Read Case 2-2 “Zipcar” and then answer the following questions. How might you ap

Question

Read Case 2-2 “Zipcar” and then answer the following questions. How might you apply Porter’s five force model to Zipcar business model? What network effects is part of the strategy of Zipcar and how do they add value?

CASE STUDY 2-2 Zipca ? Zipcar is an answer for customers who want to rent a car for a few hours in their home city rather than for a few days from a traditional rental agency, Car reservations are for a specific pick-up time and location around the city, often in neighbor- hoods so the customers need only to walk to pick up their reserved car. Customers apply for a Zipcard, which enables them ? to reserve a car online and unlock their car when they arrive at its location. The company operates with a very small staff compared to traditional rental agencies. Very little human interaction is required between the customer and Zipcar for a transaction. A customer reserves a car online, enters into the reserved car by = waving the RFID-enabled Zipcard against the card reader mounted behind the driver's side windshield, returns the car to the = same location, and is billed on the credit card already on file. The customer can check all rental records and print receipts rom the online reservation system. The system also has a color coded time chart showing the availability and location of all E rental cars in the vicinity. This transparent information exchange allows a customer to pick the car he or she wants,if avail- E able, or delay the reservation until that car is returned by another customer. Zipcar also created and installed a GPS-enabled wireless device in each car, which allows members to find and reserve a vehicle nearby using a cell phone. Customers also can use an iPhone or Android app on their iPhone or Android mobile device to find and reserve a Zipear on a 24/7 basis. Zipcar sends text alerts near the end of the rental period, and customers can text back if they want to extend their rental time. All cars were outfitted with patented wireless technology. Zipcar's proprietary IT platform carries information flow bet- ween customers, vehicles, and the company. It is used to monitor car security, fulfill reservations, record hourly usage, and maintain mileage information. The platform also relays vital technical information such as battery voltage and fuel level. It even informs the central system if a customer forgot to turn off headlights, which can quickly drain battery power This business model provides unique advantages over traditional car rentals. Customers do not have to stand in line or fill out papers to rent a car. They know exactly which make and model they will be getting. Unlike most off-airport rental agency locations, which are open only during business hours, Zipcar locations are open 24 hours. The company's rates also include the cost of gas and insurance as well as reserved parking spots at some locations. Additionally, the company uses social networking technologies to develop an online community of Zipcar members Zipsters. It encourages Zipsters to talk about their Ziptrips (i.e., share their personal experiences with Zipcar). Thus, information technology is not only the key enabler of this business model but also a faciitator in creating a buzz and encouraging community development around the concept. Zipcar changed the rules of the rental car industry by

Explanation / Answer

The porter 5 forces model:

The direct network effect seems to be working here. With more number of users using this service, the customers will have frequent access to cars and the waiting time for each location would reduce thus reducing the waiting time for customers.

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