The internationalization of Italian Firms towards SMCs. A cultural
Internationalization of New Ventures: Car-sharing firms
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1 Master Thesis Internationalization of New Ventures: Car-sharing firms Author: Christos Giannakos Student number: 10826823 Primary Supervisor: Rene Bohnsack Date of submission: 29/01/2016 (Final) Study program: Master of Business Administration Track: International Management Faculty: Faculty of Economics and Business Words: 15.801
Transcript of Internationalization of New Ventures: Car-sharing firms
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Master Thesis
Internationalization of New Ventures:
Car-sharing firms
Author: Christos Giannakos
Student number: 10826823
Primary Supervisor: Rene Bohnsack
Date of submission: 29/01/2016 (Final)
Study program: Master of Business Administration
Track: International Management
Faculty: Faculty of Economics and Business
Words: 15.801
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Table of Contents Figure 1 A Hierarchical Model of choice of Entry Modes ................................................19
Figure 2 Research design ..................................................................................................31
Figure 3 Car2Go ................................................................................................................35
Figure 4 Zipcar ...................................................................................................................50
List of tables
Table 1 Types of business models .....................................................................................16
Table 2 Business model building blocks ...........................................................................17
Table 3 Car2Go ..................................................................................................................38
Table 4 Business model Car2Go Madrid ...........................................................................44
Table 5 Business model Car2Go New York .......................................................................47
Table 6 Zipcar ....................................................................................................................53
Table 7 Business model Zipcar Madrid .............................................................................58
Table 8 Business model Zipcar New York .........................................................................62
Table 9 Car2Go interaction ................................................................................................65
Table 10 Zipcar interaction ................................................................................................67
Contents 1. Inroduction .....................................................................................................................8
2. Literature review
2.1 New Ventures ...........................................................................................................11
2.2 Internationalization ..................................................................................................13
2.3 Business models and entry modes ............................................................................15
2.4 Environment and restrictions ...................................................................................19
2.5 Automotive industry and Car-sharing ......................................................................20
2.6 Car-sharing’s impact ................................................................................................24
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3. Methodology .....................................................................................................................
3.1 Research Questions ..................................................................................................27
3.2 Research Design .......................................................................................................28
3.3 Sampling ...................................................................................................................29
3.4 Data collection ..........................................................................................................31
3.5 Data analysis ............................................................................................................32
4. Findings .............................................................................................................................
4.1 Car2Go case .............................................................................................................33
4.1.1. General data ......................................................................................................33
4.1.2. Car2Go in action...............................................................................................34
4.1.3. Business model .................................................................................................35
4.1.4. Internationalization behavior ............................................................................37
4.1.5. Expansion strategy............................................................................................39
4.1.6. Car2Go Madrid .................................................................................................41
4.1.6.1. Business model ......................................................................................41
4.1.6.2. Customer segments ................................................................................42
4.1.6.3. Monetization ..........................................................................................42
4.1.6.4. Value chain- linkages ............................................................................43
4.1.7. Car2Go New York ............................................................................................45
4.1.7.1. Business model ......................................................................................45
4.1.7.2. Customer segments ................................................................................45
4.1.7.3. Monetization ..........................................................................................46
4.1.7.4. Value chain- linkages ............................................................................46
4.2 Zipcar case ................................................................................................................47
4.2.1. General data ......................................................................................................47
4.2.2. Zipcar in action .................................................................................................49
4.2.3. Business model .................................................................................................50
4.2.4. Internationalization behavior ............................................................................51
4.2.5. Expansion strategy............................................................................................53
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4.2.6. Zipcar Madrid ...................................................................................................55
4.2.6.1. Business model ......................................................................................55
4.2.6.2. Customer segments ................................................................................56
4.2.6.3. Monetization ..........................................................................................56
4.2.6.4. Value chain- linkages ............................................................................57
4.2.7. Zipcar New York ..............................................................................................58
4.2.7.1. Business model ......................................................................................58
4.2.7.2. Customer segments ................................................................................60
4.2.7.3. Monetization ..........................................................................................60
4.2.7.4. Value chain- linkages ............................................................................61
5. Discussion and Implications ........................................................................................63
5.1 Discussion ................................................................................................................63
5.2 Further research proposal ........................................................................................68
6. Conclusion ....................................................................................................................69
7. Limitations ....................................................................................................................70
8. Reference ......................................................................................................................71
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This document is written by student Christos Giannakos who declares to take full
responsibility for the contents of this document.
