Car Sharing Strategy: Enterprise Rent-a-Car
MEMORANDUM Date: March 10, 2013 Subject: Competitive Advantage, Car Sharing and Strategic Approach: Assessment, Impact and Recommendations To: Andy Taylor, CEO From: Jason Gonzales, VP Strategy
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Introduction
This memo addresses three key issues: Enterprise Holdings’ current competitive advantage, the impact of the car sharing business on the structure and profitability of the car rental industry, and how the company should approach the car sharing business. I’ve developed my recommendations using the tools and frameworks of corporate strategy. Competitive Advantage. Enterprise possesses two key competitive advantages: 1) economies of scale through our position as industry leader with 6,000 locations and 850,000 vehicles and; 2) Ecars and ARMS, our proprietary closed-standard technology platforms. These advantages have created high barriers to entry for our competitors and have allowed us to capture more value through higher prices to our customers. The Impact of Car Sharing. Car sharing is a close viable substitute and reduces our ability to capture value in the form of high prices; because the customer can exercise choice this enhances his bargaining power. The availability of close substitutes reduces prices and therefore decreases profitability. Enterprise’s Strategic Approach. The car sharing market is a growing market that Enterprise must address. Enterprise should utilize its existing fleet and location assets, best practices, and economies of scale to further develop WeCar into a loosely affiliated brand while extending its hallmark pick-up and drop-off service to WeCar.
Discussion
Competitive Advantage: Source, Sustainability and Scope.
Source. Enterprise derives it competitive advantage through a mix of products, services and market position. With over 6000 locations, 850,000 cars, industry market
______________________________________________________________________
Introduction
This memo addresses three key issues: Enterprise Holdings’ current competitive advantage, the impact of the car sharing business on the structure and profitability of the car rental industry, and how the company should approach the car sharing business. I’ve developed my recommendations using the tools and frameworks of corporate strategy. Competitive Advantage. Enterprise possesses two key competitive advantages: 1) economies of scale through our position as industry leader with 6,000 locations and 850,000 vehicles and; 2) Ecars and ARMS, our proprietary closed-standard technology platforms. These advantages have created high barriers to entry for our competitors and have allowed us to capture more value through higher prices to our customers. The Impact of Car Sharing. Car sharing is a close viable substitute and reduces our ability to capture value in the form of high prices; because the customer can exercise choice this enhances his bargaining power. The availability of close substitutes reduces prices and therefore decreases profitability. Enterprise’s Strategic Approach. The car sharing market is a growing market that Enterprise must address. Enterprise should utilize its existing fleet and location assets, best practices, and economies of scale to further develop WeCar into a loosely affiliated brand while extending its hallmark pick-up and drop-off service to WeCar.
Discussion
Competitive Advantage: Source, Sustainability and Scope.
Source. Enterprise derives it competitive advantage through a mix of products, services and market position. With over 6000 locations, 850,000 cars, industry market