Operations Strategy in the Rental Car Industry

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II. Operations

Products (Service)

The company provides a service, mainly vehicle rental, to replace a customer’s damaged or out of service vehicle. This service has been around for awhile, in this case since 1957, and appears to be in the mature phase. A case could be made that in the case of Enterprise, the service of vehicle rental is still in the growth phase since annual revenue, fleet size, employee size, and the number of locations has grown every year since the founding of the company. The company is also still innovating new methods in delivering their service to maximize quality and efficiency. While this may make for good discussion, for the purpose of this analysis, the service of delivering rental vehicles will be considered to be in the mature phase.

Enterprise has a unique mix of products and services that differentiate it among its competitors. Enterprise was the first rental-car company to offer free pick up and drop for its customers. Hertz, Enterprise’s main competitor has only recently started offering pick up services and it is only offered at a few select locations. The idea for this service came from an entry level employee in Orlando, Florida who had only been with the company for a few months. The idea was successfully initiated and became a service differentiator that give Enterprise a competitive advantage for many years. The service became strategically, very important for Enterprise, particualrly since the majority of their customers are insurance replacement renters who need picked up at the shop where they are dropping their car off. This convenience has helped distinguish Enterprise and gain them an overwhelming majority of the insurance replacement market. It is also an example of how Enterprise uses job enrichment in as a part of its operations strategy in the area of work force management. Other disinguishing products/services include free mileage, fleet management, corporate truck rentals,

Service development is a factor in this industry but not the extent as it is in other industries. New and innovative ways to deliver the service will differentiate a company in this industry from competitors and possibly lead to a competetive advantage. While product/service development does occur in this industry, the frequency with which it must occur is not as high when compared with other industries i.e. computer technology. Changing economic conditions as related to the automobile industry have caused Enterprise to seek out a more diverse supplier base. These changing conditions have also caused Enterprise to begin purchasing used cars for use in the rental fleet as well as keeping vehicles in the fleet longer before they enter the remarketing and car sales divisions.


A job shop classification in terms of the transformation system employed by Entreprise is the most appropriate. Services are customized according to individual customer demands and each service requires a large variety of different inputs and operations. Staff are grouped according to function i.e. rental, car sales, corporate accounts, etc. There are large variations in flow times and there can also be a considerable amount of transport of materials and staff if the situation deems necessary. For example one customer may need a vehicle delivered to their place of business. For completion, this task requires two people driving two separate vehicles ( one person delivering the rental and one person to pick the rental rep up for transport back to the office). If the customer is a half hour away which is common in rural offices, a single task requires two hours of labor plus gas.

Major inputs include staff labor and vehicles. These inputs are transformed into a large variety of outputs which are basically consumed of rental customers. Management has the complex responsibility to ensure materials are moved to the proper location, varying demand is met so that the rental fleet is utilized...
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