Innovation AEM437 Strategy Case 2
1. In order to assess the commercial opportunity available in a market, many different factors need to be analyzed. First, demographic information needs to be looked at very closely. A densely populated area is always preferred. In addition, it is essential to find areas of educated, working people, who have regular internet access. The need for such a business operation also has to be determined. If the level of demand for a certain product is not high enough, the venture will inevitably prove to be unprofitable and a failure. Market research is a must when starting a business and determining where to establish it. Hundreds of thousands of dollars can be lost or gained, merely based on a chosen location and its potential for success. 2. Chase and her coworkers make certain assumptions in developing their startup and seeking funding. First of all, the assumption is made about the need for such a service. Chase believes that there is a defined and potentially lucrative niche present for a car sharing firm, and has taken many steps to further her company based primarily on this assumption. Another assumption that has been made is that funding will be available in the future, despite hitting many cold spots where money was running extremely low. It is important to keep in mind, however, that while these are assumptions, they are educated ones, based on market surveys, predictions, and estimates. Some key figures that should be taken note include the variable and overhead costs determined recently. Each car will cost the firm $4,800 a year for the lease and around $750 a year for parking. Furthermore, company overhead is averaging at $44,000 per month. these While figures appear to be quite costly, with relatively low levels of funds coming in from the business venture, I would stress to possible investors, just how much potential this company has. It is important to consider the 15,000 people only in the urban area of Boston that perfectly fit the mold as potential customers for Zipcar. Considering also that this idea is built to be expanded to more cities (14) in the US alone, there is enormous room for growth and profit. 3. The primary technological uncertainty associated with this business venture is the development and implementation of the wireless communication system to be placed in all Zipcar vehicles. This is supposed to communicate with the central location, unlock and start the vehicle for only the specified user, and send data regarding use for billing. At the time of the article, this was yet to be implemented, in part because of its costliness and some kinks. A manual record system was put temporarily in place, however if this company truly wants to grow and succeed, the wireless system is the future. First, the founders need to lock down more funding. Once this is completed, it will be easier to completely implement the wireless system, which remains in lingo presently. 4. If I were evaluating this plan I would be very interested and exciting, although I would need some questions answered. First, what is the predicted time frame for profit turnaround and positive cash flow? I would also want to know what kind of feedback Robin and co. has been receiving from its current user base of around 250 people. Furthermore, I would be curious as to the relationship between Chase, Danielson, and Zipcar in the future?