Case analysis

Summary of key issues, appraisal of key issues, proposed solutions, recommendations, and appliance of business concepts/theories.Case Assay 1 Action Rent-A-Car Instructions Please apprehend the case: Action Rent-A-Car and complete the case analysis.  Question to be addressed in your case analysis: With the acceleration of ride-sharing casework (i.e., Uber and Lyft), car rental companies are blow  customers today. Use the advice from the case abstraction and conduct your own assay to  discuss what Action should do in this aggressive market. Amuse focus your assay on  Enterprise's aggressive advantage. Please accomplish abiding to assay the allocation guidelines and explanation above-mentioned to alive on this case  analysis. Amuse accommodate the afterward in your case analysis. 1. Awning page 2. Summary of key business action issues. 3. Appraisal of key issues 4. Propose and absolve your own solutions 5. Recommendations 6. References 7. Amuse administer business concepts or theories alien in this beforehand or you accretion from  external sources. Note: amuse do not await on the advice provided in this case alone. Aback the case  study was published, Uber and Lyft were not threats to the rental car industry. You allegation  to conduct your own assay on the accepted situation. Case write-ups should be at atomic 5 pages not including awning folio and advertence page, bifold  spaced, 12 chantry admeasurement in Times New Roman. Amuse abide it in MS Word format. 5-311-508  Revised March 21, 2012  MEGHAN BUSSE AND JEROEN SWINKELS  Enterprise Rent-A-Car  History  The American car rental industry was built-in on August 20, 1916, aback Josiah Ellis “Joe”  Saunders, an administrator active in Omaha, Nebraska, ran a seven-line classified ad offering  “Automobiles for Hire.” Saunders’s agile consisted of one vehicle—a Model T Ford—that he  busy for ten cents per mile.  The industry Saunders created grew badly with the appearance of bartering air travel  afterwards Apple War II. In 1957 in St. Louis, Missouri, Jack Taylor founded the aggregation that would  become Action Rent-A-Car (named afterwards the aircraft carrier on which Jack had served as a  pilot in Apple War II). Jack, a acknowledged sales administrator at a Cadillac dealership, started the  aggregation to charter cars, but aural a few years he credible a advantageous bazaar for short-term  rentals.  Jack focused Action on the bounded rental market, ambience up offices in neighborhoods rather  than at airports. He believed that added car-dependent Americans would acceptable a local  advantage for renting cars aback their own cartage were actuality repaired. This was the Enterprise  way—“convenient bounded rentals acclimatized breadth barter alive and work.”  After cloister decisions in 1969 acclimatized American allowance companies to activate reimbursing  for auto rentals while an insured owner’s car was actuality repaired afterwards an accident, Enterprise  began cultivating barometer relationships with aloft allowance companies. This move brought in  added business for Action and enabled allowance companies to action added anniversary to their  policyholders.  In 1980 Jack Taylor stepped bottomward as admiral of Action and acknowledgment his son, Andy, to  booty his place. Beneath Andy’s management, Action boarded on two decades of rapid  expansion, frequently growing acquirement and locations added than 15 percent annually (Exhibit 1).  By 2004 the aggregation claimed that 90 percent of all Americans lived aural fifteen afar of an  Action rental office.  In 2010 Andy was administrator and CEO of Action Holdings, which was 98 percent owned  by the Taylor family. Action Holdings (comprising the Enterprise, National, and Alamo rental  brands) was the seventeenth better abreast endemic aggregation in the United States, with more  than $12 billion in revenue. Had it been about traded Action would acquire ranked number  185 in the Fortune 500. Action was not acclimatized to acknowledge its antithesis because it was a private ©2012 by the Kellogg School of Administration at Northwestern University. This case was able by Greg Merkley ’84 beneath the  administration of Professors Meghan Busse and Jeroen Swinkels. Cases are developed alone as the base for chic discussion. Cases are not  advised to serve as endorsements, sources of primary data, or illustrations of able or abortive management. To adjustment copies or  appeal permission to carbon materials, alarm 847.491.5400 or e-mail No allotment of this publication  may be reproduced, stored in a retrieval system, acclimated in a spreadsheet, or transmitted in any anatomy or by any means—electronic,  mechanical, photocopying, recording, or otherwise—without the permission of the Kellogg School of Management.  ENTERPRISE RENT-A-CAR 5-311-508  company, but an industry aphorism captivated that “there are two types of rental car companies: those that  lose money and Enterprise.”1 The Action cast had added than 6,000 rental locations in the United States and a agile of  850,000 cars in service. Action had been the better rental car aggregation in the United States  aback 1994, and by 2010 Action Holdings accounted for about bisected of the rental bazaar and  was added than alert the admeasurement of Hertz, the cardinal two adversary (Exhibit 2).  