Beacon Car Rental, a well-known and established company in the business of car rental, has just acquired Village-Car, a car-sharing start-up. Beacon must now decide whether to leave Village-Car as a completely independent subsidiary of Beacon, with its own brand, marketing strategy, operations, and organizational structure; integrate Village-Car processes into Beacon Car Rental while preserving Village-Car’s brand and market positioning; or, integrate Village-Car completely into Beacon.
Susan Fournier, Giana M. Eckhardt, Fleura Bardhi
Harvard Business Review (R1307X-PDF-ENG)
July 01, 2013
Case questions answered:
- Beacon Car Rental, a top competitor in the car rental industry, has just acquired Village-Car, a sharing car startup. Now, Henry Beyer, Beacon’s executive in charge of integrating Village-Car into Beacon, has to decide the nature of the integration. In this Learning to Play in the New “Share Economy” Case Study, decide whether it is best for Henry to:
a.) Leave Village-Car as a completely independent subsidiary of Beacon, with its own brand, marketing strategy, operations, and organizational structure;
b.) Integrate Village-Car operations into Beacon Car Rental while preserving Village-Car’s brand and market positioning;
c.) Integrate Village-Car completely into Beacon.
- For each option, present at least three advantages and three disadvantages. Then, present your solution, explain why it is the best option in your opinion, and suggest the scenario ahead of Beacon as it moves on.
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Learning to Play in the New "Share Economy" Case Answers
Case Study Overview – Learning to Play in the New “Share Economy”
In this Learning to Play in the New’ Share Economy’ case study, the central conflict that is presented is whether or not Beacon should fully, partly, or not integrate the newly acquired acquisition, Village-Car.
The criteria that will be addressed are brand image, cost efficiency, and speed of implementation. These criteria are essential due to the structure of Village-Car and the uniqueness of a growing ‘share economy.’
Alternatives for Beacon Car Rental
The first alternative in the Village-Car Case is to leave Village-Car as a completely independent subsidiary.
If Beacon were to assimilate Village-Car completely, then, as the case stated, there would be a revolt within the company due to a difference in company culture. A complete integration would strip Village-Car of anything that initially made them unique and appealing to their current audience. If there was a rejection, then it might affect the implementation speed and the cost of efficiently integrating Village-Car into Beacon.
Another con would be the effects on the company image. The case mentions collective, dedicated Village-Car users called Villagers and that the Villagers are almost certain to oppose the complete integration of their Village-Car.
The total absorption of Village-Car will indefinitely upset the brand image that Village-Car has developed. Brand image is significantly important to Village-Car because it developed a system that is different from the rental car industry.
Finally, another downfall of this alternative would be missing out on a growing $3.5 billion category. Additionally, the case mentioned that Beacon’s company model was becoming less and less profitable and that, in the long run, the costs of not changing the model might even become the downfall of Beacon in the future.
On the other hand, the full integration of new acquisitions is what Beacon undoubtedly has mastered. Village-Car will have resources from Beacon to make the company more profitable. Integration is the most cost-effective approach to this problem. As stated by Anabel, the integration will “rid of the overlaps [and] maximize synergies.”
Moreover, Village Car would profit from the benefit of being taken in by a large, respectable rental car company. Generally, consumers are more likely to do business with a name that they know well and see across a country rather than a still-developing startup. The insurance and safety of renting from a brand name are bound to draw in more customers in the area.
A final pro would be, as Henry suggests multiple times, to absorb Village-Car completely but integrate their shorter model. Doing so will consume a more flexible option, and this opens a variety of options available for the consumer to choose from. Therefore, the speed of implementing the Beacon model will be relatively smooth and efficient compared to other alternatives.
The second alternative is to integrate Village-Car operations into Beacon Car Rental while maintaining the integrity of Village-Car’s brand and market.
The first con is that according to the Journal of Consumer Research, the functionality of a shared car company is the most critical aspect of what…
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