Zipcar is a start-up organized for members on "sharing" car usage. This case tackles the business model and financial plan of Zipcar and other data depicting the first months of its operations. This case study has the object of allowing students to understand the economics and business model for the venture and how these factors affect the actual operation of the business.
Myra M. Hart; Michael J. Roberts; Julia D. Stevens
Harvard Business Review (803096-PDF-ENG)
January 13, 2003
Case questions answered:
- Evaluate this venture. Outline the value proposition(s) and evaluate the progress that the founders of Zipcar have made so far.
- What is the business model, and how has it changed from December 1999 to the current time in the case? What do the data from operations infer about how the business model is working? Are you concerned about this data (evaluate it)?
- What recommendations do you suggest for the founders, going forward?
- Be an advisor to an entrepreneur.
- Help Chase develop an effective presentation for the Springboard conference.
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Zipcar: Refining the Business Model Case Answers
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Zipcar: Refining the Business Model Case Study
Zipcar wanted to provide cars on-demand for a small duration to the subscribers (p1, pa4). The subscribers do not need to own cars if they are not driving a lot. The company had an online reservation system (p2, pa3). The company would not only provide cost savings but also provide convenience to the customer (p3, pa2).
Zipcar thought that the urban locations would be a nice target for them as it has a bigger population base, it has expensive parking and it has college-educated individuals who were the most receptive to the company’s concept (p3, pa5). Chase also identified that the niche group of the population who would be really interested in this proposition were people who traveled less than 6000 miles per year. These people had many hassles with rental car companies which prevented these people from renting cars (for private access) for the short term and whenever they need them (p3, pa7).
The market research conducted showed that this segment was growing quickly as in 1999, there were 200 car-sharing organizations across 450 cities in major countries in Europe (p3, pa8). The car-sharing organizations had 130,000 members in Europe and the valuation of this industry was estimated at $200 million with a growth rate of 30% annually with a very small investment in marketing (p4).
Zipcar could have a huge impact on the US market as the top 20 urban areas consist of 66 million Americans and 20 million Americans utilize public transport to commute to work. So in order to test this hypothesis, they started their MVP in Boston. They found Boston as a suitable place as it had insufficient and expensive off-street parking and is comprised of their target population of a huge number of college-educated people and people using the internet (p6, pa1).
Chase had made assumptions that…
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