Group Case Analysis Progress Report

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DescriptionCHAPTER 2: Organizational Strategy, Competitive Advantage, and Information Systems
3/8/23, 1:15 PM
advantage.
Problem-Solving Activities
1. Surf the Internet for information about the Department of Homeland Security. Examine the available
information, and comment on the role of information technologies in the department.
2. Experience mass customization by designing your own shoes at www.nike.com, your car at
www.jaguar.com, your business card at www.iprint.com, and your diamond ring at
www.bluenile.com. Summarize your experiences.
3. Access www.go4customer.com. What does this company do, and where is it located? Who are its
customers? Provide examples of how a U.S. company would use its services.
4. Access the website of Walmart China (www.walmartchina.com/english/index.htm). How does
Walmart China differ from your local Walmart (consider products, prices, services, and so on)? Describe
these differences.
5. Apply Porter’s value chain model to Costco (www.costco.com). What is Costco’s competitive strategy?
Who are Costco’s major competitors? Describe Costco’s business model. Describe the tasks that Costco
must accomplish for each primary value chain activity. How would Costco’s information systems contribute
to Costco’s competitive strategy, given the nature of its business?
6. Apply Porter’s value chain model to Dell (www.dell.com). What is Dell’s competitive strategy? Who
are Dell’s major competitors? Describe Dell’s business model. Describe the tasks that Dell must accomplish
for each primary value chain activity. How would Dell’s information systems contribute to Dell’s
competitive strategy, given the nature of its business?
Closing Case
POM MKT The Car Rental Industry
The Business Problem
Car rental companies began by renting cars to travelers at airports. The business model of
these companies historically has been to purchase or lease large fleets of vehicles at the lowest
possible price, rent them to customers for income, and then sell them either directly to the
public or at auction. The industry grew rapidly; by 2019 it had achieved a global revenue of
approximately $90 billion.
Enterprise (www.enterprise.com), Hertz (www.hertz.com), and Avis Budget
(www.avisbudgetgroup.com) are the three largest (in order) U.S. airport-based car rental
companies by market share. In 2019 they owned a combined 94 percent share of the $32
billion U.S. rental market. Each company encompasses multiple brands:
Enterprise Holdings: Enterprise, National Car Rental, Alamo, and Enterprise CarShare
Hertz Global Holdings: Hertz, Thrifty, and Dollar Rent A Car
Avis Budget Group: Avis, Budget, Payless Car Rental, Zipcar
Despite its large revenues, however, the car rental industry is experiencing a number of
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CHAPTER 2: Organizational Strategy, Competitive Advantage, and Information Systems
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problems:
Until recently, the traditional process of renting a car has been time-consuming,
inefficient, and irritating to customers. Customers wait to get off their planes, wait to
claim their baggage, and then proceed to curbside where they wait to board a shuttle to
the rental car lot. At the lot, they wait in line, speak with a representative, manually fill
out forms, and receive the car keys. Then they must go to the lot and find the car.
These companies all offer vehicles from the same manufacturers and therefore have
difficulty differentiating themselves.
A few decades ago, car rental companies were the only solution to people’s need to access
a vehicle without owning one. Today, people have many more options to meet their
mobility needs. Car rental companies compete with ride-hailing services such as Uber
and Lyft, as well as with peer-to-peer car-sharing services such as GetAround and Turo.
Ride-hailing services have had the greatest impact on car rental companies. In 2019, digital
marketing firm Epsilon (http://us.epsilon.com) analyzed travel transactions for 2017 and
2018. The company found that the majority of previous car rental customers had decreased
their spending on rental cars, and about half of them had stopped renting cars altogether.
In general, there are the three types of ground transportation for business travelers: ride
hailing, rental cars, and taxis. According to Certify (www.certify.com), a provider of online
travel and expense management for companies, business travelers use Uber and Lyft
approximately 72 percent of the time, rental cars 22 percent of the time, and taxis about 5
percent.
Peer-to-peer car-sharing companies enable private car owners to rent out their vehicles. The
companies take a percentage of the total cost of the rental from the people who rent out their
cars, and they provide insurance for owners and renters. Customers book rentals, chat with car
owners, arrange pickup and drop-off spots, and make payments directly through the
companies’ apps.
