Zipcar

1. Case Synopsis Zipcar is the world's largest car sharing and car club service. It is an alternative to traditional car rental and car ownership. Zipcar currently claims over 80% of the US car sharing market and half of all car sharing members worldwide. Zipcar has two product offerings – car sharing and fleet management. The car sharing product is marketed to individuals living in major metropolitan areas. The key features of the Zipcar products are technology, member-driven user experience, and an amazing team of hands-on car sharing enthusiasts. Zipcar’s second product offering, FastFleet, is a fleet management software platform based on the one used by Zipcar that is licensed on a monthly basis to both private and public organizations that manage their own vehicle fleets. Zipcar focused on maintaining Zipcar’s culture of innovative service and staying tuned into the customer experience. Zipcar also provides 24/7 customer service to serve a better service. They also carefully select the cities and universities in which it offers its services, knowing that urban markets will see the most value in car sharing. Zipcar states that one of its competitive advantages is “low cost, word-ofmouth marketing” and relies on it to bring in new members. The company’s marketing is primarily targeted at member acquisitions. Zipcar takes a local approach to marketing, positing ads on buses, bus stops, and subway stations in the neighborhoods of potential members as well as sending “street teams” to market block by block. Zipcar has two biggest competitors in this car sharing industry: Enterprise Rent-A-Car Company and Hertz Global Holdings, Inc. Each competitor has their own advantages. The car sharing industry is fraught with uncertainty and requires constant modification and improvement to meet customer demand. The car sharing industry also competes with public transportation and traditional car rental agencies.

2. Problems Identification There are some problems that Zipcar has to face their competitors: a. Zipcar has to expand their market to keep their position as market leader in car sharing industry considering there are many competitors have started to enter car sharing industry. The two biggest players in the rental car market in the US are Enterprise and Hertz. Enterprise is marketing WeCar as a convenient and easy to use way to meet the needs of consumers that value the resource saving capabilities that car sharing brings to a campus or corporation. b. Car sharing industry is fraught with uncertainty and yet still ripe for competition. Hence Zipcar has to make strategy in order to survive in the long term: what technology and innovation they should implement as their competitive advantages. Zipcar requires constant modification and improvement to meet customer demand. c. Zipcar currently claims over 80% of the US car sharing market and half of all car sharing members worldwide. Consumer demand is critical to the long term success of the car sharing market; thus Zipcar is working to secure future membership through partnerships with universities, hoping that students will never see the need to own a car and become “Zipster”. In order to be SCA, Zipcar has to increase their market share and maintain their members called Zipster.

3. Case Analysis Strategic management is about analyzing the situation facing the firm, and on the basis of this analysis formulating a strategy and finally implementing that strategy. Analysis, formulation, and implementation all need to be considered if the organization’s strategy is to meet the needs of its environment effectively. Figure 1 illustrates each part of strategy management process.

Figure 1. Strategy Management Process

Figure 2 describes Zipcar’s SWOT analysis. STRENGTH 24/7 CUSTOMER SERVICES LOW COST WORD OF MOUTH MARKETING OVER 80% OF THE us CAR SHARING MARKET ENVIRONMENTALLY FRIENDLY VEHICLES PARTNERSHIP WITH UNIVERSITIES, LIFESTYLE BRAND HIGH TECHNOLOGY FLEXCAR ACQUISITION WEAKNESS HIGH OPERATIONAL COST CONSIDERED UNPROFITABLE COMPANY

OPPORTUNITY CUSTOMERS LIKE TO USE CAR-SHARING NOWADAYS EXPAND THEIR MARKET TO ANOTHER UNIVERSITIES

THREAT FINDING AND KEEPING AFFORDABLE AND CONVENIENT PARKING NATURAL DISASTER FLUCTUATIVE OF OIL PRICE PRICE WAR BETWEEN COMPETITORS

Figure 2. Zipcar’s SWOT analysis

A framework is useful to structure and navigate around the different aspect of strategic management. One of many framework that can be used to make a strategic management using an analysis of the organization’s external environmental (opportunity and threat) and its internal environmental (strength and weakness). Figure 3 describe a framework analysis that can help Zipcar to make a new strategy.

Figure 3. Strategy Framework

If the company wants to be sustainable for long-term, the company has to make a well-planed strategy. Those strategies can be obtained from their SWOT analysis. First of all, the company needs to know their internal environment. Internal environment includes clear and specific goals, value that has been held by the company, resources, process, and also the company needs to know their strength and weakness. Secondly, the company needs to know their external environment, such as: competitors, market condition, customer’s demand, and expand opportunity. There are three types of strategies: a. Corporate strategy Zipcar has to determine their corporate strategy based on their SWOT analysis. Corporate strategy is the overall scope and direction of a corporation and the way in which its various business operations work together to achieve particular goals. Zipcar’s goal is how to be a sustainable competitive advantage (SCA) company. b. Business strategy Business strategy deals with how an organization is going to compete within a particular industry or market. Zipcar’s business strategy is how they expand

their market to increase their Zipster. By expanding their market, Zipcar can increase their revenue. There are two big competitors in car sharing industry, therefore Zipcar need to provide the customer with a better service quality. c. Functional Strategy Functional strategy is organizational plan for human resources, marketing, research and development and other functional areas. The functional strategy of a company is customized to a specific industry and is used to back up other corporate and business strategies. Zipcar need to arrange their marketing and operational strategy.

4. Case Solutions In order to be a sustainable competitive company, Zipcar needs to develop their technology, more innovative, acquire more companies. Zipcar has to expand their business in country which has far inter-city distance. It is recommended because there are difference needs in traveling of people in that country and also less mass transportation available to connect the cities. For example: Australia, because the distance between the states in Australia is quite far. Besides, the culture of people in Australia is quite similar with people in United Kingdom or United States of America. To compete with Enterprise Rent-A-Car Company and Hertz Global Holdings, Zipcar has to develop new technology to support their business. Zipcar should provide technology which can make customers easier to register, book and use their service. For example, zipcar is recommended to develop mobile application for mobile phone, so the customers can book the service easily from their own mobile phone. To increase their market share, Zipcar is recommended to make partnership with travel agent. One of Zipcar’s partnership strategy is to provide rental car service for tourists as a package with their traveling activities.

Zipcar not only makes

partnership with travel agent, but they also make partnership with gas station in order to make the customers easier to fill the fuel of their car. To maintain their loyal customers that called Zipster, Zipcar is recommended to provide point reward system. So, if the customers already used zipcar for many hours, they would get free hours to use Zipcar. Not only that, Zipsters will get free parking if they use Zipcar in places that partnership with Zipcar. Zipcar can make partnership with hotel, restaurant and café for Zipsters, so with their member card they can get special discount.

5. Conclusion and Recommendation In order to be a sustainable competitive advantage (SCA) company, Zipcar have two biggest competitors, Enterprise and Hertz Company. Zipcar must make some innovation in their technology and marketing strategy. Zipcar should provide technology which can make customers easier to use their services. In their marketing strategy, Zipcar is recommended to provide point reward system and make partnership with hotel, restaurant, or café so Zipster can get a special discount.

6. Lesson Learned In order to develop strategy, the company must know their general and competitive environment to have sustainable competitive advantage (SCA). Zipcar has their uniqueness to do their business. Its unique way became their core competency. If they can keep their differentiation among other competitors, they will get sustainable competitive advantage. To develop strategy, Zipcar must analyze their strength, weakness, opportunity, and threat.

OPPORTUNITY STRENGTH STRATEGY

WEAKNESS

THREAT STAKEHOLDER