Enterprise Rent-A-Car - Establishing Marketing Scenarios and Forecasting Alternatives - Case Study Example

Enterprise Rent-A-Car Name: Course: Tutor: Date: Enterprise Rent-A-Car Introduction to the enterprise Enterprise Rent-A-Car is the largest car renting company in North America but it has subsidiaries in other countries such as Australia and United Kingdom. The Enterprise Rent-A-Car company has more than 5000 locations globally and this has made it gain competitive advantage in the competitive market. The firm wants to open new branches in North of London and South-East region due to high demand of its services (Plunkett 2006, p. 230). The regions identified are East Midlands, Milton Keynes, Glasgow, Dublin, Manchester, Steveneage, Luton, or Hemel Hepstead. The enterprise will conduct market analysis to determine which one is the most suitable and viable. The firm is highly reputed because it dominates and controls most of the customers who want to rent cars. The enterprise has branches in most cities and airports apart from the newly established cities and airports (Pasiuk 2006, p. 122). The firm buys its vans from USA because its market coverage is expanding rapidly and the demand for US made vehicles is high. Enterprise Rent-A-Car main focus is the local rental car market which has not been ventured by most competitors. It also focuses on the household who are employed and do not have personal cars. In addition, it focuses on car rentals to customers and potential customers who need their cars be replaced (Grant 2009, p. 302). The enterprise wants to specialize on providing services for a short period such as leisure or short business trip to some tourist who visit the country. The Enterprise Rent-A-Car has embarked on expanding its operations to include all the airports and major cities for it to gain competitive advantage. It wants to expand to France and Ireland so that it can control the market. It has more that 900 offices in Canada for marketing and operation purposes (Pasiuk 2006, p. 123). The car rental market is becoming competitive due to its high quality services that meets customer’s needs at all times in UK. Its services are distinct because it provides short term holiday and vocational services or products for special occasions and breaks. The enterprise offers services such as taking customers to their hire cars centres. Though there is high competition in the market, the enterprise has maintain its neck high in the market by satisfying its customers; hence, the main factor that determines the growth of the enterprise in UK (Plunkett 2006, p. 231). The three key competitors of Enterprise Rent-A-Car are the Europcar, Avis Budget Croup incorporation, Dollar Thrifty Automotive Group Incorporation, and Hertz Global Holdings Corporation. Avis Budget Group has car rental brand that competes with Enterprise Rent-A-Car. Its services are same with those of the company. The company’s Avis Rent-A-Car unit targets leisure and corporate travelers at the high end of the market (Markides 2008, p. 62). It has more than 2000 locations in the region and found in more than 120 countries in the world. The Avis Rent-A-Car unit beat out Dollar Thrifty Automotive Group Incorporation and Hertz Global Holdings Corporation in 2010. This later led to the acquisition of Dollar Thrifty Automotive Group (DTG). This has strengthened Avis Budget's group in the leisure rental market which had been low and dominated by Enterprise Rent-A-Car (Grant 2009, p. 303). The Dollar Thrifty Automotive Group Incorporation rent its car under Thrifty Car Rental brands and Dollar Rent A Car. It serves in about 600 locations, which has reduced from 830. It has maintained its off-airport locations because its car brands have separate identities. Administrative functions and operations have been consolidated; hence, a real competitor to Enterprise Rent-A-Car (Plunkett 2006, p. 232). The car rent market in the identified market is very high and many people hire cars in the region. The company can cope with competition because the competitors have been offering low quality services. People rent cars mostly at the end of the month and when emergencies and urgent issues arise. Others rent when they are on leave and want to tour places, visit friends and relatives, and when they want to get to the airport to fly or after they alight and want to join their families, friends, and relatives (Grant 2009, p. 304). The enterprise is equal to the task and they are planning start its operations in one of the following regions in Milton Keynes, Steveneage, Luton, or Hemel Hepstead (Grant 2009, p. 305). The customers are willing to rent from the firm because it offers quality services, which is affordable. The enterprise is liked by most people who want to rent vans than its competitors. The current major customers to the company are the employees in the airport, banks, colleges and universities around, visitors from overseas and other business man and women (Plunkett 2006, p. 233). Analysis of market potential The branch location plan should be analyzed before establishing it. Most people should be using hires vehicles or vans and the number of people with their personal cars. The people should have formal and well paying jobs for them to afford. The location of the enterprise will determine its success or failure. The location to establish a branch should have many customers and potential ones (Plunkett 2007, p. 523). The location should be located at a cheaper and suitable site and not the expensive town centre location. The means of traveling to job should be the hired vans because one may choose to a location where many people use public means; hence, the firm may get customers to sustain its operations. The branches should be able to reach most of the customers in order to save time for traveling