To address their problems, car rental companies are investing in technology, offering more
vehicle choice, and providing personalized service and much more efficient pickup and return
processes. In addition, these firms want to diversify their income streams while increasing
customer satisfaction.
A Number of Possible Solutions
Improving the customer experience with online apps. As noted previously,
car rental companies have had poor customer service processes in the past. In order to make
the rental process as seamless as possible, car rental companies have developed sophisticated
mobile apps. In 2020, almost 70 percent of car rentals were made online via apps.
The apps contain data on drivers, including name, address, driver’s license number, and
payment details. With these data, the apps enable customers to easily sign in via their e-mail or
social network. Customers can quickly and easily make or change a reservation, receive
confirmation and details of the current rental and all upcoming rentals, receive receipts, and
have the option to cancel the booking. The apps make the check-in and drop-off processes
much faster and easier. Further, to ensure that customers can quickly find the car that best
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CHAPTER 2: Organizational Strategy, Competitive Advantage, and Information Systems
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meets their needs, the apps also have pages for each type of car that include the car
description, images, features, rental rules, and availability.
Avis was the first rental car company to introduce split payment functionality in its mobile app.
The company surveyed travelers nationwide and found that 87 percent were likely to mix
business and leisure in the same trip. Accordingly, Split My Bill provides travelers with the
ability to split car rental payments between two credit cards or forms of payment. Customers
have the option to split their payment by total bill amount, rental days, or additions such as
SiriusXM radio. Customers can also charge vehicle upgrade costs to a second form of
payment during their rental period.
And the result of investment in its mobile app? In December 2019, consumer insights firm J.D.
Power awarded Avis with its top rental car travel app for receiving the highest score in the
firm’s U.S. Travel App Satisfaction Study.
Connected cars. Car rental companies are connecting their vehicles to the internet.
For example, by the end of 2019 Avis had connected more than 200,000 of its vehicles to the
internet, and it planned to connect all 600,000 of its cars by the end of 2020.
Each car contains sensors that monitor certain variables, from the car’s exact location in case
the driver needs roadside assistance, to fuel levels, tire pressure, and brake pad condition. The
sensors also enable the driver to remotely lock and unlock a vehicle and flash the lights. The
companies’ goals are to improve driver safety, reduce maintenance costs, ensure that their cars
spend more time on the road, and generate new sources of revenue from selling ads and
services.
For a car to make a profit for a rental company, it must be rented out at least 82 percent of the
time. If car rental companies can monitor a car’s performance in real time, then they can
avoid spending money servicing cars that do not need it. In addition, they can reduce the
chances of a breakdown that would take a car out of service and irritate customers.
Location tracking also helps these companies generate more revenue-earning days out of their
fleets. For example, when cars are towed and impounded because of parking violations, renters
often walk away. This situation leaves the car rental companies to handle the problem, which
includes finding the lot in which the car is impounded. To address this problem, car rental
operators have set up geofencing—a virtual perimeter for a real-world geographic area—around
the largest impound lots in the United States. As a result, they no longer have to wait for
impound workers to contact them. Geofencing has reduced the average recovery time for an
impounded car by half, to six days.
Connected cars also enable these firms to broaden their customer bases by placing their cars
closer to more drivers. They hope to become less reliant on airport locations, where they earn
approximately 70 percent of their revenue. Additionally, car rental companies are working
with retailers, mall developers, and city planners to create self-service, counter-free hubs where
people can pick up and drop off a car.
For example, Avis is using this model in Kansas City, Missouri, where all its 5,000 cars are
connected. Avis is sharing live car-location data to help city planners refine their digital traffic
flow models. In that way, city planners can more effectively determine which roads are used
most frequently, and they can schedule repairs more efficiently. In return, the city has provided
dedicated parking places for Avis cars.