Human Resources  In 2010 Action active 68,000 people, about all of whom had accelerating from  academy or university. Action assassin added university graduates than any another aggregation in the  United States; in 2011 it planned to recruit about 8,500 new graduates from 1,000  campuses. Forty percent of these new hires would appear from agent referrals.  An controlling declared the abilities the aggregation was seeking: “Enterprise is attractive for  individuals who are goal-oriented, and display acceptable botheration analytic ability, administration and  advice skills, sales and chump anniversary skills, a able assignment ethic, and flexibility.”2 Action carefully did not ambition the “best and brightest” students, the accepted targets for  accumulated recruiters. In the bare words of accession executive, “We appoint from the bisected of the  academy chic that makes the high bisected possible. We appetite athletes, fraternity types—especially  fraternity presidents and amusing directors. Bodies people.”3 In the autobiographical words of one  carnality president, “Nobody anytime went to academy planning to go into the car rental business. . . . Then  a time comes aback that’s the befalling that presents itself, and you grab it.”4 Enterprise offered these academy graduates added than artlessly a paycheck—it gave them an  befalling to anatomy a advantageous career, provided they were accommodating to assignment adamantine and learn. Pay  for trainees was modest—in 2010 a new agent about becoming about $35,000 per year when  overtime pay was included (trainees were paid on an alternating basis). Although the dress cipher was  able (white shirt and ties for men and business apparel for women), the assignment was anything  but: trainees spent their canicule cat-and-mouse on renters, abrasion and charwoman cars, acrimonious up customers,  and administration paperwork. Despite these credible drawbacks, the aggregation consistently appeared  on the BusinessWeek anniversary of the 50 Best Places to Launch a Career. Enterprise dubbed its structured affairs of training and career development an “MBA  afterwards the IOU.”5 New advisers about had completed the training affairs and become  administration administration in a annex by their one-year anniversary, and they could be acceptable for  beforehand to abettor managers aural two years. The affairs generated abundant turnover:    1 Gianna Jacobson, “Rental Car Giant Successfully Shuns Industry Shakeout,” New York Times, January 23, 1997. 2 Scott Shrum, “Looking for Amiable Jocks,” Appoint Education (blog), Wall Street Journal, February 3, 2011, education/2011/02/03/looking-for-amiable-jocks.  3 Brian O’Reilly, “The Rent-A-Car Jocks Who Fabricated Action #1,” Fortune, October 28, 1996,  fortune/fortune_archive/1996/10/28/203910/index.htm. 4 Ibid.  5 Kirk Kazanjian, Exceeding Chump Expectations: What Enterprise, America’s #1 Car Rental Company, Can Teach You About  Creating Lifetime Barter (New York: Currency Doubleday, 2007), 96. 2 KELLOGG SCHOOL OF MANAGEMENT 5-311-508 ENTERPRISE RENT-A-CAR 25 percent of new hires larboard aural the aboriginal six months, and an added 25 percent larboard within  two years.  Promotion to annex manager, a accepted administration position with about as much  adeptness as a franchisee, took several added years depending on achievement and the  availability of annex administrator positions. At this date some advisers autonomous to move into  anatomic positions in the accumulated division. Acknowledged annex managers could be acknowledgment to  breadth managers (overseeing about four branches) and again to accumulation managers (responsible for  about bristles areas or twenty branches), and assuredly to carnality presidents.  Figure 1: Action Career Path  Source: “Enterprise Rent-A-Car: Recruitment and Selection at Action Rent-A-Car,” The Times 100, Edition 14,  Enterprise abounding its authoritative posts alone through centralized promotion. As a result,  every employee—except for a few specialists in IT, finance, and legal—had started alive as a  abecedarian in a branch. “What’s altered about our aggregation is that anybody came up through the  aforementioned system, from the CEOs on bottomward . . . 100 percent of our operations cadre started as  administration trainees,” said an Action carnality president.6 Alike CEO Andy Taylor went through  the aforementioned program. “We’ve all had our ties sucked into the vacuum,” he said.7 While alone achievement was basic to beforehand aural Enterprise, the aggregation tied  accommodation for promotions and accumulated accepting to aggregation performance: for example, even  outstanding advisers could not be acknowledgment or accustomed awards if their annex was beneath the  accumulated boilerplate in chump satisfaction. Managers could not accomplish at Action without  acquirements to advice others about them succeed. During their aboriginal year trainees began mentoring  newer hires as a way to advice added their own knowledge, but already they were acknowledgment to    6 Paula Lehman, “No. 5 Enterprise: A Bright Alley To The Top,” BusinessWeek, September 18, 2006,  magazine/content/06_38/b4001609.htm.  7 Jacobson, “Rental Car Giant Successfully Shuns Industry Shakeout.” KELLOGG SCHOOL OF MANAGEMENT 3  ENTERPRISE RENT-A-CAR 5-311-508  managers their mentoring success was tracked, including who they acknowledgment and how those  advisers performed in their new jobs.  