I declare that the text and the work presented in this document is original and that no
sources other than those mentioned in the text and its references have been used in
creating it. The Faculty of Economics and Business is responsible solely for the
supervision of completion of the work, not for the contents
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Abstract
Car-sharing service has influenced the mobility sector and has changed the concept of
urban mobility. Car-sharing companies offer an alternative mode of transportation more
economical and friendly to environment. The purpose of this research is to investigate the
internationalization of these firms and how the business model changes in different
countries. Findings showed that the interactions have not main effect on the business
model but in some secondary parts of it like the pricing and the customer segments. In
addition, the cases revealed that equity mode are ideal and preferred entry strategy by the
prevalent car-sharing firms, Zipcar and Car2Go.
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Ackowledgement
In these acknowledgments I would like to give thanks to some people who supported me
and contributed to my effort to pursue a Master degree in Business Administration.
My greatest regards go to my supervisor, Rene Bohnsack, who was always available to
talk with me and consult me sharing his ideas and his comments. I believe that he is the
ideal supervisor and even if he left University of Amsterdam he still cares about my
progress and gives me the right directions on my thesis.
Of course I cannot forget my family who believed and still believes in me and supports
all my decisions and dreams. They were who contributed to pursue and finish my master
degree and I know that without them I could not fulfil many of my dreams. So here is a
big “THANKS” to my father, my mother, my sister, my grandmother and grandfather but
also to all my friends for their support.
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1. Introduction
Today more than ever the evolution of information and technology has changed
the world. The way we live has changed; where we live has changed; and the toolkit at
hand has changed (Robin Chase , 2015). Alternative ways of living, more profitable and
friendly to the environment have been developed. “Sharing economy” firms have
emerged in different industries offering collaborative consumption in under-utilized
inventory. In this wave of changes, the mobility sector was not uninvolved.
The car industry has been affected by the “sharing economy” leading to different
business models of transportation. Car-sharing (Zipcar,Car2Go), personal cars driven by
the owners as taxis (Uber, Lyft) and sharing long distance trips in personal cars with the
owner who is going there as well (BlaBlaCar) are some examples of these business
models (Robin Chase, 2015).
Shared trip is considered to be the solution for big distance travel in the cost of a
subway ride leading to the defeat of prevalent means of transport like taxis, buses and
personal cars. Car-sharing comes at a time when car use per capita is falling after nearly
80 years of growth. David Metz, author of Peak Car: the Future of Travel says “the
number of journeys by cars in most developed countries is declining, creating
opportunities for car-sharing”. The world is experiencing a shift away from cars in
successful cities. This creates opportunities for car-sharing, particularly for people who
don't need a car all the time.
The increased congestion in big cities and metropolitan areas is the incentive for
the expansion of car-sharing and ride sharing. Thus car-sharing keeps out private cars
which are the dominant means of transport and the main factor for traffic problems (John
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Reed, 2011).
Car-sharing companies give the options to the residents to hire a vehicle on the
street and move away for a matter of hours or minutes. It addresses to people who don’t
need a car all the time, to use it when they need it. This kind of freedom and flexibility
gives an advantage to this service compared to public transport and leads to the further
and easier expansion of it.
The expansion of car-sharing service has become increasingly important for
automotive manufacturers and for this reason they equip their cars with technology such
as internet connectivity and GPS that can be used by car-sharing companies (Henry Foy,
2013).Car-sharing firms, whether small or big, have tailored this service to each country
so as to internationalize.
The dissertation aims to evaluate the effectiveness of the fundamental concepts of
New Ventures (NV) in conjunction with the institutional environment. From inception,
International New Venture seeks competitive advantage by use of resources and the sale
of outputs in multiple countries (Oviatt & McDougall 1994). It is an in depth analysis of
New Ventures 's market penetration and the barriers or restrictions facing in the host
country .The research is likely to centre on successful New Ventures operating in
automotive industry and especially in car-sharing with a potential vision of expansion
abroad.
Few researchers have empirically examined the link between New Ventures’
performance and the internationalization of New Ventures (McDougall, M.Oviatt 1996).
