Case study 2: Zipcar
Question1: Analyse of the Zipcar business model using Porter’s five forces model.
* Potential threat of new entrants
Even though Zipcar has been very successful with over 200,000 paying members and renting over 5,000 vehicles in 50 markets in the United States, Canada and the United Kingdom, the car renting service is not a market where there are high barriers to entry. Although there are some potentials sources of barriers to entry such as the capital required to enter the industry is high, it includes purchasing vehicles, obtaining insurance, implementing a reservation system, hiring staff, finding parking area ect.. in addition to facing high cost, new entrants needs to make high volume to be competitive and take advantage of the economies of scales.
Zipcar offer a differentiate service of renting car comparing to the traditional car rentals by being open 24 hours and allowing customer to reserve online the car they wants where they wants. This service differentiation allow to Zipcar to have a brand recognition and customer loyalty which can be a barrier to potential entrants.
* Industry competitors
In this case, there is no information about industry competitors but there are some factors that may affect the prices in a rent car industry. Those factors includes: if there are small number of competitors the prices may change slowly, in the other hand, if there is a diversity of competitors there will be different price structure. The cost conditions can be managed by having a balance between the fixed cost and variable cost, for example, Zipcar managed to have low cost by hiring a very small staff and using IT to do almost all of her transaction with the clients.
* Threat of substitute products
The potential of a substitute products in the marketplace depends on the buyers willingness to substitute the relative price to performance of the substitute, and the level of switching costs buyer faces (Pearlson &...