Robin Chase, Zipcar: An Inconvenient Discovery

Robin Chase, Zipcar: An Inconvenient Discovery

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Former Zipcar sire and  CEO Robin Chase who is a transparent, emotionally honest leader is having a problem in her business. Because the Zipcar have many problems like the other people have their own car, so they are satisfied with their car, so they don’t need Zipcar anymore, and car utilization was only 22%, much lower than the 40% she had estimated and in 24 hours she expects that they will use the in 9.6 hours, but it only went on 5.5 hours, she had made miscalculation with math. The math indicated that with 50% of revenue coming from daily rentals, a higher percentage than she had predicted, but the daily rate would have to go up 20%, Zipcar’s financial had been built fast but not flexible. Robin chase thinks that her brother Mark betray her.

Chase’s Strengths and Weaknesses as a Leader

Robin Chase thought that starting Zipcar would be an eminent idea. When her friend proposed about doing car-sharing business, Chase thought that it was a great idea since living in Massachusetts and having only three children, it made no sense maintaining and parking a car which was only being used once a month. She felt that this was the role of the car-sharing business, and as such, she ought to venture into this kind of business venture. The researchers felt that her idea is also exceptional. It could help those individuals who needed leap a benefit out of buying a car for personal reasons since owning it, would cost a lot of money when it is being put to use only once a month or for a short period of time. As much as the business generated profit for her, reducing the number of cars would, to a great extent, contribute to environment control by reducing air deterioration. This idea would also transform the highway-turned-parking lots back to their original form and use. Given the above facts, Robin Chase’s idea was amazing, but definitely, nothing could be achieved with such ease, and there exists a downside in the plan.

The eagerness to push her car-sharing business idea is what pushes her to launch the business despite his financial state. The fact that  Chase has no experience in the business industry makes the situation even more complicated for her. The problem in Zipcar has been doubled when she miscalculated all the expenses. The car utilization is only 22% lower than the 40% of what she had estimated. And the revenue per trip was about half of what she had predicted. She didn’t even notice what is happening to her company and is afraid to admit to her herself that something off is really happening.

Problem Statement

On Wellesley College, Chase majored Philosophy, English and French that have no relation to the business. Her first job role is a project administrator in JSI. During that time, she builds up an idea and decides that she wanted to go onto venture. By that time, Chase applied to MIT Sloan, but she was declined due to her low GMAT math results. She retook her GMAT,  improves her math score and did well enough hence qualified and was admitted for MIT Sloan. Robin Chase establishes her car-sharing business in the month of June 2000. Though she had some knowledge of business, she had no experience in starting and operating an enterprise. Months continue to progress, and on October 2000 her company constitutes of 430 members.

Jean Hammond, her classmate on MIT Sloan, was the first company investor with an initial investment of $50,000.  Jean believed in the idea and the whole concept behind it.

Jean got the idea came from her friend named Antje Danielson, who suggested that it is a good idea to venture a car-sharing business. On mid-October,  the impeccable business she had imagined had turned disfigured. She had estimated the car usage at 40% a value which was 22% way up than the actual one. The revenue collected per trip was about half of what she presumed. This meant that it was just an error in judgement. Additionally, based on one of the inspirational speech she had made, she said that she doesn’t have any ideas on cars and now she really admitted it. The main problem in the case study is that Robin Chase doesn’t have any knowledge or background, whether it is about the business world or the car-sharing idea she wished to pursue.

Statement of the Objective

The Company of Robin Chase is facing a crisis since she failed to prepare for this type of business venture adequately. Additionally, given the time frame that she had put on herself to launch this company and what she wanted to do for Zipcar, it was a challenge implementing the whole idea all at once. Chase ought to have prepared a cost-benefit analysis of the venture before implementing his strategy. This would have saved her the pain of losing her stakeholders, who had decided to invest in his idea. The company’s success relies on the honesty and transparency between Robin Chase, her employees and stakeholders regarding what the company’s facing. Honesty with her subordinates will ensure the growth and survival of her company at whatever crisis the company is facing today. To ensure the welfare of the company,  the researcher has prepared a solution for the problem, which is “To solve the internal and external problem of the company”.

Areas of consideration (SWOT analysis)

STRENGTHS

Price

Convenient Way of Transportation

Well-Educated Employees

WEAKNESSES

Financial Instability

Lack of Experience in the Business World

Some positions do not have suitable employees

OPPORTUNITIES

Oil Price Hike

Increase of Car Price

THREATS

Increase of Parking Fees

Competitors

Oil Price Hike

Strengths

Price – The price at which Zipcar offers its services as compared to other sharing companies is remarkably low. Zipcar offers an economical price for zealous affiliates. They offer $50 as annual membership fee, the $0.40 cost of per-mile and the $7/$4.50 per-hour usage rates are inexpensive, and that’s what attract the initial members of the Zipcar.

