Enterprise Rent-A-Car S.W.O.T. Analysis Strengths: Term Paper

Length: 15 pages Sources: 25 Subject: Business Type: Term Paper Paper: #98514784 Related Topics: University Of Phoenix, Car, Automobile, Singapore Airlines
Excerpt from Term Paper :

These include:

Used car sales

Increasing trend of car sharing

Weakened U.S. tourism industry ("Enterprise")

The sale of used cars by other organizations is a significant threat to Enterprise. Many of the world's largest car manufacturers, like Daimler Chrysler, General Motors, and Ford, are offering large incentives and low interest financing through their dealers on new vehicle purchases. For this reason, it makes owning a new vehicle more affordable for more consumers and conversely weakens used car pricing industry wide. This could be devastating for Enterprise with their traditional procedure of acquiring new vehicles and then disposing of them through their used car outlets. To date, Enterprise has enjoyed higher resale values on their vehicles, when compared to standard residual value, due to their consistent level of maintenance service. However, in recent years this margin between the vehicle sale price and the residual value has narrowed considerably, especially as used car pricing becomes more susceptible to price fluctuations.

The introduction of less expensive and better quality imports from Asian manufacturers has also compounded the problem, enticing consumers to buy new, rather than rent or buy used ("Enterprise").

In addition to the threat to revenues due to decreasing used car sales and pricing, the growing trend of car sharing is also a significant threat. Car sharing is an innovative program. Companies like Greenwheels allows members to locate the nearest available car on the Internet and then reserve it. A signal is sent to the vehicle and an onboard computer is set to recognize the driver's personalized key and code number. Research has indicated that between 4 and 10 private cars are replaced by one shared car. This has become an increasingly popular option for many people in Europe, in place of renting or leasing. This could negatively affect Enterprise's revenue in Europe, as well in America if car sharing becomes more popular in the United States ("Enterprise").

Lastly, a weak American tourism industry is also a significant threat to Enterprise. Despite the slight improvement of tourism in recent years, the industry still anticipates that 10% fewer international visitors came to America in 2004, than in 2000.

The U.S. tourism industry is already losing global market share as borders in many parts of the world have become easier and cheaper to cross, and as countries from Spain to Singapore outspend the U.S. In tourism marketing and advertising. Between 2000 and 2003, the U.S.'s share of travelers from Britain declined by 14%, while that of tourists from Germany declined 17%. The country also saw the number of tourist from Japan falling by 14% while the number of travelers from Brazil fell by 28% ("Enterprise").

This industry decline obviously negatively affects leisure car rental revenues for Enterprise, especially with the bulk of their revenues being garnered from the United States.

Ethics:

Ethics in today's hyper-competitive, increasingly globalized world is an important concept. With major corporations being drug through the proverbial mud due to unethical practices, at every turn, it would seem that the concept of ethics may be lost on large American corporations. This is not true for Enterprise and, in fact, it is their commitment to ethics that they hold as a primary reason for their success.

According to Andrew Taylor, CEO and Chairman of Enterprise, ethics begins with building relationships. The company's expansion into new geographic markets has been successful due to their ability to start building strong relationships with community members (Schlereth). This is echoed in their commitment to customer service.

The company has a core philosophy that is centered on putting people first, whether it be the customer or the employee. They may be a big company, but have a small company feel ("Who We Are"). By putting people first, profits will grow naturally ("Management Philosophy"). This philosophy of impeccable ethical behavior that leads to putting people at the forefront was developed by Jack Taylor. In addition, Jack Taylor also "taught (Andrew) the importance of hard work and of staying true to your values. He also taught (Andrew) about maintaining your values in the business world, and his principles are a guiding force for (the) company today" (qtd. In Schlereth).

It is these values and commitment to ethical behavior that has allowed Enterprise to become an international success. Jack Taylor was simply driven to do the right thing, and today the organization continues to follow his lead in maintaining those ethics. As such, the company formalized their "Founding Values" in 2003. These values state:

Our

...

And reward hard work.

Great things happen when we listen... To our customers and to each other.

We strengthen our communities, one neighborhood at a time.

