Olympic Rent-a-Car Harvard Case Solution & Analysis

Introduction

Olympic Car Rentals is known to be the fourth biggest car rental company inthe United States. Airport rental business is an attractive segments with $9.6 billion. Another business segment is local rentals, both of these segments are based on the rentals purpose.It was founded by John Uelses in 1976, it is a franchise business. Primarily, the business operations were highly conducted at major airports and at downtownlocations in many cities. Thebiggest car rental company, namely “Enterprise” is moving ahead aggressively in this segment.

Analysis of Olympic:

In addition to this, it has been also posing threats and creatingsignificant business risks for Olympic. There is a dire need for Olympic to react to these aggressive moves of its competitors and should attract a maximum number of customer, it should differentiate itself and should increase its customer base through creating different sorts of strategies and should buildcustomer loyalty as well. For many years, Olympic has been struggling to compete with its competitors because it did not hold a large market share comparatively.

In addition to this, Olympic has only 7% of overall market share which is fairly low as compared to its competitors. The current customer loyalty program offered byOlympicis not inadequate as compared to its competitors, it has also been demonstratedthat the customers are not loyal enough to the business. Thereare many medalist program members who belong to another car rental customer loyalty program which shows that Olympic has a minimal customer base. On the other hand, the presence of Olympic in major airports is a greater advantage for the business. As a matter of fact, the company has generated the largest proportion of revenue at $9.6 billion. In addition to this, the financials of Olympic show a growth of 14.6% in revenue from the fiscal years2010 to 2012 despite the severe decline in rental industry due to the financialcrises that took place in 2008.

Olympic Rent-a-Car Harvard Case Solution & Analysis

 

Key Issues and Objectives:

The rental car industry has shown an increase in customer demand and this attribute has turned the industry more competitive. The competitors are striving to gain maximum market share through developing an effective customer reward loyalty program. There is a high operational cost of Olympic Rent-A-Car which prevents the company from launching the new loyalty program against its competitors. In addition to this, at Olympic Rent-A-Car,there is unavailability of cars due to which,the company cannot offer No Blackouts, which hasresulted in preventing the company from offering customer loyalty attributes. Following are the other issues that the company is facing;

  • The major competitor;Enterprise has implemented a new customer loyalty program which tends to adversely impact on the profitability of Olympic.
  • There are no blackout days. Blackout days refer to the days where demand tends to exceed supply such as in public holidays.
  • The new loyalty reward program offered by Enterpriseworks off the basis that dollars equal points and afterwards,they are added into point accelerators and bonuses.
  • The slow growing markets for the business car rentals.
  • The market is now in maturity stage and hasa potential to decline in the future ahead.

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