MGT101 Case Synopsis on Armour Truerent

December 9, 2022

MGT101 Case Synopsis on Armour Truerent, LLP.

Order Number	636738393092
Type of Project	ESSAY
Writer Level	PHD VERIFIED
Format	APA
Academic Sources	10
Page Count	3-12 PAGES

Instructions/Descriptions

MGT101 Case Synopsis on Armour Truerent, LLP.

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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
Armour TrueRent, LLP. is a small and relatively new firm. It initially was located in the
Central U.S., and was incorporated over ten years ago with more than one hundred
retail rental stores. These stores appealed to the desire of consumers lacking cash or
credit to rent products for a short time period.
The firm struggled along, fighting problems that come from small size and inadequate
cash flow. Being small meant paying high interest rates for a line of credit, and lacking
clout when buying additional supplies and equipment for its stores. After nine years of
slow growth, Armour TrueRent, LLP. decided to change strategies.
The time appeared to be ripe for faster horizontal growth. Armour TrueRent, LLP. using
financing from a friendly bank, bought out a similar-sized competitor located in its
competitive area for $ 20 million in cash. In addition, it purchased 51 percent of the
stock of a larger rental firm in the North-Central U.S. for $ 18 million. These actions
meant that in one year it had more than tripled in size and in the market it served.
It then organized itself geographically, with three layers of management below the
president. Store managers reported to 55 regional managers, who in turn reported to 11
regional vice-presidents. Compensation for both regional and store managers was tied
to store performance. Corporate headquarters has centralized purchasing, financial
planning, personnel, training, individual store evaluations and site selection.
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. are 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
The rent-to-own industry has been consolidating for several years. The biggest problem
facing the independent store or the small chain is a lack of adequate financing. Armour
TrueRent, LLP. was fortunate that it found a bank to provide the cash needed for
expansion.
Current and future trends indicate that industry consolidation will continue. Armour
TrueRent, LLP. should aggressively continue to seek acquisitions or merger partners to
avoid being left out of the industry changes. If smaller firms will be squeezed out of the
industry, Armour TrueRent, LLP. must pursue growth to insure survival. Current social
trends appear to be growing. The U.S. continues to be an itinerant society. People
move more, so they need to own less.
People want to do more, but lack storage for ownership of things. Many people lack
both cash and credit, so the purchase of furniture and appliances is difficult. Rentals
and rent-to-own activities will continue to be a growth industry. Armour TrueRent, LLP.
must take advantage of this trend to enhance per store sales and increase cash flow for
repayment of bank loans.
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.

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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)

MGT101 Case Synopsis on Armour Truerent, LLP.

RUBRIC

Excellent Quality

95-100%

Introduction

45-41 points

The context and relevance of the issue, as well as a clear description of the study aim, are presented. The history of searches is discussed.

Literature Support

91-84 points

The context and relevance of the issue, as well as a clear description of the study aim, are presented. The history of searches is discussed.

Methodology

58-53 points

With titles for each slide as well as bulleted sections to group relevant information as required, the content is well-organized. Excellent use of typeface, color, images, effects, and so on to improve readability and presenting content. The minimum length criterion of 10 slides/pages is reached.

Average Score

50-85%

40-38 points

More depth/information is required for the context and importance, otherwise the study detail will be unclear. There is no search history information supplied.

83-76 points

There is a review of important theoretical literature, however there is limited integration of research into problem-related ideas. The review is just partly focused and arranged. There is research that both supports and opposes. A summary of the material given is provided. The conclusion may or may not include a biblical integration.

52-49 points

The content is somewhat ordered, but there is no discernible organization. The use of typeface, color, graphics, effects, and so on may sometimes distract from the presenting substance. It is possible that the length criteria will not be reached.

Poor Quality

0-45%

37-1 points

The context and/or importance are lacking. There is no search history information supplied.

75-1 points

There has been an examination of relevant theoretical literature, but still no research concerning problem-related concepts has been synthesized. The review is just somewhat focused and organized. The provided overview of content does not include any supporting or opposing research. The conclusion has no scriptural references.

48-1 points

There is no logical or apparent organizational structure. There is no discernible logical sequence. The use of typeface, color, graphics, effects, and so on often detracts from the presenting substance. It is possible that the length criteria will not be reached.