Automobile and Business Model Essay

? early appearance In 2000, Inspired by railroad car-sharing purpose in europium, Chase and Danielson started Zipcar to pursue the luck of car sharing in U. S. market. By mid-October of 2000, Zipcar had enlisted nearly 250 members with 19 vehicles located passim capital of Massachusetts. I will evaluate this probable venture and its progress based on the framework of OUTSIDE1, including opportunity, uncertainty, team, st lay outgy, investment fatality, deal and exit. opportunity Market The market size of this pains is estimated at 26,four hundred members, which is 0.04%2 of general population3 lived in Top 20 U. S. Markets. Usage of this pains grows rapidly at 30% annually. in that respect argon two competitors in U. S. market, exclusively they focused on the environmental doctor rather than convenience and apostrophize effectiveness. guest Target segment are college-educated costumers who place less than 6,000 miles per year and live in urban area. Acceptance of th is headache is really high referring to Major players in Europe market, whose marketing investment in this patience is low but the growth rate is continuously high (30% annually).Uncertainties Competition ii original competitors in U. S. market and strength competitors from car manufactures Acceptance Customer word sense is to be proved in Boston before the disdain model could be replicated to other cities Management team Co-funders commitment is not very persuade and the structure of the management is poorly organised Financing overhead continues to grow against control financial resources Team.There are deficient pieces in its team as founders are lack of experience in operating theater and relationship with car manufactures As a co-founder, Danielson commits not enough as she suave have full time mull over and focus more on family scheme Chase keeps pushing to start line of merchandise operation maintain their promise to investors although the connection is not ready. This Strategy would have cast out impacts in the future. Using technology chopine to improve cost effectiveness and adopting pipeline are consistent with its current situation. coronation Requirement.Zipcars cash menses requirement is very high. It spent $375,000 in first year, and pauperisation additional 1. 3 one thousand thousand to complete technology platform, prove the business model and better understand demand. Overhead excess the projection and continues to grow, which will make headway annex the requirement of cash. Deal The current investors holds plenty of convertible loan, which would have minus impacts on future share holders. deprivation The options for exit are available as this industry grows rapidly. The founders are not in a very strong lay out to potential exit.Business Model automobile sharing business provides a hassle-free monomania for urbanite who dont need to take in a car but need the convenience to run occasional errands4. In the m odel before celestial latitude 1999, its revenue comes from $25 application compensation and $300 annual subscription fee, plus $1. 5 periodic driving charge and $0. 4 driving charge per mile. However, Chase firm to change the pricing model with a lower membership fee and a tiered pricing structure, increasing hourly charge to between $4. 5 and $7 and adding a maximum daily rate.The info from certain operations in kinsfolk gives me a concern as seen in Exhi blot 1, that the net contribution from actual operation in folk is invalidating because of the very low revenue, though cost is only a little bit over the estimation. Conclusion The next stones throw for Zipcar is to adjust its pricing model to increase its revenue. Chase need to pitch investors in Springboard forum by steering on this Though its cash flow is negative now, Zipcar is a unique business model with cutting-edge technology and well-established customer base. Zipcar will provide a large chance for investors to be rewarded a bran-new market with 30% annual growth. point of reference 1 This framework is developed by Professor Steven Kaplan from University of Chicago 2At The Wheel, Volkswagen Pioneers Car Sharing Programs, Fastlane, October 1997 3U. S. Census, http//census. gov/population/censusdata/90den_ma. txt, December 9, 2002 4According to the case Exhibit 1 monetary Plan in May 2000 September Operation Data Total gross 29,616 14,645 Number of Cars 12 19 tax per car 2,468 771 Lease per car 367 400 Access Equip 42 42 Fuel 90 99 indemnification 142 142 Maintenance 33 33 lay 50 63 Cost per car 723 778 Net Income per car 1,745 (7) Source caller-out Data.