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Universal rental car pricing simulation
Course:- Managerial Economics
Reference No.:- EM13883787




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Question: Universal Rental Car Pricing Simulation

Assignment

Write a report of no more than ,1600 words (not including tables and other appendixes) explaining your strategy, results, and observations from the special scenario of Universal Rental Car Pricing Simulation assigned for Minor Project 2. Design and format of the report are your choice. When quoting from or crediting references, use the Harvard style. This means that there will not be footnotes, and that citations/references are "worked into" the regular text. Please see a copy of the Harvard Business Review in the Regent Library databases for examples.

Content

The report should start with an overview of your strategy (its goals and any changes during the scenario), your results (did they meet expectations?), and an explanation of how your strategy, market conditions, and competitor behavior led to those results. The body of the report should answer/discuss the following questions and topics:

Weekday vs. weekend demand. How did they differ? What are they a proxy for? How did their price responsiveness differ and why? How did you use this information in your pricing decisions?

Cost structure. Describe the economics of this business. In what ways did you use the breakeven calculator? How did the cost structure affect your pricing decisions?

Competitive price moves. What did you think the competition was doing? What kind of competitor were you up against? How intelligent was the competitor? On what do you base that assessment?

General market conditions. Did you observe any patterns in overall market demand over the duration of the game? Explain. How would you characterize elasticity of demand in this market overall? Was it a good year or a bad year to be managing this business? Why?

Answered:-

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Rental car business had grown much in the whole world. This business has become successful because of needs of daily commuters and rising price and maintenance cost of owning and running a car. In the present scenario it has become advantageous to rent a car instead to owing a car. People who cannot afford to own a car can also enjoy the ride of the same with reasonable cost. Thus without blocking one’s money one can enjoy the ride by renting a car. Rental car business faces huge competition.

This is so because the initial investment requirement of such business is very low and no fixed establishment is required, moreover the demand for rental car is too high thus gives initiative to many to go for this business. Thus it become necessary for every organization running such business to design, develop and implement strategies in order to survive and earn profit in the stiff competitive environment. With the frequent advancement in information technology rental car business had also faced several technologicalchanges for instance online booking of cabs, tracking the cabs using GPS, online payment facility and various other facility. All this facility has benefited both the customer and the business owners.

From the following report we are going to analyze the various strategies to be adopted by the business organization to survive and earn profit in the stiff competitive environment and to make pricing decision accordingly. In the said report we are going to analyze the pricing strategy for different occasion and days in a week i.e. in weekdays and weekends. Here we are going to analyze the sensitivity of price in respect of Florida car agency to maximize the profit across weekends and weekdays. (John T. Gourville)




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