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CHAPTER 2: Organizational Strategy, Competitive Advantage, and Information Systems
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Autonomous vehicles. Industry analysts expect that autonomous vehicles will be
attractive to the lucrative business traveler market. McKinsey believes that business travelers
will want self-driving rental cars, which will enable them to work on the way to their
destinations. Business travelers make up roughly 40 percent of car rental company customers.
Car rental companies have been planning to be in this market from its beginnings by
partnering with autonomous vehicle companies: Enterprise and Voyage (www.voyage.auto),
Hertz and Aptiv (www.aptiv.com), and Avis and Waymo (www.waymo.com).
Fleet management. Car rental companies operate huge networks of garages, and
they possess expertise in maintaining, repairing, and cleaning cars. As a result, these firms sell
fleet management services to other companies, including autonomous vehicle makers.
For example, Waymo’s driverless taxis need to be on the road as much as possible during each
24-hour day. Therefore, these cars must be serviced and cleaned much more frequently than
typical cars. All of the Big Three car rental companies have outstanding fleet-management
operations.
In Phoenix, Avis is servicing Waymo’s fleet of 600 self-driving Chrysler Pacifica minivans. Avis
handles tasks such as oil changes, tire rotations, and cleaning, while Waymo maintains the
autonomous vehicles’ digital systems. Avis’s deal with Waymo provides added revenue without
the large fixed cost that comes from actually owning cars. At the same time, Waymo avoids the
expense of managing maintenance.
Car sharing. Although car sharing accounts for only 1 percent of the revenues of car rental
companies, these companies have car-sharing brands. These units help them prepare for a
future with more counter-free locations for their rental fleets. Key car-sharing brands are
Zipcar (Avis), Enterprise CarShare, and Hertz 24/7.
Resale retail. Rental car companies sell their cars after a few years. Unfortunately, the weak
second-hand market has reduced industry profits. To better control the timing and location of
those sales, the Big Three are building their own physical used car sales lots.
These firms rotate their vehicles out of their rental fleets while the vehicles are still under the
original manufacturer’s warranty, and they sell them through their sales programs. The cars in
these programs are certified, meaning that they have passed a rigorous multipoint, bumper-tobumper inspection process by certified mechanics. They usually offer 12-month, 12,000-mile
warranties (which cost extra).
Value-added services. In 2018, Hertz launched Hertz+, a platform on its website that
offers its customers access to more than 130,000 global experiences. These experiences include
exclusive events, tours, and other travel opportunities. Hertz+ works with PlacePass.com, a
technology company that helps companies access the market for in-destination experiences.
Avis has deployed an open software development system that allows ride-hailing services,
digital mapmakers, city planners, and other potential partners to share data with Avis’s app.
This system has produced revenue for Avis. For example, a department store could pay Avis a
fee, in return for which Avis would embed ads in its app to steer users to the store’s website.
The app could also literally steer customers to the physical store. For example, an Avis
customer who forgot to pack a needed article of clothing could be taken to a physical store by
his or her self-driving rental car.
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CHAPTER 2: Organizational Strategy, Competitive Advantage, and Information Systems
3/8/23, 1:15 PM
The Results
According to J.D. Power, customer satisfaction with rental car companies reached record highs
in 2019. Based on a 1000-point scale, Hertz scored 856, Enterprise 855, and Avis 833, with an
industry average of 843. The small 23-point difference between Hertz and Avis highlights the
competition in the industry.
Unfortunately, the COVID-19 pandemic has damaged the entire travel industry, including car
rental companies. As of May 2020, car rental reservations at airport locations had declined
between 50 and 75 percent, according to the American Car Rental Association.
Neighborhood branch locations experienced a smaller decline in reservations than airport
locations did. One possible reason for the smaller decline is people involved in accidents need
an insurance replacement vehicle.
Car rental firms began to furlough employees in March 2020. By May, they had begun to lay
off employees. For instance, on April 20, Hertz announced that it would lay off 10,000 of its
29,000 employees in its North American operation.
And the bottom line? Regardless of the uncertainty that the car rental industry faces, the U.S.
Department of Homeland Security (DHS) has declared the industry essential, and it remains
open for business.
