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FREE-FLOATING CAR-SHARING
Five-Forces Analysis and strategic Recommendations
at the Example of Car2Go in Frankfurt am Main
AGENDA
09.01.2018Strategy Project 2017 - Car2Go 2
01
Scope
What do we analyze in the
course of the Five-Forces
Analysis?
02
Car2Go
Important facts and
information about
the company
03
Five-Forces
Internal rivalry, threat of
substitutes and new entry,
buyer and supplier power
04
S-W-O-T Analysis
What are strengths,
weaknesses, opportunities and
threats of Car2Go’s
business model?
05
Summary of
important Aspects
What are the significant
aspects for strategic
recommendations?
06
Strategic
Recommendations
What to do in the future?
AGENDA
09.01.2018Strategy Project 2017 - Car2Go 3
01
Scope
What do we analyze in the
course of the Five-Forces
Analysis?
02
Car2Go
Important facts and
information about
the company
03
Five-Forces
Internal rivalry, threat of
substitutes and new entry,
buyer and supplier power
04
S-W-O-T Analysis
What are strengths,
weaknesses, opportunities and
threats of Car2Go’s
business model?
05
Summary of
important Aspects
What are the significant
aspects for strategic
recommendations?
06
Strategic
Recommendations
What to do in the future?
LAST MILE MOBILITY:
Facilities, infrastructure, and services that allow people
to get from their front door to their final destination
via transit without driving a personal vehicle.
09.01.2018Strategy Project 2017 - Car2Go 4
SCOPE OF THE FIVE-FORCES ANALYSIS
The DEFINITION of a free-floating car-sharing is…
Station-based business models make use of
specified locations that indicate the only
places where trips can start or end.
Free-floating car-sharing enables its users to make ONE-WAY
TRIPS with provider-owned cars does without any geographically,
fixed stations . Vehicles can be parked anywhere in PRE-DEFINED
ZONES that are determined by contracts between the service
operator and the INDIVIDUAL MUNICIPALITIES.
Peer-to-peer car-sharing enables car owners
to rent their privately-owned cars to other
private people for usage.
FRANKFURT AM MAIN
5thLARGEST
730.000
5.500.000
300.000 DAILY COMMUTERS
Germany’s
largest
AIRPORT
FINANCIAL CENTER
of Europe
&
…and the MARKET OF INTEREST is
AGENDA
09.01.2018Strategy Project 2017 - Car2Go 5
01
Scope
What do we analyze in the
course of the Five-Forces
Analysis?
02
Car2Go
Important facts and
information about
the company
03
Five-Forces
Internal rivalry, threat of
substitutes and new entry,
buyer and supplier power
04
S-W-O-T Analysis
What are strengths,
weaknesses, opportunities and
threats of Car2Go’s
business model?
05
Summary of
important Aspects
What are the significant
aspects for strategic
recommendations?
06
Strategic
Recommendations
What to do in the future?
09.01.2018Strategy Project 2017 - Car2Go 6
Car2Go COMPANY INFORMATION
GERMANY
ITALY
SPAIN
NETHERLANDS
AUSTRIA
CHINA
USA
CANADA
09.01.2018Strategy Project 2017 - Car2Go 7
Car2Go COMPANY INFORMATION
2.200.000 Users
43%
YEAR-OVER-YEAR
BUSINESS GROWTH
Vehicles worldwide
in
14.000
Locations
30
Countries
8
was founded in 2008 as
a SUBSIDIARY company of
AGENDA
09.01.2018Strategy Project 2017 - Car2Go 8
01
Scope
What do we analyze in the
course of the Five-Forces
Analysis?
02
Car2Go
Important facts and
information about
the company
03
Five-Forces
Internal rivalry, threat of
substitutes and new entry,
buyer and supplier power
04
S-W-O-T Analysis
What are strengths,
weaknesses, opportunities and
threats of Car2Go’s
business model?
05
Summary of
important Aspects
What are the significant
aspects for strategic
recommendations?
06
Strategic
Recommendations
What to do in the future?
09.01.2018Strategy Project 2017 - Car2Go 9
FIVE-FORCES ANALYSIS
INTERNAL
RIVALRY
THREAT OF
NEW ENTRY
POWER OF
BUYERS
POWER OF
SUPPLIERS
THREAT OF
SUBSTITUTES &
COMPLEMENTS
09.01.2018Strategy Project 2017 - Car2Go 10
INTERNAL RIVALRY
20152014MARKET ENTRY
PARENT COMPANY
25,00035,000REGISTERED USERS
440340FLEET SIZE
CAR TYPES
SmartFortwo A-Class GLA VW Up
09.01.2018Strategy Project 2017 - Car2Go 11
INTERNAL RIVALRY
PRICE
Registration
Basic price/ month
Price / min
Price / hr
Price / km
- -
- € 4.90
- -
€ 1.00 € 1.00
€ 0.25 € 0.15
Basic Comfort
Basic fee / trip € 2.00 € 2.00
Airport fee € 10.00
Source: book-n-drive(2017)
Validation fee
Basic price/ month
Price / min
Price / hr
Price / km
€ 9.00
-
€ 0.26 € 0.31
€ 13.99 € 16.99
- * - *
smart A-Class
€ 0.34
€ 19.99
- *
GLA
Basic fee / trip - - -
Airport fee € 4.90
*up to 200 km – from km 201 it’s 0.29€/km
Source: Car2Go (2017b)
COMPARISON
3 km / 10 min
5 km / 15 min
10 km / 30 min
€ 2.92 € 2.60
€ 3.50 € 3.90
€ 5.00 € 7.80
Trip Basic smart
25 km / 60 min € 9.25 € 13.99
City** - Airport
(14 km / 20 min***)
€ 13.59 € 10.10
SUBJECTS
“Basic” and the “smart” packages
were chosen for comparison due to
their comparability of car types.
