The Car Rental Industry In The Us Economics Essay

The Car Rental Industry In The Us Economics Essay The car rental industry is a multi-billion dollar sector of the US economy. The US segment of the industry averages about $18.5 billion in revenue a year. Today, there are approximately 1.9 million rental vehicles that service the US segment of the market. In addition, there are many rental agencies besides the industry leaders that subdivide the total revenue, namely Rent-A-Car, Dollar Thrifty, Budget and Vanguard. The rental car industry is highly consolidated which naturally puts potential new comers at a cost-disadvantage since they face high input costs (since companies in this industry have revenues of billions of dollars), with very low possibilities of economies of scale. Moreover, most of the profit is generated by a few firms including Enterprise, Hertz and Avis. For the fiscal year of 2006, Enterprise generated $7 billion in total revenue. Hertz came in second position with about $3.9 billion and Avis with $2.75 in revenues. During this year, revenues were about $20 billio n, with the top six companies having combined market shares of over 90 percent. Competition in this industry goes beyond nationally, companies are expanding globally, and for example Rent-A-Car is operating in the U.S, Canada, U.K, Ireland and Germany. In the U.S market there is a strong competition between the six largest companies, especially between Enterprise Rent-A-Car and Hertz for the rental facilities in airports. The level of vertical integration in the industry has been reduced in the last decades, by letting these companies more flexibility in the market and leading to higher profit margins. In fact, among the industry players only Hertz is vertically integrated through Ford. The market size of this industry is large so there is high demand for renting, but due to the very strong competition, the profit margin is not so high or attractive, moreover, it is best attained by economies of scale. Competitiveness has risen to such an extent that, according to Business Travel Ne ws, vehicles are being rented until they have accumulated 20,000 to 30,000 miles until they are sent for sale to the used car industry. What is competition like and how strong are the competitive forces? There are many factors that shape the competitive landscape of the car rental industry. Competition is fierce not only because the market is saturated and well guarded by industry leader Enterprise, but competitors operate at a cost disadvantage along with smaller market shares since Enterprise has established a network of dealers over 90 percent the leisure segment. On the corporate segment, on the other hand, competition is very strong at the airports since that segment is under tight supervision by Hertz. Competitively speaking, the rental car industry is a war-zone as most rental agencies including Enterprise, Hertz and Avis among the major players engage in a battle of the fittest. The five competitive forces Competitive Rivalry Among Sellers There are many factors that drive competition within the car rental industry. Over the past few years, broadening fleet sizes and increasing profitability has been the focus of most companies within the car rental industry. Enterprise, Hertz and Avis among the leaders have been growing both in sales and fleet sizes. In addition, competition intensifies as firms are constantly trying to improve their current conditions and offer more to consumers. Hertz, for example, integrates its Never-Lost GPS system within its cars. Enterprise, on the other hand, uses sophisticated yield management software to manage its fleets. The Potential Entry of new Competitors Entering the car rental industry puts new comers at a serious disadvantage. Over the past few years following the economic downturn of 2001, most major rental companies have started increasing their market shares in the vacation sector of the industry as a way of insuring stability and lowering the level of dependency between the airline and the car rental industry. On one hand, this action has ensured the success in the long run of the existing firms; on the other hand it has made it much more difficult for new entrants to join this market. Existing firms such as Enterprise, Hertz and Avis carefully monitor their competitive radars in order to be ready to attack any potential new entrant in the market. Another barrier to entry is created because of the saturation level of the industry. In 2006, Enterprise had a rental location within 15 miles of 90 percent of the US population. Because of the network of dealers Enterprise has established around the nation, it has become relatively s table, and most importantly, less reliant on the airline industry compared to its competitors. The Threat of Substitute There are many substitutes available for the car rental industry. From a technological standpoint, renting a car to go the distance for a meeting is a less attractive alternative as opposed to video conferencing, virtual teams and collaboration software with which a company can immediately setup a meeting with its employees from anywhere around the world at a cheaper cost. In addition, there are other alternatives including taking a cab which is a satisfactory substitute relative to quality and switching cost, but it may not be as attractively priced as a rental car for the course of a day or more. While public transportation is the most cost efficient of the alternatives, it is more costly in terms of the process and time it takes to reach ones destination. Finally, because flying offers convenience, speed and performance, it is a very attracting substitute; however, it becomes an unattractive alternative in terms of price relative to renting a car. On the business segment, car rent al 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 the best course of action. Generally, the threat of substitute is reasonably low in the car rental industry since the effects the substitute products have do not pose a significant threat of profit erosion throughout the industry. The Bargaining Power of Buyers An interesting trend that is currently underway throughout the industry is