CASE ANALYSIS : ARON

Topics: Retailing, Business, Marketing Pages: 7 (1791 words) Published: September 25, 2013
Socratix Case Study 2

The questions asked are:
1. What is your Strategy & action Plan for geographic expansion for Aaron’s within the U.S? 2. A) Should Aaron expand internationally?
b) if Aaron was to go for international expansion, what are the key things they must keep in mind or do? 3. Could rent-to-own work for goods beyond basic durable household items? Should Aaron offer additional products and service offerings/ 4. In terms of growth, Loudermilk (CEO) viewed managerial talent as Aaron’s primary constraint. How they address this issue?

To analyze the questions asked and give logical and effective answers it is important to first understand the Rent-to-Own industry per say as well as find out what are the Strength and Weakness of Aaron’s vis-avis its competitors. For this purpose the following chapters will cover a brief of the Rent-To- Own industry followed by the SWOT analysis of Aaron’s. Two more key issues that have been raised in the case are whether Aaron could expand internationally as well as what should be the strategy of Aaron for its expansion in U.S. markets. For the said purpose it is imperative that we first understand the Political, legal and Social challenges that Aaron is currently facing and is likely to face in Future to draw out a possible viable solution. For this a PESTLE (Political, Economical, Social, Legal, Technological and Environmental) analysis is also being carried out in this case so as to offer a viable solution.

Rent-to Own industry

Brief: This unique concept sprang up in the U.S in the 1960’s in response to the growing consumer need to obtain “big ticket” household products, such as furniture, appliances, electronics, etc. Further, U.S. being a consumer driven market as well as very high on credit sales led to this concept. This concept was able to target the Bottom of the Pyramid or the lower income groups of the U.S. economy, enabling them get access to high valued household products which otherwise would be impossible for them to access. In this concept the customer or the target segment usually lives from paycheck to paycheck which makes it impossible for him/her to obtain newer appliances, furniture, electronics, etc. to cater to this segment all the above mentioned product are rented out to them for usage by the business. This invariably satisfies their need to obtain and use these products as well as generate profits for the business. Further, the same customer also is given an option to actually posses the rented item in due course of time with weekly/ monthly payment plans devised to suit their needs or return back the product with no questions asked. What’s unique about this concept is that the customer does not need to have well established/sound credit ratings to obtain a high value product which are a must in case of Retail sales done on credit. Thus, put simply even a grocery vendor or a daily wage earner with very less or meager income can also have access to a 42” inch television or leather furniture of the latest model which otherwise would be impossible for him.

SWOT Analysis:- means the Strength, Weaknesses, Opportunity and Threat analysis of Aaron’s S. No.
Strength
Weakness
Opportunities
Threats
1
Old reputed company/brand, estab. 1955
Managerial Constraints
Growth Opportunities outside U.S. e.g. Canada
Criticism from Congressmen
2
Not averse to taking Risks
Lack of Understanding of International Markets, Laws regarding Consumer Transactions and employment Diversification of Product Offerings
Restrictive Laws in Developing Countries
3
Unique monthly rental Model with standard agreement terms of 12 months Not been able to penetrate many markets in the U.S. due to state Laws/Policy Growth Opportunities inside U.S.
Criticism from Consumer advocates
4
Lesser/Lower Pricing than competitors in the industry

RIMCO stores
Restrictive Growth after 2015
5
Large area for stores compared to counterparts

Franchise...
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