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.