TRIP:
“City” set at Zeil 106, 60313 Frankfurt am Main (Germany)
Time estimate of Google Maps Navigator
09.01.2018Strategy Project 2017 - Car2Go 12
INTERNAL RIVALRY
THREAT:
LOW HIGHMEDIUM
INTERNAL RIVALRY:
LOW HIGHMEDIUM
3 km / 10 min
5 km / 15 min
10 km / 30 min
€ 2.92 € 2.60
€ 3.50 € 3.90
€ 5.00 € 7.80
Trip Basic smart
25 km / 60 min € 9.25 € 13.99
City** - Airport
(14 km / 20 min***)
€ 13.59 € 10.10
1 1
PRICING
FLEET SIZE
0
200
400
600
REGISTERED USERS NETWORK
approximately
60,000
REGISTERED
USERS
SERVICE DENSITY
0.64
per 1000 inhabitants
2500035000
CAR TYPES
DUOPOLY MARKET
09.01.2018Strategy Project 2017 - Car2Go 13
THREAT OF NEW ENTRY
THREAT:
LOW HIGHMEDIUM
MARKET
PLAYERS
INPUT-POSSESSIVE COMPANIES
OTHER CAR-SHARING COMPANIES
POTENTIAL
NEW
ENTRANTS
09.01.2018Strategy Project 2017 - Car2Go 14
THREAT OF SUBSTITUTES & COMPLEMENTS
THREAT:
LOW HIGHMEDIUM
THREAT:
LOW HIGHMEDIUM
SUBSTITUTES COMPLEMENTS
VEHICLE-SHARING CONCEPTS
PUBLIC TRANSPORTATION
OTHER
MOBILE APPLICATIONS & CERTIFIERS
SUPRA-REGIONAL PUBLIC TRANSPORTATION
company-own Certifier
applications
21
Taxis and private-owned vehicles (car, scooter, bike)
160
MILLION
PASSENGERS
per year
910
09.01.2018Strategy Project 2017 - Car2Go 15
BUYER POWER
THREAT:
LOW HIGHMEDIUM
MOBILE APPLICATIONS & CERTIFIERS
company-own Certifier
applications
i
Market SUBSTITUTES
VEHICLE-SHARING CONCEPTS
PUBLIC TRANSPORTATION
OTHER
21
Taxi and private-owned vehicles (car, scooter, bike)
160
MILLION
PASSENGERS
per year
910
?
09.01.2018Strategy Project 2017 - Car2Go 16
SUPPLIER POWER
THREAT:
LOW HIGHMEDIUM
INPUTS OPERATION RIGHTS
VEHICLES
Superior access to vehicles through Daimler
Purchase for market price or lower
MOBILE APPLICATION
Programming solution from the market at for a
comparably low price
RFID-TECHNOLOGY
RFID-chips and integration are low cost components
MUNICIPALITY OPERATION RIGHTS
Designated operation areas are assigned by
the municipality of Frankfurt am Main
CAP OF OPERATION RIGHTS
AGENDA
09.01.2018Strategy Project 2017 - Car2Go 17
01
Scope
What do we analyze in the
course of the Five-Forces
Analysis?
02
Car2Go
Important facts and
information about
the company
03
Five-Forces
Internal rivalry, threat of
substitutes and new entry,
buyer and supplier power
04
S-W-O-T Analysis
What are strengths,
weaknesses, opportunities and
threats of Car2Go’s
business model?
05
Summary of
important Aspects
What are the significant
aspects for strategic
recommendations?
06
Strategic
Recommendations
What to do in the future?
09.01.2018Strategy Project 2017 - Car2Go 18
SWOT ANALYSIS
What is the COMPETITIVE ADVANTAGE
and which BENEFITS does
Car2Go provide to
its users?
What IMPROVEMENTS OR
RENEWALS bear potential
for the future?
Which TRENDS OR CHANGES in the
market and environment would
have a NEGATIVE EFFECT?
What are internal sources of
INEFFICIENCIES and what do market
COMPETITORS
better?
S W
TO
INTERNAL
EXTERNAL
POSITIVE NEGATIVE
09.01.2018Strategy Project 2017 - Car2Go 19
SWOT ANALYSIS – LONG LIST
 Network effects as early-mover advantage, i.e. establishment of
standards and largest user network
 Superior access to input (vehicles)
 Leverage of economies of density
 Ownership of protected operation rights from the municipality
 Attractive price level for trips to the airport in Frankfurt am Main
 Utilization of Daimler’s internal capital market
(cf. ‘Cash Cows’ finance ‘Rising Stars’)
 Brand reputation of Daimler
 Premium vehicles provide ground for price
discrimination through additional perceived
benefit for quality-sensitive users
 Co-operations with public institutions, companies
or complementary services, in Frankfurt am Main
with e.g. Fraport, Deutsche Bahn or airlines
 Enhancement of pricing model and adaption to
customer desires, e.g. monthly basic fee for unlimited use
for commuters
 Introduction of innovative technologies, e.g. electric mobility
(short-term) and autonomous driving (long-term), to the fleet
 Global operations as source of learning and scale economies
 Growing popularity and acceptance due to public awareness
 Suspension of early-mover advantages by non-
existent customer switching costs
 Loosening of national regulation for transportation
services like Uber and Cabify
 Entry and market share capture by OEM’s and other
companies which already inherit input resources
 Limit of service expansion in Frankfurt imposed by the
municipality
 Lack of sustainable customer acceptance for car-sharing services
 Pricing only favorable for short-time trips, i.e. use for
commuters during rush-hour is comparably expensive
 Charge of a registration fee
 Constraints of service availability due to lacking vehicle density
 Marketing inefficiencies due to adverse customer segmentation
for a highly heterogeneous target group
 Car2Go, as subsidiary of Daimler, has a significant lower success
pressure and incentive to innovate than its competitor
S W
TO
Important note: Aspects in all four categories have already been organized in descending order of importance.
T
09.01.2018 20Strategy Project 2017 - Car2Go
Strengths
S OW
Network effects as early-mover
advantage, i.e. establishment of
standards and largest user
network
Superior access
to input (vehicles)
Leverage of
economies of density
Ownership of protected
operation rights from
the municipality
T
09.01.2018 21Strategy Project 2017 - Car2Go
Strengths
S OW
Superior access
to input (vehicles)
Leverage of
economies of density
Ownership of protected
operation rights from
the municipality
Network effects as early-mover
advantage, i.e. establishment of
standards and largest user
network
2014
35.000
2015
25.000
Network effects as early-mover
advantage, i.e. establishment of
standards and largest user
network
T
09.01.2018 22Strategy Project 2017 - Car2Go
Strengths
S OW
Leverage of
economies of density
Ownership of protected
operation rights from
the municipality
Superior access
to input (vehicles)
+
Network effects as early-mover
advantage, i.e. establishment of
standards and largest user
network
T
09.01.2018 23Strategy Project 2017 - Car2Go
Strengths
S OW
Superior access
to input (vehicles)
Ownership of protected
operation rights from
the municipality
Leverage of
economies of density
Limiting the operation area to the most densely populated
city area, thus spreading costs of indivisibilities (vehicles)
over a large amount of potential customers.