This study aims initially to review the role on New Ventures in the global market, how
they perform and which strategies they follow. Successful internationalization appears to
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require changes in the venture’s strategy (McDougall & M.Oviatt, 1996).Exogenous
technological and social changes have tended to internationalize competition in many
industries and industry’s internationalization increases the pressure on all firms to move
into foreign markets (Ohmae 1990, Porter 1990). Automotive industry and especially car-
sharing is a rapidly growing sector and it will be the focus of this study. Which strategies
and business models are ideal regarding the market penetration in foreign countries?
Foreign market risk is the central inhibit factor affecting the internationalization process
of organizations, according to traditional management theories of internationalization.
Tacit knowledge about foreign markets relieves the concern (Uppsala theory) but the
institutional restrictions are also an important factor which affects market penetration.
The exploration of these issues will reveal insights important for the Internationalization
of car-sharing industry and will contribute to a contemporary research for the
development of car-sharing expansion strategy. Going a step further this study will try to
identify imitations for the research and proposing opportunities for further academic
research.
The aim of this research will be to emphasize on the core concepts and strategies
of New Ventures accompanied by the institutional environment concept and restrictions
in the host country and how it affects the expansion strategy.
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2. Literature review: New ventures, Internationalization, Business Models
and entry modes, Institutional environment , Automotive industry and car-
sharing, Cars-haring impacts
2.1 New ventures
In the last years more and more New Ventures (NV) appear on the market
place. It is a complex issue and it has been a subject of interest and abundant research.
There is not one definition upon all academics in the field agree when it comes to New
Ventures but everyone agrees that it is a relatively young company. The diversity of the
definitions (Brush, 1995; Gartner, 1985; McDougall et al., 2003) is due to the fact that
there are many relevant aspects to be considered while studying New Ventures. This
variety of definitions doesn't mean that contradict each other but that address the topic
from different perspectives.
Brush (1995) states that New Ventures are companies that are six years old or
younger. Gartner (1985) states that the creation of the New Ventures is influenced by four
factors: the environment, the individuals, the process and the organization itself. He
defines them as an independent entity that competes in the marketplace, which could be
at national and international level. McDougall et al. (2003) pay more attention to the
market in which a New Venture may operate domestic or international markets. They
define domestic New Ventures as those “that operate entirely in the home or local market;
that is, they have no international revenues” (McDougall et al., 2003, p.60).The latter is
addressed as “a business organization that from inception seeks to derive significant
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competitive advantages from the use of resources and the sale of output in multiple
countries” (Oviatt & McDougall, 1994, p.49).
Oviatt & McDougall (1994) distinguish New Ventures in 4 different types to
facilitate the study of internationalization of NV. Based on the coordination of value
chain activities (few versus many) and the number of countries involved (few versus
many), the International New Ventures (INV) is distinguished in the following types
(Oviatt & McDougall, 1994):
Export/import start-ups
Multinational trader
Geographically focused start-ups
Global start-ups
The creation of the International New Ventures varies and this is critical point for
which we cannot define the exact starting time of its existence. International New
Ventures actions are their operations and their ability to develop ways to create value
beyond their competitors. Opportunities are the same for all the firms but it is the
organizational structure and the capability of the founder to perceive and develop
opportunities that provide the International New Ventures with a valuable competitive
advantage. The firm's specific advantage (FSA) is the key point for a firm to build
competitive advantage and competes its rivals (Oviatt and McDougall, 1994). New
ventures’ performance is influenced by multiple factors (Barringer et. al, 2004). Location,
physical resources, technical know-how, institutional environment, market information,
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processes and strategies, are some important factors that can affect the performance of
new ventures (e.g. Nicholls-Nixon et al., 2000; Song Et al., 2010; Vesper, 1990).
These elements are crucial and the founder needs to know them in order to
combine his personal characteristics with those of the specific context where the
International New Ventures operates. The entrepreneur plays a fundamental role on the
firm’s performance since his decisions influence the performance of the New Ventures.
He is the one who will spot, recognize and exploit the opportunities in the environment to
provide a competitive advantage to the New Ventures.
The entrepreneurs’ past experience in general, especially in an international
business environment, is critical benefit for the successful operation of the New Venture.
