Analysing how to Improve the Position of easyCar Essay Example

2.3.2.Intangibility: 6
2.3.3.Perishability: 6
2.3.4.Inseparability: 7
2.4.Operational procedure to support competition through low prices: 7
2.5.Impact of easyCar operations on taxis, coaches, and trains: 9
2.5.1.Rent for the hour: 10
2.5.2.Clean car policy: 11
2.5.3.Insurance purchase from the customer: 11
2.5.4.Fuel filling only when empty: 12
2.6.Significance of legal challenges of easyCar: 12
2.7.Evaluation of achieving easyCar goals and their improvement: 13
3.0.Decision: 17
4.0.References: 18

1.0.Introduction:

The easyCar company primarily operates in the auto rental industry, mainly in Europe. This industry faces intense competition from both local and international markets, with some rivals being significantly stronger than easyCar. To overcome this competition, easyCar has adopted a strategy of offering low prices. unified text:

This scheme proved to be more effective, requiring a well-designed operational system that helps reduce costs. By implementing this process, the company was able to operate in 17 different cities across various countries. Now, the company aims to expand its presence at both national and international levels. Conducting analysis of the national and international markets is crucial, as many companies have failed to establish themselves without proper analysis beforehand. Therefore, it is important to assess the characteristics of the international market, including its political nature and industry demands. To achieve the purpose of this study, various concepts will be analyzed. This report will examine the characteristics of the car rental industry and how they influence the service delivery process in this industry. Furthermore, it will explore the strategy employed by easyCar to gain a competitive advantage and assess its impact on competitors. Additionally, alternative options available to easyCar

and their impact on other industries in the market will be analyzed based on easyCar's operations. Legal challenges and regulations requiring attention by easyCar will also be discussed. Finally, an evaluation of goal achievement and methods to attain those goals set by easyCar will be analyzed.The analysis of the competition of easyCar in the western European lease auto industry reveals that there are only a few dominant companies in the market. Despite this, easyCar competes at an international level with companies like Avis, Europcar, Hertz, and Sixt in Germany. These leading competitors have a larger number of rental establishments, fleet size, and presence in multiple countries compared to easyCar. However, easyCar maintains competition through its segmenting strategy for different locations. The table below shows the comparison of easyCar with its leading rivals.

Competition Analysis

(Source: Adapted from the Case 3-3 easyCar.com)Target Customers for easyCar:
As previously mentioned, easyCar primarily operates in European cities and targets primarily coach, train, and flight travelers. This is why they started operating near coach stations, train stations, and airports, making taxis, coaches, trains, and flight travelers their target customers. In order to overcome competition from other similar companies, easyCar has implemented a segmentation strategy based on price. They have divided their customer base into two parts: the tourist segment, which is price-conscious and represents about 45 to 65 percent of their customers, and the business segment, which is less price-conscious and represents about 35 to 55 percent of their customers. The tourist segment is more concerned with service quality, flexibility, and convenience. The company mainly targets tourists' locations for their business. The table below shows the geographic locations where easyCar operates. Additionally, easyCar aims to attract both rich and poor customers by offering low prices for high-end Mercedes vehicles. This strategy has enabled lower-income individuals to travel in a Mercedes

A class. The company also targets individuals who do not use cars due to traffic congestion in highly congested cities (easyCar.com).

State

City

Number

Number Near Airport

France Nice 1 1
France Paris 8 0
Nederlands Dutch capital 3 1
Spain Barcelona 2 0
Spain Capital of Spain 2 0
Spain Majorca 1 1
Spain Malaga 1 1
Switzerland Geneve 1 1
United Kingdom Birmingham 2 0
United Kingdom Bromley 1 0
United Kingdom Croydon 1 1
United Kingdom Glasgow 2 1
United Kingdom Kingston-upon-Thames 1 0
United Kingdom Liverpool 2 1
United Kingdom London 15 0
United Kingdom Manchester 2 1
United Kingdom Waterford 1 0

Entire

5 states, 17 metropoliss

46

9

(Adopted from Case 3-3 easyCar.com)

2.3.Assorted features in general for the auto rental industry:

The design requires a team work and there is a demand for execution of selling, fiscal, and operating programs to succeed in the service or merchandise. The service quality can be easily measured by the characteristics and performance of the important factors on which clients made decisions on leasing a car. The assorted characteristics of the rental car industry are:

2.3.1.Heterogeneity - Quality:

The comparison with other professional services, the Car lease is not a particular heterogeneous service. This is because most of clients look for similar service for the particular period of time.The clients may search for different vehicles with various features such as a ski rack, child seat, and different options like unlimited mileage per day, returning with either an empty or full tank of fuel (Papier, F, Thonemann, U, 2010). The similarity can also be found in the customer service provided by the employees of the car rental company.

