Business Strategy
Team 2
Monica De Lezaeta
Daniel Serrano
Hugh Bowen
Daniel Shovlin
Adam Chapman
Wednesday, March 17, 2010
1
"Any customer can have a car painted any color
that he wants as long as it is black"
Henry Ford (1922)*
* Ford, Henry; with Crowther, Samuel (1922), My Life and Work Garden City, New York, USA: Garden City Publishing Company, Inc.
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"Any customer can have a car painted any color
that he wants so long as it is black"
Today (2010) Ford: 15 models and 25+ different colors
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3
“I will build a car for the great multitude ... so
low in price that no man making a good salary
will be unable to own one — and enjoy with his
family the blessing of hours of pleasure in God's
great open spaces.”
Henry Ford (1922)*
*Ford, Henry; with Crowther, Samuel (1922), My Life and Work Garden City, New York, USA: Garden City Publishing Company, Inc.
Wednesday, March 17, 2010
4
"Any customer can have a car painted any color
that he wants so long as it is black"
Today (2010)
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5
The Future
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6
What is zipcar?
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Founded in 1999 in Cambridge, MA
World’s leading for-profit carsharing service
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Wednesday, March 17, 2010
Membership based
Easily accessible
Highly convenient
Environmentally friendly
Established in 50 cities across the US
Additional presence in Canada and UK
325,000 members
6,500 vehicles
7
Core Competencies
• Intellectual property
• Scalable fleet management system
enabling hourly carsharing
• Wireless information gathering and
transmission technology
• Established carsharing vehicle and support
network
• Branding
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Technology
Internet
Internet
GPRS
RFID
3G - WiFi
Zipcar IT Systems
User Interfaces
Location
Administrative Application
Fleet Operations
•Current Usage
•Scheduled Usage
•Issue Management
Billing & Settlement
• Account History
• Statement Distribution
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Reporting Analytics
•Utilization
•Driver Records
•Location Performance
MRO (Maintenance, Repair & Operation)
• Schedule
• History
• Logging
Driver Side Application
Driver Tools
• Reservations
• Membership
• Card Access
Mobile Application
• Reservation
• Way Finding
• Interactive Voice
Recognition
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Financial Condition
Exhibit 1: Financial and profitability analysis
Zipcar, Inc. - Yearly Membership, Investment Infusion and Revenue 2000 - 2010
500K
$150M
Potential IPO
$120M
300K
$90M
200K
$60M
Dollars
Members
400K
Flexcar Acquisition
100K
$30M
0K
2001
2003
2004
(1)
2005
2006
(1)
2007
2008
2009
(2)
$0M
2010
Year
Number of Members
Revenue ($)
Investment Activity ($)
(1) Estimated membership based on research data
(2) Projection of membership based on previous yearly growth
References:V. Namratha Prasad (2010) Zipcar: Revolutioning car rentals? ICMR case BSTR360
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Financial Condition
revenue & cost structure
Costs / Car
Car Cost / Member
{
Margin/Member
Hours used
(Monthly contribution)
Members / Car
(month)
Utilization Rate
Monthly Fee
Revenues / Member
Margin
Lease
Access System
Insurance
Parking
Maintenance
Fuel
(Monthly Contr)
Monthly Usage
{
Monthly Penalties
# Uses
Hours / use
$ / hour
Miles / use
$ / Mile
$ / member
Existing Members
# Members
New Members
Attrition
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$ / member
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Strengths
Exhibit 2: zipcar’s rated strength vectors
Technology
10
Strong
partnerships
Aggregated
cost model
10
7
8
Brand
recognition
2
9
Convenience
4
6
6
8
Extended
national presence
10 Max.
10
Lower age limit
than rent-a-car
(Age 18+)
Relative rankings based on academic research and team evaluation
Wednesday, March 17, 2010
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Strengths
Exhibit 2: zipcar’s rated strength vectors
#3 Increase convenience
by enhancing technology
Technology
10
Strong
partnerships
Aggregated
cost model
10
#1 Leverage brand
recognition to create
stronger partnerships
7
8
Brand
recognition
2
9
Convenience
4
6
6
8
Extended
national presence
10 Max.
10
Lower age limit
than rent-a-car
(Age 18+)
