Enterprise Rent-A-Car (Enterprise), originally founded in 1957 by Jack Taylor in St. Louis, Missouri is one of the largest car rental companies within the United States. The company prides itself, as its founder envisioned, as a leader in customer service utilizing many various methods and survey tools within the organization. Enterprise rapidly expands in its few decades of operation and quickly became one of the profitable privately held companies in the United States as well as being a top employer for new university graduates. It has operations in many transportation sectors within the rental car industry and really shines in its community-tied off-airport locations, where they maintain a loyal customer base. The following is a case study that highlights potential problems and issues within the company as well analyses and recommends actions to strengthen Enterprise in its future operations.
Problems and Issues
1. Low market share of On-airport locations
2. Reliance on customer service as a driving strategy for the organization
3. Lack of customer satisfaction recording at airport locations as there is no personal tie
4. Expansion into international market
5. Technology development
6. Limited marketing and advertising (failed advertising)
7. Threatening potential impending mergers
8. Threats of losing insurance company market share to competitors
Enterprise current strategy focuses heavily on their customer service and employee focus. These concepts form the foundation of their long-term strategy as initially pioneered by their founder, Jack Taylor. He never envisioned Enterprise to become as large as it would be and he started the company to be a “neighborhood” company that would allow for close community relationships. Along with the small community concept, this allowed the employees to gain more ownership of their workplace and foster entrepreneurial spirit. As the company grew these tenants were still paramount. Enterprise developed internal methods known as “Enterprise Service Quality Index” (ESQi) to quantity their customer service information. This information is vital to the company as it leads to the strengthening of their current strategy.
The employees at Enterprise facilities are given managerial development opportunities that give Enterprise a serious competitive advantage over their competitors. Employees immediately are put on managerial development track as soon as the begin employment. Enterprise chooses to develop management internally even giving employees opportunities to enroll in online MBA programs.
The current strategy is very strong for internal improvement; however, I believe that Enterprise needs to development their strategy to adapt to include more focus of external factors in order to grow their business.
Using Porter’s Five Forces Model, Enterprise can be affected by several factors in the within the rental care industry.
• Threat of New Entrants: This threat would be considerably low. The industry has many strong competitors such as Hertz and Avis. The only threat that could occur would be the possible introduction of new technology
• Bargaining Power of Buyers: Very Standard, most customers know exactly what they want in a purchase from Enterprise
• Threat of Substitute Products: These are numerous including public transportation, ride sharing, customers using their own cars, increasing office technology reducing travel
• Bargaining Power of Suppliers: very low risk, many suppliers of vehicles to the industry
• Rivalry Among Existing Competitors: Very high, Enterprise needs to set itself apart and keep brand loyalty amongst its competitors
Upon review of these factors I believe the Enterprise needs to enhance its brand loyalty among its customer base. They are already known for valued customer service possibly, they could introduce a very competitive loyalty program with high rewards for usage this would “anchor” their current customer base for continued usage. Another possible idea could be price matching any competitor. This would take considerable review from a financial stand point but may possibly bring new customers to enterprise because of a lower rate of rental. This would also give new customers an introduction to the company values.
The diagram below utilizing SWOT analysis displays my thoughts for the internal analysis of Enterprise. The strengths are what has been already discussed, their strong skills in customer service focus and employee development. Overall, I believe that if Enterprise focuses on improving some aspects of weaknesses and invest into the identified opportunity areas that are identified then the threats identified should be able to be countered.
Overall, according to my analysis, I believe that Enterprise has poised itself for an opportunity to grow my recommendations in the following section will identify actions to take that would help them become more successful in the future. They need to maintain their past growth and strengthen what they are already strong with.
The following actions are what I recommend to Enterprise to aid its business.
1. Expand their business
Enterprise needs to work on expanding their business. I would recommend an alliance or merger of one of its smaller competitors. An acquisition of smaller competitor, preferably one with mainly airport locations, could build a larger market share against their greatest competitor, Hertz. This potential acquisition could also allow for international growth to continue on the trend path for them. This solution may not be able to propel them to the number 1 auto rental company. However, I do believe that this could slow Hertz’s growth and allow Enterprise to gain additional market share.
2. Work closer with insurance companies
As is discussed in our information, Enterprise is in threat of losing a major portion of business from the insurance providers that supply customers with damaged vehicles. The simplest solution here would be to lower the cost of the supplied rentals. By lowering the profit margin they would be able to gain more loyalty from the insurance companies and taking away some market share from Hertz.
3. Work on loyalty program and price matching
Enterprise has always been known for great customer service; however, I believe they can always improve. They need to roll out a very lucrative loyalty program for their already loyal customers. The program can have a point system and tiered levels that are easy to gain. The program could also offer benefits for new customers that may want to try Enterprise as a new rental car provider. The points that Enterprise customers gain could be used for additional vehicle rental services or could also be applied to other services such as airline miles. A strong loyalty program would only strengthen their current customer base and could also gain additional customers.
4. Invest in Upcoming Technology
Enterprise needs to start investing in technology to keep enterprise relevant in the future. They could begin the development of a mobile app for usage. This app could provide early check in services, customer support and other services. Enterprise could also roll out their standard customer experience surveys through these applications. I could see this potentially increasing the participation in their surveys. This could aid with their employee development at the branches.