Zipcar

Zipcar

Summary of Recommendations

With the information given by the article, the business model of Zipcar appears to be a successful and sustainable one. To make it fundable, however, there are still several things need to be done: recruiting a capable management team, focusing on the reduction of variable cost and the fuel expenses, developing the IT infrastructure that can fully support Zipcar’s operation, planning the next target cities for fast growth and generation of cash inflow, and developing a realistic schedule to the expansion of Zipcar.

Key Issues in the Case

Robin Chase’s goal is to scale her business model and drive Zipcar onto its next expansion. To facilitate this goal, Zipcar is desperately needed a new round of capital funding and Chase have to prove to the next stage of investors and venture capitalists that this idea has a valuable long-term profitability and potential for growth. She needs to revise the current business model so investors will want to buy in.

To identify Zipcar’s key issue lying behind, I use Michael Porter's Five Forces Model to conduct analysis:

Suppliers bargaining power: Through membership and online reservation, Zipcar can easily and quickly delivers its services to the customers. Since Zipcar fully utilized sustainable technologies like this in their operations, thereby having minimal requirement for human resource, they reduced their dependence on suppliers of labor, inadvertently reducing the bargaining power of suppliers of labor.

Buyers bargaining power: Just as stated in the case, Zipcar was the perfect answer for customers who wanted to rent a car for few hours in their home city. That just goes to say that zipcar had a target niche market and fully utilized technology in their business modeling. Contrary to the traditional methods of car renting where customers had to stay on long queues to rent a car at a higher cost with possible friction from human interaction and without the guarantee of getting a car of choice, Zipcar’s business model addresses all these problems by fully utilizing technology from the reservation stage all through to the return stage at a minimal cost to the customer. The convenience of the car renting process to Zipcar’s customers makes it very likely that they get repeat patronage, giving them a sustainable advantage.

Threat of potential new entrants: Zipcar is a highly automated business, having succeeded in eliminating the need for human interaction at the same time staying in full control of the business. It equipped its all cars with patented wireless technology, which is a strong point for competitive advantage, and at the same time mitigating the threat of potential new entrants.

Threat of substitute product: Zipcar targets at the people who do not want to own a car but occasionally wants the convenience to use a car in the urban locations, where there is a dense base of potential users, parking was expensive, and the need to drive is limited. In Unite States, this market is large and virtually untouched. In other words, there is no other substitute product can serve such people with suitable