Strategy and Competition: EasyCar - Case Study Example

easyCar: Strategy and Competition Problem Definition In essence, the problems for easyCar have three aspects i.e. business, technological and legal. The solutions therefore, come from three sides. The business problems of size of the competition as well as easyCars restricted locations make it difficult for the company to gain a sizeable market share. Their position as a car rental company makes it difficult in legal terms to present themselves as a transport services company and finally, their problems of car maintenance upkeep and fleet management can be given technical solutions. Justification for Problem Definition The immediate problems for the company are the legal problems which have cropped up with regard to their practices of posting pictures of those who keep cars longer than usual. Further, the size of the competition can be simply overwhelming as they are in a lot more places with a lot more cars to offer than easyCar. However, being small can be its own advantage since easyCar can move with agility to exploit markets where the larger car companies cannot. The problem of reduction of fleet costs and passing on the savings to the clients can be managed through the effective use of technology. In terms of legal issues and from the data given in the case, it is clear that easyCar, “received public warnings from lawyers (Lawrence and Solis, 2004, Pg. 169)” that their policies could, “violate data protection, libel, privacy, confidentiality and human rights laws (Lawrence and Solis, 2004, Pg. 169)”. However, the policies of the company certainly showed results since the first person who had a picture on the company website returned the car within two days. Certainly, there are business benefits to be had but the impact of the policies could be severely negative for the image of the company as well as the legal situation of the firm. The size of the competition creates its own issues since easyCar seems to have rental outlets in the tens while the competition such as Avis Europe, Europcar, Hertz etc have outlets in the thousands. Further, the difference in the number of cars is also tremendous since in 2002, Hertz had 700,000 cars while easyCar only had 7,000. The figures concerning European revenues also reflect the small size of the company since European revenue figures in 2002 for easyCar stood at €41 million while companies such as Europcar and Avis had revenues in excess of a billion dollars each. While the company is quite good in terms of using technology to allow customers to access and rent cars in available locations through online bookings, call centers and other resources, it seems to lack the technical implementation tools which could let it track the cars, locate them and thus create better logistics for how the cars are supposed to be rented out and returned to the company. The company also realized that moving to a different car manufacturer than Mercedes-Benz could save them money and perhaps the same could be done further by moving to cars which are even cheaper to maintain. SWOT Analysis and Porter’s 5 Forces Alternative Courses Alternative 1: Come back to the law First and most importantly, the company needs to stop engaging in practices which leave it vulnerable to a lawsuit. While most individuals who keep the car for longer than usual would certainly return it quickly once they found their face was on the company website, one simple mistake could cost the company millions of Euros. Instead of using such means, perhaps the objectives of the company could be better served through the use of technology such as GPS location systems and tracking devices that let the company know exactly where the car is at any given time and even the condition of the car. Further, the advertising campaigns of the company need to brought back from being excessively creative to those which follow the advertising regulations. Alternative 2: Change the Image To compete with the big boys of the industry, the company could change its stance with regard to how it operates and since it already offers compact cars from different manufacturers in some locations, it could also move into the larger car rental markets. Additionally, instead of focusing on cars alone, the company could merge itself with easyJet to form a company such as easyGo which provides transport services under a larger umbrella. This might also help the legal situation of the company since it is presently seen as rental car provider and not a transport services provider. Further, the company can also start renting bikes and even electric powered transporters within the city for tourists and other market segments who may not need a car in the city but would like some form of transport to east their sightseeing experience. Alternative 3: Do Nothing The revenue stream of the company has remained positive and it is clear that the consumer has accepted the image projected by the company. Since the company may find it difficult to compete with the bigger players on their own turf, it might be feasible for easyCar to remain a smaller player and focus on niche markets instead of competing in the larger segments. Pros and Cons of Alternatives Alternative Pros Cons Evaluation Alternative 1: Come back to the law Safe Approach May bring long term financial growth Reduces the chances of lawsuits Technological expenditure may be considerable Less chances of rapid fiscal gains Possible impact on image Safest approach but it will cost the company money to outfit their fleet with GPS and tracking systems Alternative 2: Change the Image Improved efficiency from merging of companies Possible legal benefits Opportunities of creating new markets Restructuring costs New markets could be dangerous to enter into No immediate benefit to the bottom line A useful alternative if the company is looking for growth without entering into a price battle with the competition Alternative 3: Do Nothing The current image is stabilized No additional costs incurred Legal issues remain in place Competition may capture markets from the company Possibly lucrative oppurtunities left unexplored. Could be seen as alternative but only if there is no cash to invest in the company and revenue streams are going dry Conclusions and Recommendations While it is possible for the company to go with alternative 3, a better choice would be to combine elements from alternatives 2 and 1 to come up with the most cost effective situation. If there are seven thousand cars with the company and a GPS unit with a built-in immobilizer on each cost approximately 500 Euros, it would cost the company €3.5 Million to outfit their entire fleet with such GPS units. However, it would also give them a significant boost over the competition since they could become the only company in Europe which has every car fitted with a GPS unit for the ‘convenience’ of the renters. Further the merging of the company may allow the Easy Group to claim that the car rental services provided by them are a continuation of the transport services provided by the company therefore the legal issues they have may be removed. Evaluations The simplest method to evaluate the state of the company and how well the alternatives have worked for the organization would be to look at the financial statements of the company in a few months time. If there are no lawsuits for the company and if the cost of installing GPS units to discourage thefts is offset by the savings in terms of cars being returned on time, the alternatives can said to have been good decisions. If not, there can at least be enough data to show that the overall impact of the decisions has pushed the company towards the negative or towards the positive side. Works Cited Lawrence, J. and Solis, S. 2004, easyCar.com Read More