There are many factors that drive competition within the hire my booking pro. Over the past few years, broadening fleet sizes and increasing profitability has been the main target of most companies within the hiremy booking pro. Enterprise, Hertz and Avis among the leaders are growing both in sales and fleet sizes. In addition, competition intensifies as firms are constantly trying to enhance their current conditions and offer more to consumers. Enterprise has nearly doubled its fleet size since 1993 to approximately 600,000 cars today. Because the industry operates on such narrow profit margins, price war isn’t a factor; however, most companies are actively involved in creating values and providing a variety of amenities from technological gadgets to even free rental to satisfy customers. Hertz, for instance , integrates its Never-Lost GPS system within its cars. Enterprise, on the opposite hand, uses sophisticated yield management software to manage its fleets.
Finally, Avis uses its OnStar and Skynet system to raised serve the buyer base and offers free weekend rental if a customer rents a car for five consecutive days Moreover, the consumer base of the rental my booking pro has relatively low to no switching cost. Conversely, rental agencies face high fixed operating costs including property rental, insurance and maintenance. Consequently, rental agencies are sensitively pricing there rental cars just to recover operating costs and adequately meet their customers demands. Furthermore, because the industry experienced slow growth in recent years thanks to economic stagnation that resulted during a massive decline in both corporate travel and therefore the leisure sector, most companies including the industry leaders are aggressively trying to reposition their firms by gradually lessening the dependency level on the airline industry and regaining their footing within the leisure competitive arena.
The Potential Entry of new Competitors
Entering the hire my booking pro puts new comers at a significant disadvantage. Over the past few years following the economic downturn of 2001, most major rental companies have started increasing their market shares within the vacation sector of the industry as a way of insuring stability and lowering the extent of dependency between the airline and therefore the hire car industry. While this trend has engendered future success for the prevailing firms, it’s heightened the competitive landscape for brand spanking new comers. Because of the severity of competition, existing firms like Enterprise, Hertz and Avis carefully monitor their competitive radars to anticipate Sharpe retaliatory strikes against new entrants. Another barrier to entry is made due to the saturation level of the industry.
For example, Enterprise has taken the primary mover advantage with its 6000 facilities by saturating the leisure segment thereby placing not only high restrictions on the foremost common distribution channels, but also high resource requirements for new firms. Today, Enterprise features a rental location within 15 miles of 90 percent of the US population. Because of the network of dealers Enterprise has established round the nation, it’s become relatively stable, more recession proof and most significantly , less reliant on the airline industry compared to its competitors. Hertz, on the opposite hand, is utilizing the complete spectrum of its 7200 stores to secure its position within the marketplace. Basically, the emergence of most of the industry leaders into the leisure market not only drives rivalry, but also it varies directly with the extent of complexity of entering the car rental industry.
The Threat of Substitute
There are many substitutes available for the hire car rental. From a technological standpoint, renting a car to travel the space for a gathering may be a less attractive alternative as against video conferencing, virtual teams and collaboration software with which a corporation can immediately setup a gathering with its employees from anywhere round the world at a less expensive cost. In addition, there are other alternatives including taking a cab which may be a satisfactory substitute relative to quality and switching cost, but it’s going to not be as attractively priced as a rental car for the course of each day or more. While public transportation is that the most cost efficient of the alternatives, it’s more costly in terms of the method and time it takes to succeed in one’s destination. Finally, because flying offers convenience, speed and performance, it’s a really enticing substitute; however, it’s an unattractive alternative in terms of price relative to renting a car. On the business segment, hire car agencies have more protection against substitutes since many companies have implemented travel policies that establish the parameters of when renting a car or using a substitute is that the best course of action.
According to Tracy Esch, a plus director of selling operations, her company rents cars up to a 200-mile trip before considering an alternate . Basically, the threat of substitute is fairly low within the hire car industry since the consequences the substitute products have don’t pose a big threat of profit erosion throughout the industry.
The Bargaining Power of Suppliers
Supplier power is low within the hire car industry. Because of the supply of substitutes and therefore the level of competition, suppliers don’t have an excellent deal of influence within the terms and conditions of supplying the rental cars. Because the rental cars are usually purchased in bulk, rental car agents have significant influence over the terms of the sale since they possess the power to play one supplier against another to lower the sales price. Another factor that reduces supplier power is that the absence of switching cost. That is, buyers aren’t affected from purchasing from one supplier over another and most significantly , changing to different supplier’s products is barely noticeable and doesn’t affect consumer’s rental choices.