Case Analysis on
Presented by,
Group 6
Niraj Ghimire
Amit Pathak
Subigya Regmi
Prajwal S Shrestha
Zipcar
• Car usage via a membership organization.
• Founded in 2000 by Antje Danielson and Robin
Chase
• Provides reliable and convenient access to ondemand transportation.
• Hassle free service
– No fuel cost
– No mantainence cost
– No Insurance cost
About the Entrepreneurs
• Robin Chase
– Major in English, French and philosophy at
Welleseley College.
– MBA from MIT’s Sloan School of
Management
• Antje Danielson
– Worked for University Committee on the
Environment at Harvard University
– Phd from the Freie University, Berlin
• Danielson’s idea to start the venture
• Chase believed the idea.
Insight behind Zipcar
• Already implement in few countries of Europe.
• Best suited for Urban Location with the dense
base of potential users.
• Expensive parking
• Limited need to drive
• High percentage of population using public
transport
Case Facts
• Several variations of the Zipcar business model
along with their financial plan.
• Include a very early version and a version
developed just prior to the launch of the business,
• Includes the data from the first few months of
operations.
• Underlies the business model for the venture and
to discover how these assumptions are holding up
as the business is actually rolled out.
Issues
• Is the business practicable in terms of market demand,
opportunities and other environmental factors?
• What were the flaws in the business model of Zipcar due to
which it couldn’t get an interest of Investors in the early
phase?
• Was the pricing strategy one of the reason to position Zipcar
different from other competitors and to cover its COGS at the
early phase of the business?
• How important was the technology building in Zipcar’s
business model?
• Was the variable cost and overhead cost a hindrance in the
growth of Zipcar?
Analysis 1
• Gap in the market.
– lack of satisfaction among every consumer
• Huge prospect in terms of market size.
– 66 million population in 20 metropolitan cities
– 20 million population using public vehicles
• strong demand for the niche product in US.
• The primary prominence as the opportunity was
the convenience and the cost saving.
Analysis 2
• The idea of car sharing business model was
relatively new in US.
• Lack of experience of both entrepreneurs.
• Unjustified financial plan and unclear numbers in
financial statement.
• Huge loss in the first year.
• The business model has not incorporated all the
costs involved in the business as the revenue of the
company increases.
Continued..
• No breakeven point mentioned in the proposed
business model.
• lacked to incorporate the staff increment to
meet the growth in business.
• Annual fee of membership is too high to hurdle.
• Cost related to parking has been ignored.
Analysis 3
• The critical component of business growth of
Zipcar.
• Higher annual subscription fees.
• Change in pricing model after the failure.
• Revise its targeted revenue and cost looking
into its actual figures and fails to covers it
COGS.
Analysis 4
• Important factor for the proper operation of the
Zipcar.
• The business was based mostly on web and hence
targeted such customers.
• Online reservation system.
• Black box to which information about the user
would be transferred.
• present the right card to the right car at the
prescribed time
Analysis 5
• Variable cost and overhead costs higher than
their expectation in the business plan.
– Lease cost at $4800/vehicle
– Parking cost at $750/vehicle
– Fuel bill 10% higher than expected
• The overhead costs higher than expected at
$44000 per month.
Conclusion
Recommendation
• Its original pricing model should consider in the
financial plan.
• It needs to consider further its marketing
expenses to increase its membership which
further increases its all overhead costs.
• focus highly on research and development.
– . Maintaining superior technology can give them a
competitive edge over their rivals.
Keep
Calm
&
Drive Safe