Problem indicators of Avis Budget Group Assignment

Problem indicators of Avis Budget Group - Assignment Example The costs of operation of Avis Budget group rose by 3% as compared to set standards.   Currently, the company is planning to acquire Zipcar, Inc. Corporation. On January 2, the management announced that the company has entered into an agreement to acquire Zipcar, Inc., the world's leading car sharing network. Final transactions are expected to be completed in March or April 2013.  These acquisitions are expensive and risky to undertake. Further, the company requires additional finances to promptly and effectively integrate the businesses of Zipcar and Avis Budget Group. This has increased the costs of managing such risks and hiring professionals to effect the acquisition. Avis Budget Group participated in the introduction and assembly of the electric vehicle in the horn of Africa, and the enlightening to people about the importance of solar power than fuel power. They have rolled out a program that teaches the people of the efficiency factors in relation to climatic change and co nditions. The company has also seen the introduction of electric cars that use solar power instead of diesel or petrol (Myers 3). The company has joined hands with other companies that fight for healthier, green environment (Avis 2).   This movement requires heavy capital investment, which further shoots up costs of operation. Though costs of production are expected to increase, the company is promising to lower prices charged for transport services. If prices are lowered, income from investment activities will not cover the costs. Under normal business operations, increase in production costs is expected to be directly proportional to increase in prices. In contrast, the Avis Budget is planning to reduce charges. This may lead to the company incurring losses that may be irrecoverable in the short-run. Reduced market coverage by 4% Competition has increased consistently in the vehicle rental industry. The car renting companies are coming up every day. More investors are realizing that car rental business is a profitable business. Examples of competitors are Buick Enclaves, Chevrolet Cobalts. These investors have created unfair competition, which has negatively affected Avis Budget Group. Competition has also risen because the car rental industry is a free competitive market stucture. In order to curb this competition, Avis Budget Group will be forced to incur extra costs in advertising and other forms of promotional activities. Prevalent of stiff competition has caused the company lose some of its potential customers. Increased competition has caused this company to increase expenditures on after-sale services and enhancing the quality of its vehicles. Competition will also come from other forms of transport such as sea and air transport, which attract more customers. This will lead to reduced profits, reduced share price and increased losses (Kings 9). Therefore, competition in the vehicle re