Case Analysis: Enterprise Rent-A-Car Case Study: Enterprise Rent-A-Car Introduction Case studies describe the real-life situations that managers face in their day-to-day work of running businesses. A case analyst plays the role of a consultant, offering business expertise in a professional, objective manner. The job of the analyst is to examine the global and local business environments and create workable strategies to respond to the demands imposed on a company by these environments. This paper analyses the case of Enterprise Rent-a-Car, a leading internal car rental company. The author will undertake the analysis at two levels: global and local.
Based on the challenges and opportunities the two environments pose and offer, respectively, the author will proceed to offer practical strategies the company can implement to ensure its success in years to come. Macro-environmental Analysis The global car rental industry is worth over 42 billion U. S. dollars (Bouquet & OConnell, 2014). The industry is dominated by U. S.-based companies that t include Enterprise Holdings, Hertz, Avis Budget, Advantage Rent-A-Car and Fox Rent-A-Car. Enterprise Rent-A-Car is a part of the Enterprise Holdings Group. Other companies in the Group include Alamo Rent-A-Car and National Car Rental.
Of all these companies, Enterprise Holdings Group leads by cars in service in the U. S., the number of U. S. branches and revenue earned from U. S. operations in 2013. While the Group made $11.5 billion, its closest rival, Hertz had revenue of $5.2 billion in the same year. Clearly, Enterprise is a global market leader in the industry. The company should take advantage of its worldwide leadership to venture into more and more markets around the world. A look at the firm’s website reveals that the company already has operations in close to fifty countries.
Other than North America, the rest of the countries are based in Europe. In order to grow its profitability, the firm should consider venturing into both emerging and established markets in South America, Africa and Asia. Some of the most attractive and promising emerging markets are found in Asia and include Singapore, Hong Kong, Bangkok and China. Brazil, by contrast, is a big established market. However, even as the company seeks to expand globally, it must be aware of the political upheavals around the world.
The firm has much control over them, even though such upheavals are likely to impact the company significantly. This is especially the case if the company operates in a particular country that experiences political instability. An example is the recent instability in the Arab world that saw leaders overthrown and imprisoned while others were killed (Bouquet & OConnell, 2014). Those events affected negatively many businesses in the Arab world, both local and multinational. Perhaps the above point explains why Enterprise has concentrated its operations in North America and Europe.
The two continents are not only the richest, but also the most stable politically. However, the company may want to appreciate that many countries in Africa, Asia and South America are politically stable. In fact, many multinational corporations, including airlines (Bouquet & OConnell, 2014), operate in these countries. Besides, it has been said that Africa has one of the fastest growing middle classes in the world (Bouquet & OConnell, 2014). This group, with its consumption habits, would provide a ready market for Enterprise’s services.
Micro-environmental Analysis Back in the U. S. where the company has its headquarters, Enterprise identifies two sets of forces that have impacts on its success: direct and indirect forces(Turner & Mujtaba, 2011). Direct forces are those that the company has significant control over and include the company’s customers and competitors. Indirect forces, on the other hand, are those that the company has little control over. They include the economy and global developments. We now analyze each of these factors in some detail. Customers Enterprise provides a variety of services, each of which targets a different group of customers(Turner & Mujtaba, 2011).
The services include replacement, retail rental, business rental and fleet management. Replacement targets customers who need a temporary car while theirs undergo repairs following an accident. The service is paid for by the client’s respective insurance company. The retail rental service targets those people who cannot afford a car, but want to enjoy the benefits of possessing a private automobile. The business rental targets those firms and organizations that want to portray an image of success without spending heavily on their fleet.
Finally, fleet management presents to business customers a comprehensive package of services that include registration and maintenance of vehicles, fuel cards and mileage monitoring. Some of the products in the company’s product mix are unsustainable in the long term. The replacement service, in particular, is prone to fluctuations in revenue brought about by changes in the policies of insurance companies. For instance, if an insurance firm reduces the amount of money paid for a rented car, the move results in less revenue earned by enterprise. Enterprise needs to find ways to shield itself from the policy changes of insurance companies.