forcing car rental companies to adapt to the needs of corporate travelers. This trend significantly reduces supplier power or the rental firms power and increases corporate buyer power since the business segment is extremely price sensitive, well informed about the industrys price structure, purchase in larger quantities and they use the internet to force lower prices. The Bargaining Power of Suppliers Supplier power is low in the car rental industry. Because of the availability of substitutes and the level of competition, suppliers do not have a great deal of influence in the terms and conditions of supplying the rental cars. Because the rental cars are usually purchased in large quantities, rental car agents have significant influence over the terms of the sale since they possess the ability to play one supplier against another to lower the sales price. Another factor that reduces supplier power is the absence of switching cost. That is, buyers are not affected from purchasing from one supplier over another. What forces are at work to change industry conditions? One of the most important forces in the car renting industry is the use of internet in companies. Internet has made possible instant linking between renting stores in different locations and provides a lower distribution and inventory cost. What is more, improvement in technology and the installation of different tools, including the GPS system in rented cars has made this industry more competitive for customers. The installation of specialized software in the facilities where cars are given for rent, for checking preferences of customers in different regions, gives details about what cars are mostly preferred and how many of them should be in that store, reducing storage costs. Which companies are in Strongest/ Weakest positions? As a moderately concentrated sector, there is a clear hierarchy in the car rental industry. From an economic standpoint, disparities exist from a number of dimensions including revenue, fleet size and the market size each firm holds in the market place. For instance, Enterprise dominates the industry with a fleet size of approximately 600,000 vehicles along with its market size and its level of profitability. Hertz comes in second position with its number of market shares and fleet volume. In addition, Avis ranks third on the map. Avis is among one of the companies that is having issues recovering its revenue margins from prior to the economic downturn. For instance, in 2000 Avis returned revenues of approximately $4.23 billion. Over the course of the next several years following 2000, the revenue of Avis has been significantly lower than that of 2000. As a way of reducing uncertainty most companies are gradually lowering the level of dependency on the airline industry and emerging t he leisure market. This trend may not be in the best interest of Hertz since its business strategy is highly linked to the airports. What strategic moves are rivals likely to make next? Since this industry operates in very narrow profit margins, it is very important to predict what the competitors next moves will be in order to be as prepared as possible. In 2007 there were some developments in this industry which were concerning Rent-A-Cars executives. These developments included a possible merger between Dollar Thrifty Automotive Group and Vanguard Car Rental as well as direct attacks on Enterprises off-airport rental markets and insurance company clients by Hertz, the second rental company in the industry. Avis uses its OnStar and Skynet system to better serve the consumer base and offers free weekend rental if a customer rents a car for five consecutive days. What are the key factors for competitive success? There are many key success factors that drive profitability throughout the car rental industry. Capacity utilization is one of the factors that determine success in the industry. Because rental firms experience loss of revenue when there are either too few or too many cars sitting in their lots, it is very important to efficiently manage the fleets. This success factor represents a big strength for the industry since it lowers if not completely eliminates the possibility of running short on rental cars. Efficient distribution is another factor that keeps the industry profitable. Despite the positive relationship between fleet sizes and the level of profitability, firms are constantly growing their fleet sizes because of the competitive forces that surround the industry. In addition, convenience is one of the crucial attributes by which customers select rental firms. Another key success factor that is common among competing firms is the integration of technology in their business proc esses. Through technology, for instance, the car rental companies create ways to meet consumer demand by adding the convenience of online rental among other alternatives. Furthermore, firms have integrated navigation systems along with roadside assistance to help their customers find the desired location easier and faster. Is the industry attractive or unattractive and why? There are many factors that impact the attractiveness of the car rental industry. Because the industry is moderately concentrated, it puts new market entrants at a disadvantage. What is more, existing companies in the industries can take measures to attack new entrants. Because of the risks associated with entering the industry among other factors, it is not a very attractive sector of the marketplace. From a competitive standpoint, the leisure market is 90 percent saturated because of the active efforts of Enterprise to dominate this sector of the market. On the other hand, the airport terminals are heavily guarded by Hertz. Realistically speaking, entry in the industry offers low profitability relative to the costs and risks associated. For most consumers, the main determining factors of choosing one company over another are price and convenience. Because of this reason, rental firms are forced to offer more to the consumers for less just to remain competitive. Based on the impact of the five forces, the car rental sector is not a very attractive industry to potential new market entrants.