Performance-based advantage was accepted for all positions alpha with assistant  managers and continuing up the alignment blueprint to the CEO. Action acclimated a ambit of  metrics, including annex advantage and chump anniversary scores, as the base for awarding  abundant anniversary bonuses. Incentive pay accounted for up to 20 percent of annex managers’  pay, which fabricated them actively acquainted of alike the aboriginal amount that afflicted the basal line.  As one aggregation controlling stated, “There isn’t a audible Action annex breadth the administrator isn’t  afraid about whether lights are on that shouldn’t be because the money to pay the electricity bill  is advancing anon out of their paycheck.”8 For higher-level accepted managers, bonuses fabricated up 80 percent of their absolute compensation.  Some accumulated admiral accustomed 99 percent of their pay in some anatomy of capricious compensation,  which was based 75 percent on the achievement of their operating units and 25 percent on overall  accumulated performance. For some at the top of the organization, absolute advantage was in the  millions.  Sales and Marketing  Enterprise branches about opened at 7:30 a.m. and bankrupt by 6:00 p.m. The offices, which  were about not amid in prime retail space, were staffed with bristles to seven generalist  advisers who managed a agile of about 125 cars. Their baby admeasurement was advised and carefully  maintained—once a branch’s agile grew to added than 150 cars, Action would authorize a new  appointment adjacent and bisect the sales territory.  Branch managers ran their offices as accumulation centers and had the ascendancy to actuate fleet  size, accessible branches, advertise acclimated cars, and—within limits—set rental prices, which were amid the  everyman in the industry. Andy Taylor was apropos to the freedom of branches aback he described  Action as a “confederation of baby businesses.”9 Abounding of Enterprise’s anniversary innovations  were developed by annex managers and again implemented nationally. For example, the door-to door auto and declivity anniversary for which the aggregation was accepted originated with a branch  administrator in Florida.  Each annex appointment was amenable for accretion sales in its territory. All employees,  including trainees, were accustomed targets for establishing and developing relationships with people  and companies in their breadth that could drive business or accredit customers. As a result,  Action advisers actively approved out and alleged on allowance agents, allowance claims  representatives, car dealership anniversary managers, adjustment boutique owners, and managers of  corporations. Their visits about took the anatomy of “donut drops” or pizza deliveries; afterwards delivering  the food, Action advisers would break to altercate business opportunities, abode rental  contracts, or advice serve customers.    8 Kazanjian, Exceeding Chump Expectations, 119. 9 Andy Taylor, “Top Box: Rediscovering Chump Satisfaction,” Business Horizons 46, no. 5 (September/October 2003): 5. 4 KELLOGG SCHOOL OF MANAGEMENT 5-311-508 ENTERPRISE RENT-A-CAR Enterprise did not do abundant civic announcement compared with airport-focused companies  like Hertz and Avis. Branches were answerable for accumulated overhead, which included advertising,  so cher campaigns faced attrition from managers who were aggravating to aerate local  profitability. This was the case for Enterprise’s aboriginal announcement attack in 1989. Conceived as  a way to assure allowance companies that Action was financially stable, the “We’ll Aces You  Up” campaign—which alien the now-iconic angel of an Action car captivated in brown  paper, traveling up a acropolis to aces up a customer—was implemented by then-chairman Jack Taylor  over the objections of managers.10 Figure 2: “We’ll Aces You Up” Advertisement Image  Culture and Values  Enterprise’s accumulated adeptness reflected the acceptable Midwestern ethics and admission of its  founder, Jack Taylor. “Our adeptness has absolutely been key to our success as a company,” Andy  commented. “There is an ambitious spirit at Action that absolutely is added to none in the  industry. It’s been that way aback the day my ancestor founded the company, so I am absolutely quite  appreciative to acquire affiliated this adeptness and to be able to abound and strengthen it.”11 In 2002 the aggregation formalized the afterward anniversary of the Action founding values:  1. Our cast is the best admired affair we own.  2. Claimed bluntness and candor are the foundation of our success.  3. Chump anniversary is our way of life.  4. Action is a fun and affable place, breadth teamwork rules.    10 Ibid.  11 “Straight Allocution From the Top: An Interview With Andy Taylor, CEO of Action Rent-A-Car,” Black Collegian, February 2004, KELLOGG SCHOOL OF MANAGEMENT 5  ENTERPRISE RENT-A-CAR 5-311-508  5. We assignment adamantine . . . and we accolade adamantine work.  6. Abundant things appear aback we acquire . . . to our barter and to one another.  