Possible Development of Enterprise Rent-A-Car - Assignment Example

Insert name: Institution Enterprise Rent-A-Car Date: Enterprise Rent-A-Car Introduction The enterprise rent-a-car is a well known company in the United States and has expanded in major areas of UK. However, the company has one major objective of establishing a new Branch in North London area near Bedford, Wartford and other areas. This is to show that the company is still growing and it has had massive achievements over the past 50 years or so. It is well known as one of the largest companies in the world for renting cars. The ultimate aim of this project report is to evaluate the possibility of likelihood of coming up with a new branch in the north of London and the South-East region, a local area surrounded by Bedford, Watford, Stevenge and Aylesbury (Central Leighton Buzzard Council). The paper also examines the demand for hire vehicles in this area as well as looking for the possible sites where the branch can be located. It involves costing out the branch setting and its profitability as well as reaching the conclusion on the feasibility of the proposal. Note that all these are aimed at reaching the objectives of the company which are profitability, customer service, expansion of the vehicle fleet as well as employee development. Possible location for the site In order to come up with a good strategy that can meet all the objectives of the enterprise, it is important to consider certain factors concerning the location of the new branch of the company. The location of this site should be more suitable for the customers’ pick-up service permits and it should be able to reach the customers in a short period of the travel time. This means that this location should be near or at the residential accommodation areas they serve and at centers of business (Central Leighton Buzzard Council). Therefore, it should be on a busy road and with high visibility especially where the traffic queues to enhance the identification of the vehicle’s signage by the occupants. However, the branch location should not be near the industrial areas where there are preferably car body shops or other businesses. It is better if the branch is located near some head offices of national companies as well as other large employers nearby. This increases the chances of the vehicle hiring process thus increasing the company’s profitability. The branch should also contain a footprint of not less than 1000 square feet to ensure there is an ample space for the vehicle storage, low neighbors upset risks by the noise from the vehicles and enough for car washing facilities. There were a number of locations selected including Buckinghamshire, Bedford, Central Bedfordshire, Luton, Leighton Buzzard, Milton Keynes, Hertfordshire, Three Rivers, Chiltern, Northampton shire, Hertsmere among other locations. Note that almost all these locations contains up to 80 percent of the required specifications. Therefore, it is difficult to select one location out of all these (Quick, 2005). However, the best of all that had all the qualifications above including enough space that rules out most of the other places is the Leighton Buzzard. It is large enough as it covers about 5.2 kilometer squared and it proves to be large in comparison to the other locations around like the East Hertfordshire 002 that is about 4.5 square kilometers. This means that it has enough and ample space where the vehicles may be stored, washed and serviced. It is also suitable because the anticipated place where the vehicle storage may be situated is a bit far from the residence houses meaning that it cannot affect them in one way or the other. For example, the noise made by the vehicles cannot affect them since they are somehow far. Leighton Buzzard According to the research carried out on Leighton Buzzard, UNIT 10 Eden Way, LU7 4TZ is that the available space found is around 1,730 sq feet of light industry and this is the largest space that can be acquired in the area. Note that in the requirement the space was not to be less than 1000 sq ft and this is over that meaning that it is already enough for the establishment of the branch. The rent for the sq feet is about £7.51/tbd. The rent (pa): £12,992. This may seem high but when compared to the rates of other smaller spaces, there is no much difference. For example, the ratable value we found out was £10,750.00. The tenure of the area is leasehold. Then the most important thing that we noted is that immediately the processes above are achieved, there should be a completion of the legal formalities term is TBD. The other thing is that the available space contains a unit of the light industry. The Leighton Buzzard can make a good success for the enterprise rent a car because it has all the features that the company looks at in order to be successful (Office for National Statistics). First, the probability of getting customers in Leighton is very high. This is because the town contains some of the great offices thus the demand for vehicle hiring by the employees in these offices may be potential customers that may lead to making good profits. For example, it is located at the center of the Oxford to Cambridge Arc and there are open Universities like Cranfield University meaning that it has a great potential of making good profits due to the available customers-to-be like the university professor’s and some students. There are also other companies and industries in the region like the Alphatec, PRP