Background

easyCar was founded in 2000 by a Greek entrepreneur Stelios easyCar only rents one specific car at each of their locations and books entirely online or over the phone It provides car rental in more than 2,400 locations in over 60 countries, including the UK, Ireland, the USA, Canada, Spain, Switzerland, France, Portugal, Italy, Greece, Cyprus and South Africa They do not offer the option of delivery and collection They do not give refunds for cancellations They charge a minimum amount for telephone bookings.

Issues

Bad Location. Customers can wait for a long time for their vehicle. Competition is larger and more dominant in Europe. Customers are responsible for gassing up and cleaning their vehicles before drop off or charges are applied. Level of quality is inconsistent. Vehicles are expensive but quality of service is low. Extra fees raise the overall price much higher than the initial rental price. Customers cannot get their money back for cancellations. Legal issues. Cancellations and Posting Pictures Policy.

Perspectives

Managements perspective: they want to maximize profits and maintain lowest cost possible. They have adopted strategies to achieve that goal. Some of these are wise while others need to be amended. Customers Perspective: Some would require better customer service and will not mind paying extra for that. Others would require cars at lowest rent possible and would prefer economy cars over luxury ones. Competitors perspective: they have to compete with the low rents offered by easyCar, but they have an edge over the company with better customer service.

Recommendations
Set up facilities near airports Reduce staff to cut costs Expand into other European markets Offer two different pricing structures Consider offering an at-home pick-up service Promote customer service

Justification
1) Set up facilities near airports

Generally avoided due to cost This is high traffic area for renters Run cost analysis to compare price between renting on airport and renting near and offering shuttle service Will increase sales

Justification
2) Reduce staff to cut costs
Use machines similar to airports or DVD rentals to handle transactions Register, swipe credit card, pay deposit, have their picture taken Would reduce staff and workload, increase speed of throughput and allow remaining staff to inspect/clean cars

Justification
3) Expand into other European markets
Initial locations primarily in Spain and the UK Should build up in countries where the ratio of cars to people is low to encourage renting in place of trains and buses Ireland, Denmark, and the Netherlands provide good opportunity

Justification

3) Expand into other European markets

Justification
4) Offer two different pricing structures

Economy Class: offer cheaper cars (Fiat 500), and continue same pricing strategy for price-conscious customers Business Class: offer existing cars (Mercedes AClass), and charge customers more in exchange for not washing or fueling the car, designed for service and quality oriented customers Maintaining only two lines will allow easyCar to keep high utilization rates

Justification
5) Consider offering an at-home pick-up service

Offer pick-up service at a price premium to go along with the business class line Would serve more customers, but would increase staffing requirements Could possibly designate the company as a transportation service and allow them to skirt the OFT ruling

Justification
6) Promote customer service
After all, this is still a service industry They are offering a great product, but doing so in a poor service environment Wait times aggravate people, and will hurt word of mouth recommendations, no matter what the price Build customer service into the mission

Consequences

Setting up facilities near airports: High car rents and High profits. Reduce staff to cut costs: installation of more computer systems, high capital investment, complicated procedure, unsatisfied customers due to lack of personal attention. Expand into other European markets : will help easyCar to increase profits by expanding. Can also lead to low rent per car. Offer two different pricing structure : lead to better customer service and differentiation in customer profiles. Consider offering an at-home pick-up service : will lead to increase in rents charged due to hiring of more staff. Still a service industry : high car rents.

Questions

1. What are the characteristics of the car rental industry? How do they influence the design of service delivery processes in this industry in general?
Characteristics Express Service Convenient locations Ease of booking Friendly user websites Customer pickup Car and size choice Different (numerous) drop off locations *compared services of Avis, Hertz, and easyCar.com to come up with similar services amongst all.

