Q.1. What are the characteristics of the car rental industry?

How do
these characteristics influence the design of service delivery process
in this industry in general?

The car rental industry can be categorized into two segments, business and
leisure. The business segment’s share is much lower than the leisure. It
accounts for 35-55%, whereas the greater remainder is dominated by the
leisure segment. Traditionally, these rental industries rent cars at different
locations through agents, which make the procedure manual, diminishing the
online booking to 10% only.

In fact, Easy Car covers 90% of the bookings online via their website, and the
remaining 10% is done by the reservation system. This shows that the
company managed to achieve 90% fleet utilization due to hostile pricing
whilst its competitor Avis Europe only achieve 68% fleet utilization.

Avis Europe and Hertz are merely examples of car rental industries that
managed to approach their customers successfully in Europe. There is also
Sixt in Germany and Atesa in Spain which comprise a major share in their
countries. Nevertheless, some car rental industries, such as Easy Car, use a
different approach in their commerce.
They tend to rent single cars, e.g.
Mercedes A Class. After a considerable
time period they have only started renting
a range of cars without the help of agents.

Q.2. EasyCar obviously competes on the basis of low price. What

does it do in operations to support this strategy?

EasyCar managed to attract many customers chiefly due to its low pricing
strategy, which was less than half it its major competitors. In order to sustain
the low cost, EasyCar had various schemes.
To begin with, they started promoting the prices as low as Euro 5 per day
with a rental preparation fee of Euro 4; this however only includes weekdays
for those customers who have booked in advanced. Conversely, prices rose
slightly in weekends by a few more Euros. The rates were adjusted according
to the requirements and expectations of car utilization at each site, which
enabled the company to attain 100% fleet utilization for some days.

Furthermore, EasyCar did not accept cash payments, and insisted on paying
the full amount through credit/debit cards at the time of booking. Another
advant5age they got from this paying arrangement is these customers were
charged Euro 5 extra (from website), and those who booked over the phone
were charged Euro 0.95 extra per minute.

Another plus point for Easy Car is that it made it obligatory to purchase loss-
damage insurance for the cars, and this eradicated the customer’s liability
towards it.

Overall, the low cost approach succeeded in attracting many customers as

the cost advertised was merely the base rent for the car with a lot of strings
attached to it. The base rent allowed customers to drive 100 kilometers per
day with an additional charge of Euro 0.12 for every extra kilometer made. As
to the returned cars, they only accepted clean ones charging on top of that a
further fee of Euro 16. Cars that failed to be returned before the set time
were charged Euro 120 instantly plus a further Euro 120 per 24 hours.
Besides, any changes that were made to bookings cost Euro 16, and even if
the change resulted in a lower rate for the customer the money was not
refunded, nor was it reimbursed whenever a booking was cancelled.

Q.3. How would you characterize the level of quality that EasyCar
provides?

EasyCar did a great job at increasing its fleet utilization. It started off with
5,000 Mercedes in the year 2000 and managed to advance it to 6,000 by
2002. The company cared a great deal about the cleanliness of the cars. They
made sure they were in a good condition internally as well as externally.

EasyCar rented their cars with diminutive fuel although they did supply a
map which showed the locations of the nearby gas stations and carwashes.
EasyCar was also very prompt about the fact the customers should return the
car within the specified time period mentioned during the booking.
Customers who failed to clean the car or return it on time were fined. The
reason for all this is to ensure that the company stood up to the expectations
of the next customer, thus making customer satisfactory a significant matter.

Q.4. Is EasyCar a viable competitor to taxis, buses and trains as

Stelios claims? How does the design of its operation currently
support this form of competition? How not?

EasyCar is definitely a viable competitor to taxis, buses and trains because its
present position is designed to support this form of competition with the low
prices it offers and the good services it grants. The only negative thing in my
opinion is perhaps the extra charges they take on cleaning and insurance.

