Enterprise Holdings Analysis

Enterprise Holdings is a rental car company composed of three different subsidiaries; Enterprise Rent A Car, Alamo and National. Enterprise Holdings is a privately owned company that provides vehicle leasing, car sales, and fleet cars to different organizations. Enterprise Rent a Car focuses from motorcycles, luxury, exotics and even commercial trucks. Alamo and National were purchased by Enterprise rent a car in 2007 and that's when Enterprise Holding was created. Alamo targets airport locations with low rates for leisure travelers and National provides a large selection of vehicles for business purpose as well as leisure. With almost 60 years in the business, Enterprise runs worldwide including United States, Canada, Mexico, Caribbean, Latin America, United Kingdom, Ireland Germany, France spain Brazil and China. (MarketLine). Enterprise does not only provide rental cars for personal use, it also provides rental cars for insurance companies, dealerships and even automotive body shops. With current inventory Enterprise Holdings provides the newest and most reliable cars to provide excellent customer satisfaction. It operated through a fleet of more than 1.7 million vehicles throughout the world in FY2015(MarketLine)

Porter Five is a model used by organizations to research the environment in which a service or product is offered to obtain competitive advantage. These analyses focus on the following key components: the threat of new entry, power of buyers, threat of substitutes, power of suppliers and threat from the competitors. These key components is what shapes every industry or market, allowing it to determine how competitive they are and how that will reflect on their profitability and how attractive it can be. Also The VRIO framework will determine on how Enterprise Holdings Competitive advantage is, based on their resources.

The threat for new competition in the rental industry is fairly low, as Enterprise Holding is the largest Rental company in the United States. With over 9,000 locations in home cities/airports in more than 30 countries, over 90,0000 employees and a fiscal year revenue of 19.4 million dollars it’s hard for a new company to enter the industry. With almost 60 years of building Enterprise has based the company on taking care of the customers first, employees second and the rest will take care of itself. This has evolve over time and has built Enterprise to be recognized in the industry. Also if the cost of entry is greater than the possible profits the company will obtain it is most likely that the threat of new competitors will not happen. Another key component that allows a business to be successful is the knowledge,experience and relationships the industry has built allowing it to operate successfully. This can take years or decades to build, something new competitors would have to wait and build up on throughout the years, making them less of a threat. With exceptional low rates, neighborhood convenience, and its outstanding service it’s hard to compete with a company as profitable as Enterprise Holdings.

Threat from buyers influence is low as the customers(buyers) are the key component of the success Enterprise has obtained. With different buyers like retail(personal use) insurance companies, dealerships, body shops, corporate accounts, fleet management, cars sales, exotic collections, and commercial trucks enterprise has a variety of ways to produce revenue. This allows them to target many customers from different levels of income, whether it’s a one day rental from from a retail customer or a contract with corporate account specifically for their employees who rent on a daily basis. For example Geico insurance is Enterprise biggest contract as they provide 100% of their rental claims. Other companies like State Farm give 50% of their claims to Enterprise and 50% Hertz(competitors). Although some insurance companies do not associate with Enterprise Holdings, their customers can request rentals from Enterprise. This usually occurs when the customers had bad experience with the competitors, or if the competitors don't have a nearby location.

Threat from superior or low cost substitutes in the rental industry can be high, but this does not mean the use of rental vehicles will decline or be affected. Customers can use their own personal vehicle, take the train if provided, use airplanes to travel, to walk if it's in a walking distance, use the bus/taxi or Uber. These substitutes are only a threat if the customer isn't financially capable of paying for the service. Other possible substitutes would be competitors like Avis, Hertz or Budget. It all depends on what the customer needs the rental for, if it benefits them to use it over any other method of transportation.

Power of suppliers for supplier is low as Enterprise Holding