An Analysis Of Zipcar Strategy Essay

Executive Summary

An appraisal of the strategic value of spread outing Zipcar concern was performed by placing its resources and nucleus competences. Through its resources and nucleus competences, a S.W.O.T. analysis and external environmental analysis were performed to place its strategic advantage and concern theoretical account where it should strongly concentrate on its merchandise distinction and merchandise cost ( efficiency ). Based on its strategic advantage and concern theoretical account, strategic value and enlargement into smaller US metropoliss, other sections of the market and other states were analysed and identified with clear execution way and recommendation.

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Zipcar was founded in 2000 by two Cambridge ( Massachusetts ) occupants. Today, it is the universe ‘s leader in car-sharing. It provides autos by the hr or by the twenty-four hours to more than 325,000 members and 6500 vehicles in 50 metropoliss in the U.S., Vancouver, Toronto and London [ 1 ].

It has redefined the manner the present coevals perceives alternate transit and strong focal point on the demand for environment conversation. Since 2004, it has doubled its rank base with current 10,000 new members fall ining Zipcar each month. This means that members on an mean save about US $ 7200 per twelvemonth by utilizing Zipcar services alternatively of having a auto. Furthermore, it can be a suited platform for electric vehicles due to the demographic and driving wonts of its user base where the mean trip in a Zipcar is less than 25 stat mis and lasts about four hours therefore doing every bit much as 95 % of all Zipcar trips short plenty for 1st coevals electric vehicles with limited scope. This could farther implement its end on green enterprises.

The company focused on three chief clients:

§ Individuals – Personal use by immature professional who did non have a auto but needed one on occasion for errands and short trips, and households who sometimes needed a 2nd auto

§ Companies – There are more than 10,000 administrations utilizing its installations and services for concern programmes.

§ Universities – There are more than 140 colleges utilizing its campus car-sharing services in U.S.

It rents autos by the hr and twenty-four hours to members in Boston, Washington, New York, New Jersey, Chicago and several smaller markets. It aimed to go a billion dollar company.

Resources and Core Competences

Its fleet was predominately made up of Volkswagen Golf and Beetle but has expanded to do it more attractive to drivers who first concern was manner and non gas milage. For illustration, mini-coopers, scion new waves, and SUVs such as the Toyota Highlander and Ford Escape were introduced [ 2 ].

Since bulk of its fleet were idle or fresh in the twenty-four hours, it was able to make a gross revenues force to market them to corporation. As such about 25 % of its gross comes from “Z2B” offering. In other words, it was able to use its resources to bring forth sustainable gross.

Service invention – As mentioned, Zipcar is a immature company that has created an option to automobile ownership for urban inhabitants in several metropoliss across the U.S. Its mission is to offer members low-cost 24/7 entrees to private vehicles for short-run unit of ammunition trips. It has been able to construct such distinguishable competitory advantage and win in a crowded and established market like the rental auto concern through radio engineering and the Internet that major rivals like Avis, Hertz, and National have chosen to disregard.

It was one the really first few administrations to use radio engineering to its advantage. The typical competency it developed around this engineering meant the company had to make several new technological procedures. By puting in RFID, it was able to streamline auto rental procedure and tracks the location of the autos in real-time that helped to better fleet output direction and extenuate the hazard of double-booking and phantom vehicles.

The online web portal was cardinal and critical facets of its concern theoretical account. For concern to work efficaciously, the hourly rental reserve and payment portal had to be user-friendly and fiddling ( extremely effectual human-computer interface ) for members to transact online. At the same clip, it should virtually be bing zero or really minimum cost to the company for each dealing. This in contract to a typical human agent would hold cost the auto rental company approximately 4 % to 10 % for each dealing.

By extinguishing complex user interface from within the auto, it efficaciously deploys a simple and effectual propinquity keycard that is held to the windscreen of each auto that allows auto users to turn up and derive entree to the autos. With farther sweetening, it has been able to effectual adapt and used mobile phone like iPhone or Blackberry to turn up and derive entree to those autos. In other words, it contemplates auto sharing through Zipcar to be every bit easy as pulling hard currency from any ATM.

Zipcar efforts to fulfill driving demands of its client at a fraction of the cost of auto ownership by contemplating to replace 20 private autos for each Zipcar service. Traditional rental companies like Avis, Hertz or Enterprise have adopted a similar concern attack but the rental procedures is clip devouring and imply its representatives managing over auto keys at specify rental locations. Therefore, the entreaty of Zipcar is its flexibleness and efficiency where one can pick up a auto at any clip from any available remote-controlled location with the auto keys waiting in the auto for the driver to whizz off on a journey.

