Enterprise Rent-A-Car, was founded by Jack Taylor in 1957 in a basement of a Missouri Cadillac dealership with only seven cars. Today, Enterprise has more than 800,000 vehicles and nearly 7,000 locations. Their main business activity is to provide rental vehicles to customers. This privately owned company, what is known to be America’s #1-car rental company, has dedicated themselves to creating the best customer service throughout their service line in addition to being successful in the industry (Kazanjian, 2007).
As stated by Weinstein, “Enterprise offers an excellent opportunity to explore the nature in which customer demand initiates organizational response, which in turn leads to organizational progress” (Weinstein, 2012).
This case study will be based on analyzing Enterprise Rent-A-Car using the Customer-Value Funnel (CVF).
According to McFarlene, the Customer Value Funnel (CVF) “serves as both a strategic and diagnostic tool for understanding an organizations current business environment and contexts and the important factors and actors that shape customer value design, creation, and delivery” (McFarlene, 2013).
With this funnel, the macro environment and microenvironment (Level I & II) will be reviewed, and Enterprise will be evaluated on their capability and the prospects to deliver customer superior value (Weinstein, 2012).
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The value drivers as described by Weinstein for the two levels mentioned above of the Customer Value Funnel that will be analyzed are society values (level I): Society, Demographics, Economic, Natural/Physical, Political/ Legal, and Technological and Suppliers, partners, competitors, and regulator value (level II) (Weinstein, 2012).
Macroenvironmental Analysis (The Global Business Community)
The macroenvironment is described as the external and uncontrollable factors that influence an organizations decision-making, and affects its performance and strategies. The factors this case describes are: Society/Subcultures, Demographics/Psychographics, Economic, Legal/Political, Natural/Physical, and Technological Factors. Society and subcultures
There are many changes in the sociocultural trends today. This causes a shift in the various lifestyle trends that affect this “Rental and Leasing Industry”. Enterprise has started moving towards fuel-efficient vehicles. They have also created “Enterprise CarShare.” This means that they have provided a service where many communities such as universities, churches etc. can use their service for mass transit. Demographics and Psychographics
Enterprise Rent-A-Car classifies their customers based on their demographics and psychographic characteristics. In order to rent a vehicle, the individual must be 21+ at many locations with a valid driver’s license for at least one year. They are a very diverse company, therefore allows all races to utilize their products/services. Based on their customers, Enterprise has gained the advantage to target what they want and how they make their purchasing decisions. Many of their customers need a car because of an accident, theft, or repairs and sometimes customers use their service for business/leisure trips. Based on the location of the branch, the brands of cars may vary or even the style of the vehicles. Economic Factors
Customers are mainly affected when the company is hit with the dramatic shifts in the economy. Due to many prices rising at these times, many customers may lessen their spending costs. Although it is not possible to control economic conditions, Enterprise is able to monitor and implement the necessary in order to decrease the effects on the company and its customers. Natural-Physical Factors
By having several branches, Enterprise is able to satisfy its customers based on their locations. According to their website, “there is an Enterprise branch within 15 miles of 90% of the U.S. population.” This has benefited many customers who rely on their company for their various needs. There is also the natural factor of being in this business world. For Enterprise, it can affect tremendously both for the good and the bad. These natural factors can create a lot of lost for the company due to them losing vehicles from hurricanes, earthquakes and so forth or gain more business because people will need vehicles due to them losing their vehicles and so forth. Political-Legal Factors
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Many political and legal factors can affect changes in the business. Enterprise can experience many issues due to these factors and it can lead to customers and service lost to them. The company needs to constantly follow up on the various laws that have changed in regards to the service they are providing in order to provide what is needed by the law. For example, many customers will not reach out to Enterprise if lawsuits are being placed on them in regards to their service/products. Technological Factors
Today, technology has continued to change in ways to benefit both the company and its customers. Enterprise Rent-A-Car, has successfully acclimatize to this continuous evolution in ways such as allowing customers to access their services on the internet to search for products (such as rentals, packages, availability), to compare prices, promotions, and to make necessary reservations/purchases. This factor has benefited the company due to greater demand for the company’s products and services. Enterprise Rent-A-Car created the Automated Rental Management System (ARMS).