Convenient means of Transportation for Members – Zipcar is the first car-sharing company in the US that has adopted a systematic and multi-city business administration model. The system allows carpooling for members who need a lift; they can easily find a car that can wait and adjust its travel routine based on their requirements. It is accessible and members don’t need to go negotiate in a front office.

Well-Educated manpower – Robin Chase, the founder of Zipcar, chose employees that are educated and smart enough to help her for the welfare of the business.

Weaknesses

Financial Instability – There are several people who argue that the plan of Robin Chase was could not succeed that resulted in fewer investors in her business plan.

Lack of Evaluated understanding of The Business World – Chase majored Philosophy, English and French. Her first job in JSI, as a project administrator did not expose her to much of the business world. During this time she decided to go on business school for her to be able to have a business background, on the other hand, even she had knowledge on business, and she didn’t have any experiences on running a business.

Semi-Skilled manpower – Before Chase launches her car venture, she hired people whose standards do not meet the requirements of the vacant positions and hence the needs of the company were not met. At one of the instances in Oakley, Chase hired a consultant who was a  former nursing assistant.

Opportunities

Hike in Car Prices – If the manufacturers of the car increase their price, that’s the time where civilians consider car-sharing rather than buying a car so they will save money.

Increase in the price of Oil – It will be an opportunity for the company if the fuel cost will raise because civilians will consider the car-sharing venture more rather than using their car or buying new cars. Zipcar has its fixed amount for the fuels and other needs that lessens the expenditures of customers.

Threats

Competitors – The vicious competition between other car-rental companies like Hertz and Avis, which are more successful than the Zipcar is totally a threat for them for they already made a name in the car-rental industry.

Oil-Price Hike – Increase of fuel may be an advantage and opportunities for the company, but on the other hand, it can also be a disadvantage for it may cause problems and reduce the profit margins of Zipcar.

Increase of Parking Fees – the parking fee affects the Zipcar because they are required to pay for it whenever they are waiting for some customers.

Assumptions as to the Acting CEO

As the CEO, there are given three alternative courses of action that will completely resolve the challenges: (a) Solving the internal and external glitches in the company is the first move; (b) Secondly, the company needs to find prospective investors that can be a source of debt capital; and (c) Close down the company to prevent more or less damage to the business.

Analysis of the Alternative Course of Action

Solve the company’s internal and external problems.

The internal factor that I would need to solve first is the company’s employees. Robin Chase hired a lot of employees that are not fit or suitable for the job in the company. She needed to hire an employee with an experience/ knowledge in-line with the position he/she is going to do. It is because if a company hires an employee whose experience or knowledge in their work is questionable, then the profits realized from their input is valueless and the company should not waste their resources on such employees. Underperformance by employees is also another challenge that may result from such a scenario. The solution, therefore, is hiring an employee whose experience and knowledge matches his job description. At the same time, having an employee who is flexible and can adjust really well is vital for the growth of the business.

The external factor that I will need to solve is the company’s relationship with the customers. Due to the proliferation of the Internet, I will email the customers or even talk to them personally, to tell the truth, that I made a pricing miscalculation making the company’s daily rate too low and that I have to raise the price for at least 25 per cent. This will allow the company to regain from the crisis that resulted from the miscalculation. To maintain the relationship with the employees, communicating with them about the challenges that we underwent would probably ease the situation and continue to serve our customers. In order to reach profitability, we have to increase the rates.

Find potential investors.

My thought is that it would be a great idea for Robin Chase to prevent further loss is to find an investor who is willing to help us with our challenges within the firm. We cannot ignore the fact that the company would get an investor who would take interest to help us if as the CEO, I would present a good proposal and convince the investor that I could regain the loss if they would invest.

Close down the company

The easy way to solve the problem within the company in order to prevent more loss and damage to the business is to close down the company. But I will have to pay the company’s debts first to avoid further conflict. In that way, resource utilization would be our main objective.

Conclusion

Zipcar has the potential to get to world-class standard by delivering a service that meets the demand for convenient short-term transportation of an untapped market Communication. Given the positive outlook provided in the 5-year financial plan, successful operation data and consumer acquisition from the month of September, and a high level of expertise in the industry will provide investors with the confidence needed to fund Zipcar’s venture.

References

Chan, N. (2016). Learn How Robin Chase Built The Car Sharing Company Zipcar – FP113. Retrieved 3 February 2020, from https://foundrmag.com/robin-chase-zipcar/

Duhaime-Ross, A. (2014). Driven: how Zipcar’s founders built and lost a car-sharing empire. Retrieved 3 February 2020, from https://www.theverge.com/2014/4/1/5553910/driven-how-zipcars-founders-built-and-lost-a-car-sharing-empire