Management Consulting Group
Executive Summary
This report examines the competitive strategy and business operations of Zipcar, in addition to its position within the U.S. car-sharing industry. The report has been commissioned in order to aid venture capitalists in assessing potential risks and rewards associated with investment in Zipcar, and evaluating the strengths and weaknesses of Zipcar as a potential investment project.
This report features:
an assessment of the U.S. car-sharing industry, based on Porter’s five forces that shape industry competition an analysis of developments in Zipcar’s business model recommendations regarding the future development of Zipcar’s competitive strategy and business operations
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As Zipcar is operating in only Boston, there are opportunities for new entrants (with sufficient resources) to establish themselves as dominant carsharing service providers in other cities. This threat to the profitability of Zipcar’s planned future expansion activities would pressure Zipcar to expand rapidly in order to remain ahead of the competition. A major barrier to entry is Zipcar’s patented technology involving wireless transmission of usage data between the shared cars and a server. New entrants would require substantial time, human, financial and technological resources in order to design, build and implement technology to rival Zipcar’s patented systems. They would also need to reach agreements with car manufacturers concerning the supply of vehicles, and secure parking spaces exclusively for subscribers.
Threat of substitutes:
Major substitutes are taxi, rental car and public transport services. As prices must remain below or equal to those of aforementioned substitute services, a price ceiling has effectively been imposed on Zipcar.
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Bargaining power of suppliers: Suppliers have little bargaining power as consumers are price sensitive and would face few switching costs in replacing Zipcar with available substitute services.
Bargaining power of buyers:
Buyers have the power to force prices down by threatening to switch from Zipcar to substitute services.
Rivalry among existing competitors:
Discount Tire Co. (2016) SWOT summarized the following analysis of the company, “Strengths: Comprehensive product and service portfolio, robust store operations and brand image and online shopping with interactive wheel system. Weaknesses: Private ownership and limited geographical spread increases its business risks. Opportunities: Positive outlook for the United States new cars market and establishment of new stores for business expansion. Threats: Intense competition and growing retail operations of other tire manufacturers” (Discount Tire Co, 2016, p. 12). This SWOT analysis if used properly, can help organizations make decisions that align their vision with their goals.
Summary: Who: Robin Chase CEO and Co-founderWhen: October 14, 2000What: Option 1: Reach out to other investors Option 2: Create a new business model Option 3: Close the businessMain Players: * Robin Chase * Antje Danielson - * Corporate PresidentOthers * Glenn Urban – Dean and mentor to Chase * JohnSnow – Consulting Firm * Paul Covell – MIT engineer * Investors CircleAlliance Partners: * Dan Holland – Venture partner * Transit Stations * AP reporter – press coverage Competitors: * Europe car sharing companies - Swiss Mobility CarSharing, Drive Stadtauto * Rental Car Companies –
Enterprise Rent-A-Car has started its operations in 1962 by establishing and successfully developing a new niche in the car renting industry. The business had strictly focused on replacing local citizens’ cars due to repairs. Later on Enterprise started to serve two additional segments, leisure & discretionally rentals and business rentals. Newly launched segments were successful; however the main focus of Enterprise continued to be the initial business stream – the Replacement Rentals. This business section takes up 78% of Enterprise’s resources, which enables the company to capture approximately 55% of the US replacement rentals market share. Yet, the total replacement Rent-A-Car
Competition within the internet sales industry is fierce and innovation is the way internet retailers are looking to grab the top spot. Internet retailers such as Walmart are following in the path of competitors and building fulfillment centers left and right to allow for faster delivery to customers. Many internet retailers have explored the possibilities of drone delivery, using customers to deliver products to other customers on their way home, and allowing customers to pick up products out of lockers in stores so they don’t have to wait in line; these competitive strategies internet retailers are seeking to implement illustrate how far firms are willing to go to gain the upper-hand on one another (Forbes, 2012).
