by the company just like the shares.
These shares are not similar to equity shares as the company has to pay dividend to the
shareholders.
This business can utilize two sources of funding which will help Rent-A-Car to develop
its business in the organization for the future. Loans from banks are the best way of generating
funds for the business development and growth. This source of funding will allow the company
to keep control over the business operations of the company and also allow the business to
ensure the other benefits such as it is a temporary liability.
Exit and succession options for business
The Rent-A-Car business can utilize this method of succession which will help it pass on
its business to another person. As this business has been founded by Jack Taylor the business
who invested in ideas which will helped the idea into executive leasing for becoming an

enterprise. This business is very well-established and had become one of the most successful car
rental company. There are certain succession option for the business of Rent-A-Car business
which allows the business for successful succession planning process such as,
Passing the business to a successor :
One way of succession the business is to pass on the business to a family member or a
friend or even a manager of the company itself. The advantages of passing on the business are,
 It reduces the involvement of the third party which save the privacy of the company.
 This a way the entrepreneur can maintain its involvement and also influence the business.
Disadvantages of this method are,
 It is one of the difficult techniques of succession which can is difficult to be trained to the
right successor (Atapattu, 2018).
 This can create conflicts at the work or the ruin the relations of entrepreneur and its
family.
Transferring ownership to a management :
The management of team or a group of employees can be used for acquiring the part of
the company. Those business which fail to find a successor this is a very crucial option.
Advantages of transferring ownership through management or employee are,
 Very limited diligence is required which is necessary.
 This is a reward to the management for long term support of the business.
 Protects the legacy and independence of the business.
Some disadvantages of this method of succession are,
 The management has limited access to the capital which can affect the business.
 Failure in the purchase attempts can affect the business morale.
Selling the business to third party:
Selling the business to a third party is also a way of succession which the business can
utilize. Sale of the business can be done in the following ways,
Initial public offerings :
For a private company like Rent-A-Car the sale of its shares on a public stock exchanges
can be a way of selling the business. Advantages of succession through initial public offering
are,

 It helps in providing the company with capable individuals for the position of the
management.
 Reduces the risk of losing some important and experience leaders and employees of the
business.
 Keeps the business financially capable.
Some disadvantages of this method of succession are,
 Founders lose the control of their company. Business may get in the hands of a competitor.
Private equity :
This business can also be sold to a private financial investor as whole, by selling all the
shares of the company to them (Atapattu, 2018). Advantages of succession through private
equity are,
 Founders get to choose the company or individual who will take over the company.
 Company performance can be maintained or be improved by the business.
There are also some disadvantages of this method such as,
 It generally leads to loss of customers. The turnover of the talent of the company decreases,
Sale to another business :
Selling the business shares to another operating company is also a way of succession
which can be a good options for the owner which is looking for a clean exit and obtain the
highest possible value. Advantages of succession sale to another business are,
 Company is able to retain capable individuals for the position of the management.
 Helps in retaining the leaders of the organization.
Disadvantages of utilization of this method are,
 The process of selling is lengthy and time-consuming and the business has to incur legal
costs.
 The business has to rehire the employees as some of them might leave the organization.
After considering the benefits and the drawbacks of these successions option it can be
recommended to the business that it should choose the passing the business to a successor which
can be a family member, friend or ever a manager of the business. This will not increase the

business competition and the founder of the business will be able to provide suggestions in the
future by being a part of the business.
Developing a business plan for growth of company including financial information and
objectives for scaling up venture.
1- Executive summary-
The main motive of this business plan is to make Rent-a-Car successful and enable it to
grow even better than other companies. Organization has gained competitive advantages by
designing and launching a new product that is Pick Up service, through which it has tracked the
customers id via advance mobile application and reach at specific location to pick them up and
drop at the destination. In order to offer this service, company has chosen the best and most
suitable funding source such as bank loan. As it enabled them to grab market chances, track
records by using interest and other approaches.
Financial projections-
Basis Year 1 Year 2 Year 3
Sales 600000 1000000 560000
Exports 16000 15000 21000
Net profit before tax 230000 516000 215000
Investment 400000 600000 70000
Employment 15.00% 16.00% 17.00%
2- Organization description-
Promoters and stakeholders-
Satisfaction customers and marketers are the promoters who may help to promote new
service in market.
By following flat organizational or management structure, firm may grow rapidly. As the
marketing and production managers are highly accountable to launch new service worldwide
effectively.