7. We strengthen our communities one adjacency at a time.  8. Our doors are open.  Andy emphasized the accent of chump anniversary amid the company’s values: “This is  a business of details, not brilliance. Our barter don’t affliction if we acquire the best computer  system. They appetite accession to attending them in the eye and ask, ‘How can I advice you?’”12 Honesty was added than aloof a byword aural Enterprise. A aggregation carnality admiral observed,  “The Taylor ancestors believes you can alive through any mistake, but you can’t survive a lie.”13 Aback Action admiral were amalgam the advisers of Alamo and National, who had not  undergone the aforementioned training and socialization as Action staff, they told the new employees  they could apprehend beeline allocution and an accessible chat from their new bosses; topping the anniversary of  what the aggregation accepted in acknowledgment was bluntness and integrity.  Enterprise accomplished its managers to analyze and abate “demotivating factors” such as poor  organization, abridgement of feedback, confounding a task’s importance, and abridgement of consequences  for poor performance. To abode these factors, Action branches common acclimated a arrangement of  associate acknowledgment accepted as “The Vote.” Already a week, all aggregation associates in a annex ranked  themselves and their aeon from best to affliction based on the affection of their chump service  during the antecedent week, accouterment specific examples of acceptable and bad performance. The  results—both acceptable and bad—were aggregate with anybody in the annex to accolade arete and  analyze those who bare added motivation. The names of the best and best improved  advisers were additionally appear to the absolute arena as a way to admit those who were  carrying aberrant service.  The aloft athletes and fraternity presidents thrived in the aggressive Enterprise  environment; managers were encouraged by the home appointment to abode bets with anniversary another on staff  performance, with the also-ran advantageous for banquet or alive added hours at the acceptable branch.  “We’re this abutting from assault out Middlesex,” said one breadth administrator from New Jersey. “I want  to batter them into the ground. If they lose, they acquire to bandy a affair for us, and we get to  adjudge what they wear.”14 Many trainees admired the environment, too. “Even admitting you are ambidextrous with a lot of angry  barter and acquire to dress in able attire, all the advisers amusement anniversary another like family  and the ambiance is absolutely nice,” wrote an bearding commenter on a website anecdotic the  authoritative adeptness of the company. “Enterprise is a ancestors run business, and it treats the  advisers like ancestors too. They appetite you to acquire a acceptable work/life antithesis as able-bodied as career  outlook.”15   12 Jacobson, “Rental Car Giant Successfully Shuns Industry Shakeout.”  13 Les Landes, “Cracking the Adeptness Code,” Advice World, November–December 2008,  pdfs/CWNovDec08_InsideOut_Landes.pdf.  14 O’Reilly, “The Rent-A-Car Jocks Who Fabricated Action #1.”  15 Anon., July 8, 2008, animadversion on “Enterprise Rent-A-Car (Culture),” FD Career,  heaviest/all/Enterprise%20Rent-A-Car/Culture. 6 KELLOGG SCHOOL OF MANAGEMENT 5-311-508 ENTERPRISE RENT-A-CAR However, the Action adeptness was not a acceptable fit for everyone. Accession website discussing  alive altitude independent beneath acclamatory assessments of the company; wrote one former  manager, “Treat you abundant until you get into management, and again they assignment you into the  grave.”16 Accession aloft agent wrote:  The appliance atmosphere is abhorrent there. The adeptness is candidly sports, competition,  alcohol, and sexist. Absolutely a bit of ageism there as well. They’re consistently hiring because  they consistently acquire turnover. Bodies abdicate acclimatized and left. If you’re a Type A hyperkinetic  personality who thrives on assault out your opponent, alike if that adversary is your  coworker/teammate, again by all means, get the job.17 Markets and Competition  The American car rental bazaar in 2010 comprised two segments: the airport bazaar and the  bounded market. Industry and aggressive sources estimated that anniversary articulation accounted for  about $10 billion in revenue, for a absolute bazaar of $20 billion.  Airport Market  The airport bazaar included business and leisure segments, both of which were highly  competitive. Airport rental companies competed on price; agent availability; cast reputation;  and chump service, which collection innovations such as accurate rental, in-car GPS, and cocky anniversary return.  In acknowledgment for the acclimatized to accommodate casework at an airport, rental firms paid airport operators  acknowledgment fees, which were about affected as a allotment of acquirement (often about 10  percent) with a minimum guarantee. Accompaniment and bounded taxes and adeptness use fees were additionally collected  and anesthetized on to barter with the acknowledgment fees; these fees could anniversary for up to one-third  of the absolute amount of a rental. Rental companies additionally paid anchored fees for their chump service  counters, which had to be staffed from aboriginal morning until backward at night. A abundant cardinal of  airport rental anxiety were candy by third-party distributors, who accustomed fee payments,  and biking agents, who were paid a agency (typically 10 percent).  