What Are Characteristics of the Car Rental Industry? How Do These Characteristics Influence the Design of Service Delivery Processes in This Industry in General?

1. What are characteristics of the car rental industry? How do these characteristics influence the design of service delivery processes in this industry in general?

Intangibility - While strictly speaking, the "service" of car rental is intangible, given the physical nature of the rented vehicle, it really is not as intangible as many other services in the sense that the consumer can see and touch the rented vehicle. For the vast majority of the period during which the customer uses the service of car rental, the physical car is the service provided. For many services, intangibility makes it very difficult for the consumer to judge quality and for the producer to control quality. This is not nearly as difficult a proposition in the case of car rental. The "convenience" factor (e.g., location, speed of pick-up and drop-off, etc.) associated with rental is the most significant intangible associated with rental cars. Perishability - Car rental is clearly a very perishable service. If a day goes by and a car is not rented, the opportunity to generate revenues from that unrented time is lost forever. Perishability is a critical factor in the rental industry given the generally high fixed cost associated with the service (i.e., a fleet of vehicles). All industry players must cope with this perishability and different companies will have somewhat different strategies for dealing with it.

2. EasyCar obviously competes on the basis of low price. What does it do in operations to support this strategy?

Operations strategy is the collective concrete actions chosen, mandated, or stimulated by corporate strategy. It is, of course, implemented within the operations function. This operations strategy binds the various operations decisions and actions into a cohesive consistent response to competitive forces by linking firm policies, programs, systems, and actions into a systematic response to the competitive priorities chosen and communicated by the corporate or business strategy. In simpler terms, the operations strategy specifies how the firm will employ its operations capabilities to support the business strategy.

Operations strategy has a long-term concern for how to best determine and develop the firm's major operations resources so that there is a high degree of compatibility between these resources and the business strategy. Very broad questions are addressed regarding how major resources should be configured in order to achieve the firm's corporate objectives. Some of the issues of relevance include long-term decisions regarding capacity, location, processes, technology, and timing.

The achievement of world-class status through operations