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Enterprise rent a car analysis
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Revenue Management Saves National Car Rental by M.K Geraghty and Ernest Johnson
In the January/February 1997 issue of INTERFACES magazine, M.K. Geraghty and Ernest Johnson were presented as finalists of the Franz A. Edelman award for their presentation on a state-of-the-art Revenue Management System that would turn a huge money losing rental car company, National Rental Car, into a profitable business within two years.
In 1993, General Motors took a $744 million dollar charge against earnings related to its ownership of National Car Rental Systems. National was facing liquidation and a layoff of more than 7,500 people unless it could post a profit in the near term and prove that the car rental business was worth saving.
Before National began using the Revenue Management System, it faced the same issues as its competitors. The car rental industry relied heavily on corporate customers that paid fixed rates and only traveled during the week leaving most rental car companies with large fleets of idol cars on the weekends. Whereas the competition was making adjustments to try and capture leisure weekend customers to generate more revenue, National remained solely focused on the business renters missing out on potential opportunities. National also planned its fleet in one-year cycles as opposed to shorter cycles more often, which led to failure in meeting changing customer demand.
The bottom line was that National did not have the proper communication tools in place to be able to react to the industry’s changing environment. National did not pursue leisure weekend customers even for break-even profit, was not able to adjust for increased or decreased car demand when planning its car fleet and had a tremendous number of missed opportunities because of a lack of supply in areas that had high demand. National was also faced with the fact that their competitors were much more nimble at making short-term pricing changes ultimately increasing their competitor’s profitability.
National quickly put together a team to assess and experiment on processes that its competitors were already implementing. Realizing that they could also raise prices and increase revenue and not erode customer satisfaction, National brought in the help of turn-around specialists to understand National’s business, quantify revenue potential, recommend organizational structure and staffing requirements, estimate costs, provide cost/benefit analysis and prioritize an implementation plan.
Using the information gained from the evaluation, National began a revenue management system that would centralize their capacity management, pricing and reservations control.
The seventh largest major domestic airline in the United States (US), Southwest Airlines, is commonly known or referred to as a low-cost carrier. Southwest Airlines is the only major airline that provides short-haul, point-to-point service in the United States. In fact it was the first airline of its type ever started; it has become the archetypical low-cost airline. The idea has proven itself so well, that other start-up airlines have based their company strategies upon the basics of Southwest. Today, there are two other low-cost air carriers (the other two airlines are considered national airlines and not major airlines) that are actively and aggressively competing with Southwest Airlines for business and profit turning. The three American low-cost air carriers are currently posting profits even in light of the US economy’s current state of affairs, with Southwest Airlines first, JetBlue second, and Air Tran third, in profits. How is this possible when the major six airlines are reporting losses of millions and millions of dollars each quarter? The answer to this question begins about 30 years ago.
Senior Management of PepsiCo is evaluating the potential acquisition of two companies – Carts of Colorado and California Pizza Kitchen – in order to expand the company’s restaurant business. If indeed PepsiCo decides to pursue the acquisition of one or both, they must decide how to align each of these business units in its historically decentralized management approach and how to forge relationships between the acquired business units and existing business units. In their evaluation, Senior Management is faced with the question of whether the necessary capital investment in order to purchase one or both of the businesses can be profitable for each of the acquired business units, but must also take into consideration that the additional business units will not hinder the profitability of the existing business units.
Despite the growth in the market, Qantas International’s market share has been falling over the past 10years, from 34% in FY02 to 16% in FY13. The entry of Virgin Australia in 2000 in part explains this, however Virgin’s growth also coincided with the demise of Ansett in 2001 “… Virgin Blue will initially increase capacity on existing routes while evaluating what c...
...Bank’s Chairman set-forth guidelines to be met for the new focus of the division. Part of the plan involves reaching out to employees and steering new behaviors towards the new visions is clearly a good way towards opening the lines of communication between staff and customers. Also, rewarding employees fairly and equitably will help aid NOC in their redesign efforts. As outlined throughout the paper NCO has their work cut-out for them, but the plan highlights on the major areas that need revamping.
In conclusion, for Amtrak to increase its profits and build its brand, it needs effective communications and cost management strategies, deliver high-quality cost effective product/services and improve the workforce with training and development. The new strategy might be expensive in the beginning, but profitable in long run, as it would increase their customer base and market value
...For a firm to be economically efficient, profit must equal marginal cost and that must be equal to the minimum ATC (average total cost). Since oligopolies produce profits that are much greater than the average total cost these firms are not productively efficient despite their sustainable economic profits year by year. As shown in the previous charts you can see that even though the revenue is increasing yearly, the expenses also follow that trend. An action they can approach can be privatization to some extent with some of their employees. "Simply stated, CP is paying its employees 6% more per [revenue ton mile] while handing proportionally 20% fewer carloads," (Deveau, 2012). Aggressiveness with pricing was also touched upon. Pricing below the short run profit maximizing level to possibly reinforce prices closer to the marginal cost and minimum average total cost.
However, the biggest problem was to figure a way to resolve its failure towards meeting their target volume/sales by reconstructing their distribution channel to successfully push Coracle in the residential market to end consumers.
Soman,D & Marand, S (2009). Managing Customer Value: One Stage at a Time.: World Scientific Publishing. p9-14.
Their chapter 11 petition was filed in the federal court in Manhattan, New York and “according to GM 's bankruptcy filing, the company has assets of $82.3 billion, and liabilities of $172.81 billion. That would make GM the fourth largest U.S. bankruptcy on record, according to Bankruptcydata.com” (CNN Money). Just to put into prospective how gargantuan this company was at the time, “until 2008, when it was overtaken by Toyota, GM was the world 's biggest carmaker, producing well over 9m cars and trucks a year in 34 different countries. It has 463 subsidiaries and employs 234,500 people, 91,000 of them in America, where it also provides health-care and pension benefits for 493,000 retired workers. In America alone, it spends $50 billion a year buying parts and services from a network of 11,500 vendors and pays $476m in salaries each month”(The Economist), so it is easy to understand by looking at that data that the fallout of this company failing would have been astronomical on the already depressed economy.
There are different types of revenue management, some examples include fare class yield management, Heuristic bid price, Displacement Adjusted Virtual Nesting and probabilistic Bid Price.
James, W. B., & Graham, B. (2004). Strategic change in the face of success? Harley-Davidson, Inc. Strategic Change, 13(4), 205.
The hotel industry performs within a saturated market, driven by customer loyalty and competitive pricing to stand-out. This competitive nature makes it extremely important to capitalise on strengths while improving on
Industry profitability: subpar to above average; fuel and maintenance costs, a growing senior staff division, unionisation of employees and competitive price wars are margins concerns.
Companies all over the world varies but yet shares a common challenge, that is to solve problem not only effectively and efficiently but also creatively. The P-O-L-C framework which stands for Planning, Organising, Leading and Controlling plays a major role in both the company’s survivability and success. The SWOT analysis looks at both internal and external factors that can affect the Starbucks’s performance. The purpose of this report is to define and analyse how Starbucks respond and should have respond to the change of its external environment on the cofee market,This report will also identify and disscuss how The P-O-L-C framework and can help starbucks to compete and reduce the loss of their failing peformance in the Australian market and how SWOT analysis helps to define some externalities that can be a threat to Starbucks.
I have selected Mc Donald’s as an organization on which I would be making this report. I would be discussing Mc Donald’s competitive advantages over other organizations by applying a Resource based view of strategy. This report would highlight the resources and capabilities Mc Donald’s has and how can it utilize those resources to gain competitive advantage over its rivals.