Please answer the following question in two paragraphs: * What do you think are
ID: 352610 • Letter: P
Question
Please answer the following question in two paragraphs:
* What do you think are the main challenges for Zipcar? Identify the symptoms, critical factors and the current state described in the case as relevant to the particular question you are analyzing. Apply the resource-based view (RBV) framework for your analysis). Be careful to identify the real problem and not the symptoms of the problem*
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 pickup 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 RFIDenabled 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 from the online reservation system. The system also has a colorcoded time chart showing the availability and location of all rental cars in the vicinity. This transparent information exchange allows a customer to pick the car he or she wants, if avail- able, or delay the reservation until that car is returned by another customer. Zipcar also created and installed a GPSenabled 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 Zipcar 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 offairport 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 facilitator in creating a buzz and encouraging community development around the concept. Zipcar changed the rules of the rental car industry by bringing the new Web 2.0 mindset of focusing on automation, customer empowerment, transparency, and community. Zipcar is very successful; as of August 2015, its Website boasts over 900,000 paying members and renting over 10,000 vehicles in 30 major metro markets in the United States, Canada, and the United Kingdom, as well as 400 college cam- puses and 50 airports.
Explanation / Answer
The main challenge for Zipcar is availability of resources i.e. cars. For example, let’s say now customer wants to book car, the app shows that there might be car near by but before customer books the car somebody else might book it. This results in dissatisfaction among customer. For company to grow customer satisfaction and retention are very important factors.
Resource based view analysis:
The main resource for the company is cars. Timely availability of car helps in customer satisfaction. Hence cars are critical resource for the company. The companies main challenge is how to maximize the usage of cars. This is very big challenge because at the end of rental period customer might renew rental or stop the rental. Now the big question for the company is will he stop the rental or not?
If company can accurately predict end of rental period, then turn around time for car will reduce. This is very useful during peak hours. Let us assume that company has 10,000 cars. During peak hours all 10,000 cars will be on road and there will be many customers who wants to book a car. If there are no car in the inventory he cannot book, hence company should hire few extra cars this will increase company’s investment. Instead of this if company accurately predicts end of rental period then turnaround time for car can be reduced. This results in higher profits at lesser investment.