2.3.2. Intangibility:

Even though the car rental industry deals with tangible cars (which can be touched and seen), it falls under the category of intangibles because they

do not manufacture the cars themselves. Instead, they use the cars for providing services to their customers. This creates complexity for customers when evaluating the quality of the cars since they are produced by other manufacturers (Marting, J, 2005). However, these complexities are overlooked in the car rental industry. The convenience factor of car rental is crucial in relation to the intangibility aspect of renting cars.

2.3.3. Perishability:

The car rental service is highly perishable in nature, as not renting out a car does not generate any revenue for the company and such missed opportunities may not come again to generate revenue for the company.However, high costs of auto and other fixed costs in the industry are a crucial factor in the auto rental service (Marting, J, 2005). Despite this, various auto lease companies have their own strategies to compensate for this loss. Unlike other manufacturing industries, the identification of internal loss is possible as reasons for loss can be identified.

2.3.4. Inseparability:

In the auto rental industry, the issue of inseparability is not significant according to Marting, J, 2005. During travel, customers may require a vehicle in a location where they do not have one. Inseparability means that both the customer and the vehicle are together during the service consumption. The process of setting up the necessary vehicle for the right place occurs without the presence of customers. Tang, C, Deo, S, 2008 state that customers interact with auto rental companies to book, pick up, and return vehicles. This transaction is consistent throughout the industry and does not limit the ability to achieve economies of scale. Lawrence, J, 2005 states that service design in the auto rental industry

is characterized by certain basic components.Rental companies, such as easyCar, focus on the physical installations, procedures, and processes in their service design. The employees' behaviors play an important role in ensuring proper service in the car rental industry. To compete with low prices, easyCar uses operational procedures and designs that have price-lowering features. This strategic approach, combined with their business strategy, allows them to offer lower prices compared to traditional companies that prioritize service and flexibility. However, these other companies' flexibility and service strategies have not supported their ability to provide low-price offerings to customers (Cleeren, K., Dekimpe, M., Verboven, F., 2006).The operational system of easyCar demonstrates that the methods utilized by easyCar can be seen as applications of production line attacks in the service sector. This is known as a production line attack to service. The easyCar organizational method enables standardization of services, reducing discretionary actions by employees, and incorporating engineering to support or replace people in the operational process (Cheng, J, Blankson, C, Wu, P, and Chen, S, 2005). The following chart illustrates how the resources and housing marketplace gives houses a competitive advantage through superior quality, efficiency, innovation in products and services, and superior financial performance. When analyzing the case study, it becomes evident that the company is effectively changing its operations to increase efficiency and implementing strategies related to employees and services to reduce costs. This has resulted in increased profit and customer satisfaction. Therefore, both objectives are being achieved to some extent according to the competitive advantage theory.

Competitive Advantage Theory of Competition:

Resources Provide House's Comparative Advantage

Firm's Market Place

Place Provides

Competitive Advantage

Superior Quality,

Efficiency and Invention

In Products and Services

Superior Fiscal Performance

(Adopted from

Bradley, F, 2005)

The next section will explain in detail the operational process and changes that the easyCar company has made to reduce its prices and gain a competitive advantage.

2.5. Deduction of easyCar Operations on Taxis, Coaches, and Trains:

The easyCar company competes with taxis, coaches, and trains by offering very short rental periods, such as one hour or two hours. This strategy allows for maximum utilization of their fleet. Renting out vehicles for one or two hours contributes to their bottom line, as keeping the vehicles unrented does not generate any returns. easyCar also segments its business into a business section and tourist section, considering weekday and weekend profits. During weekdays, there is higher demand for short rentals.During both weekends and weekdays, easyCar effectively manages the demand for autos by tourers, resulting in lower prices compared to competitors (Cleeren, K, Dekimpe, M, Verboven, F, 2006). Unlike taxis, coaches, and trains, easyCar provides all necessary facilities at a lower cost. Traditional rivals, as noted by Marting, J (2005), do not offer this flexibility and charge for a minimum rental period of 24 hours. However, easyCar's short-term rental strategy allows customers to pay only for the duration they use the car for or for pick-up and drop-off. While taxis offer a similar option, they charge more in comparison to easyCar's prices. Additionally, easyCar allows customers to pay separately for services such as cleaning the car and additional kilometers used. This flexibility in pricing and services helps easyCar compete successfully and expand its presence in London and Paris where half of its company sites are located. However, during peak times, easyCar faces challenges with staffing levels at locations which