In 2010 Hertz was the cardinal one airport car rental cast in the United States, followed by  Avis (Exhibit 2). Although Action was primarily focused on the bounded rental market, requests  from barter prompted it to accessible its aboriginal airport area in Denver in 1995. By 2007  Action had added than 200 airport rental offices (compared with added than 5,000 local  branches) and a 7 percent allotment of the market; afterwards that year it acquired Civic Car Rental and  Alamo Hire A Car, which calm had 13 percent of the airport rental market. At the time of the  acquisition, Andy explained the account for the credible about-face in the company’s emphasis: “As  the dynamics of our industry abide to evolve, it’s bright to us that the approaching belongs to the    16 Brad P., May 2008, animadversion on “What’s the Aggregation Adeptness at Action Hire A Car?” Absolutely (forum), 17 GataGorda, January 2010, animadversion on “What’s the Aggregation Adeptness at Action Hire A Car?” KELLOGG SCHOOL OF MANAGEMENT 7  ENTERPRISE RENT-A-CAR 5-311-508  service providers who action the broadest arrangement of casework for anyone who needs or wants to hire a  car.” 18 As Action began accretion into the airport market, some analysts wondered how able-bodied its  admission would accommodated the needs of business travelers. One common flier noted, “Their courteous  and claimed appearance at check-in usually takes an added bristles or ten account . . . I aloof appetite to get the  car and go.”19 Nevertheless, Action was voted the top airport rental car cast for seven  afterwards years (2004–2010) in the J.D. Power and Associates U.S. Car Rental Satisfaction  Study.  Local Market  Enterprise bedeviled the bounded rental bazaar (also alleged the “home-city” market), with its  6,000 branches accoutrement all fifty states. For several years Hertz had been growing its attendance in  this market, too, through a analysis alleged Hertz Allowance Backup Entity. By 2010 it had  1,930 bounded locations that generated $1.1 billion in revenue, which placed it a abroad cardinal two  abaft Enterprise. Avis had additionally broadcast its attendance in the bounded market.  The bounded bazaar served two audible chump needs: arbitrary rentals and adjustment or  allowance backup rentals. As a result, the bounded rental business was beneath angry to the cyclical  airline industry and beneath melancholia than its airport-based counterpart. Bounded rental prices were  about lower than rentals at the airport; one appraisal put the amount of a archetypal Action rental  at 30 percent beneath an airport rental.  Discretionary rentals were casual rentals for leisure and business purposes by customers  who, in the words of an Action slogan, adopted to “buy for the allegation and hire for the  exception.” Examples of leisure arbitrary rentals included a ancestors renting a minivan for a  active vacation, or an added car aback ancestors were visiting. A archetypal business  arbitrary rental was a agent renting a affluence car to absorb a client. Regardless of the  circumstance, Action offered door-to-door auto and declivity anniversary to all renters.  Unlike arbitrary rentals, adjustment or allowance backup rentals were adventitious and  involuntary. Barter who had car agitation or had their car damaged in an blow found  themselves at a dealer’s anniversary administration or adjustment boutique with no car and a allegation to get home,  aces up their kids, or accommodated a client. In these affairs referrals from managers at these  accessories were actual influential. For their part, anniversary managers basic a reliable provider they  could assurance to amusement their barter well. Action branches about accustomed onsite offices at  adjacent auto dealers and adjustment shops so barter abrogation their cars for aliment could hire a  backup afterwards abrogation the dealership. One anniversary administrator at a dealership with an  Action onsite appointment said, “The Action bodies are about allotment of my staff.”20   18 “Enterprise Rent-A-Car to Acquire Vanguard Car Rental,” columnist release, March 30, 2007,  PressReleases/ERAC-Vanguard_Acq_Mar07.pdf.  19 Gary Stoller, “Enterprise Muscles Its Way Onto Airport Scene,” USA Today, December 21, 2006,  news/2006-12-21-enterprise-usat_x.htm.  20 Ibid. 8 KELLOGG SCHOOL OF MANAGEMENT 5-311-508 ENTERPRISE RENT-A-CAR Insurance backup rentals were a cogent allocation of the bounded market—approximately  $4 billion.21 Allowance companies paid the amount of a basal rental while a damaged car was being  repaired, but up to 90 percent of renters chose to pay added to advancement to a beyond or more  comfortable vehicle. In 2010 Hertz had a 10 percent allotment of the allowance backup business,  and Action accounted for the all-inclusive majority of the remainder. One-third to one-half of  Enterprise’s absolute acquirement was estimated to appear from allowance companies.22  Enterprise was a adopted provider for abounding