Beacon Company is a company that deals with renting out vehicles to individuals. This involves hiring cars to travelers or people who want a vehicle for certain purposes. A car rental or hiring is where a company rents out cars for a short period of time which it generally ranges renting a car for a period of a few hours to some days. Beacon has acquired Villagecar. Villagecar offers car sharing opportunities to people who need the service of a car for a short period. The company is considering integrating Villagecar to beacon company. Henry who is the CEO thinks it is a good thing to do but his assistant thinks it is a bad idea. He thinks that Villagecar should be left to continue its car sharing business. Car sharing is the act of giving out cars for a small period of time usually some minutes to a few hours.Owning on the other hand is possessing something or belonging to oneself. Owning is where a person has his assets and can use it any time, any moment that person wants. Owning is different from sharing in that, an owner can decide what to do with his belonging while a person who has been shared that possession does not have such a decision. Many companies that have sprung up to offer these services have been divided whether to offer rental cars or sharing out cars.
The market share of car renting is bigger than car sharing. This is because older generations have been used to renting out cars. However, car sharing is picking up slowly and gaining a lot of customers. The customers of car renting wants a vehicle that can be used for some time while the clients of car sharing want convenient means of accessing a vehicle fast, using it and returning. The culture of car sharing involves acting on the decisions fast unlike car renting which requires a slow process. It is evident that the two markets have different cultures, customers and needs.
The car sharing business is one example of the growing sharing industry (Kostakis&Bauwens, 2014). Village car has been on the business for long. It offers customers various ranges of cars for short time use. The customer’s pays for the car and uses it for a certain period of time usually short after which it is returned to the company. This arrangement is convenient for people who are travelling and those who do not want to own many assets. Determining whether sharing is a robust idea or just a fad that will fade; a number of factors will have to be discussed. One factor is technology.
Car hiring is the practice of renting a car for a small amount of time. The hiring market has been there for a while. People have been hiring various items for small time use and returning it after being done with. The car hiring market has continued to expand over the decade. As distance between countries continues to shorten through fast transport, more people are visiting different countries. These people are the ones that have contributed to the growth of this market. Many companies have sprung up in various countries to fill this market. Beacon Company is such company that practices car hiring (Harvard Business Review, 2013). A person hires a car, truck or van for a period of time after which that person returns it later. The difference between car hiring and car sharing is that, car sharing involves a small period of timeand used for urgent activities while car hiring can be used for even a week.
Hertz which is a global rent-a-car company shows that sharing is not a fad but a real thing happening (Hertz247.com, 2015). The growth of shopping malls over different regions in the world has made people shop all their good in one place. Consumers find themselves buying many goods than they can carry. Hertz has managed to team up with one retailer in Europe to help customers out if they need a van to carry their goods. Other companies will join in and after sometime, people will not need to have a car during shopping or a van, the sharing companies will take over in delivering these goods. It can be conclude that the sharing business will grow owing to the number of people needing help with small tasks and associated cost of having a vehicle everywhere.
Car sharing market is growing compared to car hiring. Many people have realized the need for a quick car or van to carry out small activities. Car hiring is more complicated and it involves membership fee and other processes in order to be a regular client(Hertz247.com, 2015). On the other hand, car sharing is convenient and has little paperwork involved. The person also does not need to stay with the vehicle for long and can continue doing his or her other things.
The current generation of young adults also shows that sharing is not a fad. As explained by henrys son, the younger generation prefer holding few belongings and instead being freer. The older generation had many things in order to carry out their daily activities. For example, they used computers which had a desktop and a CPU. The younger generations use laptop which is easier to carry around unlike the CPU and desktop used before. In addition, people in the 80s used disk to store music.A person would need to have many disks for the different kind of music. Current generations use phones, ipads, iPods and many other gadgets that can play music (Harvard Business Review, 2013). These gadgets are small and convenient to carry. This suggests that current generation want fewer things. They want to be free to do everything in a convenient manner. This shows that sharing is not a fad but one of the necessities for them. It is easier to have something for a short time; if u gets bored you leave it and take another without worrying about accumulating many properties.