This system “increases efficiency and enhances customer service by streamlining communications with insurance companies, customers and Enterprise. Enabling shops to send electronic rental reservations, vehicle status updates and automated text or email customer notifications” (“Enterprise Rent-A-Car,” 2012)
Microenvironmental Analysis (The Market)
The microenvironment are the factors that affect a company’s immediate area of operations. Such factors described are: Collaboration, Competition, Suppliers, and Regulators. Collaboration
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When we take a look at the business world today, many businesses are coming together in order to coordinate and collaborate in accomplishing business goals. Based on the industry, Enterprise must work together with other companies to provide their customers the most excellent service that they are looking for. Such collaborations exist with various financial institutes, insurance companies and much more.
An example of collaboration is with Enterprise and Nissan and society. As stated by Ali Hart (2011), “Enterprise Rent-A-Car invested in and committed to 500 Nissan LEAFs and instead of scattering them throughout the country, the organization partnered with 30 of its locations in major markets, clustering the vehicles in an effort to socialize them. The company views this as a win-win-win: more people will have the opportunity to drive Nissan LEAFs or see them driving around which will potentially inspire them to purchase one; therefore, Enterprise Rent-A-Car will bolster its sustainability cred; and Nissan will save money on advertising.” Competition
There are many competitors in the “Rental and Leasing Services Industry”. According to Weinstein (2012), Enterprise’s top competitors are Hertz Global Holdings, Dollar Thrifty Automotive Group, and Avis Budget Group. However, due to the competitors providing the same services, Enterprise maintains setting itself apart, “capitalizing on its competitive advantage.” Enterprise Rent-A-Car also faces major competition based upon brand, product and generic competitors. Suppliers
Enterprise is a very diverse company. Therefore, it allows its suppliers to encourage and equal opportunities like them. This company relies greatly on their suppliers to run their business on a day-to-day basis. Because of the many suppliers, Enterprise has put in place a requirements list in order to get the very best. This list is located on the company’s website where suppliers are able to fill out a form. They look for value, capability, E-business capability, stability, diversity, and the company must have policies and procedures. Regulators
All companies go by policies, procedures, rules and so forth given by agencies. These agencies are there to ensure that the businesses are doing what they are suppose to and look at the impacts of activities. Of course, Enterprise deals with many. They deal with the Department of Motor Vehicle (DMV) because they run a business with vehicles and many more like The Environmental Protection Agency (EPA) and so forth.
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Summary
This case focused on both the macroenvironment and microenvironment of the company and how they affect the delivery of customer value.
In the macroenvironment, the factors:Society/Subcultures, Demographics/Psychographics, Economic, Legal/Political, Natural/Physical, and Technological Factors were depicted. In the microenvironment, the factors focused on were: Collaboration, Competition, Suppliers, and Regulators. All in all, in order to remain competitive within this industry, Enterprise has been successful in adapting to such changes to continue offering services that will satisfy their customers.
References
“Enterprise Rent-A-Car,” (2012).
Retrieved from: http://armsautosuite.com/. Hart, A. (2011).
Shared Value & Partnerships: The Makings of a Collaborative Economy. Retrieved from: http://www.triplepundit.com/2011/11/shared-value-partnerships-makings-collaborative-economy/ Kazanjian, K. (2007).
Exceeding Customer Expectations: What Enterprise, America’s #1 Car Rental Company, Can Teach You About Creating Lifetime Customers (First Edition).
New York: Crown Business. McFarlane, Donovan A. (2013).
“The Strategic Importance of Customer Value,” Atlantic Marketing Journal: Vol. 2: Iss. 1, Article 5. Weinstein, A. (2012).
Superior Customer Value: Strategies for Winning and Retaining Customers (Third edition).
Boca Raton, Florida: CRC Press-Francis & Taylor Group.