As mentioned, the company knows that its purchaser like “cool cars”. Thus the fleet includes mini Coopers and Volkswagen beetles. However, unlike traditional rental autos, each has a Zipcar logon and web reference doing the existent auto a communicating tool that help funny perceivers learn more about the company. Many of the autos are painted in the signature Zipcar visible radiation viridity that besides signals environmental friendly or green inaugural facet of the merchandise experience.

By partnership with metropolis authoritiess, landlords, colleges, and concern proprietors, it has formed a dedicated squad of clients who evangelise the company to possible tenants that produce resonance with drivers or clients.

Additionally, it has a strong, focal point and effectual direction squad that was capable of stirring the administration into one of the largest auto sharing leader in the industry by working and keeping nucleus competences and developing human capital to efficaciously put to death it ends and strategic way [ 9 ] [ 10 ].

S.W.O.T. Analysis


§ Ease of usage ( utilise propinquity keycard, Blackberry or iPhone ) in term of placing auto make/model, location and rates every bit good as easiness of driving off.

§ Style of its service ( cool auto )

§ Technological edification ( Wireless & A ; RFID engineering )

§ Clean and user-friendly interface within the web portal makes pilotage really easily like auto browse, cheque and comparison monetary values and position rank programs.

§ Effective stigmatization through its web site and fleets by utilizing signature Zipcar visible radiation viridity that symbolises environmental friendly.

§ No usual fusss attributed to traditional auto lease like reserve after fall ining as a member. For illustration, lost clip for boring paperwork, prohibitory auto monetary values and gasoline monetary values, limited certainty about vehicles make and theoretical account etc.

§ Avoidance of double-booking or apparition vehicles through effectual real-time fleet output direction.

§ Strong partnership or coaction with authoritiess, landlords, colleges, and concern proprietors.


§ High dependence on engineering for its seamless operation like on-line reserve, payment and fleet direction. Any failure of its incorporate system can be catastrophe. Therefore, concern eventuality program is critical and needs to be in placed.

§ There is certain failing in its selling tactics as it is mostly unknown to urban multitudes. This can ensue in lost gross revenues if possible clients are looking to lease a auto in Chicago may look for traditional rental bureaus as opposed to car-sharing. Furthermore its web site failed to be search engine optimised.


§ By been environmental friendly and following the usage of electric autos, it is in a really strong place to entice clients who have strong position about environmental and societal concern. This is critical to Zipcar in constructing up its trade name and equity apart from pulling more clients. Such trigger in term of economic sciences and societal break aid to make more awareness about car-sharing that can merely profit Zipcar.

§ Increase weekday auto use. Its fleet are merely utilized at dark and weekend while bulk are tick overing during the twenty-four hours. Besides pulling more private concern administration to utilize it fleets on employees as opposed to utilizing employee ain autos, it can besides look into converting municipal bureaus or authorities workers like societal workers or nurse to use its services. Furthermore, as force per unit areas mount for decreased fuel ingestion and car-usage, its construct can supply a alone and feasible long term solution.

§ By set uping its presence on college, it has created a strong consciousness and bridgehead of fans in term of the easiness of auto sharing every bit good as taging its environmental and societal concern among the new coevals. The pupils are portion of the new coevals of self-service economic system that fits nicely to Zipcar self-service theoretical account. By sing with Zipcar construct and auto sharing service, there is a high opportunity that those pupils would go on to utilize car-sharing as an option to auto ownerships alternatively of purchasing one.

§ Transit connexion can supply growing chance for Zipcar where it fleet can be strategically parked near train or metro Stationss to supply members easy entree to autos so they can go on their journeys to countries where public conveyance is non available. By parking at subway station, it can further make consciousness of its trade name and services


§ With its amalgamation with Flexcar, it is viing in 50 metropoliss in the U.S market including Canada. In another words, it is viing straight with larger operator like PhillyCarShare [ 5 ] and I-Go [ 6 ] that conveying alone set of competitory forces in relation to their tide niche at the metropolis and communities. Furthermore, their grassroots operation, low rental rates and non-profit position may unwittingly do them the preferable pick for concern seeking auto sharing services.

§ Large auto rental companies like Hertz, Enterprise or Avis [ 8 ] may do entries into auto sharing market. Hertz has 40,000 autos in New York entirely while Zipcar has about 6500 vehicles in entire. In other words, large auto lease companies have better economic systems of graduated table to take advantage of bing installations, expertness and fiscal support if they chose to come in auto sharing market.

§ Rising gasoline can be an economic load to Zipcar since its rate is inclusive of gasoline. It may hold to increase its rate to cover such increased disbursal. This may take to lower auto use by members and more may utilize cheaper public conveyance or portion their drives. This could impede rank growing.

