Enterprise Rent-A-Car

Memo assessing the success of the “local market” expansion planned by Enterprise’s competitors

Enterprise Rent-a-Car Inc. has been very successful as it focused on an entirely untapped segment of the car-rental market and created a niche for itself. Along the way, while its competitors slugged it out for the overcrowded airport traveler segment, Enterprise continued to prosper by expanding its inner-city operations.

With the rental car industry in the midst of a shake-out, Enterprise’s competitors are now eyeing the home-city use car rental market. However this expansion, while seemingly attractive due to the presence of just one dominant player (i.e. Enterprise) in what is the fastest growing segment of the industry, will not be as easy as anticipated. Hertz, Avis, and the like will find success difficult to come by, particularly due to the significant barriers-to-entry present in the local market segment.

The Enterprise model has been literally built brick-by-brick. They have the most number of inner-city locations, far more than any competitor, and more importantly, have established relationships with garage service managers and customers. Avoiding airport locations also helps Enterprise to cut down on commissions to travel agents. By shunning expensive advertising campaigns in favor of building, maintaining, and delivering on relationships, Enterprise has earned a formidable reputation with its customer base and gets positive word-of-mouth publicity. It would be extremely difficult for a new entrant to get an Enterprise customer to switch to their brand.

Enterprise also displays an internal consistency between its resources, capabilities, and strategies, translating into a clear-cut advantage. Their office locations are inexpensive and small, with a new one opening in proximity if one branch achieves a fleet size of 150