architect, Saracen datastore Ltd among others. Most of the employees and managers of these companies can be potential customers to the enterprise (Quick, 2005). The town has some major hotels that usually hold prominent guests that can be good customers. Some of these hotels include the De Vere Venues Harben House, Bedford Swan hotel, Express by Holiday inn Luton, Airport, Hilton garden, Hilton Milton Keynes among others. There is also the Luton airport that is near Leighton Buzzard that is also able to offer market. Note that there is also a comprehensive car pick-up locations near Leighton Buzzard that can also make the business efficient. This include Milton Keynes which is at an approximate distance of 10km away, Luton 18 km, Bedford approximately 21 km Aylesbury approximately 32 km among other location (Office for National Statistics). This mostly helps when the customers require hiring the car for a one way usage where they can drop the car at another branch of the car-pick up location. However, the general public only accounts for 20 percent of the total business that the enterprise rent a car can acquire in Leighton Buzzard. Therefore, there is no doubt that the new anticipated location of the Enterprise-A-Car company branch is very okay and it may lead to massive profitability. However, it should be noted that the competition for car hiring is very high in Leighton Buzzard since there are various car hiring companies operating in this town like the Avis rent a car, long marsh, Budget car and van rental, Vernon van and car hire, Practical car and van rental, Green motion vehicle rental Ltd among others. Therefore, the competition in the town is not a joke and enterprise rent a car company need to come up with strong and very effective strategies that can make the company very competitive to the other companies (Bedfordshire County Council). There are various ways of reducing the risk of loosing the business to other competitors and here are some of them. First of all, the enterprise rent a car must make sure its services are the best by having the most comfortable and luxurious vehicles. It should operate at a relatively cheap hiring price for its vehicles to the customers. It should as well implement the use of offers whereby during the weekends, the customers are offered the vehicles at a low price than the normal weekday prices. The same should be implemented when the customers hire the vehicle for a long period like a month or more. The process of booking the vehicle should be as simple as possible and very efficient to impress the customers and attract more. The online booking should only employ the use of credit card and it should be as well slightly cheaper than the normal rates. The company must cater for the insurance processes so that the customers are not intervened by the traffic police. The employees at the enterprise rent a car must be good speakers with attractive communication skills to convince the customers to hire the vehicle with the company. The company must also have a good relationship with most dealers of cars and other things in town. This is because most of these dealers are able to give the company good business. Some of these dealers in Leighton Buzzard include B Jones Motor engineers, Brayklake cars, Camden Motors, Camden corporate fleet services, Key motor Co., Soulbury motor Co., Grovebury Cars Ltd, Freemans Yard among others (Joyce, 2011). Around 70% of these dealers are able to work hand in hand with the enterprise rent a ca especially if the company’s charges are relatively cheap. The same relationship should be build to the body shops operators in town who are also able to provide good business. These are as well many in Leighton Buzzard. These include Car medics Ltd, Bolam crash repairs, E J Osbourne, Fleetline Coachworks, J R Joyce among others. About 60% of these body shops are able to provide business for enterprise rent a car only if there is a good relationship with them. The relationship can come when most repairs and body parts are acquired in these same body shops. This is very important because the dealers and the body shops together with other organizational relationships can offer the enterprise rent a car up to 80 percent of business (Quick, 2005). This relationship between the dealers and the enterprise rent a car as well with the body shops can greatly work out through employing the cooperate account channel through the manger of the new branch who is responsible for keeping the relationship between the company and these other corporations. The manager can be responsible for the entire portfolio for the customer relationship over many locations as they operate as the main contact for the customers meaning that they need to have the proper, excellent customer skills and a complete knowledge of the channel. The new anticipated branch at the Leighton Buzzard must have insurance for all the vehicles because there are a number of road accidents that normally occur involving the vehicles in the area. Therefore, it is important to have all the vehicles insured so that if such an accident occurs then it can cater for everything (Central Leighton Buzzard Council). The number of people that who normally get accidents every months is around 20 though most of them come out with minor injuries while some of them might end up dying. Therefore, the precaution must be taken in order to improve the efficiency of the company’s performance. The Anticipated cost of the Branch Establishment The other thing