erac tn.docx

7/26/2019 ERAC TN.docx

1/4

Learning objective:

Apply the concepts of value creation and value capture ? Understand the interaction of

internal and external strategies in creating competitive advantage ? Understand the

difference between market-level and firm-level demand elasticity ? Understand economies

of scale and network externalities ? Determine the applicability of skills and resources to

new markets

I> I . Business Definition

How would you define the Car rentals business , within the perspective of this

case / What markets are being served, with what kind of offerings and to what

customer segments ?

How is ERAC positioned in this industry ? What is its unique proposition ? Is this

sustainable?Are there any inherent gaps or weaknesses in this position-

Who are its competitors ? what are the sources of ERACs competitive

advantage ?What capabilities are demanded to create value

II> II. Industry Structure

How would you characterize the economic forces that influence outcomes in this

industryof all the five (customer power, suppliers, barriers to change ie entry

ad exit , substitution and competitive rivalry), which ones seem to dominate the

most by impact.. read Porter refresher below

Markets

Offerings

Capabilities

Competitive

Advantage

Porter forces

1. A primary force represents the barriers to changein industry structure,either from new competitors entering the industry or currentcompetitors existingthe industry. Barriers to entry often include heavy

investment in capital and market development. Barriers to exit ofteninclude service contracts that must be honored, and alternative use offacilities/assets.

2. A second force comes from thecompetitors and their strategies forgaining market share. Each competitor offers a set of products andservices that attempts to provide higher value to the product-market

segments they address. Strategies can be to provide some combination ofhigher performance, more fashion and features, higher quality, or lower

price. Increased rivalry often leads to price or service competition that

can reduce the profitability of the business.3. A third force comes from the industry suppliers. Industry suppliers often

control critical inputs that can affect a firms ability to compete. Access to

critical assets or competencies can determine what firms will lead theindustry..

4. Another force represents the potential for change in product-marketstructure of the industry through the substitution of products or services

with alternative approaches to satisfying the customer's needs. Thisrequires the identification of potential substitutes and the characteristicsthat would cause rapid substitution

5. And fifth, comes customer segmentsthat make up the markets. The sizeand importance of customers may provide the power to change the

profitability of the industry. The relative size and growth of segmentsdetermine their potential influence

ENTERPRISE RENTA-CAR : CASE


2/4

III. IDENTIFY KEY SUCCESS FACTORs

What goals had Andy Taylor set for ERAC in 1985/ what was the envisioned

future for the company

What drives value creation and value capture for ERAC ?

` - competitive positioning ?

-creation of strategic capability / core competences ?

III> IV. What are the key elements of ERACs internal growth strategy

In what customer segments does ERAC dominate ?Without focus,

is it impossible to develop effective offerings Describe ERACsposition

in its chosen segment(s).The price-quality-profitabilty position as a

tool to market leadership. Pricing power elasticity firm level andmarket level demand Identify the strategic process(es) required to

execute ERAC strategy successfully. Skills and competences thatdrive strategic performance.Identify the market development

strategy.Scale the business leveraging competences, build barriersnetwork

Vision /

Goals

Strategic

focus

Capabilties

Value

creation and

capture

1. Customers are looking for products that provide somelevel of value for the price they pay. Each buyer

segment has different requirements that affect its keysuccess factors. Requirements can include highperformance, ease of use, or rapid availability.

2. Competition is often based on price, quality, anddelivery. Depending on their strategic focus, each firmmust develop a set of skills (strategic weapons) that

allow it to perform better than their competitors oneach competitive dimension.

3. Industry regulations or standards on issues like safety,pose minimum requirements for participation in acompetitive arena.

4. Firm competences / capabilities are sources of

advantage as markets are exploited for economies ofscale , learning and network effects.


3/4

IDENTIFY CRITICAL CAPABILITIES AND PROCESSES.Ability to implement

strategy is dependent upon both the functionsand business processes .

These capabilities can be classified into product / service creation processes,and product / service delivery and satisfaction functions and processes. Theservice profit chain works as below

:

V. Evaluate ERAC Strategy

Based on Internal assessments above. What do we understand to be the firms key strengths

and weaknesses.?

And what does our external assessment tell about the key opportunities and threats facing the firm.?

Put the two together . and wrap up the case with a SWOT analysis.

What critical issues need addressing if ERAC needs to maintain or improve its competitive and

financial performance.

The combination of strengths, weaknesses, opportunities, and threats must be ranked by priorities so

that action can be planned in a manageable way.

Since managers have limited time and resources, it is important that actions be taken in order of

importance.What could renewed strategic goals be : Both for Financial performance and Market goals?


4/4

erac tn.docx

Documents