In May 2020, Hertz filed for bankruptcy, a victim of the coronavirus pandemic. By declaring
bankruptcy, Hertz maintained that it intended to stay in business while restructuring its debts
and emerging a financially healthier company.
Sources: Compiled from C. Isidore, “Hertz Files for Bankruptcy,” CNN Business, May 22,
2020; M. Zinn, “Car Rental Industry Braces for Impact from Coronavirus,” News‐Press, May
2, 2020; M. Goldstein, “Hertz Car Rental Suffers Massive Layoffs, Stock Drop from COVID‐
19 Pandemic,” Forbes, April 24, 2020; “Avis Budget Group Surpasses 200,000 Connected
Vehicle Mark,” Avis Budget Group Press Release, December 16, 2019; A. Levy, “Lyft Announces
Car Rental Service; Hertz and Avis Shares Plunge,” CNBC, December 13, 2019; “Introducing
Lyft Rentals,” Lyft Blog, December 12, 2019; I. Carey, “Hertz Rises Where Avis Falls in
Crowded Landscape for Rides,” Skift, November 8, 2019; I. Carey, “Hertz Continues to
Outshine Avis with Tech Investments for Operations,” Skift, November 7, 2019; “Increasing
Competition Drives Rental Car Companies to Achieve Record High Satisfaction,” J.D. Power
Press Release, October 16, 2019; D. Lubinsky, “‘Complete’ Tech Transformation for Rental
Companies,” Auto Remarketing, August 14, 2019; A. Shah, “Avis Revamps IT to Stay Relevant
in Changing Industry,” Wall Street Journal, July 3, 2019; “Avis Car Rental Enhances Mobile App
Experience with New Split Payment Feature,” Avis Budget Group Press Release, June 3, 2019; “Car
Rental Companies: Evolving with Consumer Needs,” Invers, May 27, 2019; A. Sheivachman,
“Avis and Hertz Struggle to Find Path to Car Rental Profit,” Skift, May 7, 2019; P. Wahba, “A
Fork in the Road for Avis,” Fortune, November 1, 2018; C. Elliott, “Car Rental Companies Are
in a ‘Transformative’ Stage. Here’s What That Means for You,” Forbes, September 23, 2018; P.
LaMonica, “Avis Will Start Providing Rental Cars to Lyft Drivers,” CNN Business, August 6,
2018; W. Richter, “Numbers Are in: Uber, Lyft v. Rental Cars & Taxis in the U.S. in Q2,” Wolf
Street, July 29, 2018; H. Shaban and P. Holley, “GM Launches a Peer‐to‐Peer Car‐Sharing
Service,” The Washington Post, July 24, 2018; A. Griswold, “Startups Like Uber Decimated Taxi
Companies. Rental Cars Are Next,” Quartz, May 10, 2018; P. Holley, “Airbnb for Cars Is Here.
And the Rental Car Giants Are Not Happy,” The Washington Post, March 30, 2018; “Avis Now
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Provides More Features on Mobile App,” Auto Rental News, July 12, 2016;
www.avisbudgetgroup.com, www.hertz.com, www.enterprise.com, accessed April
10, 2020.
Questions
1. This case has addressed a number of possible solutions for the problems afflicting the car
rental industry.
a. Which solution do you think had the greatest strategic impact on the industry?
Provide specific examples to support your answer.
b. Which solution do you think has the least strategic impact on the industry? Provide
specific examples to support your answer.
2. Apply the five forces of Porter’s Competitive Forces Model to each possible solution
discussed in this case (individually). Which forces are most applicable to each solution?
Support your answers.
Notes
1 Porter, M.E. (1985) Competitive Advantage, Free Press, New York.
2 Porter, M.E. (2001) “Strategy and the Internet,” Harvard Business Review, March.
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Case Analysis Progress Report Guidelines
Title of the Case:
The Company Name in the Case:
Company Information (One-two paragraphs):
The Problem in the Case:
Define the company problem or “what problem do I want to investigate or what questions do I want to
answer”?
Background to the Problem
Why this problem is important to the company?
Literature Review
References (4 articles related to your case topic)(Peer-Reviewed Articles)
Summarize each article in two-three paragraphs- Make sure to follow APA format to address the
references.

