Zipcar Company: Strategic Plan

free essayThe international expansion enables the organization to develop its business and obtain new market opportunities. The differences and similarities between the domestic country of the business and the countries it wants to enter represent the circumstances that guide the strategy fulfillment of the company. Zipcar Company (Zipcar) is an internationally notable company willing to expand its operations worldwide. Therefore, it needs a properly designed strategic plan taking into account the national peculiarities of any market and allowing the company to adapt to them in the short term.

Countries to Enter

Zipcar is the U.S. – based country that provides auto rental services since 2000. The flexibility of the business is ensured by the self-service, hourly payments, and wide-spread network of automatized stations. Moreover, the membership in the company is granted by the benefits for the regular customers. As the auto may be rented and returned in different locations, including small and large cities, the company decided to enlarge its business and enter the international market. To perform it, Zipcar relies on the similarities between already captured markets in the United States, the United Kingdom, Canada, Austria, and Spain.

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The next countries to enter should be evaluated and selected correctly by taking into consideration national characteristics and market opportunities. Country evaluation should be carried out to find sufficient economic resources to pursue the potential benefits (Esswein, 2011). Therefore, Zipcar should determine the probable order of the countries to enter according to the obtained economic strengths and facilities. Moreover, it should allocate the resource potential throughout the countries and determine the expected geographical positions for rental services (Venkateswaran, 2012). Zipcar may scan or analyze the foreign markets in detail. The country choice should be based on the evaluation criteria. They include return issues (sales potential, compatibility, the easy performance of operations, and resource and costs availability) and risks (economic, political, competitive, and monetary), among others. These criteria are vitally important to determine correctly the places for expansion as most of them are unknown. They also help to identify the best market segments where Zipcar may do its foreign business, minimize the risks and threats, and satisfy more customers. It should be admitted that these criteria may be changed and developed depending on the business preferences and strategic goals. The conclusion of the international strategic plan is based on the findings of the evaluation. Consequently, the selected country may be the object of more cautious analysis along with the valid forecasting of the business compatibility in a certain country.
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The results of the evaluation of the countries for the following entry according to the weight of each factor for Zipcar are presented in Table 1.

Table 1

Evaluation of the country (Venkateswaran, 2012)

Criterion Weight Germany Brazil China
Market growth Important High Medium High
Potential demand Very important Medium potential due to measured number of population and relatively short distances Advanced potential due to large population and high demand for transportation Advanced potential taking into account population and demand for transportation
Innovative leadership Important Advanced Mediate Advanced
Compatibility with contextual market experience Mandatory Tight compatibility due to similarity to the countries in which Zipcar already operates No experience of entry No experience of entry
Emergence of risks Mandatory Economic and political risks Price risks due to the low level of domestic income Transportation and currency risks
Competition Very important Intensified Weak Intensified
Resource and costs availability Very important Mediate Mediate High

Evaluated countries are the most suitable for Zipcar’s entry. The main advantages of their selection are the high potential market growth of the company (Jeyarathmm, 2008). Selection of Germany is explained by its immediate geographical nearness to Spain and Austria. Therefore, it is much easier to capture the neighboring market rather than unknown. In addition, Germany is the developed European country providing flexible business support and demanding intensified transportation services. Selected Brazil and China are densely populated. Furthermore, these states have large territories and intensified tourism flows. Consequently, rental services for branded autos will be demanded.

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Nevertheless, the disadvantages of the selected countries are the losses and threats that the company may face when entering (Jeyarathmm, 2008). Operating in German market can be affected by political and economic risks connected with the events in international scope and relations between the United States and Europe. Moreover, profits of Zipcar will depend on the fluctuations of USD-EUR. Living conditions in Brazil will force the company to reduce slightly the price or provide the cheaper cars that will decrease the profits in this region. Nevertheless, Zipcar may supply its used cars from Austria, where the company acquires leading autos (Zipcar acquires leading car, 2012). Finally, China is a dynamic country with a low cost of domestic transportation services that may change the market growth of Zipcar in advance of the Chinese rental providers. Although these countries have advantages and disadvantages, they might be selected and considered as potential markets.

Entry Mode

According to the deep expansion of the U.S. market, especially in Sacramento, Zipcar may adopt particular modes of entry at international level (Zipcar expands in Sacramento, 2013). The specifics of each selected country are in their similar market size and differences in long-term performance.

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Application of the franchise in Brazil and Germany makes it possible to sell the company’s services in compliance with certain quality characteristics due to sales technology and developed scheme, which excludes theft and fraud (Jeyarathnam, 2011). Furthermore, the franchise will enable the company to facilitate the recognition of the trademark by consumers. In addition, business development in these countries will minimize the brand copying and allow to fulfill successfully the terms of the franchise, as a franchise system was developed and tested over the years in these countries.

Application and fulfillment of a greenfield venture are the most appropriate in China as this state is geographically distant from the domestic country of the business (Rajagopal, 2009). In addition, the entry to the Chinese market of rental services will be almost completely tied to the exploitation of locally developed resources. As the sharply developing country, China will easily accept the U.S. business though Zipcar should be aware of intensified competition and national legislation. The company will enter with the establishment of a subsidiary and the construction of new facilities. At least, it will enable the company to cut the costs.

Market expansion will allow Zipcar Company to develop its rental services and business performance in the developed and developing countries. Change of branded autos will facilitate the exchange of the cars between the countries and the allocation of economic resources between the representatives of Zipcar in different states. Various countries will bring the specificity into the car rental business though the basic schemes will remain the same as in the United States.

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Conclusion

To sum up, the international expansion provides numerous business opportunities for Zipcar Company. Its operation in the United States, the United Kingdom, Spain, Austria, and Canada will be supplemented by the entry of the business to Germany, Brazil, and China. These countries were evaluated and selected as the most appropriate and suitable for the company. Its entry to these countries will face both risks and benefits. Zipcar will use the franchise in Germany and Brazil and the greenfield venture in China. It will adapt the business to the peculiarities of these countries to succeed.