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Final Class Presentation: Zipcar Strategy
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Final Class Presentation: Zipcar Strategy

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For Stanford University Economics course on Corporate Strategy

For Stanford University Economics course on Corporate Strategy

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Final Class Presentation: Zipcar Strategy Final Class Presentation: Zipcar Strategy Presentation Transcript

  • -- power behind growth in an uncertain marketcaroline stokesecon 101 - corporate strategy - final presentationdecember 2, 2009
  • today’s itinerary • background: car sharing & zipcar • the story behind zipcar’s remarkable growth – product power – branding • deeper sources of power – economies of scale – network economies – counter-positioning? process power? • 3 s’s • the road ahead
  • what is car sharing? car rentals car ownership • minimum daily rate • expensive • paperwork, inconvenient • wherever, whenever you want car sharing • hourly rental rates • convenient self-service locations throughout region
  • what is zipcar? walk-up self-service hourly car rentals for members
  • history of zipcar • 1940s - european car shares begin • 1999 - 1st u.s. player (portland car share) launches • 2000 - zipcar launches 10 locations in boston • 2006 - toronto & london • 2007 - merger with flexcar • today: – 325,000 members – 6,500 vehicles – 28 states and provinces – over 50 cities • sampling: – 100s of cars in san francisco – 1000s of cars in nyc & new jersey
  • growth drivers • product power – tremendous membership growth: nearly 200% per year – lag time • branding – media hype, customer trust • compelling value + recognition = inertia
  • more than just a service…
  • growth drivers • product power – tremendous membership growth: nearly 200% per year • branding – media hype, customer trust • compelling value + recognition = inertia
  • position power “you need to get enough cars in • economies of scale enough neighborhoods to – IT costs compete and make it appealing for people” – purchasing economies of scale -scott griffith, ceo, zipcar • network economies – comparison: cell phone network coverage – value from proximity – membership model: buying a service zipcar locations vs subway stops in boston
  • network economies X
  • position power “you need to get enough cars in • economies of scale enough neighborhoods to – IT costs compete and make it appealing for people” – purchasing economies of scale -scott griffith, ceo, zipcar • network economies – comparison: cell phone network coverage – value from proximity – membership model: buying a service zipcar locations vs subway stops in boston
  • possible power sources • counter-positioning? – non-profit players • process power? – toyota’s kaizen efficiency process: • “back in 2004 or so we started looking at toyota’s lean manufacturing techniques — what they call their kaizan process, which is continuous improvement. you empower all employees to call meetings and address process problems. we’re one of the first companies to use that in a service model. we’ve now got kaizan- trained employees in many parts of the company who are managing everything from how we manage parking tickets to how do we handle accident claims” - scott griffith, ceo, zipcar
  • the 3 s’s • superiority – product power, branding, economies of scale, network economies – size matters • significance – estimated $1billion industry in 10 years – rapid member base growth • currently 325,000 members • adding 10,000 members each month • market estimated at 2 million Americans • sustainability – last funding round in ‘06 suggests cash positive – network economies are difficult to replicate in face of uncertainty – will customer demand shift?
  • the road ahead • differential returns – seem to be cash positive while growing – revenue ~ $370/yr/customer • future challenges – maintaining lead • incumbent car rental companies – external factors • gas prices • eco-conscious movement • alternative transportation models? – initial public offering?
  • questions?