Zipcar: Refining the Business Model - Case Study Example

Evaluation of the Potential Venture & Progress
The venture of Zipcar by Robin Chase and Antje Danielson has been operating in the US market due to the demand for such services. Chase and Danielson have been successful in conducting the research and finding out the market gap and demand for this product. The idea of the venture was taken from the Switzerland market but the implementation in the US market was not easy. The analysis of Chase for the American market was correct and within a short period of time, the company was able to expand. But there was an internal problem of equity shareholding. The funds were limited and they wanted the company to grow. For this Chase approached investors and not banks as there was less cash in their banks. There was positive feedback from the investors.

The pricing strategy was the important factor with promotional activity in the US market. The target audience for the company was different in North America. The pricing strategy was difficult. Chase adopted the European model pricing strategy for a while and then customized the pricing strategy to attract more customers.

Financing was done from own resources along with convertible loans into shares and this helped to develop the business. They used low-cost tactics of marketing. Through word of mouth, free media coverage, public relations, and personal guerrilla marketing efforts, tactics were implemented. They used the internet source and website to build a huge online customer base for booking in advance from different locations. The concept of ownership feeling with the right target customers developed the business in the US.

Changes between December 1999 to May 2000
The planning and research were completed in December 1999 and the venture was started in January 2000. There was funding from Chase’s own resources along with that of Danielson. There was limited funding and the overhead costs were to be minimized as they attempted to deliver the service at low cost than the competitors. To expand the business and its operations in other cities, funding was required. For this Chase and Danielson prepared the financial investment plan and were able to attract investors for financing the business. The business did well during the phase of January - February. After February, finance was provided and their liquidity position was strong enough to manage various overheads, operating costs and they were able to expand the business. Chase developed the infrastructure to launch the operations that were significant to develop the business. Revenues were increased through the membership and there was an increase in the customers. This continued even in the month of May 2000.

Implications of Actual Operations in September
The overhead expenses were increasing and there were problems with the increase in the fuel prices, which increased the operating costs. They were still in the development phase with additional costs in the technological advancement for the service. This increased the cost. There were certain convertible loans raised during this period for the business operations.

Comfort or Concern
The prevailing scenario was a major concern for Chase and Danielson since they were still not able to withdraw the amount from business in the form of salary. The phase of development was growing with additional cost and increasing prices of fuels. There was a shortage of capital in the business and Chase utilized different alternatives from convertible loans to financing that ultimately increased the cost of capital for the long run purpose.

Actions that can be taken by Chase
Chase should evaluate the expected return on investment against the actual for tangible benefits and for the purpose of savings. She needs to establish a scorecard for the financers to evaluate the cost of capital and then develop the revenue margins that will be required to expand the business. The marketing should be focused more to generate increased sales that will increase the cash flow and stability will be maintained. This will assist the business to enter in new market with a strong financial position. This will not only help the business to develop and expand but will also generate a return on investment in a short period of time.