Zipcar
Porter’s five forces applied to Zipcar
Threat of new entrants:
Potential new entrants include existing car rental firms, companies that currently supply cars to car-sharing businesses (such as Volkswagen), and new start-up car-sharing ventures. As Zipcar is operating in only Boston, there are opportunities for new entrants (with sufficient resources) to establish themselves as dominant car-sharing service providers in other cities. This threat to the profitability of Zipcar’s planned future expansion activities would pressure Zipcar to expand rapidly in order to remain ahead of the competition. A major barrier to entry is Zipcar’s patented technology involving wireless transmission of usage data between the shared cars and a server. New entrants would require substantial time, human, financial and technological resources in order to design, build and implement technology to rival Zipcar’s patented systems. They would also need to reach agreements with car manufacturers concerning the supply of vehicles, and secure parking spaces exclusively for subscribers.
Threat of substitutes:
Major substitutes are taxi, rental car and public transport services. As prices must remain below or equal to those of aforementioned substitute services, a price ceiling has effectively been imposed on Zipcar.
5
Bargaining power of suppliers:
Suppliers have little bargaining power as consumers are price sensitive and would face few switching costs in replacing Zipcar with available substitute services.
Bargaining power of buyers:
Buyers have the power to force prices down by threatening to switch from Zipcar to substitute services.
Rivalry among existing competitors:
Rivalry between car-sharing businesses is limited because car-sharing companies in the U.S. are not targeting each other’s geographical markets. Zipcar operates in Boston, Car-Sharing Inc. in Portland, and Flexcar in Seattle. Rivalry is strong between Zipcar and companies providing substitute services, and this
Threat of new entrants:
Potential new entrants include existing car rental firms, companies that currently supply cars to car-sharing businesses (such as Volkswagen), and new start-up car-sharing ventures. As Zipcar is operating in only Boston, there are opportunities for new entrants (with sufficient resources) to establish themselves as dominant car-sharing service providers in other cities. This threat to the profitability of Zipcar’s planned future expansion activities would pressure Zipcar to expand rapidly in order to remain ahead of the competition. A major barrier to entry is Zipcar’s patented technology involving wireless transmission of usage data between the shared cars and a server. New entrants would require substantial time, human, financial and technological resources in order to design, build and implement technology to rival Zipcar’s patented systems. They would also need to reach agreements with car manufacturers concerning the supply of vehicles, and secure parking spaces exclusively for subscribers.
Threat of substitutes:
Major substitutes are taxi, rental car and public transport services. As prices must remain below or equal to those of aforementioned substitute services, a price ceiling has effectively been imposed on Zipcar.
5
Bargaining power of suppliers:
Suppliers have little bargaining power as consumers are price sensitive and would face few switching costs in replacing Zipcar with available substitute services.
Bargaining power of buyers:
Buyers have the power to force prices down by threatening to switch from Zipcar to substitute services.
Rivalry among existing competitors:
Rivalry between car-sharing businesses is limited because car-sharing companies in the U.S. are not targeting each other’s geographical markets. Zipcar operates in Boston, Car-Sharing Inc. in Portland, and Flexcar in Seattle. Rivalry is strong between Zipcar and companies providing substitute services, and this