External Environmental Analysis

Economies of scale – Zipcar and Flexcar are the two largest and countrywide auto sharing companies in the province. With their amalgamation, there is a greater economic system of graduated table as the new company will run under the Zipcar trade name and utilize its engineering. Furthermore, the move could assist spread out the pattern of auto sharing. By unifying, Zipcar efficaciously operates in 50 metropoliss in U.S., in Vancouver, Toronto and London that brings more members and more benefits in term of entree to more fleets in more location and vicinities. With more fleets in more location, it can see take downing its rank fee to lure more rank registrations to bask greater economic systems of graduated table.

Barriers to market entry – This can be unattractive for Zipcar as big rental companies may come in this market after they have a better apprehension of such concern theoretical account. In add-on, there is no authorities ordinance or limitation to forestall anyone from traveling into auto sharing concern. In add-on, the cost can be low as anyone can get down the concern with a few vehicles.

Diversification – Apart from supplying auto sharing to single, companies and colleges, it can spread out into cab concern, exigency concern or ambulances services or wellness lovingness services that required vehicles on ad-hoc or certain regular footing. Furthermore, it can besides supply vehicles to courier services or mover services. Alternatively, it can supply fleet direction services to those administrations every bit good. In this instance, it is restricted to related-constraint variegation for better public presentation of the company.

Product distinction – Zipcar provides alone experience by using radio engineering to ease auto sharing. By extinguishing complex user interface from within the auto and deploying a simple propinquity keycard that is held to the windscreen of each auto, it has allowed drivers to turn up and derive entree to the autos with easiness. By incorporating iPhone or Blackberry device, it has farther improved such experience. Furthermore, it provides a fleet of “cool cars” that cater to each single life style and demands.

Degree of concentration of house in the industry – There are several auto sharing operators within U.S. [ 7 ] that operates as a non-profit administration. However, in term of coverage, they are no every bit comprehensive as Zipcar that operates in 50 metropoliss and exterior of U.S. Therefore, it can value add its service like more entree to many metropoliss and locations for its members which is inline with Zipcar aim of supplying wheels when you want them.

Positioning and Business Model

Zipcar operates in a theoretical account of auto sharing concern that makes it hard for rivals to copy. For illustration, it utilised wireless engineering like 3G, GPRS, GPS and RFID to pull off and streamline its operation to keep thin and low operating expense. Traditional auto rental companies or non-profit car-sharing would happen it hard to pattern after it due to their existing substructure and theoretical account. This is similar to Wal-Mart efficient supply concatenation direction patterns that rivals find it hard to adumbrate. No uncertainty, clients can use other rental companies or auto sharing operators but they would lose the convenience and easiness of usage offered by Zipcar theoretical account of hourly rental understandings and convenient entree to 50 metropoliss and locations. Furthermore, it has a strong focal point on client demands and life style by supplying fleet of hip vehicles like mini Cooper, Volkswagen Beetle, BMW Bottella, Mazda and environmental friendly vehicles like Toyota Prius [ 2 ] and utilizing cool appliance like iPhone or Blackberry to turn up and derive entree to the autos. Zipcar does non necessitate to concern about auto makers or other providers since it does non utilize proprietary goods. Been a IT savvy administration, Zipcar should sit on its bing ranks by utilizing societal networking tool so members can interchange and portions thoughts and more significantly supply feedback to Zipcar who can them better on its services and offering. In other word, it should maintain listening to clients and go oning to introduce through IT.

Based on strategic directive and advantage, Zipcar should go on to concentrate on merchandise distinction and merchandise cost ( efficiency ) through greater economic systems of graduated table and merchandise distinction by offering alone fleet of vehicles coupled with excellence service and easiness of use.

Expanding its presence in smaller United states metropoliss

Zipcar has great entreaty to a figure of purchaser characters like metropolis inhabitants that on occasion need to utilize a auto for a few hours where autos ownership are expensive coupled with high parking fee in metropoliss. Harmonizing to U.S. nose count back in 1990, there were about tierce of U.S. occupants populating in metropoliss. Those clustered suburban vicinities would be suited for auto sharing, peculiarly if they have good theodolite service, pedestrian-friendly streets and local commercial Centres. Assuming that 30 % of American drivers live in higher-density, multi-modal vicinities and 20 % of these have low one-year milage vehicles ; this could intend that approximately 6 % of current in private owned vehicles could switch to auto sharing. Of class, possible demand for auto sharing will be much higher in urban countries and lower in rural countries.

Zipcar can look into meeting or purchasing over smaller operators that operate or have presence in those smaller US metropoliss if feasible. Alternatively, it can see deploying its fleet in those metropoliss since it uses wireless engineering to streamline most of its operation and the cost of spread outing in those metropoliss would be comparatively low. However, there should be sufficient figure of users within convenient walking or cycling distance where vehicles are parked with good travel options. For illustration, to hold 3 auto portion vehicles stationed in a vicinity with 10 members per vehicle would requires at least 30 member families within one square stat mi. Therefore, every bit long as there is high denseness urban vicinities with good walking or cycling distance and good public theodolite services as mentioned, it should go on to spread out its presence in those country to bask greater graduated table of economic systems with minimal hazards.

