Category: Business Plan

Case Study of Zipcar: Recommendation and Justification

Main Issue

In Zipcar: Refining the Business Model, Chase and Danielson face the challenge of not having enough capital to scale their business idea. In order to grow and be a dominating force in the ridesharing industry, Zipcar needs access to more cars. Currently, Zipcar only has 12 cars and needs more inventory to expand its services. In addition, Zipcar has few employees and is only in Boston. Also, Zipcar needs to figure out what its pricing model is so that it can remain competitive. Since there are competitors that are essentially doing what Zipcar is doing and because there is also the threat of car manufacturers and car rental companies creating a similar venture, Zipcar needs to come up with a brand differentiation strategy to attract and retain more customers.

Because competing in this market involves a high amount of capital and investments, Chase and Danielson need to be clear on what all of Zipcar’s strategies are so that Chase can present this business opportunity to investors. Additionally, lease costs and parking costs are both increasing. As a result, the revenue that is the return on these 12 cars is low, so Zipcar needs to find a way to be profitable while being competitive in its pricing model and strategy.

Evaluation of Available Options

Chase has several options, including not asking for more capital from investors since she and Danielson have been able to run the company on $375,000. Another option is for Chase to ask for $1.3 million in addition to the $375,000 that has already been spent on the business.

Recommendation and Justification

As stated in the main issue, Zipcar needs to find a way to differentiate itself from its competitors. Throughout the case study, Zipcar is described as a company that places an emphasis on environmental impact rather than on simply convenience in comparison to the competitors. Zipcar should definitely highlight this throughout its marketing efforts and bring awareness to people about how the usage of Zipcar has a significant impact on the environment.

Another part of the recommendation is to raise capital in order to hire more employees and purchase more cars. Based on the financial projections, it can be seen that Zipcar needs to reach its breakeven point. The way it will do this is by increasing its number of vehicles. A key consideration is the utilization rates of Zipcar. With a total usage revenue of $14,644.50 being broken down into $5,317.60 for revenue from daily uses and $9,326.90 for revenue from hourly uses, it is evident that a larger percentage of revenue is coming from hourly uses. With this said, the hourly rates can be set higher than the overall daily use price of Zipcar. Additionally, there is a substantial percentage of people using Zipcar during nights and weekends, so increasing the prices during these times could generate more revenue as well.

Both the per mile charge and per hour charge can be increased until Zipcar is not only breaking even but bringing in profit. Considering overhead and cost of goods sold—specifically parking, lease, and fuel costs—are increasing for the cost of each individual car, the prices must increase as well. With an overhead of $44,000 per month, Zipcar needs to produce more revenue. Although Zipcar is already profitable with 239 members enrolled as of September 2000, Chase and Danielson need more members and more vehicles to scale this business to other cities besides Boston. Due to this, marketing efforts must be increased at a high rate. Throughout the case, there was a notable lack of marketing efforts. Zipcar’s marketing strategy is greatly influenced by word-of-mouth marketing in addition to advertising on cars. If Zipcar wants to grow its business, more marketing must be done and more money needs to be invested into the business and utilized for marketing purposes.

During Chase’s pitch to investors, she needs to emphasize Zipcar’s success in Boston and how Zipcar is different than the competitors in the industry as mentioned previously. As stated in the case study, Zipcar can be marketed as a convenient, cost-saving, and environmentally friendly technology. Rather than advertising Zipcar in subway stops and creating postcards, Zipcar needs to create a more personalized and creative marketing strategy approach. Since Zipcar is providing an alternative to owning a car, Zipcar can focus on urban areas such as New York City and on customers like college students who are in favor of saving money. In addition, college students love the rise of the sharing economy versus the traditional economy that is rooted in high ownership rates.

In order to persuade the investors to put $1.3 million into Zipcar, Chase needs to communicate the benefits of Zipcar in a succinct, precise, and effective manner. She also needs to define her marketing strategy in a clearer and more specific way because market segmentation and targeting are highly important and are key in any business. Zipcar could narrow in on its marketing efforts and campaigns by focusing on college campuses. With many colleges and universities located in Boston, this could lead Zipcar to enter the market in other areas. Because there are competitors that offer the same exact service, Zipcar needs to do an excellent job at informing its target market about the cost advantages and energy efficiency of Zipcar versus owning a car.

Another recommendation for Chase and Danielson is to gain enough traction so that car manufacturers would want to partner with Zipcar. However, first, they need to focus on following through on the marketing strategies discussed throughout this section so that investors can see Zipcar’s potential and the company can gain more members and ultimately traffic.

A way to appeal to the investors who would be putting in $1.3 million is to mention the way the investment money has been handled in the past. In the past, Zipcar has taken out convertible loans that have then been converted into equity. This type of negotiation is significant when dealing with investors, so proposing the cash investment through this lens would be in Chase’s best interest.