FFM
Network effects as early-mover
advantage, i.e. establishment of
standards and largest user
network
T
09.01.2018 24Strategy Project 2017 - Car2Go
Strengths
S OW
Superior access
to input (vehicles)
Leverage of
economies of density
Ownership of protected
operation rights from
the municipality
09.01.2018 25Strategy Project 2017 - Car2Go
Weaknesses
TS OW
Pricing only favorable for
short-time trips
Charge of a
registration fee
Constraints of
service availability due to
lacking vehicle density
Marketing inefficiencies
due to adverse
customer segmentation
09.01.2018 26Strategy Project 2017 - Car2Go
Weaknesses
TS OW
Charge of a
registration fee
Constraints of
service availability due to
lacking vehicle density
Marketing inefficiencies
due to adverse
customer segmentation
Pricing only favorable for
short-time trips
09.01.2018 27Strategy Project 2017 - Car2Go
Weaknesses
TS OW
Pricing only favorable for
short-time trips
Constraints of
service availability due to
lacking vehicle density
Marketing inefficiencies
due to adverse
customer segmentation
Charge of a
registration fee
9€ 0€
09.01.2018 28Strategy Project 2017 - Car2Go
Weaknesses
TS OW
Pricing only favorable for
short-time trips
Charge of a
registration fee
Marketing inefficiencies
due to adverse
customer segmentation
Constraints of
service availability due to
lacking vehicle density
VS.
09.01.2018 29Strategy Project 2017 - Car2Go
Weaknesses
TS OW
Pricing only favorable for
short-time trips
Charge of a
registration fee
Constraints of
service availability due to
lacking vehicle density
Marketing inefficiencies
due to adverse
customer segmentation
CURRENTLY BUT:
09.01.2018 30Strategy Project 2017 - Car2Go
Opportunities
TS OW
Co-operations with
public institutions, companies
or complementary services
Enhancement of
pricing model and
adaption to customer desires
Introduction of innovative
technologies to the fleet
Global operations as source of
learning and scale economies
09.01.2018 31Strategy Project 2017 - Car2Go
Opportunities
TS OW
Enhancement of
pricing model and
adaption to customer desires
Introduction of innovative
technologies to the fleet
Global operations as source of
learning and scale economies
Co-operations with
public institutions, companies
or complementary services
09.01.2018 32Strategy Project 2017 - Car2Go
Opportunities
TS OW
Co-operations with
public institutions, companies
or complementary services
Introduction of innovative
technologies to the fleet
Global operations as source of
learning and scale economies
Enhancement of
pricing model and
adaption to customer desires
?
?
?
09.01.2018 33Strategy Project 2017 - Car2Go
Opportunities
TS OW
Co-operations with
public institutions, companies
or complementary services
Enhancement of
pricing model and
adaption to customer desires
Global operations as source of
learning and scale economies
Introduction of innovative
technologies to the fleet
09.01.2018 34Strategy Project 2017 - Car2Go
Opportunities
TS OW
Co-operations with
public institutions, companies
or complementary services
Enhancement of
pricing model and
adaption to customer desires
Introduction of innovative
technologies to the fleet
Global operations as source of
learning and scale economies
09.01.2018 35Strategy Project 2017 - Car2Go
Threats
TS OW
Suspension of early-mover
advantages by non-existent
customer switching costs
Loosening of
national regulation for
innovative transportation services
Entry and market share capture
by OEM’s and other companies
Limit of service expansion
in Frankfurt imposed
by the municipality
09.01.2018 36Strategy Project 2017 - Car2Go
Threats
TS OW
Loosening of
national regulation for
innovative transportation services
Entry and market share capture
by OEM’s and other companies
Limit of service expansion
in Frankfurt imposed
by the municipality
Suspension of early-mover
advantages by non-existent
customer switching costs
?
09.01.2018 37Strategy Project 2017 - Car2Go
Threats
TS OW
Suspension of early-mover
advantages by non-existent
customer switching costs
Entry and market share capture
by OEM’s and other companies
Limit of service expansion
in Frankfurt imposed
by the municipality
Loosening of
national regulation for
innovative transportation services
09.01.2018 38Strategy Project 2017 - Car2Go
Threats
TS OW
Suspension of early-mover
advantages by non-existent
customer switching costs
Loosening of
national regulation for
innovative transportation services
Limit of service expansion
in Frankfurt imposed
by the municipality
Entry and market share capture
by OEM’s and other companies
09.01.2018 39Strategy Project 2017 - Car2Go
Threats
TS OW
Suspension of early-mover
advantages by non-existent
customer switching costs
Loosening of
national regulation for
innovative transportation services
Entry and market share capture
by OEM’s and other companies
Limit of service expansion
in Frankfurt imposed
by the municipality
AGENDA
09.01.2018Strategy Project 2017 - Car2Go 40
01
Scope
What do we analyze in the
course of the Five-Forces
Analysis?
02
Car2Go
Important facts and
information about
the company
03
Five-Forces
Internal rivalry, threat of
substitutes and new entry,
buyer and supplier power
04
S-W-O-T Analysis
What are strengths,
weaknesses, opportunities and
threats of Car2Go’s
business model?
05
Summary of
important Aspects
What are the significant
aspects for strategic
recommendations?
06
Strategic
Recommendations
What to do in the future?
09.01.2018Strategy Project 2017 - Car2Go 41
HIGHLIGHTS OF SWOT
AGENDA
09.01.2018Strategy Project 2017 - Car2Go 42
01
Scope
What do we analyze in the
course of the Five-Forces
Analysis?
02
Car2Go
Important facts and
information about
the company
03
Five-Forces
Internal rivalry, threat of
substitutes and new entry,
buyer and supplier power
04
S-W-O-T Analysis
What are strengths,
weaknesses, opportunities and
threats of Car2Go’s
business model?