can lead to customer waiting times or queues for cars.When the auto arrives, clients must wait for the fuel to be filled and for the auto wash to be completed before they can travel (Wright, C, Mechling, G, 2002). The auto wash incurs an additional cost, as it is part of their travel requirement. This situation occurs because easyCar's auto rental operational scheme lasts for a few hours. Another limitation is that during peak periods, prices increase as the rental period approaches its end. As a result, clients who are unsure of their stay duration will face higher prices, making it less competitive (Cheng, J, Blankson, C, Wu, P, and Chen, S, 2005). This pricing model is the reason behind this system. Due to the current fleet's high utilization rate of 90% and pricing model factors, clients who want to rent a car for a short period at short notice may not be able to find a car available. As a result, they resort to alternatives like taxis, trains or coaches. easyCar's operational method is not suitable for satisfying this demand (Marting, J, 2005). In order to effectively compete for these types of clients, easyCar needs to make changes to their service process. These changes could include relaxing cleaning policies and implementing an automated drop-off system to reduce waiting time for clients.The company needs to make changes to strengthen its position in the international market and compete based on cost. These changes include:
- Purchasing Mercedes A category cars in bulk to obtain price advantages and reduce fixed costs. This also allows for flexibility in shifting vehicles between locations based on demand. However, offering different

cars with low status has resulted in customer dissatisfaction. To address this, the company made operational changes to reduce costs and eliminate some flexibility. This partnership with suppliers has helped reduce costs, improve quality, and enhance supply chain flexibility.
- Implementing a clean car policy that transfers traditional tasks from customers to the company. This change has reduced the number of employees needed at each site, resulting in cost reduction.The alteration described in this section is interesting because it decreases the employees' anticipation about the operations. This is due to the occasional need for auto cleaning and uncertainty about when the vehicles will return. As a result, one or more clients may have to wait for their vehicle with the aforementioned alterations. However, if only one employee is working in a particular location, this can create issues as the price for waiting clients increases from ˆ11 to ˆ20. Average priced clients may choose to leave as there is a ˆ9 increase in price (Marting, J, 2005).

Insurance purchase from the client:
According to Wright, C, Mechling, G (2002), clients are required to purchase insurance with easyCar, with more focus on sales rather than operations. This change reduces conflicts between employees and clients during damaged car situations. However, in the previous process, employees faced difficulties with clients and were left with some liability. Although this alteration was helpful, it still presents challenges in locations where only one employee is working and has to deal with both waiting clients and damaged car issues simultaneously.The new fuel policy implemented by easyCar has contributed to their low-cost scheme. Previously, customers had to wait to fill up the tank before returning the

car, causing delays and frustration for those in a hurry. However, with the new policy, customers can return the car as long as the fuel index light is on, saving time and allowing the car to be immediately re-rented. This has helped reduce the important dealing of gas degrees before employee handover and has been instrumental in the success of easyCar (Tang, C., Deo, S., 2008).

In addition to this, easyCar faces legal challenges that impact their operations. One significant challenge is the office of fair trade's opinion against easyCar. This challenge is primarily designed to reinforce the benefits of cost obtained through easyCar's demand system and high rates of utilization. Stelios, the founder of easyCar, argues that the lack of proper punishment for those who don't modify or cancel reservations within a week leads to a decrease in fleet utilization from 95% to 65% and three times higher prices. However, this negative evaluation has a less significant impact on the overall output management approach adopted by easyCar (Marting, J., 2005).The impact on net income from these operations drives the cost savings achieved from high usage rates. Furthermore, posting images of tenants with delinquent vehicles is a significant legal challenge faced by easyCar. While there have been no legal actions taken yet, this challenge has been included in the case as it could lead to potential discussions regarding the rental car industry and implementing policies to minimize the chance of legal claims against the company. Reducing risk is crucial for international organizations, and the company must follow risk reduction procedures in the international market. Factors such as host country, home country, and their respective legal and

political influences are shown in the chart above and play a role in the company's success. In some countries, governments have policies relating to vehicle usage and impose taxes to reduce pollution. Additionally, taxi fares, bus fares, and train fares also impact the company's success in both international and local markets.In order to increase the usage of public transportation, some authorities limit the availability of menus for coaches and trains (Guthrie, F, Crothers, N, 2003). Therefore, it is crucial to analyze the political risks and exposures before entering international markets. The provided tables show that easyCar operates in only a few locations, potentially due to the risks associated with entering international markets (BTE, 2006). However, the company plans to expand to 180 new locations in 2003 and 2004, necessitating an assessment of the political risks in different international markets.