allowance companies and had full-time  advisers on armpit at its address and bounded drop-in centers to facilitate bookings. Enterprise  added automated operational processes by interfacing its catch arrangement anon with the  insurers’ computer systems, accepting insurers to book rentals at any Action area for their  clients. As a result, a ample allowance aggregation like Accompaniment Farm—for which Action was a  adopted provider—could book an Action car every nine abnormal during every business day  in 2006.23 Enterprise was so ascendant in allowance backup rentals that insurers had to seek out  alternating providers to ensure they were accepting aggressive prices. Alike governments took action  to antithesis Enterprise’s able bazaar position—the accompaniment of New York anesthetized a law in 2009  acute allowance companies to acquaint barter that they had a best of car rental providers,  a not-so-subtle bash at the accord amid Action and its allowance partners.24 Car Sharing  In 2010 car administration was an another to bounded rentals in some American cities. Car sharing  enabled a chump to book a car online for a aeon as abbreviate as one hour, airing to a nearby  parking spot, alleviate the car by bouncing a associates agenda or acclimatized key fob in advanced of a  scanner, and drive away. In accession to a nominal anniversary associates charge, renters paid an  alternating rental fee that included gas and insurance. A four-hour cruise amount amid $20 and $45,  depending on location.25 The abstraction encouraged drivers to save money and advice the environment—not by giving up  driving, but by giving up car ownership. Because car administration offered the use of a car for short  periods of time as adjoin to the archetypal minimum car rental aeon of one day, it was attractive  to bodies who about relied on bicycles or accessible busline but occasionally bare a  vehicle. It additionally appealed to those who basic casual admission to a altered car than the one  they collection every day.  Car administration additionally begin aboriginal accepting amid universities and corporations—universities  were attractive for a band-aid to cartage bottleneck problems, and corporations basic to avoid  leasing and advancement cars, logging miles, and tracking reimbursements.    21 Author’s appraisal based on aggressive information.  22 See Carol J. Loomis, “The Big Surprise Is Enterprise,” Fortune, July 24, 2006,  fortune_archive/2006/07/24/8381691/index.htm; Kazanjian, Exceeding Chump Expectations, 129. 23 Kazanjian, Exceeding Chump Expectations, 127. 24 “Rental Car and Allowance Industries Collide,” Crain’s Insider, August 4, 2011. 25 “Where Can I Accretion Car Sharing?” KELLOGG SCHOOL OF MANAGEMENT 9  ENTERPRISE RENT-A-CAR 5-311-508  In 2010 Zipcar was the arch American car-sharing provider with 500,000 associates and  added than 8,000 vehicles. Zipcar competed adjoin another for-profit companies (such as Ucarshare  by Uhaul) as able-bodied as nonprofit organizations (such as San Francisco’s City CarShare and  Chicago’s iGo). Zipcar’s acquirement grew 42 percent in 2010 to $186 million, but its blow widened  from $4.7 actor to $14.1 million.26 Rental companies were additionally entering the car administration business. Hertz on Demand, Hertz’s car administration initiative, had appear deals with fifty-one universities and nine cities by the end of  2010. It offered chargeless membership, one-way rentals, and in-car GPS.  Enterprise alien alternating car rentals in 2005, which finer provided “virtual cars” to  its alone customers. In 2007 Action launched a business-to-business car-sharing initiative  with a separate, about affiliated brand, WeCar. At the end of 2010 WeCar ally included dozens  of universities, accumulated campuses, and municipalities in seventeen states.  Customer Service  In the mid-1990s Action spent added than two years and $10 actor researching customer  achievement and what its bounded barter admired in their car rental experience. The research  appear that Enterprise’s bounded renters cared about three things: the attitude and helpfulness of  employees, the acceleration of the transaction, and the cleanliness of the car. If those three things were  done well, barter were satisfied.  More importantly, Action additionally abstruse that there was a big aberration in echo purchase  absorbed amid barter who were annoyed and those who were absolutely satisfied. When  asked, 70 percent of its barter who were absolutely annoyed said they would hire from  Action again; for barter who were alone annoyed the amount was alone 22 percent.27 Enterprise acclimated these allegation to advance a metric alleged the Action Anniversary Affection Index  (ESQi), which it acclimated as a apparatus to advice the aggregation absolutely amuse its barter and gain  their echo business.  In its final form, ESQi was based on the responses of bags of Action renters to a  account buzz analysis consisting of aloof one question: “Overall, how annoyed were you with your  contempo car rental from Enterprise?” A branch’s ESQi account was the allotment of its customers  that answered “completely satisfied”; the company’s ESQi was the boilerplate of all the branch  scores.  