05
Summary of
important Aspects
What are the significant
aspects for strategic
recommendations?
06
Strategic
Recommendations
What to do in the future?
09.01.2018Strategy Project 2017 - Car2Go 43
STRATEGIC RECOMMENDATIONS
1
ENHANCED CUSTOMER SEGMENTATION efforts have to be implemented by Car2Go in order to tackle the
weaknesses of the pricing model. This enables the company to introduce SEGMENT-ORIENTED TARIFFS that
attract more customers and increase the market share as well as the profitability. A further mean for
enhancement are PROMOTIONAL CAMPAIGNS in order to effectively address specific target groups and win
new customers.
09.01.2018Strategy Project 2017 - Car2Go 44
STRATEGIC RECOMMENDATIONS
1
ENHANCED CUSTOMER SEGMENTATION efforts have to be implemented by Car2Go in order to tackle the
weaknesses of the pricing model. This enables the company to introduce SEGMENT-ORIENTED TARIFFS that
attract more customers and increase the market share as well as the profitability. A further mean for
enhancement are PROMOTIONAL CAMPAIGNS in order to effectively address specific target groups and win
new customers.
2
Car2Go has to enter NEW COLLABORATIONS by leveraging on PUBLIC TRANSPORTATION COMPLEMENTS.
This provides ground for the creation of BUNDLED, CO-OPERATIVE SERVICES that limit the buyer power
while positioning the own service as most favorable. A potential partner is the Deutsche Bahn with which
Car2Go could combine the car-sharing service with train passengers that arrive in Frankfurt.
09.01.2018Strategy Project 2017 - Car2Go 45
STRATEGIC RECOMMENDATIONS
1
2
ENHANCED CUSTOMER SEGMENTATION efforts have to be implemented by Car2Go in order to tackle the
weaknesses of the pricing model. This enables the company to introduce SEGMENT-ORIENTED TARIFFS that
attract more customers and increase the market share as well as the profitability. A further mean for
enhancement are PROMOTIONAL CAMPAIGNS in order to effectively address specific target groups and win
new customers.
Car2Go has to enter NEW COLLABORATIONS by leveraging on PUBLIC TRANSPORTATION COMPLEMENTS.
This provides ground for the creation of BUNDLED, CO-OPERATIVE SERVICES that limit the buyer power
while positioning the own service as most favorable. A potential partner is the Deutsche Bahn with which
Car2Go could combine the car-sharing service with train passengers that arrive in Frankfurt.
3
The company is able to INTRODUCE INNOVATIVE TECHNOLOGIES to its services as a first-mover through the
parent company Daimler. This superior access allows Car2Go to secure its market position by setting
technology standards which likely lowers operation costs and increases service attractiveness. In general, a
resulting CONSTANT SERVICE ENHANCEMENT represents a COMPETITIVE ADVANTAGE in the recurring first-
mover role in the market.
09.01.2018Strategy Project 2017 - Car2Go 46
STRATEGIC RECOMMENDATIONS
1
2
3
ENHANCED CUSTOMER SEGMENTATION efforts have to be implemented by Car2Go in order to tackle the
weaknesses of the pricing model. This enables the company to introduce SEGMENT-ORIENTED TARIFFS that
attract more customers and increase the market share as well as the profitability. A further mean for
enhancement are PROMOTIONAL CAMPAIGNS in order to effectively address specific target groups and win
new customers.
Car2Go has to enter NEW COLLABORATIONS by leveraging on PUBLIC TRANSPORTATION COMPLEMENTS.
This provides ground for the creation of BUNDLED, CO-OPERATIVE SERVICES that limit the buyer power
while positioning the own service as most favorable. A potential partner is the Deutsche Bahn with which
Car2Go could combine the car-sharing service with train passengers that arrive in Frankfurt.
The company is able to INTRODUCE INNOVATIVE TECHNOLOGIES to its services as a first-mover through the
parent company Daimler. This superior access allows Car2Go to secure its market position by setting
technology standards which likely lowers operation costs and increases service attractiveness. In general, a
resulting CONSTANT SERVICE ENHANCEMENT represents a COMPETITIVE ADVANTAGE in the recurring first-
mover role in the market.
4
Car2Go should pursue a ‘GLOCALIZATION’ STRATEGY characterized by exploiting LEARNING EFFECTS from
global operations while simultaneously focusing on the INDIVIDUAL LOCAL ENVIRONMENTS, in Frankfurt as
well as all others markets.
09.01.2018Strategy Project 2017 - Car2Go 47
STRATEGIC RECOMMENDATIONS
1
2
3
4
ENHANCED CUSTOMER SEGMENTATION efforts have to be implemented by Car2Go in order to tackle the
weaknesses of the pricing model. This enables the company to introduce SEGMENT-ORIENTED TARIFFS that
attract more customers and increase the market share as well as the profitability. A further mean for
enhancement are PROMOTIONAL CAMPAIGNS in order to effectively address specific target groups and win
new customers.
Car2Go has to enter NEW COLLABORATIONS by leveraging on PUBLIC TRANSPORTATION COMPLEMENTS.
This provides ground for the creation of BUNDLED, CO-OPERATIVE SERVICES that limit the buyer power
while positioning the own service as most favorable. A potential partner is the Deutsche Bahn with which
Car2Go could combine the car-sharing service with train passengers that arrive in Frankfurt.
The company is able to INTRODUCE INNOVATIVE TECHNOLOGIES to its services as a first-mover through the
parent company Daimler. This superior access allows Car2Go to secure its market position by setting
technology standards which likely lowers operation costs and increases service attractiveness. In general, a
resulting CONSTANT SERVICE ENHANCEMENT represents a COMPETITIVE ADVANTAGE in the recurring first-
mover role in the market.
Car2Go should pursue a ‘GLOCALIZATION’ STRATEGY characterized by exploiting LEARNING EFFECTS from
global operations while simultaneously focusing on the INDIVIDUAL LOCAL ENVIRONMENTS, in Frankfurt as
well as all others markets.
AGENDA
09.01.2018Strategy Project 2017 - Car2Go 48
01
Scope
What do we analyze in the
course of the Five-Forces
Analysis?
