Business Strategy

Team 2 Monica De Lezaeta Daniel Serrano Hugh Bowen Daniel Shovlin Adam Chapman

Wednesday, March 17, 2010 1 "Any customer can have a car painted any color that he wants as long as it is black" Henry Ford (1922)*

* Ford, Henry; with Crowther, Samuel (1922), My Life and Work Garden City, New York, USA: Garden City Publishing Company, Inc.

Wednesday, March 17, 2010 2 "Any customer can have a car painted any color that he wants so long as it is black"

Today (2010) Ford: 15 models and 25+ different colors

Wednesday, March 17, 2010 3 “I will build a car for the great multitude ... so low in price that no man making a good salary will be unable to own one — and enjoy with his family the blessing of hours of pleasure in God's great open spaces.” Henry Ford (1922)*

*Ford, Henry; with Crowther, Samuel (1922), My Life and Work Garden City, New York, USA: Garden City Publishing Company, Inc.

Wednesday, March 17, 2010 4 "Any customer can have a car painted any color that he wants so long as it is black"

Today (2010)

Wednesday, March 17, 2010 5 The Future

Wednesday, March 17, 2010 6 What is zipcar?

• Founded in 1999 in Cambridge, MA • World’s leading for-proﬁt carsharing service • Membership based • Easily accessible • Highly convenient • Environmentally friendly • Established in 50 cities across the US • Additional presence in Canada and UK • 325,000 members • 6,500 vehicles

Wednesday, March 17, 2010 7 Core Competencies

• Intellectual property • Scalable ﬂeet management system enabling hourly carsharing • Wireless information gathering and transmission technology • Established carsharing vehicle and support network • Branding

Wednesday, March 17, 2010 8 Technology

Internet Internet

GPRS RFID 3G - WiFi

Zipcar IT Systems User Interfaces

Location

Administrative Application Driver Side Application

Fleet Operations Reporting Analytics Driver Tools •Current Usage •Utilization • Reservations •Scheduled Usage •Driver Records • Membership •Issue Management •Location Performance • Card Access

Mobile Application Billing & Settlement MRO (Maintenance, Repair & Operation) • Reservation Account History • • Schedule • Way Finding Statement Distribution • • History • Interactive Voice • Logging Recognition

Wednesday, March 17, 2010 9 Financial Condition

Exhibit 1: Financial and proﬁtability analysis

Zipcar, Inc. - Yearly Membership, Investment Infusion and Revenue 2000 - 2010 500K $150M Potential IPO

400K $120M

300K $90M Dollars Members 200K $60M

Flexcar Acquisition

100K $30M

0K $0M (1) (1) (2) 2001 2003 2004 2005 2006 2007 2008 2009 2010 Year Number of Members (1) Estimated membership based on research data Revenue ($) Investment Activity ($) (2) Projection of membership based on previous yearly growth References: V. Namratha Prasad (2010) Zipcar: Revolutioning car rentals? ICMR case BSTR360

Wednesday, March 17, 2010 10 Financial Condition

Lease revenue & cost structure Access System Costs / Car Insurance Parking Maintenance { Fuel Car Cost / Member

Margin/Member Hours used (Monthly contribution) Members / Car (month) Utilization Rate

Revenues / Member Monthly Fee Margin (Monthly Contr) # Uses Hours / use Monthly Usage $ / hour Miles / use { $ / Mile

Monthly Penalties $ / member

Existing Members

# Members New Members

Attrition $ / member

Wednesday, March 17, 2010 11 Strengths

Exhibit 2: zipcar’s rated strength vectors

Technology

Strong Aggregated partnerships cost model 10 7

8 Brand 2 9 recognition Convenience 4

6 6

10 Max. 10 Extended Lower age limit national presence than rent-a-car (Age 18+)

Relative rankings based on academic research and team evaluation

Wednesday, March 17, 2010 12 Strengths

Exhibit 2: zipcar’s rated strength vectors

#3 Increase convenience Technology by enhancing technology 10

Strong Aggregated partnerships cost model #1 Leverage brand 10 7 recognition to create stronger partnerships

8 Brand 2 9 recognition Convenience 4

6 6

10 Max. 10 Extended Lower age limit national presence than rent-a-car (Age 18+) #2 Increase university campus presence Relative rankings based on academic research and team evaluation

Wednesday, March 17, 2010 12 Weaknesses

Exhibit 3: zipcar’s rated weakness vectors

Return location & round trip 10

Poor suburban Predefined availability reservations

6 7

7 Not for 2 Easily imitable 2 9 commuters business model 4 6 6

10 Max. Network Lack of presence technology in transportation dependance hubs

Relative rankings based on academic research and team evaluation

Wednesday, March 17, 2010 13 Weaknesses

Exhibit 3: zipcar’s rated weakness vectors

Return location #5 Evolve the & round trip business model 10

Poor suburban Predefined availability reservations

6 7

7 Not for 2 Easily imitable 2 9 commuters business model 4 6 6

#4 Expansion in suburban 8 areas of dense cities 10 Max. Network Lack of presence technology in transportation dependance hubs