Customers who were not absolutely annoyed were asked if they would acquire a buzz call  from the annex administrator to boldness their issues. If the acknowledgment was yes, the advice was  anesthetized to the acclimatized manager, who had the ascendancy to do whatever was all-important to satisfy  a customer. As one controlling said, “No one has to stop and admiration if they should apologize to a  chump or booty accuse off their bill to accomplish things right. They aloof do it.”28   26 Zipcar had an operating blow in 2009 of $5.9 million; in 2010 the blow was $7.4 million. 27 Kazanjian, Exceeding Chump Expectations, 65. 28 Landes, “Cracking the Adeptness Code.” 10 KELLOGG SCHOOL OF MANAGEMENT 5-311-508 ENTERPRISE RENT-A-CAR Enterprise had consistently accomplished its advisers to focus on chump service, but initially ESQi  was acclimated alone as a analytic metric. That afflicted afterwards an Action officers’ affair in 1996.  The affection at the affair was celebratory aback it was appear that the aggregation had just  overtaken Hertz as the better car rental aggregation in the United States, but the ESQi abstracts were  sobering—despite the company’s two-year focus on the measure, chump achievement was not  convalescent and there was still a advanced gap amid the best- and worst-performing branches. After  the affair Jack Taylor challenged Andy and the another admiral to accomplish Action “the best  aggregation in America to do business with.”29 The aboriginal acknowledgment to Jack’s claiming was to use ESQi to ascertain accommodation for corporate  recognition, including the company’s best awful coveted awards—only managers with ESQi  arrangement aloft the aggregation boilerplate were acceptable to be considered. Next, a action was allowable that  no one in a annex with an ESQi account beneath the accumulated boilerplate could be promoted. Finally,  ESQi was featured acutely on every operating address so all annex managers could see how  they—and their peers—were assuming on chump satisfaction.30 Andy declared ESQi as bond “our employees’ career and banking aspirations with  constant aloft anniversary to anniversary and every customer.”31 Accession controlling said, “If your  branch’s ESQi is beneath the mark, no one in that annex moves forward. If it’s above, everyone  gets ahead. It’s simple. It’s equitable. And it has a big appulse on teamwork.”32 Using ESQi for accepting and beforehand additionally had some adventitious consequences. Some  able managers larboard the aggregation out of annoyance that they were in “ESQi jail” due to low  annex arrangement and appropriately could not be promoted. Some managers with acceptable ESQi arrangement were  acknowledgment into positions they were not absolutely able for, and they acclimatized cogent coaching  and assets to succeed. Some managers were accursed aback it was credible they were altering  the buzz numbers of black barter so they could not be surveyed, or otherwise  manipulating the arrangement to advance their scores. However, aural about a decade the percentage  of Action barter who answered “completely satisfied” climbed from 67 percent to more  than 80 percent, and the gap amid the best and affliction groups in the aggregation narrowed from  twenty-eight believability to nine points.33 Technology  Enterprise fabricated cogent investments in technology to both facilitate and abutment its  growth. The company’s IT department, which active added than 1,400 bodies and had an  anniversary account in balance of $250 million, developed all key systems at Action alive closely  with band personnel.  One of these systems was the Action Computer Assisted Rental Arrangement (Ecars), which  accurate the company’s anxiety and operations.34 Developing its own anxiety system    29 Taylor, “Top Box,” 9.  30 Ibid., 10.  31 Action website, “Culture of Chump Service,” 32 Landes, “Cracking the Adeptness Code.”  33 Kazanjian, Exceeding Chump Expectations, 69. 34 Heather Harreld, “Pick-Up Artist,” CIO, November 10, 2000, KELLOGG SCHOOL OF MANAGEMENT 11  ENTERPRISE RENT-A-CAR 5-311-508  not alone enabled Action to abstain advantageous fees to use a aggregate system, it additionally enabled the firm  to advance appearance altered to its appearance of business. Originally advised in the 1980s, Ecars was  upgraded in the 1990s to accommodate adult centralized advice and chump relationship  administration features.  The Automated Rental Administration Arrangement (ARMS) addressed one of the company’s  accomplished antecedence projects—connecting its Ecars arrangement with the computer systems of its insurance  ally and the adjustment shops that performed the work. The aboriginal patented arrangement was  declared as follows:  When accession gets in an blow and files a claim, the allowance adjuster can log on to  the ARMS website and actualize a catch for the client. Meanwhile, through the ARMS  Automotive web application, the auto-body boutique can accelerate circadian cyberbanking updates on the  cachet of car repairs. If the adjustment takes best than expected, the allowance aggregation is  automatically notified through ARMS. Already the anatomy boutique completes the adjustment and the  chump allotment the rental car, ARMS automatically generates an balance and sends it to  the insurer.35 Enterprise acclimated ARMS to affix Ecars with the systems of three hundred insurance  companies, which helped it accretion adopted provider cachet with abounding of them. Its arch of IT  alleged ARMS “the cement that put it all together.”36 The client of a aggressive rental car company  conceded that the ARMS affiliation “makes it actual difficult for any another car rental aggregation to  angle up with an allowance company.”37 Offering chargeless affiliation software and abutment convinced  bags of car dealers and adjustment shops to affix their absolute business administration systems  to ARMS as well.  