02
Car2Go
Important facts and
information about
the company
03
Five-Forces
Internal rivalry, threat of
substitutes and new entry,
buyer and supplier power
04
S-W-O-T Analysis
What are strengths,
weaknesses, opportunities and
threats of Car2Go’s
business model?
05
Summary of
important Aspects
What are the significant
aspects for strategic
recommendations?
06
Strategic
Recommendations
What to do in the future?
09.01.2018Strategy Project 2017 - Car2Go 49
The End
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Thank You
for Your Attention!

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5-Forces Analysis, S-W-O-T, Strategic Recommendations - Car2Go (2017)

  • 1. FREE-FLOATING CAR-SHARING Five-Forces Analysis and strategic Recommendations at the Example of Car2Go in Frankfurt am Main
  • 2. AGENDA 09.01.2018Strategy Project 2017 - Car2Go 2 01 Scope What do we analyze in the course of the Five-Forces Analysis? 02 Car2Go Important facts and information about the company 03 Five-Forces Internal rivalry, threat of substitutes and new entry, buyer and supplier power 04 S-W-O-T Analysis What are strengths, weaknesses, opportunities and threats of Car2Go’s business model? 05 Summary of important Aspects What are the significant aspects for strategic recommendations? 06 Strategic Recommendations What to do in the future?
  • 3. AGENDA 09.01.2018Strategy Project 2017 - Car2Go 3 01 Scope What do we analyze in the course of the Five-Forces Analysis? 02 Car2Go Important facts and information about the company 03 Five-Forces Internal rivalry, threat of substitutes and new entry, buyer and supplier power 04 S-W-O-T Analysis What are strengths, weaknesses, opportunities and threats of Car2Go’s business model? 05 Summary of important Aspects What are the significant aspects for strategic recommendations? 06 Strategic Recommendations What to do in the future?
  • 4. LAST MILE MOBILITY: Facilities, infrastructure, and services that allow people to get from their front door to their final destination via transit without driving a personal vehicle. 09.01.2018Strategy Project 2017 - Car2Go 4 SCOPE OF THE FIVE-FORCES ANALYSIS The DEFINITION of a free-floating car-sharing is… Station-based business models make use of specified locations that indicate the only places where trips can start or end. Free-floating car-sharing enables its users to make ONE-WAY TRIPS with provider-owned cars does without any geographically, fixed stations . Vehicles can be parked anywhere in PRE-DEFINED ZONES that are determined by contracts between the service operator and the INDIVIDUAL MUNICIPALITIES. Peer-to-peer car-sharing enables car owners to rent their privately-owned cars to other private people for usage. FRANKFURT AM MAIN 5thLARGEST 730.000 5.500.000 300.000 DAILY COMMUTERS Germany’s largest AIRPORT FINANCIAL CENTER of Europe & …and the MARKET OF INTEREST is
  • 5. AGENDA 09.01.2018Strategy Project 2017 - Car2Go 5 01 Scope What do we analyze in the course of the Five-Forces Analysis? 02 Car2Go Important facts and information about the company 03 Five-Forces Internal rivalry, threat of substitutes and new entry, buyer and supplier power 04 S-W-O-T Analysis What are strengths, weaknesses, opportunities and threats of Car2Go’s business model? 05 Summary of important Aspects What are the significant aspects for strategic recommendations? 06 Strategic Recommendations What to do in the future?
  • 6. 09.01.2018Strategy Project 2017 - Car2Go 6 Car2Go COMPANY INFORMATION GERMANY ITALY SPAIN NETHERLANDS AUSTRIA CHINA USA CANADA
  • 7. 09.01.2018Strategy Project 2017 - Car2Go 7 Car2Go COMPANY INFORMATION 2.200.000 Users 43% YEAR-OVER-YEAR BUSINESS GROWTH Vehicles worldwide in 14.000 Locations 30 Countries 8 was founded in 2008 as a SUBSIDIARY company of
  • 8. AGENDA 09.01.2018Strategy Project 2017 - Car2Go 8 01 Scope What do we analyze in the course of the Five-Forces Analysis? 02 Car2Go Important facts and information about the company 03 Five-Forces Internal rivalry, threat of substitutes and new entry, buyer and supplier power 04 S-W-O-T Analysis What are strengths, weaknesses, opportunities and threats of Car2Go’s business model? 05 Summary of important Aspects What are the significant aspects for strategic recommendations? 06 Strategic Recommendations What to do in the future?
  • 9. 09.01.2018Strategy Project 2017 - Car2Go 9 FIVE-FORCES ANALYSIS INTERNAL RIVALRY THREAT OF NEW ENTRY POWER OF BUYERS POWER OF SUPPLIERS THREAT OF SUBSTITUTES & COMPLEMENTS
  • 10. 09.01.2018Strategy Project 2017 - Car2Go 10 INTERNAL RIVALRY 20152014MARKET ENTRY PARENT COMPANY 25,00035,000REGISTERED USERS 440340FLEET SIZE CAR TYPES SmartFortwo A-Class GLA VW Up
  • 11. 09.01.2018Strategy Project 2017 - Car2Go 11 INTERNAL RIVALRY PRICE Registration Basic price/ month Price / min Price / hr Price / km - - - € 4.90 - - € 1.00 € 1.00 € 0.25 € 0.15 Basic Comfort Basic fee / trip € 2.00 € 2.00 Airport fee € 10.00 Source: book-n-drive(2017) Validation fee Basic price/ month Price / min Price / hr Price / km € 9.00 - € 0.26 € 0.31 € 13.99 € 16.99 - * - * smart A-Class € 0.34 € 19.99 - * GLA Basic fee / trip - - - Airport fee € 4.90 *up to 200 km – from km 201 it’s 0.29€/km Source: Car2Go (2017b) COMPARISON 3 km / 10 min 5 km / 15 min 10 km / 30 min € 2.92 € 2.60 € 3.50 € 3.90 € 5.00 € 7.80 Trip Basic smart 25 km / 60 min € 9.25 € 13.99 City** - Airport (14 km / 20 min***) € 13.59 € 10.10 SUBJECTS “Basic” and the “smart” packages were chosen for comparison due to their comparability of car types. TRIP: “City” set at Zeil 106, 60313 Frankfurt am Main (Germany) Time estimate of Google Maps Navigator