Relative rankings based on academic research and team evaluation

Wednesday, March 17, 2010 13 Marketing

Public Relations • Partnership with Starbucks® - lowcardiet© Viral and micro marketing strategies • Word of mouth focus on brand interaction and positive member experience • Local businesses and universities relationships • Information cards • Street teams “feet on the street and out in the neighborhood” • Free rides outside Whole Foods Social media campaigns

Wednesday, March 17, 2010 14 Competitive Analysis Strategic groups (rent-a-car industry)

Exhibit 4: Competitive landscape Exhibit 4b: U.S. market analysis Airports Selling Avis Cars Points Budget (in thousands) (in thousands) Hertz Avis Group 338 3.2 Enterprise Hertz 302 3.1 Holdings Enterprise 850 7.5

Geographical scope Geographical Zipcar 6.5

Urban Low Price Premium Geographic car distribution vs cost of rent. Other factors like car segmentation or additional services not represented. Source: Avis group FY2009-10K; Hertz FY2009-10K; Enterprise Holdings website; Academic research

Wednesday, March 17, 2010 15 Competitive Analysis Strategic groups (rent-a-car industry)

Game Geographical scope Geographical Zipcar 6.5 Changer

Zipcar Urban Low Price Premium Geographic car distribution vs cost of rent. Other factors like car segmentation or additional services not represented. Source: Avis group FY2009-10K; Hertz FY2009-10K; Enterprise Holdings website; Academic research

Wednesday, March 17, 2010 15 Opportunities

Exhibit 5: zipcar’s rated opportunity vectors

International presence

Increased Business & social convenience networking alliances

8 5

10 6 Presence in 2 Paradigm transportation hubs shift 4

6 8 8 9 10 Max. Market ﬂeet Capitalize on management green movement system

Relative rankings based on academic research and team evaluation

Wednesday, March 17, 2010 16 Opportunities

Exhibit 5: zipcar’s rated opportunity vectors #6 Expansion to main International European cities presence

Increased Business & social convenience networking alliances

#7 Expansion to suburban 8 5 areas of dense cities 6

10 6 Presence in 2 Paradigm transportation hubs shift 4

6 8 8 9 10 Max. Market ﬂeet Capitalize on management green movement system

Relative rankings based on academic research and team evaluation

Wednesday, March 17, 2010 16 Threats

Exhibit 6: zipcar’s rated threat vectors

Traditional rent-a-car 10

Increase in Car ownership leasing rates bias

8 9

5 2 Increase in 2 Taxi Co. parking cost 4

6 7

10 Max. 10 Increase in Increase in insurance cost fuel cost

Relative rankings based on academic research and team evaluation

Wednesday, March 17, 2010 17 Threats

Exhibit 6: zipcar’s rated threat vectors

Traditional #8 Competitive Advantage rent-a-car or Entry barriers 10

Increase in Car ownership leasing rates bias

8 9 #11 Capital investments

5 2 Increase in 2 Taxi Co. parking cost 4

6 7

8 #10 Partnerships

10 Max. 10 Increase in Increase in insurance cost fuel cost #9 Market securities investments

Relative rankings based on academic research and team evaluation

Wednesday, March 17, 2010 17 Potential Strategies Strategies for Cost Reduction

Strategies for Growth

Wednesday, March 17, 2010 18 Potential Strategies Strategies for Cost Reduction

Strategies for Growth Business growth: Leverage brand recognition Increase university presence Expansion to other areas

Wednesday, March 17, 2010 18 Potential Strategies Strategies for Cost Reduction

Strategies for Growth Business growth: Leverage brand recognition Increase university presence Expansion to other areas

Create entry barriers: Technological edge Competitive advantage

Wednesday, March 17, 2010 18 Potential Strategies Strategies for Cost Reduction

Strategies for Growth Business growth: Leverage brand recognition Increase university presence Expansion to other areas Create Strategic Partnerships

Create entry barriers: Technological edge Competitive advantage

Wednesday, March 17, 2010 18 Wheels when you want them

Time for your questions

Wednesday, March 17, 2010 19 Recap of Strategies Recap of primary strategies Form Strengths Form Weaknesses

#1 Leverage brand #4 Expansion in suburban recognition to create areas of dense cities stronger partnerships Business Growth #2 Increase university #5 Evolve the business model campus presence

#3 Increase convenience by enhancing technology #8 Competitive Advantage or Entry barriers

#9 Market securities investments

#6 Expansion to main European cities #10 Partnerships Entry barriers #7 Expansion to suburban areas of dense cities #11 Capital investments Form Opportunities Form Threats

Wednesday, March 17, 2010 20