Case # 1
Enterprise Rent-A-Car has started its operations in 1962 by establishing and successfully developing a new niche in the car renting industry. The business had strictly focused on replacing local citizens’ cars due to repairs. Later on Enterprise started to serve two additional segments, leisure & discretionally rentals and business rentals. Newly launched segments were successful; however the main focus of Enterprise continued to be the initial business stream – the Replacement Rentals. This business section takes up 78% of Enterprise’s resources, which enables the company to capture approximately 55% of the US replacement rentals market share. Yet, the total replacement Rent-A-Car market accounts only for 27% of the entire US Rent-A-Car industry, whereas business rentals and leisure/discretionary rentals account for 40% and 33% of the market respectively. Thus, the Enterprise market share of the entire industry equals to 14.85%, which is still substantial. The Enterprise underlying business situation is promising, yet management is concerned with the future growth opportunities. Despite effective operations and therefore lower operation costs, the company still faces several obstacles on its way to a greater success. As Enterprise had taken the “home-city” niche, several competitors had followed to create a harsher competition. Furthermore, it is apparent that Enterprise brand recognition requires more attention as the majority of US citizens are not familiarized with the company’s services. It also becomes harder to hire new employees, as the workplace is not considered to be attractive to the public. In fact, there is an explanation for both of the cases. Enterprise spends a substantially lower proportion of its revenues on advertisements (0.84%), compared to 2.8% other companies in the industry. Yet, regardless of these everyday obstacles that the company has to face with as it grows, the current situation that Enterprise finds itself in is quite satisfying. Above mentioned obstacles are just the symptoms of the real issue. Currently managers are puzzled with the choice in the available future tactics, target markets and marketing strategies as a whole. At this point of time Enterprise is operating in 3 separate markets with already established competitors. Yet, the company has been acting as a conglomerate of small individual stores, rather than as a single entity. For a company surrounded by strong competitors, it is essential to collaborate and direct all its outstanding resources and stores into a strongly unified body. This will allow Enterprise to reinforce a single solid marketing strategy into the entire company at all levels, and to replace currently self-managing stores. If all stores are to implement the same tactics all at once, the competitors could be outrun more easily and it would enable a faster growth. Therefore, the goal of Enterprise management should be to create a comprehensive coherent strategy plan, in which they should specifically outline the target audience and the channels of promotion, as well as to define clear roles and tactics for every store and business function. By prioritizing its markets and target audiences the strategy plan will enable the company to avoid scattering its efforts, so that a greater growth can be achieved.
Now, let’s look into the internal and external environments to help us understand what the strategy should look like. SWOT Analysis:
The market position
| Enterprise was able to create and expand the replacement market. Its pioneer appearance in the market enabled the company to earn itself a strong market position. This allowed them to develop valuable network and to obtain specific knowledge about the sector, which gives Enterprise a large advantage over its competitors.
| Low operating costs
| Effective operations decrease Enterprise operating costs and allow higher...
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