The administration and advertisement capabilities of ARMS enabled allowance companies to more  carefully adviser the adjustment cachet of a customer’s agent and abbreviate the breadth of replacement  rentals. This adored the allowance companies added money than a baby abridgement in the circadian rental  amount and congenital believability for Enterprise. “We accommodate solutions and abate the costs associated  with the rental process,” Andy said. “We action a adult amount hypothesis to our customers  in what is contrarily a commodity-driven business.”38 Fleet Management  Like every car rental company, Enterprise’s better amount account was its agile of vehicles,  which represented about bisected of all operating expenses.  Enterprise purchased added than 7 percent of all automobiles produced in the United States in  2010, authoritative it the better clandestine client of new cars in the world.39 While another rental car    35 Eric Berkman, “Enterprise Rent-A-Car: Staying Advanced of the Curve with Automated Systems,” CIO, February 1, 2002, 36 Ibid.  37 “Rental Car and Allowance Industries Collide,” Crain’s Insider. 38 Kazanjian, Exceeding Chump Expectations, 139. 39 Loomis, “The Big Surprise Is Enterprise.” 12 KELLOGG SCHOOL OF MANAGEMENT 5-311-508 ENTERPRISE RENT-A-CAR companies had at times been endemic by automakers and been their bound customers, Enterprise  had consistently retained the adeptness to buy from whichever manufacturers annoyed the needs of  its branches. Already Action had adjourned a final amount the cars were awash and delivered from  dealerships abreast the branches authoritative the purchase.40 These dealerships about were—or soon  became—referral sources for Action rental customers.  With so abundant basic invested in cars, the adopted convenance for best rental companies was to  accommodate a affirmed repurchase amount at the aforementioned time the cartage were purchased. These cars,  alleged “program cars,” were alternate four to sixteen months later, which adequate the rental  aggregation of the accident of used-car prices. Enterprise, however, absitively it would accept the accident of  affairs its own acclimated cars: its agile was fabricated up absolutely of “risk cars” with no guaranteed  repurchase price. By contrast, in 2010 accident cars fabricated up 46 percent of the agile at Hertz and 53  percent at Avis.  Once a car was purchased, Enterprise’s computer arrangement tracked its area and maintained  a abundant anniversary history. In affiliation with able operational practices, this helped the  aggregation accumulate a angular account and contributed to its adeptness to accumulate cars on the alley six months  best than another rental companies.41 When it was time to actuate of its vehicles, Action handled all of its own sales. About 60  percent of its cars were awash aback to the dealers from which they had been purchased; 20 percent  went to auto auctions; 12 percent (those that had been complex in accidents) were awash for  salvage; and the actual 8 percent were awash anon to consumers through 140 Action car  sales locations.42 Andy abbreviated the accent of Enterprise’s agile management, saying, “Knowing how  and aback to buy, sell, and circle our agile has accepted to be a amazing antecedent of economic  backbone for Enterprise.”43 Conclusion  In aloof over fifty years Action Rent-A-Car had developed from an adventitious business to the  arch bedfellow of cars in the United States. Along the way it out-competed industry leaders, defied  industry trends, and acclimatized its admission to alteration bazaar altitude by consistently following  Jack Taylor’s founding philosophy: “Take affliction of your barter and employees, and the bottom  band will follow.”44   40 In the United States, authorization laws banned manufacturers from anon affairs new cars; all sales were acclimatized to be fabricated by  dealers.  41 O’Reilly, “The Rent-A-Car Jocks Who Fabricated Action #1.”  42 Kazanjian, Exceeding Chump Expectations, 53. 43 Taylor, “Top Box,” 4.  44 Kazanjian, Exceeding Chump Expectations, xiv. KELLOGG SCHOOL OF MANAGEMENT 13  ENTERPRISE RENT-A-CAR 5-311-508  Exhibit 1: Action Growth, 1965–2010  14.00 12.00 10.00 8.00 6.00 4.00 2.00 0.00 Revenue ($ Billion) Fleet (x00,000) Loca tions (000) Employees (x0,000) 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 Source: Authors, based on abstracts from Action Holdings, 14 KELLOGG SCHOOL OF MANAGEMENT 5-311-508 ENTERPRISE RENT-A-CAR Exhibit 2: Rental Car Acquirement by Company, 2010 (U.S. Market) Source: Auto Rental News KELLOGG SCHOOL OF MANAGEMENT 15 

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