Assignment Purposes/Learning Outcomes:

After completion of Assignment-1 students will able to understand the

LO 1.1 State the concept of management functions, roles, skills of a manager and the different theories of management.

LO 2.2: Employ knowledge and techniques of strategic planning, problem solving, decision making and change management.

Assignment 1 (Case Study)

ARMOURTRUERENT, LLP.

CASE SYNOPSIS

The case of Armour TrueRent, LLP. illustrates how a smaller firm can achieve market power and survive through horizontal integration. Growth, however is only the beginning of a successful strategic process. It does not ensure long-term success, as there are numerous strategic challenges for this and other firms in similar circumstances. The firm has reached a size that could attract the attention of larger competitors. This new level of competition would increase the hostility and complexity of the external environment. Due to the new larger size, the firm will also encounter internal problems in such areas as management and logistics. Armour TrueRent, LLP.

THE COMPANY

. . . . . . Armor TrueRent LLP. . . . 20 . 51 18 . . . 55 11 . . . . 55 11 . . . . 55 11 . . .

THE INTERNAL ENVIRONMENT

STRENGTHS

The firm has an excellent MIS system that each unit of merchandise and each rental agreement. The computer at each store is connected to the main computer at corporate headquarters. Each day's activity is compiled for stores by region. Management has access to daily, weekly and monthly data in order to make precise decisions about personnel, about merchandise, about stores, and about regions. Since all merchandise goes directly from vendors to stores, no warehouse or storage costs are incurred. Various vendors are used to help keep merchandise prices competitive. Growth rates in revenues per store have been increasing at 18 percent a year.

WEAKNESSES

The biggest weakness facing Armour TrueRent, LLP. is the inefficiencies associated with absorbing the two chains it purchased. Regional managers and store managers must learn new methods and new information-gathering guidelines. Organizational cultures are slow to change.

THE EXTERNAL ENVIRONMENT

OPPORTUNITIES

. . . . . . . Armor TrueRent LLP. . . . . . . . . .

THREATS

The rent-to-own industry is highly competitive. In 1994, the ten largest firms accounted for 37 percent of the total industry sales. The rental industry must also compete with discount and department stores for customers. Another serious threat is the growth of the credit industry. Credit cards are available to almost anyone, giving people more choices when considering a major purchase. Rent-to-own stores may lose potential customers to big discount and department stores that offer easy credit or access to their credit cards. The rent-to-own industry is heavily regulated and further legislation at the national level is being considered. Restrictions on interest rates and fees, on contract language and disclosure, and on lending in general would increase costs and further limit the profit potential of the industry. Other near term costs that are expected to increase are shipping rates, taxes, fuel/energy, and paper costs. Investors will shy away from an industry where profits are falling and firms are consolidating.

QUESTIONS

Q1. What different strategies are available to this firm Armour TrueRent, LLP.? (Hint: More horizontal growth, Increase store sizes/activities etc. etc.) Give at least three other strategies. (2 Marks)

Q2. What are the problems and benefits associated with each strategy? (2 Marks)

Q3. What would be the best choice of action? Why? (1Mark)