Bargaining Power of Buyers: The bargaining power of buyers is high in the department store retail industry. The volume of buyers is high, and buyers are very price sensitive in this industry. The products are not highly differentiated, and there are numerous stores that offer the same, or similar, products, giving buyers the opportunity to search for the lowest prices and information. The industry has substitutes available in the form of specialty, differentiated products and stores. This increases the power of buyers,
Secondary Data. This source of data will be collected from government departments and agencies, and also competition in the car sharing market. The secondary data will be used to assist in answering the research questions. Market research information was done on two car sharing businesses currently operating in the US and globally, they are: Zipcar and Enterprise.
If someone sees the success they are having in New York, they could very easily create their own app that is very similar and put it in place in LA, Dallas, Chicago, etc. If DropCar doesn’t reach out and hit those markets soon, somebody else will for sure. It would be very similar to Lyft taking some of Ubers’ business. In most areas, Uber is the go to option, but Lyft was able to attack the smaller cities before Uber could get to them, taking away a lot of potential business for Uber. I feel that same problem could happen to DropCar if they don’t act
Just as the suppliers lack the ability to have bargaining power, so does the customers Alliant Energy serves. According to Porter’s fourth force – bargaining power of the consumer, this force looks at the power of the consumer to affect pricing and quality. Consumers have the power when there are not many of them, but many sellers, as well as when it is easy to switch from one business’s product or services to another (Brooks). In this type of market, the buying power of the consumer is very low, due to the limitation of corporate competition. Alliant Energy has what is called a “Regional Monopoly”, where they control an entire area. With the exception of MG&E in the city of Madison, Alliant Energy are the only source of energy for many communities.
Zipcar idea has begun in 1999, while Anje Danielson returned from her Europe trip and bring the Car Sharing business and share it with Robin Chase. When the two cofounders started working on the business concept and business plan, they looked at all aspects of market and checked if there is place for them in the market. Based on their market analysis they found out that the concept of car sharing is a niche in the US market and rental car services had not thought of this niche yet. Based on their primary research urban locations could give them large number of potential users. Because, in urban locations parking is expensive, public transportation is available, and people
Nowadays, the new generation of young adults are using the taxi service called, “Uber” or, “Lyft.” Uber and Lyft are much convenient compared to a regular yellow tax company because, at a click of a button using your smart phone, your location gets sent to the driver, and they pick you up using your location services. Uber and Lyft gets used more often because it can be cheaper and it is efficient. Uber also offers a service where you can get picked up in a black Cadillac, also known as VIP service. Also with Airbnb, the young generations coming up is more creative and want to try new things. This effects the supply and demand in the markets for shared rides is where supply is low and demand is high. Uber and Lyft are now taking over to a point,
Buyers (consumers) have a great deal of bargaining power because the buyer has a variety of brands to choose from and a lot of options to choose from such as precook, fresh, roasted and boneless.
UPS has been in the package delivery business for 95 years, providing services to businesses and consumers worldwide in more than 200 countries. In 1994, UPS began to investigate the potential of e-commerce and started an internal group focused on enabling e-commerce. UPS redefined its core business and found ways to change its structure and processes, forming new businesses to take advantage of new opportunities. UPS was interested in finding ways to leverage their extensive infrastructure and expertise in basic transportation of goods, services, and
The market was picking up and cost owning a car is high; ZipCar came into the market at the right time
I don’t see any reason that might appear this pricing policy to be unfair. Pricing is based on demand and high price is to ensure availability of ride at extreme weather conditions such as heavy raining, snow fall etc. as it is providing incentive to the drivers. Previously in such situations people had to wait for long time to get a ride from taxi drivers as there pricing is flat for almost all the weather and other situation where demand of ride may rise a lot.
Technological advancements spurred the creation of a digital and sharing economy. It is easier than ever for two people from different locations to connect and do business with one another. With the evolvement of the sharing economy, a smartphone application by the name of Uber has been born and is a potential monopoly in the making. This essay aims to answer the following question: What growth strategies have Uber used in the market and what impact do these strategies have on the market? To answer this question the author will examine Uber role in the sharing economy, platform development strategies and pricing schemes used by Uber, and Uber’s impact on the car ownership industry. Many of these themes such as pricing