Zipcar

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Zipcar is in its early stage of development having created and tested the basic service and associated technology pertaining to car sharing and has also acquired customers. Chase has developed an aggressive growth model to create a profitable firm, however, there are certain key issues that need to be addressed to reduce overall business risk and invite additional funding to finance national expansion. Zipcar needs to prioritise the strengthening of its management team, implement measures to ensure costs are contained and profit milestones are met and also focus on searching for subsequent rounds of funding. A detailed discussion of the key issues at hand and essential steps to be taken are outlined below.

Management Team
At this stage, Zipcar’s management team consists of Chase (full time) and Danielson (part time), both with limited entrepreneurial experience especially with respect to car rental/sharing expertise and virtually no management experience. Not only are they understaffed, their lack of experience is highlighted by the poor hiring decision for the role of President. Further, both women also assume the role of mothers to young children and have in the past prioritized family over their careers. Danielson has also avoided full time commitment to the business raising doubts as to her continued involvement. These issues would cause significant concern to any investor given the integral role management is required to play in a start-up firm. Future investors especially will pose two key questions - firstly how will they make sounds business decisions with insufficient experience and secondly should a family crisis arise, who will oversee the business?

Volatility of variable costs
Chase’s projections show that fuel, insurance and parking costs grow only with respect to growth in the number of vehicles owned. However, fluctuations in these costs especially fuel is almost certain over the period of 5 years given historical trends in fuel prices...
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