In addition, EasyCar has made it easy for customers to reach them anywhere
and anytime and this reflects the high profits they generate at different
locations. In every 1 hour drive you should spot their rental rest. It is also
easy to spot the company from the bulk of promotions and advertisements
they have on bus stations and also on their own cars. EasyCar has made it
their objective to provide cars to customers for the long run not only a means
of experience.

Like I mentioned earlier, majority of the renting is done without agents, and
95% of the bookings are through the internet along with reminders through
company’s phone reservation. This will facilitate the process for the
customers and this service is not provided by other competitors.

Into the bargain, the company tried to evade higher costs for the customers
by locating far from the airport parking because it is notable that airport
spaces are more expensive. They always try to be available for these
customers, 24/7.

A disadvantage however is that EasyCar only rents single cars to customers

at each location, in contrast with its competitors who rent variety of vehicles.
This minimizes the customers’ options and preferences and may drive them
to away.

Q.5. What is the operational implications of the changes made by

EasyCar.com in the last year?

In 2002, the clean car policy was executed which condensed the preparation
fee of the car from Euro 11 to Euro 4 as long as the customers returned the
cars in a clean form otherwise they will be charged Euro 16. This policy
presented the company badly in the reviews; however they succeeded in
making the customers return the cars in the preferred state.

Along with that, EasyCar came out with a bright idea for customers to return
the cars in the opted time, but this idea was criticized by lawyers. The way it
was done is that the photos of those who fail to return the cars on time will
be posted in the company’s website as an act of shame, and fortunately it did
work with some customers!
Also in 2002, the loss-damage insurance scheme was initiated at Euro 6 per
day and it was optional. The benefit of it is that it reduced the customer’s
financial responsibility towards the vehicle, which encouraged most of them
to get it in the first place. In 2003, the insurance scheme was enforced at
Euro 4 per day.

In 2003, EasyCar permitted rentals for as less as an hour only and that within
a short notice of an hour as well. Again, that made it convenient for more
people to rent at their expense.
Q.6. How significant are the legal challenges that EasyCar is facing?

One major legal challenge that faced EasyCar is that customers were given 1
week-time span to cancel their bookings and collect their refund in full. This
was an order that came from the Office of Fair Trading to the company. The
decision was in view of the set of decisions that the Consumer Protection
Distance Selling Regulations set. The reason for that 7-day free-returning
policy is to give customers the opportunity to change their minds if they
desired to.

Eventually, it was decided by the Office of Fair Trading that EasyCar is not a
transportation service company because customers are the ones who drive to
the branch. Their role was just to sell the cars.

Stelios, who is the owner of EasyCar, pointed out that if the company was
treated like a transportation company then the utilization rate of the cars will
decrease accordingly.

Another critical challenge the company had to undergo was when they came
up with the picture posting idea. According to lawyers, such a policy might
affect the company in the aspects of: violation of data protection, libel,
privacy, confidentiality and human rights.

Q.7. What is your assessment of the likelihood that EasyCar will be

able to realize its goals for 2005?

In my opinion, I believe that EasyCar will be capable of attaining their goals in

2005 because of the way they manage their company and the different
policies they have implemented which showed success in the past years.
They have used SMART objectives, also known as Specific, Measurable,
Attainable, Realistic and Timely, to maximize the company’s value.

What is more, the company has established a very efficient system to

generate more revenue and increase their sales by the use of technology and
allowing booking online. They have cleverly placed charges in different
actions to make more money too.

Moreover, each branch came up with a methodology of calculating their

efficiency in terms of pricing in coordination with the utilization rates of the
vehicles. This helped to protect their assets and utilize them more efficiently
and effectively.

EasyCar reluctantly tried to tackle any problems that faced them, like the
reduction in the number of overdue cars, by implementing the posting-
picture scheme also there was a lot of conflict regarding it.

Stelios was quick at realizing mistakes, for that he strived to cancel any
failing projects immediately to avoid further cost problems and losses. For
instance, he tried to dispose the Internet Café Company when he felt that it
was of no use.

To sum up, I think that EasyCar is up to developing itself in the coming years
and will be able to achieve the goals set, and continue to make profits.