INSC 539 IT Systems Seminar

Zipcar is a pioneering service based on patented technologies, and an understanding of its model is intrinsic to understanding how IS and Technology allows us to gain competitive edge. Hence, this paper would address two issues; (1) it would analyze the business model of Zipcar using Porters five forces model, and (2) it would look at how Zipcars CEO can sustain competition or what types of competitive advantage can the CEO derive from IS in general. In addressing the first issue, Porters five forces model would be used by looking at how the five forces affect the traditional car rental industry at large versus Zipcars business model. In considering the second issue, recommendations would be made in consideration of MIS theory on how Zipcar can maintain its competitive edge and what other competitive advantages can it gain by using IS.

Question 1 Porters Five Forces & Zipcars Business ModelWhen we do a quick analysis of the car rental industry would quickly bring to light the threats and issues within the industry; such as, the threat of new entrants, and intensity of competition is quite high. First, the issue is that virtually anyone can open a car rental business these days for many reasons. Capital requirements dont often tend to be an issue as most car financing tends to be through debt. Also, there are brand considerations; however, any domestic car rental firms can potentially sustain based on relationships with regional tour operators and businesses. The issue that arises then is that the threat of entry under the traditional car rental model is too high. However, Zipcar effectively addresses this by using patented technology at the core of its operations. Hence, for another company to utilize a model similar to Zipcar, it would need to find work-around to all of Zipcars patent; which can be sufficiently time-consuming. As such, Zipcar has addressed the threat of new entrants that most car rental face.Zipcar has also addressed the issue of highly intense competition by providing a car rental service that is different from other services and comes with a more competitive pricing. First, the use of Information system and Information Technology ensures that customers are better informed about the services they are about to received and hence appropriately satisfied. This avoids customer dissatisfaction. Second, Zipcar uses a community model through Facebook and Twitter to address customer and public relations. As a result, this ensures a greater brand loyalty and word-of-mouth promotion that endows the firm with a sustainable competitive edge that remains undeterred through highly intense competition faced by traditional car rentals.The use of community model however worsens Zipcars bargaining position with its customer. It should be realized that while the information culture brought about by the internet has automatically increased customers bargaining power normally rental customers tend to be travelling individuals who do not have group power. However, Zipcar has put in itself in a predicament as it has provided its customers with a grouping platform. Herein, customers can oppose price increases or changes to features, which can severely inhibit Zipcars prices.In a similar vein, it should be realized that Zipcar possesses suppliers with high bargaining power; i.e. oil producers, vehicle and vehicle part manufacturers. First of all, it should be realized that Zipcars business model like the traditional model is influenced by oil prices which are beyond its control. Moreover, in car rental industries, some form of damage to the car after a rent is only expected, and hence routine maintenance and repair are necessary. This means that oil and parts are a basic necessity for Zipcar. Also, since Zipcar operates in over 50 countries it must possess a considerable fleet the repair and maintenance of which can be costly unless and until Zipcar can lower its suppliers bargaining power. However, Zipcar does not seem to have addressed this issue. This relative issue with Zipcars model is that it does not address this issue and the collective wear and tear can cause Zipcars vehicles condition to deteriorate over time and provide an adverse customer experience, and high bargaining power of suppliers mean that Zipcar might be discouraged from more timely repairs.

Question 2 - Recommendations In order to sustain competitive advantages, first, Zipcars CEO should invest considerably on more fuel-efficient technologies, and research and development. The only competitive force that remains to afflict Zipcars operation prominently is that of fuel prices. It can dedicate fuel efficiency standard that should be followed by all of its vehicles. It should be realized that Zipcars wireless proprietary technology already takes into account mileage and fuel information. As a result, if Zipcar can curb the usage of fuel with respect to its operation, it would greatly reduce its impact and hence allow Zipcar to provide economical prices to its customers. Secondly, research and development would ensure that Zipcar stays technically innovative in its offerings. For instance, Zipcar can work with Google and its driverless car concept (Muller, 2012) to allow its car to maneuver themselves into areas where they would be potentially rented rather than stay in areas where rent potential is less. Finally, the case has illustrated the use of IS to maintain a competitive advantage of differentiation. Besides differentiation, Zipcar can also aim to acquire a more low-cost competitive advantage. Also, significant steps that Zipcar can take in this direction are through self-driven cars that come to Zipcars maintenance depot themselves, SCM and BI integration that allows Zipcar to pre-order petrol, oil and car parts before an expected shock. The implementation of Supply Chain Management Systems should be particularly important as it would allow Zipcar to shorten cycle times for its services, i.e. it would allow Zipcar to realize maintenance and repair on time, moreover based on records of previously ordered parts Zipcar can back-order parts well-before they run out (Bowersox et al., 2002). Moreover, Zipcar can utilize its global presence to scour areas where parts are considerably cheaper and export them to nearby operations.

ConclusionZipcars model is quite akin to Apples iPhone; it has the potential to change the industry and in a positive manner. It would make it much simpler to rent cars across the world. While this is seen in the manner Zipcars model handles competitive forces such as threats of new entrants and intensity of competition, Zipcars model needs to address effectively the issue of threat of substitutes, bargaining power of customer and bargaining power of supplier if it aims to revolutionizing the industry. Zipcar can either utilize this by sustaining its competitive advantage through utilizing fuel-efficient cars and investing in R&D, or/and Zipcar can commit to an appropriate IS solution, such as SCM, to address bottlenecks and issues within its operations.

ReferencesBowersox, D. J., Closs, D. J., & Cooper, M. B. (2002). Supply Chain Logistics Management. New York: McGraw-Hill.Keegan, P. (2009). Zipcar - The Best New Idea in Business. CNN Money, August 27. Retrieved from http://goo.gl/7ay0rMuller, J. (2012). With Driverless Cars, Once Again It Is California Leading The Way. Forbes Magazine. Retrieved from http://goo.gl/RhGWo