Strategic Research on ZipCar
Scott Hunt
4/3/2014
MGMT 452
Case Study: Zipcar
Assignment Questions
1. Evaluate this potential venture and the progress that Chase has made.
The potential of Zipcar exceeded the expectations of the owners Chase and Danielson in many factors. Their goal of creating this urban-style car borrowing system gave new light to the ideas of what options urban populations see in commute. The initial idea needed to be sized properly and growth was a big factor in terms of how fast they could get their cars on the road. With every bump and hurdle, the owners faced new issues of assumption miscalculations and investment needs. However, the success of their pivoting methods gave hope to the success of the business. The progress that Chase made in developing this new venture provided a new method of transportation at a easier cost to the consumer (over annual periods). Overall, the business shows great potential to be a standout service in large urban areas.
2. What is the business model, and how has it changed between December 1999 and May 2000? What does the data from actual operations in September say about how the business model is playing out in practice? Does this data give you comfort or concern?
The first business model focused on a large annual fee, $300, and small expenses for per mile and per hour calculations (.40 cents per mile and $1.50 per hour). The focus of these numbers was based off different pricing structures and cost assumptions. Users would be able to set blocks of time to use the cars and the software would calculate the billing towards each customer. These assumptions turned out to be inaccurate and Chase was forced to restructure her business model. She decided to lower the annual cost, which according to her data was the main factor in deterring customers from using the service. The annual cost was dropped to $70, but the charge per hour and mile was increased to allow costs for cars to be covered. The data showed much improvement after
4/3/2014
MGMT 452
Case Study: Zipcar
Assignment Questions
1. Evaluate this potential venture and the progress that Chase has made.
The potential of Zipcar exceeded the expectations of the owners Chase and Danielson in many factors. Their goal of creating this urban-style car borrowing system gave new light to the ideas of what options urban populations see in commute. The initial idea needed to be sized properly and growth was a big factor in terms of how fast they could get their cars on the road. With every bump and hurdle, the owners faced new issues of assumption miscalculations and investment needs. However, the success of their pivoting methods gave hope to the success of the business. The progress that Chase made in developing this new venture provided a new method of transportation at a easier cost to the consumer (over annual periods). Overall, the business shows great potential to be a standout service in large urban areas.
2. What is the business model, and how has it changed between December 1999 and May 2000? What does the data from actual operations in September say about how the business model is playing out in practice? Does this data give you comfort or concern?
The first business model focused on a large annual fee, $300, and small expenses for per mile and per hour calculations (.40 cents per mile and $1.50 per hour). The focus of these numbers was based off different pricing structures and cost assumptions. Users would be able to set blocks of time to use the cars and the software would calculate the billing towards each customer. These assumptions turned out to be inaccurate and Chase was forced to restructure her business model. She decided to lower the annual cost, which according to her data was the main factor in deterring customers from using the service. The annual cost was dropped to $70, but the charge per hour and mile was increased to allow costs for cars to be covered. The data showed much improvement after