  • 12. 09.01.2018Strategy Project 2017 - Car2Go 12 INTERNAL RIVALRY THREAT: LOW HIGHMEDIUM INTERNAL RIVALRY: LOW HIGHMEDIUM 3 km / 10 min 5 km / 15 min 10 km / 30 min € 2.92 € 2.60 € 3.50 € 3.90 € 5.00 € 7.80 Trip Basic smart 25 km / 60 min € 9.25 € 13.99 City** - Airport (14 km / 20 min***) € 13.59 € 10.10 1 1 PRICING FLEET SIZE 0 200 400 600 REGISTERED USERS NETWORK approximately 60,000 REGISTERED USERS SERVICE DENSITY 0.64 per 1000 inhabitants 2500035000 CAR TYPES DUOPOLY MARKET
  • 13. 09.01.2018Strategy Project 2017 - Car2Go 13 THREAT OF NEW ENTRY THREAT: LOW HIGHMEDIUM MARKET PLAYERS INPUT-POSSESSIVE COMPANIES OTHER CAR-SHARING COMPANIES POTENTIAL NEW ENTRANTS
  • 14. 09.01.2018Strategy Project 2017 - Car2Go 14 THREAT OF SUBSTITUTES & COMPLEMENTS THREAT: LOW HIGHMEDIUM THREAT: LOW HIGHMEDIUM SUBSTITUTES COMPLEMENTS VEHICLE-SHARING CONCEPTS PUBLIC TRANSPORTATION OTHER MOBILE APPLICATIONS & CERTIFIERS SUPRA-REGIONAL PUBLIC TRANSPORTATION company-own Certifier applications 21 Taxis and private-owned vehicles (car, scooter, bike) 160 MILLION PASSENGERS per year 910
  • 15. 09.01.2018Strategy Project 2017 - Car2Go 15 BUYER POWER THREAT: LOW HIGHMEDIUM MOBILE APPLICATIONS & CERTIFIERS company-own Certifier applications i Market SUBSTITUTES VEHICLE-SHARING CONCEPTS PUBLIC TRANSPORTATION OTHER 21 Taxi and private-owned vehicles (car, scooter, bike) 160 MILLION PASSENGERS per year 910
  • 16. ? 09.01.2018Strategy Project 2017 - Car2Go 16 SUPPLIER POWER THREAT: LOW HIGHMEDIUM INPUTS OPERATION RIGHTS VEHICLES Superior access to vehicles through Daimler Purchase for market price or lower MOBILE APPLICATION Programming solution from the market at for a comparably low price RFID-TECHNOLOGY RFID-chips and integration are low cost components MUNICIPALITY OPERATION RIGHTS Designated operation areas are assigned by the municipality of Frankfurt am Main CAP OF OPERATION RIGHTS
  • 17. AGENDA 09.01.2018Strategy Project 2017 - Car2Go 17 01 Scope What do we analyze in the course of the Five-Forces Analysis? 02 Car2Go Important facts and information about the company 03 Five-Forces Internal rivalry, threat of substitutes and new entry, buyer and supplier power 04 S-W-O-T Analysis What are strengths, weaknesses, opportunities and threats of Car2Go’s business model? 05 Summary of important Aspects What are the significant aspects for strategic recommendations? 06 Strategic Recommendations What to do in the future?
  • 18. 09.01.2018Strategy Project 2017 - Car2Go 18 SWOT ANALYSIS What is the COMPETITIVE ADVANTAGE and which BENEFITS does Car2Go provide to its users? What IMPROVEMENTS OR RENEWALS bear potential for the future? Which TRENDS OR CHANGES in the market and environment would have a NEGATIVE EFFECT? What are internal sources of INEFFICIENCIES and what do market COMPETITORS better? S W TO INTERNAL EXTERNAL POSITIVE NEGATIVE
  • 19. 09.01.2018Strategy Project 2017 - Car2Go 19 SWOT ANALYSIS – LONG LIST  Network effects as early-mover advantage, i.e. establishment of standards and largest user network  Superior access to input (vehicles)  Leverage of economies of density  Ownership of protected operation rights from the municipality  Attractive price level for trips to the airport in Frankfurt am Main  Utilization of Daimler’s internal capital market (cf. ‘Cash Cows’ finance ‘Rising Stars’)  Brand reputation of Daimler  Premium vehicles provide ground for price discrimination through additional perceived benefit for quality-sensitive users  Co-operations with public institutions, companies or complementary services, in Frankfurt am Main with e.g. Fraport, Deutsche Bahn or airlines  Enhancement of pricing model and adaption to customer desires, e.g. monthly basic fee for unlimited use for commuters  Introduction of innovative technologies, e.g. electric mobility (short-term) and autonomous driving (long-term), to the fleet  Global operations as source of learning and scale economies  Growing popularity and acceptance due to public awareness  Suspension of early-mover advantages by non- existent customer switching costs  Loosening of national regulation for transportation services like Uber and Cabify  Entry and market share capture by OEM’s and other companies which already inherit input resources  Limit of service expansion in Frankfurt imposed by the municipality  Lack of sustainable customer acceptance for car-sharing services  Pricing only favorable for short-time trips, i.e. use for commuters during rush-hour is comparably expensive  Charge of a registration fee  Constraints of service availability due to lacking vehicle density  Marketing inefficiencies due to adverse customer segmentation for a highly heterogeneous target group  Car2Go, as subsidiary of Daimler, has a significant lower success pressure and incentive to innovate than its competitor S W TO Important note: Aspects in all four categories have already been organized in descending order of importance.
