Payless Car Rental: To consolidate or not to consolidate?

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Hello Student,

In order to approach this question and form a conclusion as to whether or not Payless Car Rental should consolidate, you first need to obtain an understanding of the company and what it does, its background and/or history; you need to look at the development of the company over the years (since its formation) by searching its website band/or looking at articles or other media information that might be available online; you also may need to pay attention to the company's financials, if available, with the aim mainly of ascertaining whether the company is heavily debt-burden; and you can also make mention of its competitors and the possible threats been faced from them. After doing this then you should be able to form a conclusion as to whether Payless Car Rental should or should not be consolidated with another company.

Consolidation generally refers to a combination or amalgamation of two or more firms into one new firm through the transfer of net assets. It is a major trend in many industries, and the main reason why companies consolidate is to improve investment returns through cost cutting and productivity gains. It is not impossible for companies that have nothing in common to come together in order to diversify. Hence, if you determine or feel that Payless Car Rental should consolidate - the company that you choose may not necessarily be a car rental company. Therefore consolidation can either be horizontal or vertical:

1) Horizontal integration occurs when two companies within the same industry become one, on roughly equal terms. This type of integration often raises antitrust concerns, as the combined firm will have a larger market share than either firm had before merging.

2) Vertical integration occurs when two companies are at a different stage in the production process; for example, a car maker merging with a car retailer or a parts supplier. It raises antitrust concerns only if one of the companies already enjoys some monopoly power, which the deal might allow it to extend into a new market.
Source: http://www.ehow.com/about_6555139_definition-industry-consolidation.html

History/Background Information on Payless Car Rental

If you visit the company's website (www.paylesscar.com), you will find that Payless Car Rental is privately held by Avalon Global Group and it is headquartered in St. Petersburg, Florida. The company was formed in 1971 and at that time it was at a small hometown operation in Spokane, Washington. For more than 35 years, ...