Description

CASE 28 Enterprise Rent-A-Car Focuses on Its People

Enterprise Rent-A-Car, with annual sales of more than $13 billion, is the largest and most

profitable car-rental business in North America. The company runs more than 6000 locations that

fall within 15 miles of 90 percent of the U.S. population. Enterprise also operates in Canada,

Germany, Ireland, and the United Kingdom.

When Jack Taylor started Enterprise in 1957, he adopted a unique strategy. Most car-

rental firms targeted business and leisure travel customers who arrived at an airport and needed

to rent a car for local transportation. Taylor decided to target a different segment—drivers whose

own cars were being repaired or who were driving on vacation, hauling home improvement

materials, or in need of an extra vehicle for an out-of-town guest, or who, for some other reason,

simply needed an extra car for a few days.

Traditional car rental companies must charge relatively high daily rates because their

locations in or near airports are expensive. In addition, their business customers are price-

insensitive because their companies pay for the rental expenses. While the airport locations are

convenient for business customers, these locations are inconvenient for people seeking a

replacement car while their car is in the shop. Although Enterprise has airport locations, it also

maintains rental offices in downtown and suburban areas, near where its target market lives and

works. The firm provides local pickup and delivery service in most areas.

Enterprise also rewards entrepreneurship at a local level. The company fosters a sense

of ownership among its employees. For example, its management training program starts by

defining a clear career path for each management trainee. Then it teaches employees how to

build their own business. Their compensation is tied directly to the financial results of the local

operation. Employees from the rental branch offices often advance to the highest levels of

operating management.

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The firm hires college graduates—8000 each year from 1000 campuses—for its

management trainee positions because it believes a college degree demonstrates intelligence

and motivation. Rather than recruiting students with the highest GPA, it focuses on hiring people

who were athletes or officers of social organizations, such as fraternities, sororities, and clubs,

because they typically have the good interpersonal skills needed to deal effectively with

Enterprise's varied customers.