In order for two separate companies to be integrated into one, some business functions should work as one. The human resource management is one such area. Employees should lean to work together and understand each other. This will lead to attainment of the organizations goals and objectives. Marketing of the two companies also need to be analyzed whether it is proper to market them as one company or as two different companies. In ensuring the success of the integration process in light of the above points, an analysis of the two companies’ strategy is analyzed below.
Merging the two companies is a bad idea. The first factor that discourages merging is customer base. Both companies have their customers that they have become accustomed to. It is hard changing the taste and preference of a person to like something he or she did not like. The same case applies to beacon company and VillageCar.The customers of beacon are mostly travellers. On the contrary, village car clients are that of convenience and affordability. These are the ideals that govern its customers. Integrating the two companies fully, that is, scale deal, beacon will lose these ideals. Changing the company from sharing to rental may have serious setbacks (Harvard Business Review, 2013). The customers may stop accessing the service of the Villagecar and opt for another company that offers the same service. In the end, Beacon will have a large business, large costs and no service to deliver bringing an end to Villagecar.
Another disadvantage of integrating Villagecar to beacon is the culture of the different business. A company has its traditions and culture. This is what defines a company. The culture and traditions at times are what make a company unique and successful in its own way. The same can be said of villagecar. A culture of the company can involve the way people do things in the workplace or how they run the activities. This can also involve small breaks, bonuses, the way people are seated. In addition, the culture of a company involves treatment the workers receive (Hubbard, Rice & Galvin, 2015). Villagecar employees are used to a fast pace where the atmosphere is fun and the decisions required in the workplace are made quickly. This may not be the case with beacon where it is a rental business and decisions may be prolonged for some time.
VRIO test can be used to determine if integration can work. VRIO test is a framework used to analyze a firm’s capabilities and internal resources to find out if the organization can be a source of sustained competitive advantage (strategicmanagementinsight.com, 2015). This is a strategic analysis carried out for both companies.For Villagecar, the first test is to know if the company is valuable. The customer base of Villagecar shows that it is valuable (Millard-Ball et al, 2005). In addition, its assets show that it is able to cover a large area. However,the service of Villagecar is not rare with an example of Hertz already in the market. It is not also common and this gives it a competitive edge. Imitating the service offered by Villagecar is costly. This will entail buying cars of different designs to capture different customers. This still gives it a competitive edge by discouraging potential competitors through cost. Lastly, the organization level at Villagecar is good. This means that the people can work without major issues and everything is well coordinated. With the above points, it is seen that integrating the company is a wrong move because the company is already competitive in its own market. To ensure that this competitive advantage is maintained, the company is reviewed after a period of time. To make sure all of this steps are successful, a strategic plan is important (Hubbard, Rice, & Galvin, 2015).
However, despite the disadvantages, there are some advantages if proper merging is done. The advantage of integrating the two companies is that it will have a wide customer base. This will enable the two companies to combine their already existing customers into one. In addition, the assets will also increase. The cars that beacon and Villagecar have will be combined increasing the number of cars. This will be used to serve the clients better and cover a wide area as compared to the area that one company was covering before. A good example is Google and YouTube (Harvard Business Review, 2013). Google has used scope deal in integrating YouTube to Google. This has been done by leaving YouTube to do what it does best but it has integrated Google plus in order for a person to comment on the videos. In this circumstance, Google has used the popularity of YouTube to boost its social platform Google plus. This is a win-win situation for the two companies without fully integrating them.
If integration is chosen, it should use the scope deal method where not all the businesses are integrated together, rather, they are integrated selectively. This allows both the companies to retain their uniqueness while at the same time retaining their customers. Scope deal integration will allow beacon to cater for both markets allowing them to have a bigger market and additional income opportunity. In addition, the employees should also be able to understand each other and marketing should not be carried uniformly, rather, marketing should be carried differently for the two companies.YouTube and Google is an epitome of a scope deal integration method (Harvard Business Review, 2013).
Millard-Ball, A., National Research Council (É.-U.)., Transit Development Corporation., &États-Unis. Federal Transit Administration. (2005). Car-sharing: Where and how it succeeds. Washington, D.C: Transportation Research Board.
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