Another way for Chase to go into the pitch is through stating the growth of the car-sharing industry. According to the case study, the car-sharing industry grows at a rate of 30% each year. Considering the investment into Zipcar has not been close to the $1.3 million that would be invested, an appealing factor would be that the investors would own most of the equity of Zipcar.

Chase needs to stress the fact that car-sharing services are prospering in Europe and no other competitor is locating itself in the Northeast like Zipcar is doing. Because of the growth potential that Zipcar has and due to the market that it is in, Chase has the capacity to create a compelling argument that is based on why $1.3 million would further advance the future of Zipcar. Acquiring this capital is pivotal in the success of Zipcar and will further the Zipcar business model, feasibility, and revenue streams—creating a sustainable business in the process.

Costco’s Key Competitive Strategies

Primarily, Costco’s strategy is to create maximum market and sales volumes by selecting high quality, branded product with wide spreading merchandise in minimal revenue. As Costco is a wholesale store every items can only be purchased in bulk. For example, Advil comes only in 360-count bottle, which is very much larger than common sized found in supermarket or a drug store. In the same way, Costco’s core focus is to sale definite product in a huge quantity with less profit so the customer can make a wise selection (Miles media, 2017). For example, if someone is offered with twenty-five different flavoured candies then it is relatively difficult to make a good choice in comparison to having just five flavours.

In the same way, Costco present one of the biggest and most elite item alternative to be found under a solitary rooftop. It furnishes its individuals with a determination of around 3,600 dynamic products. Of these, 85% of the items are quality branded items and about 15% convey the organization’s private mark, Kirkland Signature, which is intended to be of equivalent or preferred quality over national brands (W. Shonk, D. Anders, B. Miller, 2016). A common retailer acquires around 125,000 to 150,000 products for customers to browse. It also operates self-administration fuel stations at some of the areas in the U.S., Canada, Australia, Japan, Spain, and United Kingdom. Costco is known for conveying top quality national and local brands, with 100% satisfaction, at costs reliably beneath conventional discount or retail outlets (W. Shonk, D. Anders, B. Miller, 2016). In the core of their targets and strategy, Costco’s uniqueness is that they merchandise membership to their clients which produce the fixed income consistently as well as increment of the brand reliability and familiarity with the consumer towards Costco (Miles media, 2017).

One of the vital disadvantages of the Costco is that they simply have 4,000 choices of product. For the most part, different stores, for example, Wal-Mart loaded around 40,000 to 150,000 things for customers to look over and BJ’s have 7,300 things (Miles Media, 2017). Likewise, another serious issue of Costco methodology is they spend exceptionally less in the promotion and exclusively depend on the notoriety and verbal advertisement. Moreover, the significant contenders of the Costco that is Sam’s Club spent about dollar 50 million every year on publicizing and standard mail advancements. It might influence Costco’s future execution and contenders, for example, Sam’s Club may remove its market share of the overall industry because of the absence of limited time exercises (Miles Media, 2017).

The business plan of action depends on limited distribution centre evaluating which makes rivalry incredibly high. The main three noteworthy players in the American discount club industry, as per all profound sales are: Costco, Sam’s Club, and BJ’s Wholesale Club. Because of low net revenue and focused estimating, the intensity of contention is amazingly high.(W. Shonk, D. Anders, B. Miller, 2016). Costco’s business and competitive strategy has impressed the consumer worldwide. Costco has introduced the competitive strategy which involves the huge discount in the product if purchase in bulk size and the membership fee. Costco’s income is more from the membership fee rather than the product revenue. This means the product sold in the Costco wholesales may have some profit or also may have loss. It applies the annual membership fee of fifty-five dollars and every year members of the Costco wholesale are rapidly increasing. Of those, there are 94.3 million members of Costco worldwide in 2018 (Market Watch, 2019). Together both the strategies generate the consumer’s commitment toward Costco. In addition, Costco operates a different manufacturing department which supplies packed food, raw meat processing, jewelleries, etc. All of these competitive strategies is more focus on cost leadership and differentiation which means low cost product with high quality attributes. Despite of selling the low price item with minimal profit, Costco’s annual net sale is approximately 116.073 billion USD increasing (Market Watch, 2019). By this, Costco gains power to purchase the large quantity of goods, which is advantage to negotiate the prices from suppliers and create some profit in the goods. The focal point of Costco and the CEO is to beat all the vast chain stores by concentrating on the significant factor of selling more in amount however offering to a lesser degree a choice However, Costco’s main concepts is to produce more sales and make a dynamite end result.

In conclusion, it can be noted, that the strategy of member might be a drawback for Costco, simply opening doors for just individuals with membership implies shutting doors for every one of the individuals who even can’t bear to pay or not inclined to make a payment for membership fee annually. So all consumers should have the equal right to purchase goods from the store they like to. As Costco does not have many item decision (4000) contrasting with the contenders that can be a future difficulties for the Costco in light of the fact that client needs decision.