  • 20. T 09.01.2018 20Strategy Project 2017 - Car2Go Strengths S OW Network effects as early-mover advantage, i.e. establishment of standards and largest user network Superior access to input (vehicles) Leverage of economies of density Ownership of protected operation rights from the municipality
  • 21. T 09.01.2018 21Strategy Project 2017 - Car2Go Strengths S OW Superior access to input (vehicles) Leverage of economies of density Ownership of protected operation rights from the municipality Network effects as early-mover advantage, i.e. establishment of standards and largest user network 2014 35.000 2015 25.000
  • 22. Network effects as early-mover advantage, i.e. establishment of standards and largest user network T 09.01.2018 22Strategy Project 2017 - Car2Go Strengths S OW Leverage of economies of density Ownership of protected operation rights from the municipality Superior access to input (vehicles) +
  • 23. Network effects as early-mover advantage, i.e. establishment of standards and largest user network T 09.01.2018 23Strategy Project 2017 - Car2Go Strengths S OW Superior access to input (vehicles) Ownership of protected operation rights from the municipality Leverage of economies of density Limiting the operation area to the most densely populated city area, thus spreading costs of indivisibilities (vehicles) over a large amount of potential customers. FFM
  • 24. Network effects as early-mover advantage, i.e. establishment of standards and largest user network T 09.01.2018 24Strategy Project 2017 - Car2Go Strengths S OW Superior access to input (vehicles) Leverage of economies of density Ownership of protected operation rights from the municipality
  • 25. 09.01.2018 25Strategy Project 2017 - Car2Go Weaknesses TS OW Pricing only favorable for short-time trips Charge of a registration fee Constraints of service availability due to lacking vehicle density Marketing inefficiencies due to adverse customer segmentation
  • 26. 09.01.2018 26Strategy Project 2017 - Car2Go Weaknesses TS OW Charge of a registration fee Constraints of service availability due to lacking vehicle density Marketing inefficiencies due to adverse customer segmentation Pricing only favorable for short-time trips
  • 27. 09.01.2018 27Strategy Project 2017 - Car2Go Weaknesses TS OW Pricing only favorable for short-time trips Constraints of service availability due to lacking vehicle density Marketing inefficiencies due to adverse customer segmentation Charge of a registration fee 9€ 0€
  • 28. 09.01.2018 28Strategy Project 2017 - Car2Go Weaknesses TS OW Pricing only favorable for short-time trips Charge of a registration fee Marketing inefficiencies due to adverse customer segmentation Constraints of service availability due to lacking vehicle density VS.
  • 29. 09.01.2018 29Strategy Project 2017 - Car2Go Weaknesses TS OW Pricing only favorable for short-time trips Charge of a registration fee Constraints of service availability due to lacking vehicle density Marketing inefficiencies due to adverse customer segmentation CURRENTLY BUT:
  • 30. 09.01.2018 30Strategy Project 2017 - Car2Go Opportunities TS OW Co-operations with public institutions, companies or complementary services Enhancement of pricing model and adaption to customer desires Introduction of innovative technologies to the fleet Global operations as source of learning and scale economies
  • 31. 09.01.2018 31Strategy Project 2017 - Car2Go Opportunities TS OW Enhancement of pricing model and adaption to customer desires Introduction of innovative technologies to the fleet Global operations as source of learning and scale economies Co-operations with public institutions, companies or complementary services
  • 32. 09.01.2018 32Strategy Project 2017 - Car2Go Opportunities TS OW Co-operations with public institutions, companies or complementary services Introduction of innovative technologies to the fleet Global operations as source of learning and scale economies Enhancement of pricing model and adaption to customer desires ? ? ?
  • 33. 09.01.2018 33Strategy Project 2017 - Car2Go Opportunities TS OW Co-operations with public institutions, companies or complementary services Enhancement of pricing model and adaption to customer desires Global operations as source of learning and scale economies Introduction of innovative technologies to the fleet
  • 34. 09.01.2018 34Strategy Project 2017 - Car2Go Opportunities TS OW Co-operations with public institutions, companies or complementary services Enhancement of pricing model and adaption to customer desires Introduction of innovative technologies to the fleet Global operations as source of learning and scale economies
  • 35. 09.01.2018 35Strategy Project 2017 - Car2Go Threats TS OW Suspension of early-mover advantages by non-existent customer switching costs Loosening of national regulation for innovative transportation services Entry and market share capture by OEM’s and other companies Limit of service expansion in Frankfurt imposed by the municipality
  • 36. 09.01.2018 36Strategy Project 2017 - Car2Go Threats TS OW Loosening of national regulation for innovative transportation services Entry and market share capture by OEM’s and other companies Limit of service expansion in Frankfurt imposed by the municipality Suspension of early-mover advantages by non-existent customer switching costs ?
  • 37. 09.01.2018 37Strategy Project 2017 - Car2Go Threats TS OW Suspension of early-mover advantages by non-existent customer switching costs Entry and market share capture by OEM’s and other companies Limit of service expansion in Frankfurt imposed by the municipality Loosening of national regulation for innovative transportation services
  • 38. 09.01.2018 38Strategy Project 2017 - Car2Go Threats TS OW Suspension of early-mover advantages by non-existent customer switching costs Loosening of national regulation for innovative transportation services Limit of service expansion in Frankfurt imposed by the municipality Entry and market share capture by OEM’s and other companies
  • 39. 09.01.2018 39Strategy Project 2017 - Car2Go Threats TS OW Suspension of early-mover advantages by non-existent customer switching costs Loosening of national regulation for innovative transportation services Entry and market share capture by OEM’s and other companies Limit of service expansion in Frankfurt imposed by the municipality
  • 40. AGENDA 09.01.2018Strategy Project 2017 - Car2Go 40 01 Scope What do we analyze in the course of the Five-Forces Analysis? 02 Car2Go Important facts and information about the company 03 Five-Forces Internal rivalry, threat of substitutes and new entry, buyer and supplier power 04 S-W-O-T Analysis What are strengths, weaknesses, opportunities and threats of Car2Go’s business model? 05 Summary of important Aspects What are the significant aspects for strategic recommendations? 06 Strategic Recommendations What to do in the future?
  • 41. 09.01.2018Strategy Project 2017 - Car2Go 41 HIGHLIGHTS OF SWOT
  • 42. AGENDA 09.01.2018Strategy Project 2017 - Car2Go 42 01 Scope What do we analyze in the course of the Five-Forces Analysis? 02 Car2Go Important facts and information about the company 03 Five-Forces Internal rivalry, threat of substitutes and new entry, buyer and supplier power 04 S-W-O-T Analysis What are strengths, weaknesses, opportunities and threats of Car2Go’s business model? 05 Summary of important Aspects What are the significant aspects for strategic recommendations? 06 Strategic Recommendations What to do in the future?
  • 43. 09.01.2018Strategy Project 2017 - Car2Go 43 STRATEGIC RECOMMENDATIONS 1 ENHANCED CUSTOMER SEGMENTATION efforts have to be implemented by Car2Go in order to tackle the weaknesses of the pricing model. This enables the company to introduce SEGMENT-ORIENTED TARIFFS that attract more customers and increase the market share as well as the profitability. A further mean for enhancement are PROMOTIONAL CAMPAIGNS in order to effectively address specific target groups and win new customers.