and money for hiring other vans to take the person to their destination. It should not be too far from their places of residence or accommodation and not to far from centres of business (Pasiuk 2006, p. 124). The number of household with cars should few so that they can hire the enterprise’s vans. If most of them have their personal cars, then the region is not profitable if enterprise establishes a branch. The location should be safe because safety is essential for the customers and their luggage or goods. Safety will reduce cases of theft and injury to the customers which may make the customers and potential customers shy away from the company. When the customers and potential customer shy away from the company’s services, the competitors will benefit because they will look for better service from them (Markides 2008, p. 67). Location is therefore essential for the success of the company. The location preferred is the one with high visibility i.e. in a busy road or market where occupants can easily notice. This is important because it will convenience the customers at all times when they want the services of the enterprise and the roads are in good conditions (Plunkett 2006, p. 234). Customers should not take too much time searching where the company is because they will be wasting a lot of time; hence, may become late and opt for other enterprises. The most ideal place or location is the proximity to car dealers because it will be helpful especially if there is a cluster of dealers in industrial areas where business are near and preferably in car body shop. This is where spare parts can be bought incase of any mechanical problem arising. The head office should be near the other subsidiaries or branches because communication will be easier and making decision will not take too long (Pasiuk 2006, p. 125). There should be ample space for parking and store for storage of luggage of the customers safely. The facilities for washing the cars should not be making a lot of noise and low risk to the neighbors who live near the enterprise. It should be located in a polluted free area especially near garbage collection points or where there are industries producing more smoke into the air (Plunkett 2007, p. 526). The cost of setting up the new plan is estimated to be £120, 000, 000. This is the total estimated cost for the premise or new branches to be established. This will be enough to buy new vehicles, construct a store, and buy a plot for parking and to install any other gadget that is of importance (Pasiuk 2006, p. 126). Identification and evaluation of new opportunities The new opportunities can be identified by conducting a market research and analysis. It can also be identified based on demand on some target markets. This is possible when people in those regions constantly request for our services. If the business market has more than five million people, then it is an opportunity that the firm should consider tapping (Grant 2009, p. 306). It is evaluated by checking at the income levels and how frequent people hire cars in that region. The frequency of car hiring in the region should be established. If it is high, then the region is an opportunity that needs to be exploited. A city with many corporations such as banks and universities can be an opportunity and should be utilized. The opportunity identified should be evaluated thoroughly before planning to invest by identifying the possible challenges and risks that may befall the venture (Plunkett 2006, p. 236). An opportunity can be identified by forecasting on the returns that can be earned because some opportunities may be lucrative but they have no returns. The costs of establishing it should be estimated and the possible returns. If the returns are higher than expenses, then that is an opportunity and should be utilized. An opportunity can be identified by looking at the markets where the competitors are so that you analyze whether they satisfy that market or not. The market is then analyzed to find out whether there is high demand or not (Plunkett 2006, p. 237). Establishing scenarios and forecasting alternatives The alternative areas are important if the initial locations are not performing as anticipated. The potential locations include East Midlands, Dublin, Glasgow, Amsterdam, Edinburgh, and Belfast. These are the potential locations because they are near the airport where the firm can venture into. The locations can be profitable to the Enterprise Rent-A-Car because there are few firms offering the same services and there is high demand for our services because of our high quality. The few companies offering the services include Avis, National, Budget, Euro car, and Hertz (Pasiuk 2006, p. 128). The above locations are alternatives if the first ones fail; a branch can be opened to serve the customers and potential customers in those regions. These are potential markets because the airports surrounding them are being expanded. There are buildings and parking spaces under construction that can be rented (Plunkett 2007, p. 528). There are new banks, universities, and restaurants coming up; hence, an opportunity for the firm. Because the identified locations are outside the city centre, the costs of establishing branches are low. The costs can be more than £100000 because they are outside the city centre including the premium. The alternative locations will cater for emergencies, risks, and losses made by other branches (Grant 2009, p. 308). Structuring the business plan The location chosen is East Midlands airport because it estimated to have more than seven million people of which two thirds are part of the enterprise customers and potential customers. East Midlands airport in London is the best location to establish a branch because it is one of the fastest growing airports in UK with a population