Zipcar Case & It Doesn’t Matter

Zipcar Case & IT Doesn’t Matter

Zipcar Case

1.  Analyze the business model of Zipcar using Porter’s five forces model.

1. Threat of new entrants:  The threat of new entrants is something to be concerned about.  The barriers to entry are no different now than when Zipcar first launched with the exception that technology has evolved.  The major advantage Zipcar has is it is the first entrant and established in its current markets, but this is not the case in other markets/cities where Zipcar does not currently have a presence.  The other advantage Zipcar has is the patent on its wireless technology, but a new competitor might be able to develop technology that could function just as well.  In order to keep the threat of new entrants minimal, Zipcar would have expand into other cities and take advantage of its existing infrastructure.
2. Supplier power:  The biggest equipment costs I can guess for Zipcar would be car purchasing and maintenance and infrastructure cost/maintenance.  For cars, there are a few big suppliers that also provide service.  The models offered by the various companies that could fill the needs of Zipcar are largely similar.  There are a few differences but all of the major car suppliers offer models that have similar fuel effiency, power plant (combustion engine, full electric, or hybrid), etc.  While Zipcar might be able to dictate price, the company could shop around for the best price with small cost for switching.
3. Threat of substitution:  The threat of substitution is high.  The target market is big cities, and big cities have an established taxi system, mass transit systems, as well as a large Uber network.  If customers are only taking Zipcars to get from point A to point B back to point A with in the city, then Zipcar would be in direct competition among these products which can perform the function similarly.  Zipcar’s advantage over these substitutes is the hourly rate charge and the freedom that comes with having a vehicle.
4. Buyer Power:  Depending on the needs, buyer power might be high.  While there are not many services like Zipcar, there are a few substitutes.  The advantage that Zipcar has over other rental companies is the hourly charge for the car, which would be appealing to some.  However, there is little cost for a buyer to switch to a substitute product if it fills the needs better or cheaper.
5. Competitive rivalry:  Zipcar’s main competitors are existing rental car companies.  These provide a similar service.  There is very little difference between the rental companies in terms of the products offered, but differentiation comes down to quality, price, ease of use, and (in terms of Zipcar) duration of rental.  Zipcar allows for the rental of a car for a few hours of the day, whereas the competitors typically allow day rentals.  Zipcar is also fairly easy to use as the buyer can do everything on their phone, or internet browser.  The cost for a buyer to switch is also pretty low, if services such as loyalty programs are not taken into account.  This makes the competitive rivalry fairly aggressive.

1. Discuss the synergy between the business strategy of Zipcar and information technology.

Zip car would be unable to operate if not for a sound information technology.  Having cars stationed throughout a city and being able to monitor the status of the car are key as the availability and proximity of Zipcars is one appealing feature to many of Zipcar’s customers.   Another appealing feature of Zipcars is being able to join the service, reserve a car, and unlock the car without having to use anything else but the user’s phone.  All of this would not be possible without the strategic use of information technology.