Our doors are open ("Our Founding Values").

Enterprise is committed to the upholding of these values and the ethical behavior tied to them.

When Andrew Taylor was specifically asked about what business schools could teach students about ethics his reply was inspiring. He stated that he believed that ethics and strong values are an important component of business, now more than ever. There have been too many examples of what happens to companies when they act unethically and throw their values to the wayside. "Success and ethical behaviors are not mutually exclusive" (Schlereth).

Managing Productivity, Quality and Service:

One key component to Enterprise's success is their ability to effectively and efficiently manage productivity, quality and service. Motivation is critical to this effective and efficient management. Enterprise is one of the few innovative organizations that actually ties rewards to team performance. This takes the rewards out of the hands of the employee's bosses and places it in the hands' of their customers. Customer and peer feedback, as a truer indicator of productivity, are an integral part of performance rankings and these are tied to compensation and promotions (Reichheld & Rogers).

For managers to get promoted, their branches must deliver customer service at or above the average for all comparable branches. Success is judged by a metric called the Enterprise Service Quality index (ESQi), which shows the percentage of customers who rate a branch five out of five when asked if they were completely satisfied. If a branch doesn't achieve or exceed the company's average feedback score, the entire team is ineligible for promotion (Reichheld & Rogers).

Many of the Enterprise branches have also instituted a weekly metric named The Vote, where team members openly discuss and rank one another on their customer service. This personal accountability for the entire team's success has equated to higher ESQi scores, for these branches (Reichheld & Rogers). These higher scores relate directly to improved productivity, improved quality and improved service for the organization.

Complimenting this program is Enterprise's unique management training program. The organization trains their managers-in-training to run their own business. Unlike other businesses, they reward these employees for entrepreneurship ("Rewarding Success"). This only serves to enhance productivity, quality and service.

Innovation and Change:

In today's hyper-competitive rental car industry it is only through being innovative and embracing change that Enterprise has garnered the top spot in their industry. Enterprise's success began with innovation. While most rental car agencies such as The Hertz Corp and Avis Rent-A-Car focused on servicing travelers at airports, Enterprise decided to focus on local customers who needed a short-term replacement vehicle ("Neighborhood Network"). It was a revolutionary idea that would greatly affect the structure of the organization and the plethora of offices located where their customers lived and worked. As Bachmann notes,

Enterprise Rent-A-Car Co. has shot from relative anonymity to become the clear leader among car rental companies. They achieved this position not by copying Hertz and Avis but by specializing in different markets. Instead of competing for airport rentals, they aimed at the insurance and car repair markets.

Further innovation and change has come with their "We'll pick you up" service, as well as their "Month or More" service. It is through Enterprise's innovation that the rental car industry was redefined. They utilized what Berry et al. term "market-creating service innovation." This is defined "as an idea for a performance enhancement that customers perceive as offering a new benefit of sufficient appeal that it dramatically influences their behavior, as well as the behavior of competing companies" (Berry, Shankar, Parish, Cadawallader, & Dotzel). Enterprise Rent-A-Car provides a well-documented example of niche marketing at its finest, identifying customers' needs and addressing them more competently than anyone else (Levoy). It is this commitment to continued innovation and change that will lead Enterprise into a successful future.

Managers and Their Roles:

Andrew Taylor, Chairman and CEO, and son of Enterprise founder Jack Taylor is the driving force behind the organization. Taylor became involved in the automotive business more than three decades ago ("Andrew Taylor").…

Sources Used in Documents:

References

1957. 2006. Enterprise Rent-A-Car. November 13, 2006 http://aboutus.enterprise.com/who_we_are/milestones.html.

1962. 2006. Enterprise Rent-A-Car. November 13, 2006 http://aboutus.enterprise.com/who_we_are/milestones.html.

1969. 2006. Enterprise Rent-A-Car. November 13, 2006 http://aboutus.enterprise.com/who_we_are/milestones.html.

1970. 2006. Enterprise Rent-A-Car. November 13, 2006 http://aboutus.enterprise.com/who_we_are/milestones.html.


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