Zipcar+Case


 * Zipcar Case**

Who: Robin Chase, CEO Zipcar and
Antje Danielson, Vice President of Environmental Affairs and Strategy.

====Immediate Issue/Problem Being Faced: Due to Chase and Danielson has an idea establish car sharing business, right now they did tthe first step of business already. However, they still need raising capital to continue growth of the company. ==== Much of this case analysis went sideways because the correct immediate issue was not identified. On page 1 and 11, the case says that Chase needs to come up with an effective presentation for investors in a month's time. This is about revising the business plan (or coming up with a "Plan B" as per the article you were assigned).

====Basic Issues: Although the idea had been in other markets for years previous to the Zipcar venture it had not been able to access a portion of automobile users large enough to make it attractive at just 0.01% of car users. They need to find a way to reach more of the market to increase their potential business. ====

It is important to have a professional management team for Zipcar. Because that the investors of Zipcar seemed to question the qualifications of Chase and Danielson, especially their lack of car expertise and their perceived inexperience at running complex operations. Yes. ====Zipcar need to increase the earning per share, enhance the value of the company, and improve investors confident for the future of the company. ====

Specifically, these are the things the case mentions:

 * ** Management is unbalanced; Chase is committed full time, while Danielson is only part-time (but they share ownership and profits) **
 * ** Owners are new at the business; little direct experience **
 * ** Venture may not be big enough (offer enough return) to attract sophisticated investors **
 * ** “Daily max pricing” means that costs continue to incur while billable revenue does not; cars per member is actually less than predicted because of this usage pattern. **
 * ** Some costs are coming in at a higher rate than anticipated; advertising, for example **
 * ** Attrition rate is higher than anticipated **
 * ** First president was not a good fit for the company – what next? **
 * ** Convertible loans (to equity) may dilute ownership **

====Urgency/Importance: high importance as the company needed money to continue operation and while they were the first in the market if they did not capture the market early a larger company with more capital could come in and take it over. The competition is high and they can't afford to stand where they are because they will lose business and they will be in financial difficulty Yes. How do you rate this issue in terms of urgency? ====

Decision Criteria:
====1,Can Zipcar capture a large enough portion of automobile users to make the business profitable and create interest in other car users that may not use a service like this. ==== ====2. Create more advertising as many people that live or work in densely populated areas would see value in using a service like this. Without the ability to reach possible customers through new markets, their sales will freeze and they will not be able to continue to turn a profit. ==== ====3,In order to make the operation more effectiveness and efficiency, it is important ot consider whether the existing technology and the management system is to match each other or not. ====

Alternatives:
====1. Offer the service for a very low cost at first possibly take some losses so as investors could see the potential in the company. ==== 2. Purchase small-engine cars to cut costs <span style="font-family: Arial,Helvetica,sans-serif; font-size: 16px;">3. Looking for more partnership or investor in order to gain more money to invest in the __business__. Due to they do not have enough money to make the company more grow. The next investors, Chase and Danielson must look from great reputation in car industry or related in order to create more cheap sources in buying cars. Reputation investors could create goodwill and extraordinary car share business.

Do any of these alternatives solve the immediate issue?
====<span style="font-family: Arial,Helvetica,sans-serif; font-size: 16px;">Missing Information: What vehicles they are using and if it is costing them anything to park the vehicles. How much cost in each car including zipcard, parking, attrition, lease cost and access equipment. All these information could help in decision making for next move. How they are going to advertise in urban city's? and Is it going to be worth the capital they need to invest? Due to urban city's being very large, Zipcar might spend too much in advertising. ====

====<span style="font-family: Arial,Helvetica,sans-serif; font-size: 16px;">Assessment of Alternatives: The first alternative could create problems as investors would like to see profits not just attractive interest. ====

====<span style="font-family: Arial,Helvetica,sans-serif; font-size: 16px;">1. Offer the service for a very low cost at first possibly take some losses so as investors could see the potential in the company. ====

<span style="font-family: Arial,Helvetica,sans-serif; font-size: 16px;">Cons

-could end up with same amount of customers but at a lower price, less income
<span style="font-family: Arial,Helvetica,sans-serif; font-size: 16px;">2. Purchase small-engine cars to cut costs

<span style="font-family: Arial,Helvetica,sans-serif; font-size: 16px;">Pros

-Should be able to do it without lwering their profit margin
<span style="font-family: Arial,Helvetica,sans-serif; font-size: 16px;">Cons

-Creates more problems because older cars can break down
- Maybe lose some customers who demand a higher quality of driving.

<span style="font-family: Arial,Helvetica,sans-serif; font-size: 16px;">3. Fing reputative investors or partner in order to create brand awareess and goodwill of company. <span style="font-family: Arial,Helvetica,sans-serif; font-size: 16px;">Pros: The profit is to create well know of the company in order to expand business faster and easier in the urban area. Also, __money__ is another factors that company need to expand more grow. Good investor will push business in positive way. They might be able to expand in many countries soon, and get stronger company. Another benefit to gain more capital expand businesses in Boston and other urban area, company will get economis of scale in having many branches in Boston and close urban areas. It will make company grow faster and stronger.

<span style="font-family: Arial,Helvetica,sans-serif; font-size: 16px;">Cons: However, they might get a bad investor which destroy or too control the company. Chase might loss control, and internal management team might have the conflict. It could create weakness instate of strength of the company.

====<span style="font-family: Arial,Helvetica,sans-serif; font-size: 16px;">Selection of Preferred Alternative: the second alternative would be more attractive as it would show how people are interested in using Zipcar while still creating attractive numbers for investors to see. This could be the first step in a process that eventually leads to them getting back to newer cars once their name has spread more and has allowed them to create a larger customer base. With the added benefit of being able to lower costs as well as the price that they offer, the profit margin will remain the same and allow them to increase the attraction that investors have to them ====

====<span style="font-family: Arial,Helvetica,sans-serif; font-size: 16px;">Assumptions: That the idea would be attractive to people rather than owning their own vehicles while not being forced to wait for a car to be available. Zipcar's business have very good technology in operating renting car through Zipcar website. Assumption that technology is not the problem in development process. ====

====<span style="font-family: Arial,Helvetica,sans-serif; font-size: 16px;">Action/Implementation Plan: Purchase the less expensive vehicles in the initial stages so as they car turn profits easier while still creating more and more interest in the company and service. ==== <span style="font-family: Arial,Helvetica,sans-serif; font-size: 16px;">__Start__ advertising more in densely populated areas as well as areas such as downtown where people would see the value in the service. As business begins to increase again, they should slowly begin to introduce their new cars again while liquidating their old inventory. With their current inventory they could liquidate it in order to raise capital while raising funds so that they can reduce their debt while purchasing older vehicles.

<span style="font-family: Arial,Helvetica,sans-serif; font-size: 16px;">This plan does not solve the immediate issue, nor deal with the basic issues mentioned in the case. If the business model is flawed, no amount of advertising will help. They also do not hold "inventory" because they don't own the cars. They are leasing them. Read the case carefully.