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DescriptionCHAPTER 2: Organizational Strategy, Competitive Advantage, and Information Systems 3/8/23, 1:15 PM advantage. Problem-Solving Activities 1. Surf the Internet for information about the Department of Homeland Security. Examine the available information, and comment on the role of information technologies in the department. 2. Experience mass customization by designing your own shoes at www.nike.com, your car at www.jaguar.com, your business card at www.iprint.com, and your diamond ring at www.bluenile.com. Summarize your experiences. 3. Access www.go4customer.com. What does this company do, and where is it located? Who are its customers? Provide examples of how a U.S. company would use its services. 4. Access the website of Walmart China (www.walmartchina.com/english/index.htm). How does Walmart China differ from your local Walmart (consider products, prices, services, and so on)? Describe these differences. 5. Apply Porter’s value chain model to Costco (www.costco.com). What is Costco’s competitive strategy? Who are Costco’s major competitors? Describe Costco’s business model. Describe the tasks that Costco must accomplish for each primary value chain activity. How would Costco’s information systems contribute to Costco’s competitive strategy, given the nature of its business? 6. Apply Porter’s value chain model to Dell (www.dell.com). What is Dell’s competitive strategy? Who are Dell’s major competitors? Describe Dell’s business model. Describe the tasks that Dell must accomplish for each primary value chain activity. How would Dell’s information systems contribute to Dell’s competitive strategy, given the nature of its business? Closing Case POM MKT The Car Rental Industry The Business Problem Car rental companies began by renting cars to travelers at airports. The business model of these companies historically has been to purchase or lease large fleets of vehicles at the lowest possible price, rent them to customers for income, and then sell them either directly to the public or at auction. The industry grew rapidly; by 2019 it had achieved a global revenue of approximately $90 billion. Enterprise (www.enterprise.com), Hertz (www.hertz.com), and Avis Budget (www.avisbudgetgroup.com) are the three largest (in order) U.S. airport-based car rental companies by market share. In 2019 they owned a combined 94 percent share of the $32 billion U.S. rental market. Each company encompasses multiple brands: Enterprise Holdings: Enterprise, National Car Rental, Alamo, and Enterprise CarShare Hertz Global Holdings: Hertz, Thrifty, and Dollar Rent A Car Avis Budget Group: Avis, Budget, Payless Car Rental, Zipcar Despite its large revenues, however, the car rental industry is experiencing a number of about:srcdoc Page 52 of 57 CHAPTER 2: Organizational Strategy, Competitive Advantage, and Information Systems 3/8/23, 1:15 PM problems: Until recently, the traditional process of renting a car has been time-consuming, inefficient, and irritating to customers. Customers wait to get off their planes, wait to claim their baggage, and then proceed to curbside where they wait to board a shuttle to the rental car lot. At the lot, they wait in line, speak with a representative, manually fill out forms, and receive the car keys. Then they must go to the lot and find the car. These companies all offer vehicles from the same manufacturers and therefore have difficulty differentiating themselves. A few decades ago, car rental companies were the only solution to people’s need to access a vehicle without owning one. Today, people have many more options to meet their mobility needs. Car rental companies compete with ride-hailing services such as Uber and Lyft, as well as with peer-to-peer car-sharing services such as GetAround and Turo. Ride-hailing services have had the greatest impact on car rental companies. In 2019, digital marketing firm Epsilon (http://us.epsilon.com) analyzed travel transactions for 2017 and 2018. The company found that the majority of previous car rental customers had decreased their spending on rental cars, and about half of them had stopped renting cars altogether. In general, there are the three types of ground transportation for business travelers: ride hailing, rental cars, and taxis. According to Certify (www.certify.com), a provider of online travel and expense management for companies, business travelers use Uber and Lyft approximately 72 percent of the time, rental cars 22 percent of the time, and taxis about 5 percent. Peer-to-peer car-sharing companies enable private car owners to rent out their vehicles. The companies take a percentage of the total cost of the rental from the people