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MAHBANO YASMEEN-GMBA N1-ZIPCAR CASE ANALYSIS 1) How would you assess the overall validity of the Zipcar business

idea? Zipcar is an overall strong business idea and Chase has the necessary dedication and base i.e. 250 members, 19 car fleet and approx. 22k revenue, to accomplish the target of additional $1.3million investment to strengthen her business however she needs to work on further exploiting the positive aspects of the idea and control negative points. Pros Cons Strong target market (Boston) and expected Poor execution and team imbalance Lack demand scalability to populated cities of experience in the business segment and Danielsons partial commitment with equal Potential revenue generation of $23million share in profit and ownership (0.04%x 66M = 26,400 members) Daily max price of $44 policy costs No existing competitors in North America continue to incur while billable revenue does The technological concept of admit only the not hence cars per member is actually less assigned driver to the car to get accurate data than predicted because of this usage pattern. Strong Customer Value Proposition based on Convertible loans are a potential issue extensive market research need for higher level investors to expand Innovative marketing controlled marketing project. budgets Based on points shared above I believe that the business idea can be a great success if Chase and Danielson are able to hire the right person who is an expert from given industry (car rental business maybe?) to create a strong profile of the team. This way they can further improve their financial model and prospects of acquiring further investments. 2) Why did the founders revise their financial plans (Exhibit 3 -> Exhibit 5)? Plan 1 was based on assumptions from similar European business models and capacity utilization. Hence based on European structure she included $300 annual subscription fee and keeping in mind US market a 40% utilization rate. Other costs like lease, parking, access equipment and attrition rate were also assumed based on knowledge in plan 1. As the project initiated, the founders realized the actual costs that they incurred from experience and further market research. This lead to a change in costing structure where variable costs increased slightly and potential revenues increased significantly. Overall this financial model is more realistic and appealing to investors as compared to the previous one. I believe that one of the triggers behind this change was need for more investments and developed investors. Chase had to attract more investors and most importantly sophisticated investors who can help her business expand. 3) What can you learn from the real operation data (Exhibit 8b)? The actual data of operation in September shows that the models financials gave better than expected results. The comparison in terms of planned vs actual shows that 101 new members registered in 1 month therefore this rate it will exceed initial estimate of 440 new members/year. Due to this raise in new members, some variable costs declined partially. Some costs increased as compared to the planned financials. Parking fee/car/year was higher than expected (25% more) and fuel bill was10% higher than planned. Moreover, lease cost went up to $4,800 per vehicle because as risk associated to ZipCar increased with respect to the size of the company. We can see that the contribution margin will decline given aforementioned costs are variable costs. The analysis of ratio of trips taken vs miles driven for hourly and daily users shows that daily users are using vehicles for longer stretches (commuting between cities perhaps) as compared to hourly users. Similarly in terms of total hours used we can see daily users data shows more hours as compared to hourly users. However when we see the respective billing pattern, it yields opposite in terms of revenue. This seems to be underlying issue of the business model that Chase needs to address. She should follow tiered pricing to reap maximum profit from the daily users as well as the costs incurred do not vary for hourly and daily users.