Our generation Essay

Throughout the past couple of centuries, our world has changed over a period of time. Everything has changed; generations, the way we live, nature and so much more. History is created every day, and at every moment without even realizing it. Our culture is a huge part of our everyday environment that we do not realize how incredibly significant they influence our lives. There are many important elements that have changed American society; for example the television. Television can be used as a tool to motivate learning and to increase awareness of public issues. Social Interaction, education, culture, and criminal exposure are some of the key reasons to why the television has played a significant role in our lives. In today’s modern culture, television has played a big role throughout people’s every day lives. We depend on TV for entertainment, news, education, culture, weather, sports, and so much more. Without the TV, our social interaction percentage would be low; because of the lack of topics. People these days, talk about TV shows, movies, and more, and without it, a lot of people would be anti social. While television is often criticized for isolating people, it can also bring them together. For example, Super Bowl parties and other events in which people congregate around the TV. During the month-long telecast of March Madness, fans gather at work, in bars and other places to compare brackets, view college basketball games, and discuss the results. In addition, some TV shows invite viewers to share their opinions by calling in or posting comments. Televisions have influenced education and teaching practices. Educators have had to adapt and provide lessons that not only educate but entertain the learner. It has been shown that attention spans have decreased since the prominence of television. Reading is not seen in the same esteem as in previous generations. Studies have shown that public television programs emphasize literacy development. Using engaging characters and interesting stories, shows like â€Å"Sesame Street,† and â€Å"Sid the Science Kid,† motivate children to learn, while other specialty channels, such as â€Å"Animal Planet† and â€Å"Discovery Channel†, also provide educational content in an entertaining way. Television also provides cultural experiences, which can help broaden viewers’ perspectives and increase tolerance and appreciation for different lifestyles.TV has the ability to create powerful capabilities, TV allows people especially adolescents to share cultural experience with one another. Shows like â€Å"National Geographic,† â€Å"House Hunters International,† and â€Å"The Amazing Race,† focus on life in parts of the world that may be unfamiliar to most Americans. Even shows that concentrate their efforts in the U.S., such as â€Å"Diners, Drive-Ins and Dives,† and â€Å"House Hunters,† can improve cultural awareness by highlighting the foods, housing trends and customs in different regions of the country. Lastly, the impact of television also serves to expose criminal activity. According to a 2011 article in †Time† magazine, the television show â€Å"America’s Most Wanted,† was â€Å"an unprecedented collaboration between law enforcement and television,† and led to the capture of 1,154 fugitives as a result of phone tips from TV viewers. Kevin Perkins, an assistant director of the FBI’s criminal investigation division told â€Å"Time,† the agency captured 17 of its most highly-ranked fugitives and also solved over 550 cases as a result of TV viewer tips. Perkins also says that they’ve captured suspects within minutes of an episode airing on TV. Also the news; today these days, there are many news channels to inform us on what is happening around the world. Without the news, we would often wonder what is happening, despite the advantage of also having social media,it is often not reliable nor true. References: Time.com: The End of American’s Most Wanted: Good News for Criminals, Bad News for the FBI. To conclude., throughout the past hundred of years, our world has changed over a period of time; generations, the way we live, nature, and more. History is created ever day, and at every moment without even realizing it. Our culture is a huge part of our every day environment that we do not realize how incredibly significant they influence our lives. One important element; the television has changed American society. Social Interaction, education, culture, and criminal exposure are some of the key reasons to why  the television has played a significant role in our lives. Without the television, our generation would be a lot different.

Setting Up a New Business: Business and Marketing Plan

It ensures a firm to be proactive in anticipating and planning for market changes ahead of time. It ensures a business to be a leading edge and not a following edge. A complete marketing plan must provide answers to questions like; who is the customers, how the product gets to customers and the most effective method of Implementation. A good plan will direct to the expectation and time to get the results (Makeover, 2008). Everyone In the firm an predict what will happen or future company prospects. A company gets prepared for market opportunities and to remain health, always prepared for any rising problems.It keeps a business ready to cope with unexpected events and identify the best market mix. Importance of business plan A business plan is a kind of road map for a company. It gives goals, visions and benchmarking for your business. It gets created with aims of persuading others to assist in achieving the set goals and vision. It should describe all the business concepts, principal s, products, target markets, and also trends in the market amongst any others. It also outlines the financial budgets like sources of funds to start a business.It gives the total cost of the business, the expected level of returns or profits. It provides an opportunity to check on reality of the business and give momentum to the business. A business through a plan can evaluate where the gap are, what is working and future projections of the and guidance to run the business smoothly. Business plan is like a calling card for the business. It should always be able to outline your purpose and your identity. Successes and failures are clearly highlighted in a business plan, therefore, giving mime to acknowledge and organism your work in a better way.The peoples owning a business are made responsible and accountable to all happenings of the business giving flexibility and freedom to business owners. Conclusion While setting up a new business, one has to draw a convincing business and mark eting plan. These two plans play a vital role in ensuring the business thrives to expectations. Business plans give financial planning while the marketing plan gives market strategies to find an excellent market for the products. When these two are put together, possibilities of success are extremely high. References Berry, T. (2004).