who rent out their cars, and they provide insurance for owners and renters. Customers book rentals, chat with car owners, arrange pickup and drop-off spots, and make payments directly through the companies’ apps. To address their problems, car rental companies are investing in technology, offering more vehicle choice, and providing personalized service and much more efficient pickup and return processes. In addition, these firms want to diversify their income streams while increasing customer satisfaction. A Number of Possible Solutions Improving the customer experience with online apps. As noted previously, car rental companies have had poor customer service processes in the past. In order to make the rental process as seamless as possible, car rental companies have developed sophisticated mobile apps. In 2020, almost 70 percent of car rentals were made online via apps. The apps contain data on drivers, including name, address, driver’s license number, and payment details. With these data, the apps enable customers to easily sign in via their e-mail or social network. Customers can quickly and easily make or change a reservation, receive confirmation and details of the current rental and all upcoming rentals, receive receipts, and have the option to cancel the booking. The apps make the check-in and drop-off processes much faster and easier. Further, to ensure that customers can quickly find the car that best about:srcdoc Page 53 of 57 CHAPTER 2: Organizational Strategy, Competitive Advantage, and Information Systems 3/8/23, 1:15 PM meets their needs, the apps also have pages for each type of car that include the car description, images, features, rental rules, and availability. Avis was the first rental car company to introduce split payment functionality in its mobile app. The company surveyed travelers nationwide and found that 87 percent were likely to mix business and leisure in the same trip. Accordingly, Split My Bill provides travelers with the ability to split car rental payments between two credit cards or forms of payment. Customers have the option to split their payment by total bill amount, rental days, or additions such as SiriusXM radio. Customers can also charge vehicle upgrade costs to a second form of payment during their rental period. And the result of investment in its mobile app? In December 2019, consumer insights firm J.D. Power awarded Avis with its top rental car travel app for receiving the highest score in the firm’s U.S. Travel App Satisfaction Study. Connected cars. Car rental companies are connecting their vehicles to the internet. For example, by the end of 2019 Avis had connected more than 200,000 of its vehicles to the internet, and it planned to connect all 600,000 of its cars by the end of 2020. Each car contains sensors that monitor certain variables, from the car’s exact location in case the driver needs roadside assistance, to fuel levels, tire pressure, and brake pad condition. The sensors also enable the driver to remotely lock and unlock a vehicle and flash the lights. The companies’ goals are to improve driver safety, reduce maintenance costs, ensure that their cars spend more time on the road, and generate new sources of revenue from selling ads and services. For a car to make a profit for a rental company, it must be rented out at least 82 percent of the time. If car rental companies can monitor a car’s performance in real time, then they can avoid spending money servicing cars that do not need it. In addition, they can reduce the chances of a breakdown that would take a car out of service and irritate customers. Location tracking also helps these companies generate more revenue-earning days out of their fleets. For example, when cars are towed and impounded because of parking violations, renters often walk away. This situation leaves the car rental companies to handle the problem, which includes finding the lot in which the car is impounded. To address this problem, car rental operators have set up geofencing—a virtual perimeter for a real-world geographic area—around the largest impound lots in the United States. As a result, they no longer have to wait for impound workers to contact them. Geofencing has reduced the average recovery time for an impounded car by half, to six days. Connected cars also enable these firms to broaden their customer bases by placing their cars closer to more drivers. They hope to become less reliant on airport locations, where they earn approximately 70 percent of their revenue. Additionally, car rental companies are working with retailers, mall developers, and city planners to create self-service, counter-free hubs where people can pick up and drop off a car. For example, Avis