The company has set goals to increase easyCar sales from ?27 million to ?100 million. This achievement is expected through operations in 130 new locations over the next two years. These goals aim to generate a profit of ?10 million, which poses a challenge for easyCar. It is also important to note that easyCar's operational model aims to simplify the development of new locations compared to traditional car companies.This allows for minimal installations required and creates new waves for easyCar with all the necessary equipment for running a location. It also makes at least 130 new locations available within the market budget. The main goal is to improve operational challenges by finding ways to reduce costs and maintain customer satisfaction. This, in turn, increases profits for easyCar. To achieve the growth goals of easyCar, it is

necessary to lease out 21,600 vehicles by the end of 2004 (easyCar.com). easyCar should address operational issues such as designing a system that can provide services efficiently, effective system planning, and management of key elements.

First, in the design of the system, it should be ensured that the products and services have the necessary features, such as side airbags in cars. This design focuses on delivering products and services to customers based on technical and economic factors.

Secondly, in the planning of the system, management should plan the use of resources based on the production design system. This planning system helps manage the system design to adapt to changes in the environment (Lawrence, J, 2005).In the easyCar company, the demands of tourists frequently change during different seasons. During these times, the planning system of the company reorganizes the layout to improve efficiency. To accomplish this, a new operating unit is introduced with the shortest possible planning timeline. This helps easyCar determine which services to offer, who will work, when to start, and what resources will be used. It is important to understand the strategic nature of operations, including supply chain management, value addition through operations, technological performance impact, and the global competitive market. Additionally, operational processes play a significant role in gaining a competitive advantage over rivals. Factors such as service security and durability are crucial for achieving easyCar's international trading goals. The company's past behavioral actions and decision-making strategies also impact goal measurement. The service and market they operate in significantly influence easyCar's strategic decision-making process. To achieve success in the international market, easyCar should provide a single service that incorporates essential characteristics of

an international market.However, the company should also improve the local market to increase the brand value. easyCar has multiple sites in the same city, making it a more viable competitor for taxis, coaches, and trains. There is a need for expansion strategies in order to compete against taxis, trains, and coaches in European cities. To better compete in the tourist segment, it is preferable to increase locations in tourist destinations and near airports, etc.

Global markets, Products/services and products:

New

Markets

Current Global Existing Local

Products/Services Brands

New (Adopted from Bradley, F, 2005)

The above chart provides suggestions for easyCar's entry into new global markets. It emphasizes the importance of analyzing service, market, and brand. EasyCar is currently operating in popular cities like London and Paris, as well as in countries like Spain, Switzerland, and France (Parment, A, 2008). The analysis of markets, competitors, and their strengths should also be considered as competitors can go to great lengths to eliminate rivals. easyCar's brand needs significant improvement for success in various international markets.According to Parment, A, 2008, easyCar can gain a competitive advantage through its brand equity, financial strength, and international distribution ability. These brand resources will help increase confidence in easyCar's sustainability in international markets. Before entering new markets, easyCar should consider the importance of selecting the right international market to expand its locations. This will enable easyCar to achieve its goals of increasing sales, profitability, and customer satisfaction by offering better quality and operational efficiency. The selection of technologies, customer segments, and customer mapping are crucial factors in choosing international markets. BTE, 2006, suggests that attractive tourist locations or countries and the professionalism of the local workforce

are contributing factors to market segmentation. To succeed in international markets, easyCar should focus on risk limitation, management stability, synergy, economies of scale and scope, and continuous learning. However, easyCar is currently lacking management stability as its operating procedures continually undergo change.The easyCar company also recognizes the need for improved human resource management.

3.0.Decision:

The detailed analysis of the study reveals that easyCar has the necessary capabilities to enter the new market, with a strong focus on operational process and design enhancements. These improvements in operational process are essential for establishing the brand, as they effectively facilitate changes. In addition, the company has announced plans to make 12,000 vehicles available from undisclosed pickup points, utilizing car clubs.

Furthermore, technological advancements were made in 2003, allowing customers to make online reservations, phone updates, and access information during arrival times. These innovations have greatly enhanced the customer experience. The glove boxes serve as key pickup locations for vehicles, conveniently located in the usual places.