Argumentative Essay on Feminism and Environmental Justice

In this essay, women are not equal to men. Nature has it, from time immemorial, that the two can and will never be equal. Even though feminism tries to make the equality a reality by trying to secure similar rights as those of men, it shall never be achieved. Maybe in the virtual life, equality can be achieved but not in the physical life. A tool that is used to make rules and regulations and to determine the course of life is power (Lukes 1974 and 2005, and Connolly 1983). It is true beyond any reasonable doubt that this tool rests in the hands of selected few: the males. Without distorting the meaning of power to suit the different positions, it remains as the ability to act when compelled to. This makes it a powerful resource. When viewed critically, it’s seen that this positive social advantage is unequally distributed among sex. The males walk away with a greater portion that the females. This has made the feminine to device methods of redistributing this asset. The question that arises in the process is that â€Å"who distributed this resource initially? And was there inequality? Who has the power to redistribute this resource now? And how feasible can it be? These are questions without definite answers. Trying to distribute power equally among sex is a good idea that nobody can oppose, but, is power a co mmodity that is possessed by individuals in different amounts? (Young 1990, 31). In Justice, Gender, and the Family, Susan Moller Okin is aware and states clearly that families lack power balance. A given family member is advantaged over the other. Considering the domination that is brought about by power, several feminists look at it as oppression, patriarchy and subjection. This is a misperception of the highest order as it distorts the whole meaning of power. In attempt to balance the situation, there is an overreaction displayed by women. They forget that they were made and not created. This is according to the Holy bible. The bible further affirms that man is the head of the family. (I’ve alluded to the bible because I believe in it) Another aspect of inequality (or equality as others may view it) is in the social aspect of life. Protection is a key point about life. Everybody enjoys the fruits of a safe and secure environment. In a family, who provides this security? The answer is obvious. Physical security may exist but another aspect of security always misses in the absence of man. The presence of a man in a family streamlines everything. Truly, something cannot exist where it doesn’t or fail to exist where it truly does. We cannot talk about non-existing phenomena. We always mention inequality because it truly exists and everybody knows this. Several movements are in place now to champion for the female rights and equality. If equality existed, then why all these movements? Why all the women organizations? Why? The more the attention is shifted towards women, the more the male counterparts are exposed to danger. Several pro women campaigns endanger males. This has resulted in gender imbalance and current population results reveal that women population is beyond compare to men. And with such campaigns, if no serious action is taken, the males might be extinct. It is surprising to see women tending to move toward men when not even a single man desires to be like a woman. The term widow in my community is so common, but why not widowers? How many times have we seen women trying to be like men? Similarly how many cases have been seen about women tending to be like women? The answers are clear. Women always try to be like men. This is a confirmation that they have identified what lacks in them so as to be completely equal to men. It is an environmental injustice to claim equality between men and women. However, cover ups are normally taken to wrap the underlying reality. It is a bitter reality that might take ladies their entire life to come into terms with. In basic simple terms, man is not and will never be equal to women. References Morriss, P. (2002). Power: A Philosophical Analysis, 2nd edition. Manchester: Manchester University Press. Okin, S. M. (1989). Justice, Gender and the Family. New York: Basic Books. Pateman, C. (1988). The Sexual Contract. Stanford: Stanford University Press. Pitkin, H. F. (1972). Wittgenstein and Justice: On the Significance of Ludwig Wittgenstein for Social and Political Thought. Berkeley, CA: University of California Press. Ramazanoglu, C(1993). Up Against Foucault: Explorations of some tensions between  Ã‚   Foucault and feminism. New York: Routledge. Rubin, G. (1976). â€Å"The Traffic in Women: Notes on the Political Economy of Sex,† in Rayna Reiter, ed., Toward an Anthropology of Women. New York: Monthly Review Press. Said,E. (1986). â€Å"Foucault and the Imagination of Power,† in Foucault: A Critical Reader, ed. David Couzens Hoy. Oxford: Blackwell. Sawicki, J. (1991). Disciplining Foucault: Feminism, Power, and the Body. New York: Routledge. Wartenberg, T. (1990). The Forms of Power: From Domination to Transformation. Philadelphia: Temple University Press. Weber, M. (1978). Economy and Society: An Outline of Interpretive Sociology, trans. Ephraim Fischoff et al. Berkeley, CA: University of California Press.