is using this model in Kansas City, Missouri, where all its 5,000 cars are connected. Avis is sharing live car-location data to help city planners refine their digital traffic flow models. In that way, city planners can more effectively determine which roads are used most frequently, and they can schedule repairs more efficiently. In return, the city has provided dedicated parking places for Avis cars. about:srcdoc Page 54 of 57 CHAPTER 2: Organizational Strategy, Competitive Advantage, and Information Systems 3/8/23, 1:15 PM Autonomous vehicles. Industry analysts expect that autonomous vehicles will be attractive to the lucrative business traveler market. McKinsey believes that business travelers will want self-driving rental cars, which will enable them to work on the way to their destinations. Business travelers make up roughly 40 percent of car rental company customers. Car rental companies have been planning to be in this market from its beginnings by partnering with autonomous vehicle companies: Enterprise and Voyage (www.voyage.auto), Hertz and Aptiv (www.aptiv.com), and Avis and Waymo (www.waymo.com). Fleet management. Car rental companies operate huge networks of garages, and they possess expertise in maintaining, repairing, and cleaning cars. As a result, these firms sell fleet management services to other companies, including autonomous vehicle makers. For example, Waymo’s driverless taxis need to be on the road as much as possible during each 24-hour day. Therefore, these cars must be serviced and cleaned much more frequently than typical cars. All of the Big Three car rental companies have outstanding fleet-management operations. In Phoenix, Avis is servicing Waymo’s fleet of 600 self-driving Chrysler Pacifica minivans. Avis handles tasks such as oil changes, tire rotations, and cleaning, while Waymo maintains the autonomous vehicles’ digital systems. Avis’s deal with Waymo provides added revenue without the large fixed cost that comes from actually owning cars. At the same time, Waymo avoids the expense of managing maintenance. Car sharing. Although car sharing accounts for only 1 percent of the revenues of car rental companies, these companies have car-sharing brands. These units help them prepare for a future with more counter-free locations for their rental fleets. Key car-sharing brands are Zipcar (Avis), Enterprise CarShare, and Hertz 24/7. Resale retail. Rental car companies sell their cars after a few years. Unfortunately, the weak second-hand market has reduced industry profits. To better control the timing and location of those sales, the Big Three are building their own physical used car sales lots. These firms rotate their vehicles out of their rental fleets while the vehicles are still under the original manufacturer’s warranty, and they sell them through their sales programs. The cars in these programs are certified, meaning that they have passed a rigorous multipoint, bumper-tobumper inspection process by certified mechanics. They usually offer 12-month, 12,000-mile warranties (which cost extra). Value-added services. In 2018, Hertz launched Hertz+, a platform on its website that offers its customers access to more than 130,000 global experiences. These experiences include exclusive events, tours, and other travel opportunities. Hertz+ works with PlacePass.com, a technology company that helps companies access the market for in-destination experiences. Avis has deployed an open software development system that allows ride-hailing services, digital mapmakers, city planners, and other potential partners to share data with Avis’s app. This system has produced revenue for Avis. For example, a department store could pay Avis a fee, in return for which Avis would embed ads in its app to steer users to the store’s website. The app could also literally steer customers to the physical store. For example, an Avis customer who forgot to pack a needed article of clothing could be taken to a physical store by his or her self-driving rental car. about:srcdoc Page 55 of 57 CHAPTER 2: Organizational Strategy, Competitive Advantage, and Information Systems 3/8/23, 1:15 PM The Results According to J.D. Power, customer satisfaction with rental car companies reached record highs in 2019. Based on a 1000-point scale, Hertz scored 856, Enterprise 855, and Avis 833, with an industry average of 843. The small 23-point difference between Hertz and Avis highlights the competition in the industry. Unfortunately, the COVID-19 pandemic has damaged the entire travel industry, including car rental companies. As of May 2020, car rental reservations at airport locations had declined between 50 and 75 percent, according to the American Car Rental