of 4172174. it is located in Leicestershire near Castle Donning ton. The airport is used by more than five (5) million passengers. It is the 12th busiest airport in UK and the most common car hire is Car Rental East Midlands Airport. A spacious parking is found at Rhino Car Parking Section. The number of passengers is over seven (7) million and its population has been increasing by 400% in ten (10) years. The airport employ over 420 people directly and over 6900 indirectly. The airport drives the economy in the region because the most popular destinations include Dublin, Glasgow, Amsterdam, Edinburgh, and Belfast which are lucrative for most business men. There is ample space for parking and cheap rental spacious houses that will be used in transacting business. The costs of renting are about £100000 per room compared to other regions which is more than £500000 (Markides 2008, p. 68). The new branch will boast the image of the enterprise because customers and potential customers will see the enterprise as expanding; hence, financially stable. The customers will have the trust in the enterprise and will become loyal even in other branches. The attractiveness and feasibility is gauged in order to determine the potentiality of the new branch whether it is viable or not. It should be able to attract funding and legal documents for raising capital (Plunkett 2006, p. 238). Most employees working in East Midlands do not have personal cars and they hire the few vans available from Euro car, Avis, National, Budget, Euro car, and Hertz car renting companies. Recruitment and training plan For a company to be successful, human resource department should recruit and train qualified employees or staff. The employees will be recruited by the human resource manager in the branch (Plunkett 2007, p. 529). It should have a branch manager, three assistant managers, ten graduate trainees who are self driven and five vehicle service assistants. The vehicle service assistants will collect and deliver vehicles and clean them before customers come to hire them. They are the ones to ensure safety of the clients and the luggage (Pasiuk 2006, p. 129). The company recruits entry level graduates only through a vigorous process. This will ease promotion and training of employees. The trainees can be promoted depending on their hard work, commitment and dedication at work place. The staffing structure and procedure will enhance promotion in the branch within twelve months. This will be improved by training where employees are trained in order to improve on their skills, knowledge, competencies, and experience (Grant 2009, p. 310). For graduate trainees, their starting salary ranges between £10,000 and £18000, accountant £ 25000, and that of a manager should be £35,000. The salaries and allowances will be increased when the company has stabilized in the market and is able to generate sufficient income. Graduate trainees and managers should be paid a bonus and other allowances based on the profit made by the branch. Allowances and commissions will be based on the number of customers who visit the firm to hire the vans (Plunkett 2006, p. 239). Training should be conducted in a period of 3 months. This is to explain to the new employees what they are supposed to do on daily basis. This is also to equip the employees with the necessary skills so that they can understand how to deal with different customers and to remain effective and efficient in service delivery (Pasiuk 2006, p. 130). Enterprise Rent A Car Trainee Training Structure Enterprise Training Time Table Objectives of the training 1st month Understand the purpose of the 4 Steps of the Sales Process. Understand the organization structure Understand what is fault business and its effects Explanation of the key business and what it entails, history, and management of the enterprise 2nd month You should understand how to use the EMO The customer relations and how to handle and direct customers. Understand how to set up a claim to collecting A/R’s Understand the maintenance and how to keep the car clean and attractive to clients 3rd month Understand the corporate business. Understand the targeted dealership modules used and the body shop. Find out the value added factors that the enterprise can offer in this type of business. How to attract, develop, and retain efficiently the Enterprise account development models. body shop/dealership operations and Corporate Business (Targeted Body shop and Targeted Dealership modules used) Advertising and sale promotion plan Advertising and promotion is to create awareness of the existence of the service of the Enterprise. The Enterprise Rent-A-Car should develop a model to be used to advertise its products or its services to the customers and potential customers in the target market (Plunkett 2007, p. 533). The branch should have an advertisement model that is unique that relies upon high quality services, competitive pricing, and customer pick-up services. The word of mouth is the strongest sales and marketing driver. It is highly reputed because the sales person will work hard to promote and maintain the reputation of the firm. It will become easier when directing the customers to the new location; hence, seeking to impress the target customers (Pasiuk 2006, p. 131). The word of mouth will go beyond making after sales phone calls to customers to get feedback on the services they are offering in the market. Apart from word of mouth, the new branch can develop a television advert that will advertise the services the firm offers and its location (Grant 2009, p. 311). Location of the firm is crucial because it is still new and many people want to know where it located or may not know where it is located (Markides 2008, p. 70). The new branch is lucky because its facilities are located near its corporate