  • 44. 09.01.2018Strategy Project 2017 - Car2Go 44 STRATEGIC RECOMMENDATIONS 1 ENHANCED CUSTOMER SEGMENTATION efforts have to be implemented by Car2Go in order to tackle the weaknesses of the pricing model. This enables the company to introduce SEGMENT-ORIENTED TARIFFS that attract more customers and increase the market share as well as the profitability. A further mean for enhancement are PROMOTIONAL CAMPAIGNS in order to effectively address specific target groups and win new customers. 2 Car2Go has to enter NEW COLLABORATIONS by leveraging on PUBLIC TRANSPORTATION COMPLEMENTS. This provides ground for the creation of BUNDLED, CO-OPERATIVE SERVICES that limit the buyer power while positioning the own service as most favorable. A potential partner is the Deutsche Bahn with which Car2Go could combine the car-sharing service with train passengers that arrive in Frankfurt.
  • 45. 09.01.2018Strategy Project 2017 - Car2Go 45 STRATEGIC RECOMMENDATIONS 1 2 ENHANCED CUSTOMER SEGMENTATION efforts have to be implemented by Car2Go in order to tackle the weaknesses of the pricing model. This enables the company to introduce SEGMENT-ORIENTED TARIFFS that attract more customers and increase the market share as well as the profitability. A further mean for enhancement are PROMOTIONAL CAMPAIGNS in order to effectively address specific target groups and win new customers. Car2Go has to enter NEW COLLABORATIONS by leveraging on PUBLIC TRANSPORTATION COMPLEMENTS. This provides ground for the creation of BUNDLED, CO-OPERATIVE SERVICES that limit the buyer power while positioning the own service as most favorable. A potential partner is the Deutsche Bahn with which Car2Go could combine the car-sharing service with train passengers that arrive in Frankfurt. 3 The company is able to INTRODUCE INNOVATIVE TECHNOLOGIES to its services as a first-mover through the parent company Daimler. This superior access allows Car2Go to secure its market position by setting technology standards which likely lowers operation costs and increases service attractiveness. In general, a resulting CONSTANT SERVICE ENHANCEMENT represents a COMPETITIVE ADVANTAGE in the recurring first- mover role in the market.
  • 46. 09.01.2018Strategy Project 2017 - Car2Go 46 STRATEGIC RECOMMENDATIONS 1 2 3 ENHANCED CUSTOMER SEGMENTATION efforts have to be implemented by Car2Go in order to tackle the weaknesses of the pricing model. This enables the company to introduce SEGMENT-ORIENTED TARIFFS that attract more customers and increase the market share as well as the profitability. A further mean for enhancement are PROMOTIONAL CAMPAIGNS in order to effectively address specific target groups and win new customers. Car2Go has to enter NEW COLLABORATIONS by leveraging on PUBLIC TRANSPORTATION COMPLEMENTS. This provides ground for the creation of BUNDLED, CO-OPERATIVE SERVICES that limit the buyer power while positioning the own service as most favorable. A potential partner is the Deutsche Bahn with which Car2Go could combine the car-sharing service with train passengers that arrive in Frankfurt. The company is able to INTRODUCE INNOVATIVE TECHNOLOGIES to its services as a first-mover through the parent company Daimler. This superior access allows Car2Go to secure its market position by setting technology standards which likely lowers operation costs and increases service attractiveness. In general, a resulting CONSTANT SERVICE ENHANCEMENT represents a COMPETITIVE ADVANTAGE in the recurring first- mover role in the market. 4 Car2Go should pursue a ‘GLOCALIZATION’ STRATEGY characterized by exploiting LEARNING EFFECTS from global operations while simultaneously focusing on the INDIVIDUAL LOCAL ENVIRONMENTS, in Frankfurt as well as all others markets.
  • 47. 09.01.2018Strategy Project 2017 - Car2Go 47 STRATEGIC RECOMMENDATIONS 1 2 3 4 ENHANCED CUSTOMER SEGMENTATION efforts have to be implemented by Car2Go in order to tackle the weaknesses of the pricing model. This enables the company to introduce SEGMENT-ORIENTED TARIFFS that attract more customers and increase the market share as well as the profitability. A further mean for enhancement are PROMOTIONAL CAMPAIGNS in order to effectively address specific target groups and win new customers. Car2Go has to enter NEW COLLABORATIONS by leveraging on PUBLIC TRANSPORTATION COMPLEMENTS. This provides ground for the creation of BUNDLED, CO-OPERATIVE SERVICES that limit the buyer power while positioning the own service as most favorable. A potential partner is the Deutsche Bahn with which Car2Go could combine the car-sharing service with train passengers that arrive in Frankfurt. The company is able to INTRODUCE INNOVATIVE TECHNOLOGIES to its services as a first-mover through the parent company Daimler. This superior access allows Car2Go to secure its market position by setting technology standards which likely lowers operation costs and increases service attractiveness. In general, a resulting CONSTANT SERVICE ENHANCEMENT represents a COMPETITIVE ADVANTAGE in the recurring first- mover role in the market. Car2Go should pursue a ‘GLOCALIZATION’ STRATEGY characterized by exploiting LEARNING EFFECTS from global operations while simultaneously focusing on the INDIVIDUAL LOCAL ENVIRONMENTS, in Frankfurt as well as all others markets.
  • 48. AGENDA 09.01.2018Strategy Project 2017 - Car2Go 48 01 Scope What do we analyze in the course of the Five-Forces Analysis? 02 Car2Go Important facts and information about the company 03 Five-Forces Internal rivalry, threat of substitutes and new entry, buyer and supplier power 04 S-W-O-T Analysis What are strengths, weaknesses, opportunities and threats of Car2Go’s business model? 05 Summary of important Aspects What are the significant aspects for strategic recommendations? 06 Strategic Recommendations What to do in the future?
  • 49. 09.01.2018Strategy Project 2017 - Car2Go 49 The End All images on the slides of this presentation are protected by copyright. The images are intended only for internal use. Any form of dissemination or publication of the images contained herein is not permitted. Thank You for Your Attention!