In particular when a domestic New Venture has an international vision then the
experience in international market is fundamental for the future expansion. This happens
because this allows them to make decisions easily taking into account a wide range of
factors before they decide.
According to McDougall et al. (2003) experimentation is important for
entrepreneurs in order to discover the winning business model and market recipe in each
country. Changes in the strategies and in the business plans will lead to the ideal business
model and entry mode which will be profitable in the specific country.
2.2 Internationalization
Several models of early firm internationalization have appeared (eg. Bilkey &
Tesar, 1997; Reid, 1981;Czinkota, 1982) describing the adoption of exporting by small
and medium sized firms through a number of stages from “uninterested” to “committed
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involvement” in exporting. OECD consider internationalization as “seeking to compete
beyond national borders’ (OECD, 1998) as well as Chryssochoidis et al. (1997) define it
as a process of entering and developing operations in a foreign country. The general and
most popular description of internationalization is the Uppsala model (Johanson &
Vahlne 1977, 1990). It portrays internationalization as an incremental process that
depends on the firm’s experience knowledge of foreign markets. The high uncertainty of
internationalization causes firms to begin the process with the foreign country
“psychically” closest to them with only small commitments of resources. The Uppsala
model (Johanson & Vahlne, 1977) suggest that firms tend to expand in nearby
geographic countries that have similar Country Specific Advantages (CSAs).They exploit
their Firm Specific Advantages (FSAs) to overcome the problem of Liability of
Foreignness in the foreign markets (Hymer,1960; Zaheer,1995).. The Liability of
Foreignness can be defined as the impact of different forms of distance (cultural,
economic, institutional and geographic) and that explains the difficulties firms have in
operating abroad. As the foreign experience and the understanding of foreign markets
increases, firms are willing to make more investments in foreign countries dissimilar to
their home. Markets are more internationally integrated since the developments in
communication and transportation makes them cheaper, faster and better facilitating the
internationalization. These changes have contributed to increasingly global demand in
many markets forcing firms to adopt an international perspective (Ohmae
1990,;UNCTAD 1993).
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2.3 Business models and entry modes
The internationalization requires a strategic vision, new ways of defining the
value proposition and delivering it to the customers through the development of
business models (Christensen and Rosenbloom 1995; Chesbrough and Rosenbloom 2002;
Chesbrough 2004). By business models we define “a business as such as well as the
general way in which firms create and capture value” (Bohnsack et al., 2014 p.285).
The business model concept attracts the attention of the scholars (Hargadon and
Douglas 2001; Morris et al. 2005; Zott and Amit 2007) as an approach which drives the
strategic design in new entrepreneurial ventures and becomes an important issue for the
firms. It can be described as a model of how a firm does business that must be given to
uncover the relevant design dimensions and elements. However there is not a generally
accepted definition of what a business model is and the term is developing according to
the phenomena of interest of each researcher separately ( Zott, Amit and Massa, 2011).
From the beginning of this decade scholars have focused on coherent definitions
and on identifying building blocks of the business models. Many scholars such as Hamel
(2000), Osterwalder (2004), Yip (2004) and Baden & Fuller (2013) and practitioners like
Linder & Cantrell (2011), Chesbrough (2003.2006) and Mitchell & Coles (2004a,b) have
proposed various definitions and frameworks for the business models. Business model
usually is mistakenly confused with the strategy. As Shafer et al. (2005) noted “ a
business model is not a strategy”. Strategy and business model are a part of the final
business decision process. Osterwalder and Pigneur (2002) define the business model as
“the conceptual and architectural implementation of a business strategy”.
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In the International New Venture literature (Di Gregorio et al. 2008; Oviatt and
McDougall 1994b), domestic and international market opportunities results in four types
of business models: domestic-based, import-based, export-based and semi-global (Table
1)
Semi-global is the business model frequently used for expansion since this model
entails the characteristics of both the import and export-based business model. It
generates competitive advantage from international sales and sourcing activities and
knowledge ( Rask 2014).
The various definitions for business model results in the existence of many
business model components but the most reappearing are the value proposition,
processes/activities/value chain, value network (partners/alliances) ( Onetti et al., 2012).
