Zip Car

2241 Words9 Pages
Management Consulting Group

Executive Summary
This report examines the competitive strategy and business operations of Zipcar, in addition to its position within the U.S. car-sharing industry. The report has been commissioned in order to aid venture capitalists in assessing potential risks and rewards associated with investment in Zipcar, and evaluating the strengths and weaknesses of Zipcar as a potential investment project.

This report features:
 an assessment of the U.S. car-sharing industry, based on Porter’s five forces that shape industry competition   an analysis of developments in Zipcar’s business model recommendations regarding the future development of Zipcar’s competitive strategy and business operations 
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As Zipcar is operating in only Boston, there are opportunities for new entrants (with sufficient resources) to establish themselves as dominant carsharing service providers in other cities. This threat to the profitability of Zipcar’s planned future expansion activities would pressure Zipcar to expand rapidly in order to remain ahead of the competition. A major barrier to entry is Zipcar’s patented technology involving wireless transmission of usage data between the shared cars and a server. New entrants would require substantial time, human, financial and technological resources in order to design, build and implement technology to rival Zipcar’s patented systems. They would also need to reach agreements with car manufacturers concerning the supply of vehicles, and secure parking spaces exclusively for subscribers.

Threat of substitutes:
Major substitutes are taxi, rental car and public transport services. As prices must remain below or equal to those of aforementioned substitute services, a price ceiling has effectively been imposed on Zipcar.


Bargaining power of suppliers: Suppliers have little bargaining power as consumers are price sensitive and would face few switching costs in replacing Zipcar with available substitute services.

Bargaining power of buyers:
Buyers have the power to force prices down by threatening to switch from Zipcar to substitute services.

Rivalry among existing competitors:
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