Group 5

CASE: ZIPCAR

Q1. Analyse the business model of Zipcar using Porter’s five forces model.

Competitive Force Impact

Threat of New The threat of new Entrants is moderate. Zipcar has established itself as
Entrants a leading company in the car share industry and it has created a synergy
between its business model and IT. There are barriers for new entrants
in terms of development of the necessary infrastructure, presence of
established brands, etc. The technology used by Zipcar is difficult to be
imitated.
Bargaining Power of Bargaining power of buyers is relatively high. Although, Zipcar serves
buyers a unique market segment and offers convenience, there are other
substitutes available like rental cars, public transportation, Uber.
Hence, the onus of selection lies on the buyers. For Zipcar to be
competitive, it has to create a strong market identity and should adhere
to the price-sensitivity of consumers.
Bargaining Power of Bargaining powers of suppliers is very low because the suppliers are
Suppliers not concentrated. There are a variety of options available and hence,
Zipcar has the liberty to select its suppliers on the basis of its
requirements.
Competitive Rivalry The competition for zip-car comes from traditional car rental
companies such as Avis and Hertz. However, with its advanced
technology and cost- efficiency and the convenience it provides to its
customers, it has established a strong brand presence.
Threat of Substitutes Substitutes for Zipcar includes public transportation, car-pooling, car
ownership, traditional car rentals. Growing environmental concerns has
led to a strong inclination towards usage of public transports and car-
pooling. Zipcar should be aware of the strength of new and existing
competitors, and should consider the market price-sensitivity and other
such factors while deciding on its strategies.
 Q2. Discuss the synergy between the business strategy of Zipcar and information technology.

1. Increase market share.

2. Maximise profitability.
3. Using IT in order to achieve its
business objective.

Business Strategy

Organisational Strategy Information Systems Strategy

1. Keep staff size as less as possible as every process is 1. Provide the most convenient customer experience through
automated. wireless technologies like GPS, RFID, etc.
2. Facilitate the business model of Zipcar in such a way so 2. Availability of Zipcars for 24 hours through app-services.
as to ensure little human interaction. 3. In app support to customers which will help them in picking
3. Focus on building brand community through creation of up and dropping the cars at their nearest locations.
a social community of Zipcar users (known as Zipsters). 4. Use Web 2.0 extensively.
4. Ensure innovation and automation to enhance
customer experience.

Through its unique business model Zipcar has been able to establish a proper alignment
between business, organizational and information systems strategies. This has helped it to
achieve a strong presence in the car-rental market. Zipcar provides an amazing customer
experience, like they can wave the Zipcard against the card reader mounted behind the
windshield and book the car while the stored credit card information provides the billing for
it. They can also search for the car using mobile apps with the help of GPS enabled wireless
devices. This has been able to be achieved through the synergy between the business and
information strategy. Apart from this the online network community (Zipsters) help the
company to stay updated with customer needs so that it can keep updating its application to
provide best customer experience.
Q3. What network effects are part of the strategy of Zipcar? How do they add value?

Zipcar extensively uses social media networking to reach out to the current and potential
customer base. They have developed exclusive online community of the Zipcar members
namely Zipsters which gives them a sense of belongingness and cohesion within the group
encouraging them to discuss and share their Zipcar experiences and feedback with the other
users. This extensive use of technology helps them in creating the necessary buzz around the
users thus creating a network effect. The income generated from the mass users can be used to
advertise further to attract more users and eventually using this income to scale the business
further in terms of number of cars and locations.

Network effects can be critical in creating brand awareness amongst the users thus helping in
capturing more user base at a low cost. Further this gives Zipcar users a platform to directly
engage with the Zipcar as well as other Zipsters thus making the users feel more attached to
Zipcar. Also, low-cost advertisement can be achieved via network effects.

Q4. As the CEO of Zipcar, where is your most threatening competition? What would you
do to sustain a competitive advantage?

Zipcar is one of the companies that has a strong business model where IS strategy supports and
complements the overall business strategy but in this competitive market, it is important that
every company makes the best out of the available technologies and resources in order to have
an edge over its competitors.

As per our analysis, we feel most threatening competition comes from companies which
provide the same customer service for lower cost. Traditional car rental companies such as
Avis and Hertz can be considered as potential powerful competitors. They have a strong
presence, financial ability and experience in the car rental industry which enables them to enter
the car sharing market. These companies can obtain similar technology as Zipcar and use it for
their advantage. Also, competition may come from personal transportation companies like
Uber that has a large network of customer base and strong IT support if they venture out in car
rental business then they will find little difficulty to make presence in this business.

Further in order to sustain the competitive advantage, Zipcar has to be aware of the changes in
their market and need to understand the latest development in the field of information
technology like AI, NLP. These technologies can help in providing customized services to the
users helping them in choosing the car more conveniently in a user-friendly way. Additionally,
venturing out into new businesses will help reduce dependency on one source of profit this
reducing the overall risk and better equip Zipcar for the disruptive market.