Company Analysis: Enterprise Rent-A-Car
History
Enterprise Rent-A-Car is an American company renting cars. It was founded by Jack Taylor in 1957 at St. Louis, Missouri, U.S, as an executive leasing company. It is headquartered in Clayton, Missouri, United States and operates in the car rental industry. Enterprise Rent-A-Car is Enterprise Holdings, Inc.’s subsidiary. The company was originally named Executive Leasing Company before being changed to Enterprise Rent-A-Car in 1969. Enterprise Rent-A-Car acquired the Vanguard Automotive Group in 2007. Apart from renting cars and commercial trucks, Enterprise Rent-A-Car manages commercial fleet and sells used cars. It is the largest company renting cars in the U.S with presence in over 5,000 locations
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Enterprise Rent-A-Car encountered poor performance and low sales during the unstable economic period. More so, the company has failed to address the safety of its customers. Between 2006 and 2008, the company was accused of purchasing over 50,000 Buick LaCrosses, Chevrolet Impalas and Chevrolet Cobalt cars lacking the side-curtain airbags to lower the costs and increase the profits. The omission of the side-airbags is a violation of customers' safety measures. It was unethical for the company to be less concerned about the safety of its customers. This controversy had a negative impact on the revenues of the Enterprise Rent-A-Car company and adversely affected the reputation built over the overs because the customers were concerned about their safety. Enterprise Rent-A-Car has also been accused of paying the employees low salaries compared to the …show more content…
Nevertheless, the company should behave in an ethical manner and avoid all forms of discriminations in the workplace.
Porter's Five Forces
The Porter's five forces will help the Enterprise Rent-A-Car to identify the competition in the car rental industry to beat rivals. The Porter's five forces evaluate the threat of new entrants, the bargaining power of buyers, the bargaining power of the suppliers, the threat of substitute products as well as existing competition.
The Threat of the Substitute
There are several substitute products in the car rental industry such as personal cars and public transport that the customers use to meet their leisure and business demands. Technological advancements such as video conferencing may completely discourage the need to travel. It means that Enterprise Rent-A-Car faces a high threat of substitutes in the market (Kotler & Armstrong, 2014).
The Bargaining Power of
This paper will focus on the future of the U.S. Automobile industry as the United States recovers from the worst recession we have experienced in the past 75 years. I will provide information on the following topics pertaining to the U.S. automobile industry:
As strategy consultants of McCormick & Associates, we use Porters Five Forces Model as a framework when making a qualitative evaluation of a firm's strategic position (Appendix 1.2). These five forces determine the competitive intensity and therefore attractiveness of a market. These forces affect the ability of a company to serve its customers and make a profit. A change in any of the forces normally requires a company to re-assess the market place.
Porter’s Five Forces is defined as threats of new entrants, bargaining power of suppliers, power of buyers, the threat of substitutes and rivalry among existing competitors. New entrants into the industry aim to gain market share from rivals, so the intensity of competition may require to make changes on current strategy of marketing to maintain existing market share. The bargaining power of suppliers is one of the threats on the industry where price changes or product quality by suppliers can impact the profitability. Therefore, it is important for the companies to keep alternate suppliers or a contract to ensure prices, quality and quantity of the product so to avoid the company's supply from falling behind. The power of buyers can force the companies to lower the prices and offer different type products and service. Buyer can threaten the company with the competitors which may cause a negative impact on the bottom line to the companies. Thus, it is important to create a loyalty market share to avoid this threat. The threat of substitutes increases when another industry offers a similar product or services to customers within the same industry with a lower price. In this case, the industry profitability sinks since the product is available at a better price. This threat forces most competitors to price match or better performance. Rivalry among existing competitors ...
The automaker Chevrolet has experienced much technological change in the past 104 years. Although it, Chevrolet, is a French name, it is an American car company. It was primarily founded by William C, Durant, along with Louis Chevrolet, on November 3, 1911. It wasn’t until six years of existence that it became part of the Automotive Division at General Motors, otherwise known as GM. Durant had previously tried to buy out Ford and failed. This caused him to resort to co-founding Chevrolet. The first car sold by the company commonly called Chevy was the Classic Six, at the price of 2,500 dollars. Chevy started producing these vehicles in 1912-1913. The car’s value may seem like pocket change but that is the common day equivalent of roughly 57,000
According to the authors, De Wit & Meyer (2007), this can be a dangerous move and quite possibly lead to bankruptcy. This was noted as a bold endeavor with a substantial amount of risk. Tom Folliard, the CEO of CarMax, uses innovation to redirect the current trend of standard practices, (De Wit, & Meyer, 2010). Through expansion, CarMax provided a wide variety of automotive brands to their customers, not limiting their sales to only a few makes and models, (De Wit, & Meyer, 2010).
