Enterprise

The main way that Enterprise differs from its rivals is that it does not have offices in the airport. It instead strategically chooses its locations in a way that 90% of the American population lives within 15 minutes of its offices. The Enterprise management is keenly aware that Americans would welcome a local option for renting cars when their own vehicles were being repaired or when they are going for a vacation and don’t want to use their cars. The management understands that keeping the local population happy is vital to the company’s success. The biggest tradeoff that it makes in this case is losing those customers who are coming from out of state and need a rental car for a vacationing or business purposes. It therefore loses on an opportunity to attract fresh clients from overseas. Having a location at the airport also helps in building awareness of rental car company’s services and by using its premises it’s helps in projecting a strong visual brand.

Enterprise, while choosing not to open an airport location, opens inexpensive rental offices everywhere else in the city (as close as possible to its customers) thereby reducing overhead significantly. It then establishes relationships with the auto dealerships. It rents cars for a little as $16 a day and keeps it cars on the road for six months longer than Hertz and Avis do, further reducing its operational costs. Enterprise goes to great lengths in identifying its customers need and delivers exceptionally high standard of customer service for its home-city market. A focus on customer service is the driving force behind its business. For example, customers benefit from a local pick-up service to take them to the branch to collect their car. It is this level of customer service that makes Enterprise different from its competitors.

Enterprise became a household name in a relatively short period of time – in the face of formidable competitors such as Avis and Hertz. The other car rental agencies focused on the lucrative airport market, leaving Enterprise alone in serving people in their own cities. By establishing partnerships with auto dealerships, Enterprise ensures that no other firm can compete with them. Enterprise’s costs are so low that no other firm can find it profitable to move Enterprise’s territory/locations. Enterprise’s unwavering focus on customer service has largely contributed to its reputation and therefore has a loyal customer base. Simply by delivering the cars to those in need, enterprise ensures that should other firm enter the market, a ruinous and cut throat price competition would ensue. For above reason’s I think that Enterprise does have a sustainable competitive advantage.

Kodak’s competitive advantage is largely due to the razor-blade strategy that it pursues. It sold user friendly cameras and films for low costs which allowed it to have a dominant market share. In addition to marketing their products extensively (with emblematic slogans like “You press the button, we do the rest”), it also expanded their distribution internationally.  It built great relationships with retailers and thus enjoyed a near monopoly in their home market in USA. But I do not think that their competitive advantage is sustainable in the long run. While Kodak has cut costs significantly and is now run more efficiently, it’s not yet clear that Kodak’s distinctive competencies and core capabilities are rare, imperfectly imitable, or non-substitutable. Kodak produces high-quality photographic film, paper, and cameras, but there are at least a dozen other companies that sell the same products. There are even more companies competing to set the standard for digital cameras and pictures. It is also evident that Kodak implements technological advancements slower than its competitors.  Through most of the 1980s and 1990s, Kodak continued to focus and invest in film-based technologies, while Fuji was systematically extracting itself from film-based photography and shifting massive resources, both financial and human, to the new and unproven digital technology. By 2003, Fuji had 5000 digital labs in the US whereas Kodak had only 100. Therefore, Kodak has a lot of work to do to create a sustainable competitive advantage, especially in digital photography.

As described above, the traditional photography industry was structured around the razor-blade model. Kodak put all its profits into R & D which insured its dominance of the industry which deterred competitors from entering into the market. The high profits that film sales brought to retailers helped to insure that Kodak dominated shelf space in stores, making it even harder for a potential competitor. Much of the film developing occurred in independent kiosks, drugstores, and specialized firms; all utilizing Kodak products. In digital imaging world, no single firm dominates the sale of digital cameras and the market is highly competitive. It finds a market that is highly competitive on both features and price. As digital imaging can employ the use of several technologies produced by separate firms, outsourcing became common in this arena to lower manufacturing costs. It is valued by the consumers who appreciate the convenience and low costs. The consumers are generally not loyal to any particular brand and buy cameras that suit their needs.