Expanding to other sections

As highlighted, Zipcar should spread out into cab concern, courier concern, mover concern, exigency concern, ambulances services or wellness lovingness services by non merely offering vehicles but besides its swift output direction services to assist those companies to break managed and streamline their operations. This can be done in a signifier of strategic confederation or partnership. In add-on, its services could be bundled with public theodolite base on ballss, taxis service and sit portion fiting to give clients an incorporate bundle of mobility options. It can besides widen those services by join forcesing with province city managers, metropolis council members, or constabularies force who deals with parking restraints in major metropoliss.

Expanding to other states and metropoliss ( Singapore, Hong Kong, Taipei and Tokyo )

States like Hong Kong, Singapore or major metropoliss like Taipei or Tokyo are suited mark for Zipcar services as they are typically high denseness metropolitan countries where walking, cycling and public theodolite are feasible transit option. Furthermore high cost of auto ownership coupled with high parking force per unit area in term of cost and infinite made these metropoliss suitable market for Zipcar to spread out its abroad concern similar to those in London. Residents in those metropoliss normally do non necessitate autos to travel to work or travel about their day-to-day activities. Therefore, low vehicle ownership rates are one of the best forecasters of the economic viability of auto sharing plans.

It can see co-operative schemes by organizing a joint local spouse to run fleet of vehicles that utilise it swift direction systems for auto sharing. Alliance formation would avoid high cost of investing since resources are shared including hazard. By organizing interactive confederation, it can make joint economic systems of range between spouse houses. For illustration, by researching ways to work with auto makers like Toyota, its members can prove electric autos to planing vehicles specifically for the sharing market. Similarly by working with closely with assorted governments and companies, it can roll up public theodolite base on ballss, taxis service and sit portion fiting to supply clients a to the full incorporate bundle of mobility options merely like in its place state.


Zipcar should go on to concentrate on merchandise distinction and merchandise cost ( efficiency ) through greater economic systems of graduated table and merchandise distinction through its alone fleet of vehicles that comes with excellence service and easiness of use. It should see take downing it rank fees to pull more ranks to farther use its fleet. It should go on to join forces with assorted governments and companies to utilize its fleet direction system to bask greater economic systems of graduated table. It should look out for chances to execute consolidation through amalgamations and acquisition at the same clip signifier strategic confederations with abroad local spouses, auto makers and IT seller to further develop its competitory border.

It should go on to accommodate to client demands by utilizing an effectual client relationship direction ( CRM ) system to obtain and to heighten its relationships with clients, retain clients and supply better client service that leads to competitory advantage for the concern.

It should establish a more vocal selling run to educate the mark demographic about the benefits of auto sharing. This could include aggressive print advertisement on all urban and public transit vehicles in add-on to its ain fleet of vehicles. It should farther put in bettering the hunt engine optimization of its web portal to pull traditional auto tenants. This would better ranking on organic hunts and increase the transition rate.

Through integrated selling scheme this would increase consciousness about Zipcar and its auto sharing benefits that farther reenforcing the house ‘s hip and green individuality.


[ 1 ] Team: place office. Accessed on 17-01-2010, hypertext transfer protocol: //

[ 2 ] Four Leaders You Need To Know. Accessed on 17-01-2010, http: //

[ 3 ] Zipcar is switching into higher cogwheel as market widens. Accessed on, 17-01-2010, hypertext transfer protocol: //

[ 4 ] Zipcar – The best new thought in concern. Accessed on 17-01-2010, hypertext transfer protocol: //

[ 5 ] Philly Car portion. Accessed on 17-01-2010, hypertext transfer protocol: //

[ 6 ] IGo Car portion. Accessed on 17-01-2010, hypertext transfer protocol: //

[ 7 ] List of carsharing operators. Accessed on 17-01-2010, hypertext transfer protocol: //

[ 8 ] Avis: For more on the history of Avis, see

[ 9 ] Zipcar: We interviewed Robin Chase in November 2007. Other utile information came from ‘‘Part-Time Wheels: City Dwellers Share Cars through New Service ” by Heidi B. Perlman, Associated Press, hypertext transfer protocol: // ; and from ‘‘Scott Griffith: Zip uping Ahead ” by Lisa new wave der Pool, Boston Business Journal, August 24, 2007 ;

[ 10 ] Zipcar is switching into high cogwheel as market widens ” by Yoon S. Byun, The Boston Globe, January 13, 2008. hypertext transfer protocol: //


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