Module 4 Case BUS 401: International car-sharing business - Zipcar
Please write a 5 page International strategic plan for Zipcar addressing the questions in the attached instructions. Use credible and reliable sources. Reference sources of information with both a bibliography and in-tex citations.
Module 4 - Case
Market Selection and Foreign Entry-Mode
Assignment Instructions
Zipcar is a highly successful new company specializing in a brand new model for automobile rental services, which allows their customers long-term and flexible access to shared vehicles on a daily or hourly basis. Zipcar's innovative model allows those who sign up for their membership services to share cars with other members on a flexible basis, creating a cost effective alternative to car ownership. Since its founding in 2000, it has grown to become a major player in the U.S. automobile rental market and has expanded internationally to Canada, the U.K., Spain, and Austria and offers rental services to almost one million customers.
Before writing your paper, make sure to carefully review the concepts of country selection and evaluation in Venkateswaran (2012) as well as the discussion of advantages and disadvantages of different foreign entry mode decisions in Jeyarathmm (2008) and Rajagopal (2009). Once you have finished reviewing the basic concepts of this module, read the following two articles and do some of your own additional research on Zipcar:
Zipcar expands in Sacramento becoming 26th major metro market: Based on strong demand, Zipcar increases number of vehicles, will open office (Nov. 6, 2013) PR Newswire [Proquest]
Esswein, P. M. (July, 2011). Zipcar: Robin Chase. Kiplinger's Personal Finance, 65, 1 [Proquest]
Zipcar, Inc.; Zipcar acquires leading car sharing service in Austria. CarSharing.at. (July 25, 2012). Mergers & Acquisitions Week, 196. [Proquest]
Now suppose you have been hired by Zipcar to come up with an international strategic plan. Write a 4- to 5-page strategic plan for Zipcar that addresses the following issues:
- What country or countries should Zipcar enter next beyond the five countries they already operate in? Explain your reasoning for this selection based on criteria from the background materials including Venkateswaran (2012).
- What mode of entry should Zipcar use to enter this country or countries that you chose? For example, should they use a joint venture, franchising, a greenfield strategy, etc.? Refer to the concepts from Jeyarathmm (2008) and Rajagopal (2009) in your answer.
Assignment Expectations
- Answer the assignment questions directly.
- Stay focused on the precise assignment questions; don't go off on tangents or devote a lot of space to summarizing background materials.
- Make sure to use reliable and credible sources as your references. Articles published in established newspapers or business journals/magazines are preferred. If you find articles on the Internet, make sure they are from a credible source.
- Reference your sources of information with both a bibliography and in-text citations. See the Student Guide to Writing a High-Quality Academic Paper, including pages 13 and 14 on in-text citations. Another resource is the “Writing Style Guide,” which is found under “My Resources” in the TLC Portal.
Trident University
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Module 4 Case BUS 401
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Table of Contents
Introduction ...........................................................................................................3
Direction ................................................................................................................4
Goals.......................................................................................................................4
Entry Strategy .......................................................................................................4
Modes of Entry …………………………………………………………………..6
Conclusion………………………………………………………………………..7
References………………………………………………………………………..9
Introduction
Zipcar is an International car-sharing business that specializes in providing its customers with vehicles on a rental basis. The business allows customers who do not use vehicles on a regular basis to hire a vehicle for a limited period. The service is different from car rental as it is available 24 hours a day, the model is self-service, members of Zipcar are pre-approved by undergoing a vetting mechanism that includes background checks, the membership cost often includes fuel and insurance thus saving the members money CITATION Pat11 \l 1033 (Esswein, 2011).
The car sharing model is attractive as it allows members to have access to a wide range of vehicles without having to deal with the resultant constraints on vehicle ownership. The model is particularly sufficient in cities where the public transport system is adequately developed. In such instances, car sharing can be more affordable compared to owning a vehicle. Users have access to different vehicles depending on their needs; they are unburdened by maintenance costs, insurance, etc. A vehicle is usually delivered to a designated point that is easily accessible and users pick the vehicle, use it and return it after use. Zipcar accepts liability for fuel, cleaning, insurance, etc.
Since its inception in 2000, Zipcar has grown to become a notable player in the rental market. It has done this using a number of mechanisms such as mergers and acquisitions CITATION Zip12 \l 1033 (Zipcar, 2012). It has expanded internationally to Canada, the U.K., Spain, and Austria. It currently has over one million users. As a result of increased demand for its services, Zipcar issued an IPO to fund its expansion strategy. Zipcar plans to venture into other key markets internationally and exploit its competitive strategy. It utilizes an "inside out" stratagem with regard developing markets for the Zipcar platform CITATION Zip13 \l 1033 (Zipcar, 2013). The strategic plan, therefore, guides the expansion.
Direction
The global demand for automobile rental vehicles has been on the rise. In 2013, the average rate for car rental was 65 dollars. Moving forward to 2015, this is expected to rise to between 67 and 70 US dollars CITATION Sta15 \l 1033 (Statista, 2015). The number of vehicles used in the car sharing platform has grown and superseded the figures registered prior to the financial crisis of 2007-2008. The industry achieved 23.6 million USD in revenue with 1.86 million vehicles in their fleetsCITATION Sta12 \l 1033 (Statista, 2012). A 10% growth rate is expected in the years to come from 2015 moving forward.
Zipcar must, therefore, venture into new markets to achieve this growth. In investing in new markets, Zipcar can emerge as a market leader especially in companies where competition is limited or non-existent.
Goals
1 Venture into new markets that do not have a car sharing model or where it exists does not satisfy the needs of consumers.
2 Achieve a 50% market share within 24 months of commencing operations.
3 Achieve a 15% Return on Investment year on year
4 Provide high-quality services to consumers at affordable prices and build a strong brand backed with a sustainable business framework.
Entry Strategy
Expanding a business internationally brings new risk aboard, without a proper examination of the market, such an endeavor can result in losses and the brand name being brought into disrepute CITATION Bue15 \l 1033 (Buerki, Nandialath, Mohan, & Lizardi, 2015). Determination of the country should be based on a number of key factors;
Determination of the country should be based on a number of key factors;
1 Legal Framework
A...