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?
Your answers should be in your own words, but should also incorporate (and cite) key terms and concepts from the reading and lectures for this week’s assignment. Your submission should be approximately be in APA format, two full pages, double spaced, running header, subheadings, in text citations and a reference list.
Zipcar experiences a number of problems, which are common among the start-ups. It encounters crucial strategic decisions before beginning to expand and open its business. More importantly, the initial business plan was designed utilizing the comparisons and assumptions of a European market hence the necessity to revise it to adhere to the American market and utilize existing experience (Hart, Roberts & Stevens, 2005). Antje Danielson in 1999 came up with the idea of starting Zipcar and she consulted Robin Chase about the concept of car sharing. In fact, Danielson had learnt of the model of car sharing in her visit to Germany. Moreover, she discovered that it was an emerging trend across Europe. Chase and Danielson agreed to be business partners and they started to design their business plan and to pursuing its funding (Hart, Roberts & Stevens, 2005).
However, the main challenge the entrepreneurs encountered from potential investors was that no entrepreneur had an adequate practical experience to operate car sharing business or automobile industry. The business model in this industry was characterized by a complex operation. They also realized that the main team together with probable investors’ opinion of that team is important to acquiring support. The problem was also evident because Danielson and Chase could not obtain more funds ($1.3M) to finance their operations (Hart, Roberts & Stevens, 2005). Similarly, the vehicl