Reference list

1. Miles Media,2017, Costco case study and strategic analysis, http://milesonmedia.com/costco-case-study-and-strategic-analysis/ Retrieved on 01/05/2019
2. W. Shonk, D. Anders, B. Miller, 2016, Team1-Costco Wholesale cooperation case analysis, https://www.academia.edu/36420109/Team_1_-Costco_Wholesale_Corporation_Case_Analysis, Retrieved on 01/05/2019
3. The Statistics Portal, n.d., Costco-statistics and facts, https://www.statista.com/topics/4399/costco/, Retrieved on 01/05/019
4. Market Watch, 2019. Annual Financials for Costco Wholesale Corp., https://www.marketwatch.com/investing/stock/cost/financials., Retrieved on 02/05/2019

Essay about Starting a Business

Challenges faced when starting a business

Abstract

There are many challenges that an owner might face while starting a business depending on what a business might sell due to the current difficulties. Which is when taking proportions and answering every detail and being ready for any flaws that might occur and ruin the business. such as the pandemic and how businesses may tend to struggle with how they could operate and make a profit by selling their goods to their customers. They must also pay attention to their market and the competition that is selling against them and might lose them to customers such as sanitizers against wet wipe companies because of the pandemic crisis going on. Including keeping up with people’s trends and desires. Owners should be able to tell if their stock prices match the customer’s demand and or if they are going to be stable for the next month for the business to survive. They should also be prepared for what their consumers want most at their current moments and try to come up with ideas that would help them get safer.

Keywords;(stock, desire, demand, survive)

Challenges faced when starting a business

A business might face a lot of difficulties when starting such as knowing the exact proportion of demands that their customers want so they don’t overly supply and waste their money. Businesses should be able to handle a crisis when it comes their way and be able to handle their financial downfalls and rise up again. They should also be prepared for any type of recession that might happen without their knowledge. They should handle a crisis such as the pandemic that is going on right now . to figure out ways that they can profit while staying at home. Schools profit by using online teaching for their students to learn at a distance. overtime entrepreneurs learn to make better decisions and make their businesses succeed. An example of real-life risk is how many businesses got shut down because of a pandemic going on due to a sickness called Covid-19, Businesses struggled with how could they make a profit when people aren’t allowed to visit any shops, so it led to businesses creating an idea such as online shopping for people to order at a distance and be able to protect themselves, not only does the business reduce its risk of getting sick but they could also gain profit from customers. Such as the supermarket where people order online the necessary supplies that they want and they deliver them to their houses safely with limited risk of human contact and at a safe distance from getting ill. Another type of business that seems to be benefiting are salons such as “The salon I go to just announced it would create custom color kits for clients, providing everything they need to touch up, plus FaceTime support,” says Kristen Elworthy, Opening a business through this type of situation might be very hard cause they need to consider the fact of employment and how products are going to be supplied or produced. they need to think of ways such as making online for ordering and delivering to their customers safely and also hiring employees to live chat with the customer in case they needed help in their online ordering. They should be ready for problems that haven’t even happened yet they should keep a wide eye for what may happen in the future and be prepared .. Covid-19 has led to reducing business hours and which meant limiting their time in selling their products. For example, some countries place curfews for their citizens and try to protect them, while others reduce the employee’s shifts or working hours. The outbreak of the disease has led to a high rate of unemployment some jobs were useless if workers had to stay away from each other and their jobs could not have been handled at a distance. Some examples of jobs that have been shut down such as dentists, working staff, schools, and coffee shops. businesses should be ready to have a negative demand for their supply because when a crisis comes the last thing people might want is useless things that won’t help them stay safe or get through it example in a pandemic people won’t even think of going to malls just so they can buy clothes if they are going to stay indoors or going to the cinema for their entertainment. The pandemic of covid-19 the lack of resources has been increasing people are buying more than what they needed and are creating a shortage of food and raw materials for other people and their needs as to what they want. The lack of toilet paper in some countries such as America and Australia. the lack of food and raw materials for people is also becoming a problem because it would lead to starvation. Some businesses, in this case, are benefiting a lot such as hand sanitizer companies, medical supplies, and tissue companies because they keep their business working so they can supply more and more for their customers and yet profit a lot from it. People will also start funding medical institutions to try and develop a cure for solving the problem. Another type of world crisis that is going on is the increase in plastic in the environment which lead to people getting mad and stopping buying any products made out of plastics, which lead to a lot of companies losing profit but they came up with an idea such as making metal straws to reduce the pollution and stop killing turtles for their plastic. Making a funding business or campaign to volunteer and save the turtles from plastic where would benefit a lot because that’s what people want. An example is a business called “Eco-Maniac” which is located in the indigo icon tower. Their website gives more information as to what they do such as “Our mission is to provide you with eco-friendly alternatives to the single-use plastics that are littering our planet. Rethink, Refuse, Reduce, Reuse! We can help you with products designed to help you live a more sustainable, earth-friendly, ocean-friendly lifestyle!”. They try and spread awareness and help the environment stay safe. Also helping the habitat of animals. Businesses try to come up with ideas to benefit the world and at the same time profit from it.

