Business Differentiation: What Makes a Select Few Leasing Companies Consistently Outperform Their Peers?
Executive Summary
The equipment leasing industry is at a crossroads. Consolidation, increased competition, excess liquidity, commoditization, shrinking profit margins and greater regulatory scrutiny have conspired to make these trying times. How can you succeed in this environment?
There are no easy answers of course. Observing your competition, however, can provide helpful insights. More specifically, assessing how industry leaders navigate turbulent markets in both weak and strong economies can offer valuable lessons.
The research findings in this Study clearly indicate that there are a group of lessors Ð identified as the "Outperformers" - who consistently outperform their peers and, while they may not have all the answers, seem to operate at a higher level. Their superior financial performance reflects a longer-term strategic view that emphasizes:
- organic growth
- customer centricity
- a partnership with their workforce
- operational creativity
- an external focus that foments deep ties with stakeholders
The Outperformers expand revenues more quickly, control costs more effectively and manage risk better than their peers. Outperformers are generally better equipped than their competitors at pulling the appropriate financial levers to optimize financial performance.
Financially, the Outperformers exceed industry averages. Over the past five years, their average operating return on equity was 22.5 percent and their compound annual growth rate in assets was 5.2 percent. In contrast, their peers achieved an average operating return on equity of 12.5 percent and compound annual growth rate in assets of 3.5 percent.
The characteristics and perspectives of the Outperformers that differentiate them from the rest of the pack can help provide useful guidance, if not a roadmap, for persevering in the years ahead.
Table of Contents:
- 1 EXECUTIVE SUMMARY
- 2 INTRODUCTION
- 4 FINANCIAL ANALYSIS
- 4 1.1 - Return on Equity
- 8 1.2 - Financial Levers Utilized by Outperformers
- 10 1.3 - Does Business Model Affect Performance?
- 13 THE DIFFERENTIATION FACTORS
- 13 2.1 - Overview
- 14 2.2 - Differentiation Factor 1: Industry Pressures
- 21 2.3 - Differentiation Factor 2: Business Capabilities
- 24 2.4 - Differentiation Factor 3: Leadership Perspectives
- 26 2.5 - The Three Differentiation Factors Combined: Top of Mind Issues
- 29 2.6 - Widest Differences between Outperformers and the Others
- 30 2.7 - Common Business Capabilities
- 32 MARKET SHARE ANALYSIS
- 32 3.1 - Compound Annual Growth Rate
- 33 3.2 - Outperformers’ Formula For Success
- 34 OPERATING MODELS
- 34 4.1 - Overview
- 34 4.2 - Operating Model of Outperformers
- 36 4.3 - Relationships with Certain Stakeholders
- 38 WHAT WOULD AN OUTPERFORMER RECOMMEND?
- 38 5.1 - Roadmap for the Future
- 40 5.2 - A Final Note: Questions to Ponder
- 41 EPILOGUE
- 42 APPENDIX
- 42 Appendix A - Methodology
- 43 Appendix B - Public Company Disclaimer
- 43 Appendix C - Endnotes
- About Accenture