that must be taken into consideration is the total cost that is required for complete establishment of the new branch of the Enterprise-A-Car Company in England. It should be noted that the new branch must begin with between 30 and 70 vehicles on rent. The objective of the branch should be to acquire up to 100 or more vehicles within the first 12 months. This means that in one year, it should have approximately 100 or more vehicles and in three yeas it should not have less than 320 vehicle fleet. When this is calculated quarterly it brings the number to approximately 35 vehicle fleet. This should be the main objective of the enterprise before it establishes the new branch. It should be able to meet these requirement through making profits because attaining 320 vehicles in a period of three years is not a joke, it must be worked for. This also depends on the strategies that would be laid down in marketing and making known the new enterprise branch. The cost of establishing the ‘build-out’ branch is approximately £100,000. This covers the branch’s length of lease and other requirements. The cost of the vehicle fleet is not included. To get a clear picture of the total cost involved on opening a new branch as far as the vehicles are concerned, it is important to take a look at the following table/sheet (Catford, 2011). The sheet contains a fiction branch that is used to help note the key areas that need to be examined when talking about the cost of establishing a branch. For example, when the new branch has 142 vehicles, with an 89 percent utilization of the vehicles then it is able to generate around £ 614.74 average revenue per vehicle. The other costs that need to be included are the customer allowances, travelling and entertainment expenses, vehicle insurance, fuel costs, tax and license, maintenance, the employee salaries, credit card charges, car preparation (drivers and cleaning), fleet lease costs among others. These are well seen on the below tables together with their anticipated costs. Note the average cost per vehicle is around £ 505.72 while the anticipated profit per vehicles £109.02. Therefore, there is no doubt that the company can do well especially when all the concepts are taken into consideration. The cost and all the expenses that are experienced at opening the new branch are divided into two major category. Direct Cost The direct cost refers to the type of expense which os compulsory and must be met for the process of any organization (University of Wyoming, 2011). For example,in any company this can be machinery cost, labour cost, material and so on. However, the direct cost of Enterprise Rent a Car include the employees salaries, the cars, fuel for the cars, the electricity and gas bills, insurance, payment of tax, rent for the space where the vehicles are be kept and depreceiation. Note that for the enterprise rent a car company to established a new branch, it must be in a position to cater for these compulsory costs. Indirect cost The indirect cost refers to the type of expense whereby the expense is not fixed meaning that it is not a must for these expenses to be met for the company to run. In any company, these costs may be such as security, supervision, advertisement and so on. The indirect cost of Enterprise Rent a Car include security, maintenance cost, car wash, office equipment, promotion activities and advertisement. The Marketing Budget Marketing refers to a positive long-term relationship between the seller and the consumer whereby both parties are satisfied and meet their needs. In the Enterprise Rent a Car, the marketing strategy plays a very crucial role because it is the main path in building a strong link to the customers together with the local business (University of Wyoming, (2011). A business cannot operate in a place where it has enemies and without any relationship with the local business. The coordination of such kind is very crucial to enhance business operation. This is the reason as to marketing idea is aimed at earning higher profit. In order to achieve the marketing goal, it is important to focus on some communication tools of marketing in order to enhance the communication with the target market. Conclusion In order for the enterprise rent a car company to establish the new branch, it must identify the best location suitable for the establishment of the new branch. This must meet certain requirements mainly being making profit because this is the key factor of running any business. Therefore, the area must be located at a place with potential customers where there are some national offices and other business companies though not related to enterprise-rent a car. The best location that meets these requirements is Leighton Buzzard according to research done. The next step was to come up with the budget that can meet all the requirements needed for the new branch. Bibliography Bedfordshire County Council, (2010) Urban Area Profile for Leighton. UK Bedfordshire Library service Leighton Buzzard Timeline, 2011 Central Leighton Buzzard Council, Population for Central Leighton Buzzard. England J.R. Joyce, 2011. Car Body repairs and Body shops in the Leighton Buzzard area. Byyourcar.co.uk Kevin Quick (2005). Leighton-Linslade Past Times Nick Catford, (2011). Disused stations: Leighton Buzzard. England. Office for National Statistics, (2001) Census Parish Headcourts for Leighton-Linslade. UK University of Wyoming, (2011). Competition tips; understanding direct and indirect Cost groups. Read More