Hertz operates its car rental business through various brands in 145 different countries. Hertz was named, for the thirteenth time, by Travel + Leisure readers as the Best Car Rental Agency (Hertz Annual Report, 2013). Hertz is one of the top companies in the car rental industry by obtaining 18.6% of the market share (IBISWorld, 2014). In addition to the leading position that Hertz has built within its industry, the focus was to add more value offerings while recreating the experience in car rentals across the globe. Hertz employs both growth and competitive strategies to sustain competitiveness.
Porter’s Five Forces Model is a widely used tool by strategists to develop a competitive analysis, from which they will be able to develop strategies (David, 2013). When looking at Delta, it would be beneficial to look at the external forces this will help top management develop strategies to combat external factors, threats from external factors could potentially harm Delta. According to Porter, the nature of competitiveness in a given industry can be viewed as a composite of five forces: 1) Rivalry among competing firms, 2) Potential development of new competitors, 3) Potential development of substitute products, 4) Bargaining power of suppliers, 5) Bargaining power of
• Differentiated themselves from the typical used car lot by introducing service departments and their own financing arm. CarMax Auto Finance income increased 14% to $300M totaling $5.93B in
They have over 11,555 worldwide rental car locations and are at the point where they can cover their short-term liabilities with cash flow from their operations. Hertz’s adjusted earnings per share increased 77.1% meaning that their market value has increased. Their revenues increased by 34%, while they had a cumulative cost savings of $3 billion (Hertz Annual Report, 2013). This demonstrates that Hertz has the financial resources and the access to markets that they need. Hertz has successfully integrated their ExpressRent kiosks in more than 48 markets and their eReturn option for Hertz Gold loyalty program members, in which they have the ability to choose the Hertz ‘Fuel Purchase Value Option’ that lets them automatically buy a full tank at the start of the rental, so they can turn in the car with the gas at any level and not have to worry about filling up on the way to the
Porter has identified five competitive forces that shape every industry and every market. These forces determine the intensity of competition and hence the profitability and attractiveness of an industry. The objective of corporate strategy should be to modify these competitive forces in a way that improves the position of the organization. Porters model supports analysis of the driving forces in an industry. Based on the information derived from the Five Forces Analysis, management can decide how to influence or to exploit particular characteristics of their industry.
Porter’s competitive forces model includes five forces that need to be analysed. These forces include the intensity of rivalry from traditional competitors, threat of new market entrants, threat of substitute products and services, bargaining power of customers and bargaining power of suppliers (Laudon & Laudon, 2007). See diagram below;
There are many different automobile companies providing buyers with many styles of cars, trucks, SUVs, and motorcycles. Toronto Star January 14, 2005 present ways to approach the automotive buying process. There are many different surveys, crash reports, and rating systems comparing different companies and their vehicles. Things you should look for when reading these published articles are who conducted the study? Who paid for it? Who gains from it? Who loses? These are all things to keep eye on as some automotive companies will run their own surveys making their products seem overpowering against the competition. Some prove their products are safer then the competition where the competition has been proven time and time again to make that survey seem inaccurate.
The Porter five forces model (see Appendix 1) as an external analysis tool was established by Michael E. Porter and firstly announced in his book “Competitive Strategy: Techniques for Analyzing Industries and Competitors” in 1980 . The main idea of the Porter five forces concept is that the attractiveness of a market depends on the characteristic of the five competitive forces that have an impact on a company (see Appendix 2).
These five forces include: bargaining power of suppliers, bargaining power of consumers, competitive rivalry, threat of substitution, threat of new entry. The bargaining power of suppliers, threat of substitutes, and threat of new entries are low for AVON, while the bargaining power of consumers and competitive rivalry is high. The beauty industry is less impacted by a recession; Brazil being a prime example. Competition is competitive in all markets both domestic and foreign. AVON entered the Brazilian market before the competition, but is now battle grounds for entry between L’Oréal and Sephora. AVON is the number one company for direct selling method and marketing (AVON, 2016). Porter’s five forces are similar between domestic and foreign
Porter’s five forces is a framework for analyzing an industry and business strategy development. It looks at forces that determine the competitive intensity of an industry and hence the overall attractiveness of that industry. The configuration of the five forces differs by industry. Understanding the competitive forces and their underlying causes reveals the roots of an industry’s current profitability while providing a framework for anticipating and influencing competition over time.