#2 Increase university
campus presence
Relative rankings based on academic research and team evaluation
Wednesday, March 17, 2010
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Weaknesses
Exhibit 3: zipcar’s rated weakness vectors
Return location
& round trip
10
Predefined
reservations
Poor suburban
availability
6
7
7
Not for
commuters
2
2
9
Easily imitable
business model
4
6
6
8
10 Max.
Lack of presence
in transportation
hubs
Network
technology
dependance
Relative rankings based on academic research and team evaluation
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Weaknesses
Exhibit 3: zipcar’s rated weakness vectors
Return location
& round trip
#5 Evolve the
business model
10
Predefined
reservations
Poor suburban
availability
6
7
7
Not for
commuters
2
2
9
Easily imitable
business model
4
6
#4 Expansion in suburban
areas of dense cities
6
8
10 Max.
Lack of presence
in transportation
hubs
Network
technology
dependance
Relative rankings based on academic research and team evaluation
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Marketing
Public Relations
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Partnership with Starbucks® - lowcardiet©
Viral and micro marketing strategies
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Word of mouth
focus on brand interaction and positive member experience
Local businesses and universities relationships
Information cards
Street teams
“feet on the street and out in the neighborhood”
Free rides outside Whole Foods
Social media campaigns
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Competitive Analysis
Strategic groups (rent-a-car industry)
Exhibit 4b: U.S. market analysis
Exhibit 4: Competitive landscape
Airports
(in thousands)
(in thousands)
Avis Group
338
3.2
Hertz
302
3.1
Enterprise
850
7.5
Zipcar
6.5
Avis
Budget
Geographical scope
Cars
Selling
Points
Hertz
Enterprise
Holdings
Urban
Low
Price
Premium
Geographic car distribution vs cost of rent. Other factors like
car segmentation or additional services not represented.
Source: Avis group FY2009-10K; Hertz FY2009-10K; Enterprise Holdings website; Academic research
Wednesday, March 17, 2010
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Competitive Analysis
Strategic groups (rent-a-car industry)
Exhibit 4b: U.S. market analysis
Exhibit 4: Competitive landscape
Airports
(in thousands)
(in thousands)
Avis Group
338
3.2
Hertz
302
3.1
Enterprise
850
7.5
6.5
Game
Changer
Avis
Budget
Geographical scope
Cars
Selling
Points
Hertz
Enterprise
Holdings
Zipcar
Zipcar
Urban
Low
Price
Premium
Geographic car distribution vs cost of rent. Other factors like
car segmentation or additional services not represented.
Source: Avis group FY2009-10K; Hertz FY2009-10K; Enterprise Holdings website; Academic research
Wednesday, March 17, 2010
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Opportunities
Exhibit 5: zipcar’s rated opportunity vectors
International
presence
Increased
convenience
Business & social
networking
alliances
8
5
6
10
6
2
Presence in
transportation hubs
4
Paradigm
shift
6
8
8
9
10 Max.
Market fleet
management
system
Capitalize on
green movement
Relative rankings based on academic research and team evaluation
Wednesday, March 17, 2010
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Opportunities
Exhibit 5: zipcar’s rated opportunity vectors
#6 Expansion to main
European cities
International
presence
Increased
convenience
#7 Expansion to suburban
areas of dense cities
Business & social
networking
alliances
8
5
6
10
6
2
Presence in
transportation hubs
4
Paradigm
shift
6
8
8
9
10 Max.
Market fleet
management
system
Capitalize on
green movement
Relative rankings based on academic research and team evaluation
Wednesday, March 17, 2010
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Threats
Exhibit 6: zipcar’s rated threat vectors
Traditional
rent-a-car
10
Increase in
leasing rates
Car ownership
bias
8
9
5
2
Increase in
parking cost
2
Taxi Co.
4
7
6
8
10 Max.
Increase in
insurance cost
10
Increase in
fuel cost
Relative rankings based on academic research and team evaluation
Wednesday, March 17, 2010
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Threats
Exhibit 6: zipcar’s rated threat vectors
#8 Competitive Advantage
or Entry barriers
Traditional
rent-a-car
10
Increase in
leasing rates
#11 Capital investments
Car ownership
bias
8
9
5
2
Increase in
parking cost
2
Taxi Co.
4
7
6
8
#10 Partnerships
10 Max.
Increase in
insurance cost
10
Increase in
fuel cost
#9 Market securities
investments
Relative rankings based on academic research and team evaluation
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Potential Strategies
Strategies for Cost Reduction
Strategies for Growth
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Potential Strategies
Strategies for Cost Reduction
Strategies for Growth
Business growth:
Leverage brand recognition
Increase university presence
Expansion to other areas
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Potential Strategies
Strategies for Cost Reduction
Strategies for Growth
Business growth:
Leverage brand recognition
Increase university presence
Expansion to other areas
Create entry barriers:
Technological edge
Competitive advantage
Wednesday, March 17, 2010
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Potential Strategies
Strategies for Cost Reduction
Strategies for Growth
Business growth:
Leverage brand recognition
Increase university presence
Expansion to other areas
Create Strategic Partnerships
Create entry barriers:
Technological edge
Competitive advantage
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Wheels when you want them
Time for your questions
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Recap of Strategies
Recap of primary strategies
Form Strengths
#1 Leverage brand
recognition to create
stronger partnerships
#2 Increase university
campus presence
Form Weaknesses
#4 Expansion in suburban
areas of dense cities
Business Growth
#5 Evolve the business model
#3 Increase convenience
by enhancing technology
#8 Competitive Advantage
or Entry barriers
#9 Market securities
investments
#6 Expansion to main
European cities
#7 Expansion to suburban
areas of dense cities
Form Opportunities
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Entry barriers
#10 Partnerships
#11 Capital investments
Form Threats
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