Moreover, whereas Enterprise claims that its fleet management package is unique, there is no guarantee that its rivals will one day introduce comprehensive fleet management packages. The company must explore ways to ready for such an eventuality. Competitors Enterprise recognizes two major rivals: Avis Car Rental and Hertz Car Rental(Turner & Mujtaba, 2011). While Enterprise’s success depends on the satisfaction of its customers, Avis has followed suit. In fact, Avis has committed itself to customer satisfaction full scale. For instance, Avis has put in place a Customer Loyalty Program for repeat renters and developed smartphone applications for its products.
Hertz, on the other hand, has over forty more years of experience than Enterprise. Clearly, Enterprise will have to take measures to stay ahead of the completion in years to come. Economy Since the economic downturn of 2008-2009 revenues from retail rental have declined as consumers try to cut unnecessary spending in order to cope with the cruel economic situation. Rather than sit back and lament, Enterprise seized the opportunity to innovate.
The result was the introduction of weekend car rental in order to net in the recreational renter. The move is commendable. Global Events On the surface, the company has very little (if any) control over what happens on a global scale but has effects on the company locally. However, as is the norm, Enterprise takes the challenge and turns it into anopportunity. For example, the company took advantage of the persistent rises in global oil prices to introduce hybrid cars into its fleet. As a result, the company’s fleet of hybrid and other fuel efficient cars is the largest in the country.
Value Creation Overall, the company’s solution to all the challenges presents by both the internal and external environments is to create value(Turner & Mujtaba, 2011). First, the company seeks to create value to the customer by decentralizing decision-making in the company. Doing so allows the manager of the lowest branch to arrive at decisions speedily such that the needs of the customer are met. Secondly, the company creates value to its employees by giving them equal opportunity for promotion. Thirdly, the company only employs people whose values are consistent with the company’s.
Thirdly, the values of the founder of Enterprise, Jack Taylor, have been incorporated into the firm. Other than growth and profitability, Taylor values people and their well-being. Clearly, the approach to creating value for everyone has served Enterprise well, propelling it into a global leader in car rentals. The firm will do well to uphold value creation and inculcate those values into present and future employees. By doing so, the enterprise will create an environment in which every person who interacts with the company winsand ensure its continued growth.
Conclusion Enterprise is the world leader in the business of car rental. Since its inception in 10957, the company’s success has been hinged on a simple philosophy: make the customer happy and the rest, including profits, will follow. Even so, there are many measures the company can take to ensure its continued growth and profits. These measures are discussed in the preceding paragraphs. For emphasis, however, the firm should consider expanding into other countries outside North America and Europe, after the manner of its rival Avis that operates in a hundred and fifty countries around the world.
In addition, the company should diversify its product offering and further differentiate existing products from those of its competitors. If implemented, these recommendations will put the Enterprise on a solid growth path for years to come. References Bouquet, A., & OConnell, J. (2014). Dynamic Packaging Spells the End of European Charter Airlines. Journal of Vacational Marketing, 13-21. Turner, P. R., & Mujtaba, B. (2011). Case 1: Enterprise Rent-A-Car - A Market-Driven Company. Fort Lauderdale: Nova Southern University. A. GRADING RUBRICS Grading Rubric A – MKT 5017: Customer Value Case Analysis 1 (CC1) Performance Criteria Inadequate 0 Developing 17.5 Proficient 20 Very Good 22.5 Exemplary 25 Scores Macroenvironmental Analysis Does not provide an analysis of global business environment Provides a partial analysis of global business environment Provides an analysis of global business environment Provides a comprehensive analysis of global business environment Provides a well written, comprehensive and insightful analysis of global business environment Microenvironmental analysis Does not provide an analysis of market environment Provides a partial analysis of market environment Provides an analysis of market environment Provides a comprehensive analysis of market environment Provides a well written, comprehensive and insightful analysis of market environment Total (50 points max. )