Zipcar+Case


 * Zipcar Case**

Reading:

 * ZIPCAR: Refining the Business Model by Hart, M, Roberts, M. & Stevens, J.**

Who:

 * Robin Chase and Antje Danielson**

Immediate Issue/Problem Being Faced:

 * Need to raise equity capital to grow their business – Business model has to be fine-tuned. Good. **

Basic Issues:

 * 1) **Zipcar needs to prove to potential investors that they are a viable company that has the potential to generate considerable revenue in a market that is presently, virtually non-existent in U.S.A. This is a paraphrase of the immediate issue. **
 * 2) **The required technology is not yet fully developed because of a lack of capital.**
 * 3) **Investors, perhaps are not taking them seriously because they are two women trying to ‘squeeze’ into the car business – investors fear they don’t know what they are doing because neither of them has a history with ‘cars’, also their perceived inexperience at running complex operations needs to be dealt with.**
 * 4) **Perhaps Chase isn’t getting enough help from Danielson and feels she is starting to be in this venture alone.**
 * 5) **Zipcar needs to be more attravtive to get more car users in order to change the market percentages. And what is making them unattractive? Be specific. **
 * ** Venture may not be big enough (offer enough return) to attract sophisticated investors **
 * ** “Daily max pricing” means that costs continue to incur while billable revenue does not; cars per member is actually less than predicted because of this usage pattern. **
 * ** Some costs are coming in at a higher rate than anticipated; advertising, for example **
 * ** Attrition rate is higher than anticipated **

Urgency/Importance:

 * The urgency is about a 1 because the presentation has to be completed by the end of October. She has about two weeks to fine-tune her presentation at the Springboard 2000 New England venture forum.**
 * The importance is the company needs to find more money to supply its operation and capture the market earlier than other companies who have larger capital. How do you rate the importance of this issue? **

Decision Criteria:

 * 1) **The estimates don’t match with most of the actual expenses – is the company truly viable? Or, can they revise their business model so that it is? **
 * 2) **Is there concrete probability that this is truly a good venture.**
 * 3) **If equity capital isn’t raised soon, venture may fade – people don’t want to be sitting on the edge of their seats in anticipation. They want tangible results. Patience will be lost and people will move on to the next best thing – something more credible. This is a basic issue. **
 * 4) ****If equity capital isn’t raised soon, Zipcar cannot remain in business – they simply won’t be able to keep up with the costs.**** ** This is a basic issue. **
 * 5) ****The technology isn’t fully in place yet. The paper-based log system they currently use is not good. It is not reliable, people could easily cheat, and the time span of when they get to bill the clients is too long.**** ** This is a basic issue. **

company and synthesize the resource from both sides together to increase the power of development.
3. Collecting the used cars that still useable and can sale out from the market and repair them to sale in order to get the profit of price banlance. 4.Focus on the type of leasing car for travelling which looks like more potential users. 5. Increase the insurance to make it more creditable to attract users. 6. If they buy instead of lease the cars - maybe insurance cost could decrease. 7. Make arrangements with homeowners to use their land/space to park their cars - maybe they will get cheaper parking rates. 8. Get someone with a proven track record to help develop the business model - something is obviously not 'clicking' and that is why Zipcar is having so much difficulty to get money for this venture 9. Seek out more customers, rather than only focusing on the 'typical 'customer.

Your alternatives should be discreet (very different from each other, without overlap) and reasonably address/solve the immediate issue. What alternatives can you recommend that will change what is wrong with the business model such that investors will be interested. Some of what you have listed might fit better in an implementation plan. Can you use the article to help you assess some viable options? This is why you are given the article.

If you identify more than three or four alternatives, you will tend to run into trouble.

Assessment of Alternatives:
//Pros// //Cons//
 * Alternative 1_**
 * Attract more customers
 * Keep the comany running and increase the captial slowly as well
 * It is the competitive advantage in the industry and change the business model
 * It is the risk to increase more loss because it decrease the gross profit by decreasing the selling price
 * Some customers will think that if some bad things happened to Zipcar, and they will think about the safety about the cars so that they don't want to buy it.

//Pros// //Cons//
 * Alternative 2_**
 * The plan B will bring Zipcar to be a new business model and get the ideas from other car companies
 * This will change the current loss situation to Zipcar and increase the capital assets as well
 * They can search for more funding and to do the investment because they will merge to be a big company
 * The current management organization will change so that Chase may face the risk of loosing CEO
 * If Chase wants Zipcar to be the parent company, it is better to hold more shares so that it needs encough money to do the investment and merging.

//Pros// //Cons// //Pros// //Cons//
 * Alternative 3_**
 * It is low cost to get into a new market - second hand cars and maintance and may increase the profit.
 * It can collect money to do the next step and long-term plan
 * It will attract more customers who can not afford to the new cars
 * The safety about the used cars is a big issue. It may make customers worry about the safety.
 * It will increase the labor cost from the reparing and access cost, maintance cost as well.
 * It will decrease the luxurious customers to buy the expensive cars because they may think Zipcar's main market is used cars.
 * Alternative 4_**
 * Leasing is new business model which help Zipcar to earn more profit and decrease the risk of financing.
 * It will attract more customers and increase the Zipcar's reputation
 * There is no enough cars to do the leasing and the insurance about the lease will increase, in another word, the cost will increase.
 * Zipcar will grow slowly because the leasing will not earn more profit than selling cars.
 * __**

Selection of Preferred Alternative:
====I prefer the alternative 2 and add alternative 4 later as well, which means Zipcar will search for more vendors and cooperate with other companies to work together and increase the power of development. And after the "new company" created, there is new name for it and they can take the ideas of leasing to travel at other cities. Because it can increase the power of innovation and a plan B is good for company to change the model, and increase the reputation as well. Added new cooperator, there must be more ideas and more chance to increase the company's capital equity so that it can continue the next level of Zipcar's development.====

Action/Implementation Plan:
 During the short time, the marketing manager do the surveys in the industy and find the appropriate company to cooperation. Chase and the head officer will judege that company and negotiation with the company. After the cooperation, the new organization will be created and the management team may be changed. They will think of new ideas or innovation to help company get out loss trouble. The leasing idea will take into consideration because they will have more cars (assets) after merging. At the same time, they can do some social responsibiltity and increase the reputation for the company. This will bring more power of development. And it will also attract more customers, especially who want to travel to different cities and return the car at different cities as well.This plan does not solve the main issue.