References

1. https://www.ecomaniaccompany.com/wp/
2. https://www.nbcnews.com/better/lifestyle/11-ways-help-small-businesses-affected-coronavirus-right-now-ncna1178261

Potomac River Pollution Intervention in Washington, DC: Informative Essay

Imagine touring the DC monuments and being in awe of their beauty. Suddenly, you look and see the filthy and disgusting water of the Potomac River, ruining your beautiful image of Washington, DC. The Potomac River is not safe to swim in because of the pollution from overflowing sewage and runoff that occurs due to rain. This problem has an impact on the residents of Washington, DC, as well as tourists and students. Due to the pollution in the Potomac River, aquatic life has diminished and recreational enjoyment of the river hardly exists. The DC Water’s Blue Plains Advanced Wastewater Treatment Plan published a pamphlet that explains their work. DC Water uses ethos, pathos, and logos in its pamphlet to help inform and show its audience a solution to this problem through the creation of facilities that transform wastewater into clean water and energy.

DC Water’s plan is described as being one of a kind, purifying 384 million gallons of water a day and over one billion gallons a week at peak performance. This plant covers more than 725 square miles of the DMV area and treats all of the water in the District of Columbia. The plant is located in a great position at the bottom of Washington, DC, allowing for water headed towards Maryland and Virginia to be treated. The project regularly tests its water and always plans on conducting at least 100,000 tests a year. This constant filtering and testing of water make a large impact on the river in an attempt to clean it up.

Many of the pages in the pamphlet are based on scientific evidence, establishing credibility to their claims by using ethos. An example of this would be DC Water stressing the importance of removing nitrogen and other nutrients from the river because of the damage it causes to the water and local environment. It is critical that nitrogen is removed from the water, and DC Water states: “Nitrogen can act as a fertilizer in the Potomac River and the Chesapeake Bay, creating unruly grasses that deplete oxygen needed by marine life to live and thrive”. Clearly, this is a major problem that DC Water is addressing. This is scientific proof presented to the reader to help justify the need for the purification plant in the Potomac River.

The pamphlet uses logos on pages 4 and 5 when describing the process of purification in the water. DC Water provides the logical steps they use to purify their water and also gives justification as to why this needs to happen. The pamphlet also talks about the use of water and turning it into energy. DC Water can simplify the complicated process of what they are doing, and by doing so, they are able to logically show the reader what their plan is. This allows the reader to actually see what the facility is doing, as well as see environmental statistics related to the project, without having to do heavy reading. When the reader can see the facility and its complex parts, they can understand the project more easily and find it easier to support.

Pathos is used to make the reader feel the need for this work to continue. Community members will read this pamphlet and want the work to continue because of the benefits it offers the community. This water that is being purified also affects their health. DC Water explains: “Before sewers, disposal methods were even more primitive, contributing to epidemics of cholera and dysentery that caused a high death rate. Sewage conveyance and treatment, and the sanitation they brought to the district, were heralded for public health, quality of life, and economic benefits.” It is an understatement to say this treatment plant is important. This sewage water could be the reader’s drinking water, therefore growing an emotional connection to this project. Without DC Water, the reader might not be getting clean drinking water, which raises major health concerns. Therefore, the reader may feel obligated to support DC Water and their efforts.

The pamphlet’s target audience is local citizens, politicians, and financial backers. Citizens are concerned with their community and are always looking for ways to improve it. In this instance, citizens in the DMV area are concerned with the pollution and poor quality of water in the Potomac River. This pamphlet targets politicians in the hope of gaining support and making sure they are able to continue what they are doing in their community. If there was a problem with their project, there could be actions taken to prevent DC Water from doing what they are doing. Politicians can also provide government funding to their agency if they believe it is doing a good job. Through the pamphlet, DC Water can garner support and help grow its project through its different methods of appeal.

This pamphlet provides a great way to inform the community about a local solution to a serious problem. There is scientific and factual evidence, as well as a local emotional appeal to those who read it. The author is able to explain the importance of this project, and this project does a great job of trying to solve the problem of pollution in the Potomac River. This project showed me how powerful the use of pathos, logos, and ethos is. Through the use of those techniques, DC Water showed why their work is important, and how their project is making a great impact in the DMV area. It is important to call on the community and local legislators of Washington, DC to support DC Water and take the appropriate steps necessary to help end pollution in the Potomac River.