Running Head: ENTERPRISE RENT A CAR 1
ENTERPRISE RENT A CAR
Running Head: ENTERPRISE RENT A CAR 2
Table of Contents
Introduction......................................................................................................................................3
Key Issues........................................................................................................................................3
SWOT Analysis...............................................................................................................................4
Strengths......................................................................................................................................4
Weaknesses..................................................................................................................................4
Opportunities...............................................................................................................................5
Threats.........................................................................................................................................5
Porters Five forces Model................................................................................................................6
Bargaining power of buyers:.......................................................................................................6
Bargaining power of supplier:.....................................................................................................6
The threat of substitute:...............................................................................................................7
The threat of new entrance:.........................................................................................................7
Competitive Rivalry:...................................................................................................................7
Alternatives......................................................................................................................................8
Explore international Market.......................................................................................................8
Enter into new Market Segment..................................................................................................8
Increase use of technology...........................................................................................................9
Recommendations............................................................................................................................9
Running Head: ENTERPRISE RENT A CAR 3
Introduction
Enterprise Rent a car was among the largest rental car service in United States. The
enterprise was held for the ownership of having an ownership of rental car market. In 2007
Enterprise was leading in North America. The ride sharing concept was prevailing and the rent a
car was losing its demand. This case discuss the issues of marketing strategies and various ways
to deal with these issues to stay competitive in the market.
Key Issues
Due to decrease in demand Company started to look for the issues and after research three issues
were on surface. In service business the satisfaction level of consumer is important and the
overall customer satisfaction along with that it help the company to increase the consumer
loyalty because it will allow consumers to continue with rent a car services. Due to millennial
behavior and interest in car sharing services and developing consumer loyalty was important
because these changing trends would affect the consumers. The decreasing sales of vehicles left
the enterprise with inventory on their book. Competition in the industry was increased because of
the ridesharing concept i.e. Uber, Lyft and Turo was evolving in the market. The focus of all the
service providers was on consumer service and consumers satisfaction because in the end
company having loyal consumers will rule the industry. The research concluded that there are
three potential things that enterprise focus i.e. attitude of the employees, transaction speed and
cleanliness of vehicle (Busse, 2012). But the survey results shows that there were number of
complaints about employee’s behavior, cleanliness of vehicle, and wait time. The rate of satisfied
customers was low and these poor ratings affect the business returns.
Running Head: ENTERPRISE RENT A CAR 4
SWOT Analysis
To understand the company’s internal and external position, a detailed SWOT analysis
has been carried out, which is explained as below
Strengths
The company has offers its customers a unique pick up and drop off service, including
different flexible cancellation policies.
The company has the highest revenue in the United States’ car rental industry. Being a
top performer also generates a confidence in existing and potential customers.
The company has a wide access to locations, with almost 5500 company’s locations
which are directly accessible to 90% of the populated areas.
Enterprise is ranked as the top employer of fresh graduates, thereby recruiting the top and
new talent from the market.
Weaknesses
The company does not provide pre-pay incentives to its customers as compared to its
competitors just like its competitor i.e. Budget offers incentives for its customers to help
in paying rentals and keep the commitment towards reservations.
Car sharing business is a great and potential idea nowadays but the company is not
providing such services like other competitor i.e. ZipCar, which has an access to 170
locations.
Running Head: ENTERPRISE RENT A CAR 5
The company has a lower international market presence (83 countries) as compared to
other competitors like ZipCar with its market presence in 156 countries.
Opportunities
There is an opportunity to tap the under-age driver market, whereby the company can
offer its services by charging less from the potential customers.
The company can gain a wider market share by utilizing the pre pay discount options,
thereby providing an incentive for the customers to make an upfront payment.
There is an opportunity to expand the business in a car sharing business.
As the company is famous for its highest level of customer services, so it has the
opportunity to exploit the live chat method n understanding the customer needs in a better
way.
Threats
Add-ons are becoming towards the company’s business as rental companies are making
almost 10% of the revenues through add-ons.
Different federal impositions are putting the threat towards the business, as the laws
require the company to fix such recalls before renting out a car.
The car sharing market is becoming a threat towards the car rental market and its
profitability.
Running Head: ENTERPRISE RENT A CAR 6
Porters Five forces Model
Bargaining power of buyers:
In the car rental industry, the bargaining power of customers is a bit higher as compared
to the other industries because it is a service provider industry. The bargaining power is high
because there are so many competitors in this industry that are providing the same services and
competing based on services. As customers get more and more options they get the power to
choose among them and bargain on prices and quality of services. In the U.S rent car industry,
there are so many organizations and services providers that left most power and influence to the
customer. In that type of industry, customer has more power to influence prices, so there is high
bargaining power of customer for renting car enterprises.
Bargaining power of supplier:
The bargaining power of suppliers is quite low in the rental car industry, as the main
supplier in this industry are dealers and especially car manufacturers. The suppliers such as the
car manufacturer’s industry are segregated because there is no barrier to entry for the foreign car
manufacturers and attractiveness of the market. The foreign manufacturer can penetrate and in
this industry without or with minimum constraints, so there is high competition in the car
manufacturing industry that left power with customer industry such as car rental industry. So
more options, agreements are available to the rental car market that reduces the bargaining power
of suppliers.
The threat of substitute:
Running Head: ENTERPRISE RENT A CAR 7
The threat of substitutes is high in this market because there are more even low-cost and
economic options for customers for traveling. But there are various alternative modes of
transportation offered to consumers that are more cost-effective than the rent a car service
business, the ease, and comfort that the rent a car provides is incomparable. But on the other
hand, because the living standard of people is improving they most focus on comfort
convenience rather than economic value while selecting among the options available to them.
The threat of new entrance:
The threat of new entrants is higher in this market that is the reason that put the cap on
the earning, as well as the profitability of a company, such as rent a car enterprise. So the
company need to maintain their prices or should increase funding as well the investment to
increase barrier to the new entrance that discourages new competitors to enter the market.
Competitive Rivalry:
The competitive rivalry is also high in this market because the market is highly
fragmented, there are so many competitors in the market varying in size from much smaller to
the bigger in size of operations, with the diversified options to the customers. So in this industry,
there is a high cost of setting because there is need to buy cars and so on that require high fixed
cost along with high bargaining power of customer lead company such as enterprise rent a car to
lower their prices to service and compete in this industry.
Running Head: ENTERPRISE RENT A CAR 8
Alternatives
Explore international Market
Enterprise experienced enough success in its local market along with international
market. Enterprise should enter into international markets to increase the success ratio in the
company. The recent entry of enterprise into Canadian market was successful. Enterprise should
explore the international markets to increase the consumer base and achieve the market share.
Enter into new Market Segment
Enterprise is stuck in between rent a car service, whereas the company stated on their
website to enter into new segment i.e. fleet services, Rental trucks and car sales. But there was
lack of airports that hinder enterprise to provide service to the consumers. Nut now its time for
enterprise to enter into new segments.
Increase use of technology
Millennial generation is attracted by technology. Enterprise should increase the use of
technology in its service to attract new generation and retain the competition in the market.
Enterprise should use new technology to provide quality service to the consumers and prevail the
green activities.
Recommendations
It is recommended for enterprise use technology to increase the consumer base and enter
into new segments to meet the revenue targets. Along with that it is important for enterprise to
Running Head: ENTERPRISE RENT A CAR 9
improve the consumer services. It is high time for Enterprise to enter into new segments to
increase the satisfaction level of consumers. Competition in the industry is increasing and
enterprise need to work of marketing techniques to attract the consumers.