These characteristics affect the total design of this service industry. Customers prove to be the leading cause of services offered and if the services customers want are not being offered, the car rental company will not be as dominant as others. Perhaps Avis and Hertz are leading competitors because they have implemented ways to make all or most of these characteristics exist in this business whereas easyCar is lacking in some of the areas and options.

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

Simplify the product offered by having a limited type of fleet. Does not work with agents-books 95% of business online. The other 5% are made by phone which the customer pays for. Small staff. Gas and cleaning fees were put on the customer. Cars prices were generally the price of competitors. Promotions were fairly low cost in which the name and number, phone number, and web address were located on the cars.

easyCars strategy may not be truly a low cost for their customers or if it is more of a low cost for them. As stated on page 647 of our text easyCar's base price covered only the core rental of the vehicle-the total price customers paid was in many cases much higher and depended on how the customer reserved, paid for, used, and returned the vehicle."

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

As stated in the issues, the level of quality easyCar provides does not match up to the level of quality of the cars they rent out. Long waits, inconvenient locations, and unexpected fees or chores should not be expected while renting a Mercedes.

4. Is easyCar a viable competitor to taxis, buses, and trains as Stelios claims? How does the design of its operations currently support this form of competition? How not?
In 2003 easyCar changed their policies to allow people to rent a car with as little as one hour's notice of rental. Stelios believed this would be serious competitionfor taxis, buses, and trains. Although you could rent a car anytime you would like without having to go at a specific time, as you would for a bus and a train, you still have to call or book online an hour in advance and have to deal with gas, cleaning, and drop off. Depending on how long a persons trip is for, it may not be worth the extra time and hassle to deal with renting a car.Alsomanytake trains or busesfor something soroutine like getting to work which they would not need a rental car for.Renting a car would most likely be cheaper than a taxi for a longer trip, however most people taking taxis do not take very long trip. Overall, although cars, taxis, trains, and buses are all means for transportation, people opting to take taxis, buses, and trains may not have any interest in renting a car.

5. What are the operational implications of the changes made my easyCar.com in the last year?

The stocking of fleet with variety of vehicles that included Vauxhall Corsas, Ford, Renault Clios and Toyota. This implies variety to customers and lesser rents for cheaper cars. EasyCar also allowed rentals for as little as one hour and with as little as one hours notice of rental. This implies better service to customers. Easy car made it mandatory for its customers to purchase loss-damage insurance. This implies paying extra for it. EasyCarss effort to double its advertising budget for 2003 was a fruitful one. More advertising implies more customers.

6. How significant are the legal challenges that easyCar is facing?

The legal challenge to grant customers seven days from the time they made a booking to cancel their booking and receive a full refund was a significant and serious one . The other policy of posting the pictures of customers whose cars was 15 days or more overdue also drew legal criticism but was not a very significant one.

7. What is your assessment of the likelihood that easyCar will be able to realize its goals for 2005?

easyCar will not be able to achieve its goals for 2005, on the basis of the goals achieved till 2003 and their growth rate. The following reasons make it difficult for EasyCar to achieve its goals:

Dissatisfied customers. Customers were made to wait for long time, they were not refunded for cancellations, and they were expected to pay for cleaning of cars and fueling of gas. The company was facing a serious legal challenge. If they lose this case, it would mean a huge loss in profits. They had only one or two employees per location. That means that each employee was dealing with a lot of customers each day. This implies unsatisfied customers as well as employees. Most of the cars rented by easyCar were high end. This policy contradicts their policy of providing value for money.

Continued..

The policy of returning cars in an hour or two was a complete failure. Customers failed to return cars on time which leads to other customers waiting for their prebooked cars. The company was not able to provide cars for all the booking made because of the small fleet size. They charged customers at the time of booking and not at the time of actual handling of car. This was another dissatisfaction to customers They only had internet and phone booking. Many people still need the help of associates to book cars for them. Therefore there was a lack of personal attention. It was supposed to be a service industry. Such industries are expected to have large number of employees and good customer service. This company is now working as a broker because of the losses it had to face.