On Becoming The Cost Leader In Budget Corporate Car Rental Business PT. Aldira Berkah Abadi Makmur

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Supranata, Alexis Aryana and Bastian, Fery Kurniawan and Syarif, Ricky Akhmad and Nastinasari, Riesmayanti and Djaiman, Stefanie Olivia (2006) On Becoming The Cost Leader In Budget Corporate Car Rental Business PT. Aldira Berkah Abadi Makmur. Project Report. Sekolah Tinggi Manajemen IPMI, Jakarta Selatan. (Unpublished)

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Budget corporate car rental industry is a highly competitive industry because not only are there many players in this segment; the players must also be able to deal with thin margins. To some extent the nature of the corporate car industry budget is opposite to the budget segment in ether industries and makes it more difficult for the players to survive. If we recall southwest's case in the airline industry budget, the industry has a stronger bargaining position than the buyers therefore they can reduce discretionary in the client's side and put more control in the players' side while in the budget corporate car rental busines the beyers have stronger bargaining positions because they have many options and rent in large numbers of cars. E-auction tender process, like Telkom did, has squeezed the providers' margin and price training power. Some players even dare to accept a contract that recovers very little cost of capital. Our analysis shows that Aldira's Standard Operating Procedure (SOP) is already in line with their business objectives of becoming the cost leader in this segment but some improvements can be made to lower the operating cost and put more control on Aldira's side. According to the cost variance analysis there are significant discrepancies between actual and budgeted expenses. The variances exist because of some possible reasons such as the unavailability of the standard for service and spare parts replacement and might also cause by mark up, especially for reimbursement cases. Therefore, to avoid the variance Aldira must put more control on their side by establishing a standard for services and replacement parts. The control can also be increased by creating new workshop networks and hiring more people to increase the man to rented car ratio. The result of abnormal analysis shows that Aldira is still liable for client's mistakes, the expenses which should be borne by the client and insurance company. The abnormality occurs because of the ambiguity or vague definition of own risk and shared responsibilities between providers and clients'in the contract. Until today, Aldira's actual total maintenance cost is still below the limitation. which is 3-4% of car's price, because some clients don't perform routine maintenance costs in authorized workshops continuously but even so, actually the Internal Rate of Return (IRR) of Aldira's car rental business is still below Bank Indonesia Certificate (SBI) ) rate which means that there are many investment alternatives that can provide a higher rate of return. To recover the high cost of capital Aldira must perform cross subsidy between premium cars such as Toyota Camry and Altis with Multi Purpose Vehicle (MPV) cars such as Innova, Avanza and deer pick up because premium car is a profit center while MPV car is more as a cost center. The MPV status as a cost center could be leveraged to a profit center by changing the routine maintenance policy of those cars from authorized workshops to regular workshops to increase revenue to total maintenance cost ratio. If it is not possible than fleet structure it should be arranged in such a way that it enables cross subsidy by taking account of the number of cars rented, price rates, rental periods and non routine maintenance margins.

Item Type: Monograph (Project Report)
Subjects: H Social Sciences > HF Commerce
H Social Sciences > HJ Public Finance
Divisions: Library > GFP (Group Field Project)
Depositing User: Elza Christina Nur Ramadani
Date Deposited: 16 Jan 2020 08:17
Last Modified: 16 Jan 2020 08:17
URI: http://repository.ipmi.ac.id/id/eprint/235

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