Zipcar case Analysis

On

Fundamentals of Entrepreneurship & Intrapreneurship

Submitted To: -

Dr. Ramakrishna Dikkatwar

Submitted By: -

Nilam yadav

PRN: 19021141141

Section: B

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 Date: 30/4/2021

Assignment questions are as follows

I. What is Zipacar's business model? How it has changed between Dec 1999 & May
2000? What do the data from actual operations in September say about how
business model is playing out in practice? Does this data give you comfort or
concern?
Ans: The Zipacar business model has advanced among December 1999 and May 2000.
Prior to December 1999, the business model was targeted on gaining revenue from
subscription fees from the customer. The motive for such a layout of the enterprise model
turned into that Chase had estimated running expenses of apartment of automobiles to the
customers at a mile decrease determine. Prior to December 1999, the enterprise model
changed into designed in the sort of way that the motors owned by way of the corporation
are to be dispensed on parking spaces (which were leased) over the metropolis. The
parking websites are usually located at busy city facilities so that they may be
straightforwardly accessible through the subscribers.
The commercial enterprise changed into based at the club model consistent with which
member changed into bought to potential car users at a set by and large subscription.
Zipcar owned the automobiles or the rent on cars. According to the enterprise model, the
usage of each car by a member is to be determined thru a surprisingly complicated
automatic device. The system possessed the capacity to carry out GPS monitoring and
mileage recording. According to the commercial enterprise version, the automobiles are
equipped with onboard computers which can be mechanically synchronized with the
relevant workplace. The on-board laptop system releases the automobile owner for the
booked duration. Such systems are a necessary element of the business plan to prevent
ability abuse.
Prior to December 1999, the business version entailed that the users are accountable for
the well-timed return of the cars from the region at which they picked it. Fees are
typically charged for the quantity of kilometers traveled and the length of use. The

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pricing version designed via Chase contained inside them fuel, consumables, cleaning,
insurance, and so forth.
Another characteristic of the business version turned into that constant fees like parking
space or garage condo, street tax, and coverage top class payments aren't paid separately
with the aid of the customers; alternatively, those charges have been designed to be part
of the month-to-month subscription costs and hourly fee. When not in use, relying on the
issuer has only a low or no expenses (e.g., Registration rate, monthly rate) to pay. The
enterprise model additionally states that a driving force isn't always tied to a particular
vehicle or to a selected sort of automobile. Rather vehicles are allotted depending at the
state of affairs and the vicinity of the commuter. Booking will be achieved for the
automobiles earlier via the organization website, smartphone, etc. In almost all
companies must be the existence of the car are predefined and can be extended simplest if
the automobile is then now not but been posted through different customers.
Even a rudimentary evaluation of the statistics suggests that the commercial enterprise
model has no longer been appearing well. The constant charges are too high and the
profitability of the business is compromised by using the wrong assumptions pertaining
to overheads. The excessive running leverage of the corporation implies greater risk and
extra danger at once translates into an excessive required fee of return by means of the
investors. The high leverage because of the enterprise model is possibly the cause that the
enterprise has now not been capable of gain any large investments.
The data from real operations show that the enterprise version isn't always acting as
predicted and reflects that this particular commercial enterprise version requires
economies of scale. This enterprise model cannot be anticipated to supply tremendous
outcomes if the scale of operations is small. Hence, the need for capital for the
commercial enterprise version is pondered through the financial results.
As an investor of Zipcar and as a part of top management, this fact could have given me
extra of a trouble than comfort. The best comforting characteristic of the records is that
the client retention ratio is quite excessive for this commercial agency. The regarding
function is stronger which relates to immoderate annual overhead prices of the
commercial organization - for instance, the fixed costs related to Administration
Expenses, Office Equipment, Office Supplies, Insurance, Marketing, and Annual Lease.

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 The concerning element of the records is that due to the one’s costs, the business stands
the hazard of going insolvent and includes with it an immoderate degree of risk of failure
in instances of low consumer call for. These are the primary terrible elements with a
purpose to sign risk for anyinvestor.

II. Evaluate this venture the progress made by Chase.

Ans : - The business venture Zipcar is a car-sharing business that provides a highly useful
facility to the organization, which is, giving the ease of flexible use of automobiles and to
pay only for the duration of the few hours during which the automobile has been used.
The potential venture case study "Refining the Business Model" is quite promising and
the business idea is quite strong. The problem is with the management of the business and
the execution of the plan. The business made the wrong hiring decision, was overly
optimistic in making cost projections and struggled with determining the appropriate
business model for the venture. However, Chase is on the right track and it is anticipated
that she will pull the business out of these challenging circumstances.

III. What actions should Chase take as a result of the September operating results ?
Ans : - The actions which Chase must take are to lessen the sales and perks of manipulate
personnel and to invest within the advertising and advertising of the commercial
corporation. September's running effects have shown that the profitability of the
employer is not as high as predicted. The number one purpose for low profitability is the
high overhead fixed charges in preference to variable costs of the commercial enterprise.
The immediately motion following drafting those financial statements is to both greatly
growing the revenues by improving the consumer base and the fleet of the car. This
choice seems tough attributable to capital restraints. The corporation does now not own
enough budget to make any substantial boom in the duration of the fleet. The second path
of motion is to take a closer inspection of the fixed fees and put off all those costs which
appear to be redundant.

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IV. What is strongest argument Chase can make to a potential investor about the
effectiveness of the Venture? What specifically should her elevator pitch be at the
Springboard forum?
Ans :- The strongest argument should be the newly improved business model, especially
the advantages of the new model compared with the trational rental car industry.
From my point of view, her pitch should be like “ Hi, I am chase and I have brought my
new venture idea about a new concept of sharing car business named Zipcar. It provide
the customer with reliable commuting services with a reasonable cost. Our goal is to ease
the transporation in the big cities and increase the commuting efficiency.
The main attraction point of this idea will be that it will led to feel free to transport
yourself to any area on you own flexible schedule instead of renting the car for the whole
day. It has the netural advantages of lower cost and suitable prices. We believe Zipcar is
the new trend of future care sharing business and will continue seeking for better way to
improve it as we expand our business plan. Thankyou”…