Association. Neighborhood branch locations experienced a smaller decline in reservations than airport locations did. One possible reason for the smaller decline is people involved in accidents need an insurance replacement vehicle. Car rental firms began to furlough employees in March 2020. By May, they had begun to lay off employees. For instance, on April 20, Hertz announced that it would lay off 10,000 of its 29,000 employees in its North American operation. And the bottom line? Regardless of the uncertainty that the car rental industry faces, the U.S. Department of Homeland Security (DHS) has declared the industry essential, and it remains open for business. In May 2020, Hertz filed for bankruptcy, a victim of the coronavirus pandemic. By declaring bankruptcy, Hertz maintained that it intended to stay in business while restructuring its debts and emerging a financially healthier company. Sources: Compiled from C. Isidore, “Hertz Files for Bankruptcy,” CNN Business, May 22, 2020; M. Zinn, “Car Rental Industry Braces for Impact from Coronavirus,” News‐Press, May 2, 2020; M. Goldstein, “Hertz Car Rental Suffers Massive Layoffs, Stock Drop from COVID‐ 19 Pandemic,” Forbes, April 24, 2020; “Avis Budget Group Surpasses 200,000 Connected Vehicle Mark,” Avis Budget Group Press Release, December 16, 2019; A. Levy, “Lyft Announces Car Rental Service; Hertz and Avis Shares Plunge,” CNBC, December 13, 2019; “Introducing Lyft Rentals,” Lyft Blog, December 12, 2019; I. Carey, “Hertz Rises Where Avis Falls in Crowded Landscape for Rides,” Skift, November 8, 2019; I. Carey, “Hertz Continues to Outshine Avis with Tech Investments for Operations,” Skift, November 7, 2019; “Increasing Competition Drives Rental Car Companies to Achieve Record High Satisfaction,” J.D. Power Press Release, October 16, 2019; D. Lubinsky, “‘Complete’ Tech Transformation for Rental Companies,” Auto Remarketing, August 14, 2019; A. Shah, “Avis Revamps IT to Stay Relevant in Changing Industry,” Wall Street Journal, July 3, 2019; “Avis Car Rental Enhances Mobile App Experience with New Split Payment Feature,” Avis Budget Group Press Release, June 3, 2019; “Car Rental Companies: Evolving with Consumer Needs,” Invers, May 27, 2019; A. Sheivachman, “Avis and Hertz Struggle to Find Path to Car Rental Profit,” Skift, May 7, 2019; P. Wahba, “A Fork in the Road for Avis,” Fortune, November 1, 2018; C. Elliott, “Car Rental Companies Are in a ‘Transformative’ Stage. Here’s What That Means for You,” Forbes, September 23, 2018; P. LaMonica, “Avis Will Start Providing Rental Cars to Lyft Drivers,” CNN Business, August 6, 2018; W. Richter, “Numbers Are in: Uber, Lyft v. Rental Cars & Taxis in the U.S. in Q2,” Wolf Street, July 29, 2018; H. Shaban and P. Holley, “GM Launches a Peer‐to‐Peer Car‐Sharing Service,” The Washington Post, July 24, 2018; A. Griswold, “Startups Like Uber Decimated Taxi Companies. Rental Cars Are Next,” Quartz, May 10, 2018; P. Holley, “Airbnb for Cars Is Here. And the Rental Car Giants Are Not Happy,” The Washington Post, March 30, 2018; “Avis Now about:srcdoc Page 56 of 57 CHAPTER 2: Organizational Strategy, Competitive Advantage, and Information Systems 3/8/23, 1:15 PM Provides More Features on Mobile App,” Auto Rental News, July 12, 2016; www.avisbudgetgroup.com, www.hertz.com, www.enterprise.com, accessed April 10, 2020. Questions 1. This case has addressed a number of possible solutions for the problems afflicting the car rental industry. a. Which solution do you think had the greatest strategic impact on the industry? Provide specific examples to support your answer. b. Which solution do you think has the least strategic impact on the industry? Provide specific examples to support your answer. 2. Apply the five forces of Porter’s Competitive Forces Model to each possible solution discussed in this case (individually). Which forces are most applicable to each solution? Support your answers. Notes 1 Porter, M.E. (1985) Competitive Advantage, Free Press, New York. 2 Porter, M.E. (2001) “Strategy and the Internet,” Harvard Business Review, March. about:srcdoc Page 57 of 57 Case Analysis Progress Report Guidelines Title of the Case: The Company Name in the Case: Company Information (One-two paragraphs): The Problem in the Case: Define the company problem or “what problem do I want to investigate or what questions do I want to answer”? Background to the Problem Why this problem is important to the company? Literature Review References (4 articles related to your case topic)(Peer-Reviewed Articles) Summarize each article in two-three paragraphs- Make sure to follow APA format to address the references. Purchase answer to see full attachment

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