customers and business people in Luton airport which is growing faster. The managers of the new branch are paid in terms of commission; therefore, they will have to design an advert that will attract and appeal to many customers in all target markets. They should build a good relationship with the customer because if they do not get out searching for customers, they may not get customers to hire the vans; hence no profit increase and growth (Plunkett 2006, p. 241). The most common advertising and promotion media used in UK are the business magazines, television advertisement, use of radio and some designed vehicles used to advertised. These are the most popular media or channels that can be used to advertised the new services and location of the firm (Plunkett 2007, p. 535). The UK vehicle hire company has special vans and magazines are popular because most people buy the business magazines and like road shows (Pasiuk 2006, p. 132). The TV programme should be advertised some few minutes before news in the morning, afternoon, and in the evening. Creating awareness is the first thing the branch managers and employees should undertake; otherwise they may not receive any commissions or even salary at the end of the month. They should be aggressive and take advantage because the company is located within the market and they will not spend a lot of money (Markides 2008, p. 72). The reputation of the company should be utilized because the company is well known for high quality services it offers to the customers. The word of mouth will be easy because the customer can be brought to the firm’s offices immediately to assess and check where the firm is, and get clarifications on what he does not understand. The advert should clearly indicate that the firm has located to a new place in order to avoid confusion and should specify it is Luton (Plunkett 2006, p. 242). Projecting development and start-up costs The graph above shows the market forecast for the enterprise from 2009 to 2014. It shows the revenue expectation. The table below shows the estimated revenues and costs forecasted for the next three years. The expected revenue per car in a year is £28990 and the total costs are £21960; hence, an average profit of £7030 per year and it expected to remain constant for the next three because of the prevailing market conditions and anticipated competition from the new comers in the market (Pasiuk 2006, p. 133). The new location (East Midlands) is viable after I conducted market research and analysis. I estimated or forecasted the possible customers per day, income, expenses and profits and I found that, the location is profitable. The new branch financial forecast for 3 years Enterprise Rent-A-Car Average yearly Cost and Revenue per Vehicle £”00” £”00” £”00” Average returns/vehicle 28990 Vehicle costs Maintenance costs 70 Depreciation value 80 Tax and licence expenses 110 insurance 160 Fuel costs 200 Miscellaneous expenses 100 Interest on loans 40 760 Branch operating costs Salaries and wages 6100 Commissions 1000 Car preparation (drivers and cleaning) 500 Bonuses 1400 Traveling and entertainment costs 430 Rent 2200 allowances 330 Light heat, water, and rates 150 Phone and stationery cost 340 Office and miscellaneous expenses 400 Cleaning costs 350 13200 Overheads Call centre (head office) 400 Advertising and promotional 700 Branch overheads 6900 8000 Total estimated cost per vehicle per year 21960 Average profit per vehicle 7030 The chart above shows the estimated returns from the three regions East, West, and North for each quarter. This is important in choosing the location to establish the new branch depending on returns. Presenting the recommendations to Enterprise For the enterprise to gain competitive advantage, it should improve on the quality of its services such as pricing and time saving. Quality services will ensure customers remain loyal to the enterprise for long. The enterprise reputation will not be ruined negatively and the firm will dominate the market (Grant 2009, p. 312). The enterprise should employ qualified staffs who understand what they are doing in order to offer quality services to the clients. They should be trained with qualified trainers for them to gain the necessary skills and knowledge (Plunkett 2006, p. 245). For the enterprise to gain competitive advantage, the enterprise should conduct a comprehensive market research and analysis so that it can understand what the clients or customers want in terms of price, quality, and location of new branches (Markides 2008, p. 75). Customers are important and they determine the success or failure of the enterprise. If they are satisfied, they will continue using the services of the enterprise; hence, continued returns to the firm. The enterprise management should understand what the clients want and what they dislike to avoid offering services that dissatisfy the customers that may make them shift to other enterprises which offer better services than them (Pasiuk 2006, p. 134). Reference: Plunkett, J. W. 2006. Plunkett's Automobile Industry Almanac 2007 (E-Book): Automobile, Truck and Specialty Vehicle Industry Market Research, Statistics, Trends and Leading Companies. Dublin: Plunkett Research, Ltd. Pp. 230-245. Pasiuk, L. 2006. Vault guide to the top transportation industry employers. New York: Vault Inc. pp. 122-134. Grant, R. M. 2009. Contemporary Strategy Analysis: Text Only. New York: John Wiley and Sons. Pp. 302-312. Markides, C. C. 2008. Game-changing strategies: how to create new market space in established industries by breaking the rules. New York: John Wiley and Sons. Pp. 62-75. Plunkett, J. W. 2007. The Almanac of American Employers 2008: Market Research, Statistics and Trends Pertaining to the Leading Corporate Employers in America. Dublin: Plunkett Research, Ltd. Pp. 523-536. Read More