These components are also visible in the Business model by Baden-Fuller (2013). Their
model consist of four elements: indentifying the customers, customer engagement,
monetization and value chain and linkages. These dimensions relate the business model
and they will be addressed in the thesis to describe the existing of the latter. The
subcategories created to answer the main question of each dimension give us the chance
to use a meaningful map of possibilities in order to identify and analyze the companies
and their business models. Table 2 shows the business model framework by Baden-Fuller
Table 1 Types of business models
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(2013) that is chosen on the basis of previous discussed business model concepts.
Besides the business models, entry modes are also critical for the successful
expansion of a New Venture. Which is the right entry mode that will facilitate the specific
business model? An entry mode is defined as an institutional setup with the purpose of
facilitating the transfer of goods and services from one market context to the marketing
channel of another ( Root, 1987; Andersen, 2005).Studies have shown that the choice of
entry modes depends on different types of factors like firm-specific factors ( Erramilli &
Rao, 1993; Kim and Hwang, 1992;Kumar and Subramaniam, 1997; Madhok, 1997),
industry-specific and country specific factors ( Amderson & Gatignon, 1986; Kogut &
Singh, 1988; Tse, Pan & Au, 1997).
In this study we will use the hierarchical perspective of Kumar and Subramaniam
Business Model Blocks
Description
Indentifying the customers
Who is the firm’s targeted user and customer groups? -Simple Business Model (BM)
-Two sided Business Model (BM)
Customer engagement
What is the value proposition for the customers? -Taxi system -Bus system
Monetization
When and how is money raised? -Complementary assets
-Value pricing -Simple pricing
Value chain-linkages
How does the firm deliver its product/service to the customer?
-Integrated -Hierarchy -Networked
Table 2 Business model building blocks
Baden-Fuller
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(1997), the Hierarhical Model of Choice of Entry Modes which categorizes the modes as
equity-based and non-equity based. In addition these two main categories are composed
of subcategories, wholly owned operations and equity joint ventures (EJVs) the first and
contractual agreements and export the latter. This model helps the manager to decide
about the entry strategy since it is assumed that they consider all modes of entry together
at the same level and point of time and that all the factors have the same level of
relevance for all modes of entry ( Kumar & Subramaniam, 1997). So this model
facilitates the process decision taking into account that managers consider only a few
critical factors at each level of the hierarchy and different factors at different level of
hierarchy. Both equity and non-equity are connected to investment risk and return,
location choice, adaptation to local environment and management, control of operation
and other characteristics.
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2.4 Environment and restrictions
Oviatt & McDougall (1994) state it is necessary to be in an environment that aids
nurtures and sustains entrepreneurships. Both government and private sector should
contribute to the creation of such environment. Here they are expected to do this by
implementing legal, bureaucratic and regulatory frameworks. All these factors can be
generalized under the term of institutions. According to North (1990) institution is the
constraints on behaviour imposed by the state or societal norms that shape economic
interactions. The existence of New Ventures is the combination's outcome of
entrepreneurs’ capabilities and environment suitability for them.
Figure 1
A Hierarchical Model of choice of Entry Modes
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New companies when they expand abroad face many difficulties until they
establish themselves in the new country.
International New Ventures usually experience three types of liability:
Newness and inexperience (credibility and viability issues)
Size (ability to withstand the challenges of internalization)
Foreignness of New Ventures (overcome entry barriers, builds links to customers
and suppliers and gain acceptance of potential customers.)
Countries pose many constraints in the institutional environment when foreign
businesses penetrate the local market :
Law, rules and regulation matter because they affect the transactional trust, the
degree of trust that parties to a business transaction place in each other.
Government is a determinant factor because it establishes and enforces the rules,
regulations and property rights.
Countries can be characterized as entrepreneurial or less entrepreneurial depending on
the state’s influence. It affects laws and regulation system in a great extent and thus it
affects the entrepreneurship in each country.
2.5 Automotive industry and Car-sharing
In our research we will focus on New Ventures in automotive industry and
especially in car-sharing, a sector which gains much attention the last years. Car-sharing
constitutes an eco-efficient service of transportation friendly to the environment which
targets in reducing the environment impact of consumption. Eco-efficiency can be
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defined as the extent to which a certain consumption technology is able to produce the
desired units of service at low environment cost (Meijkamp, R.,1998).
Car-sharing means simply that one car is shared by several people. It is a service
for those who want to use cars but they don’t want to own them outright. There have been
used many different definitions for car-sharing (Millard-Ball, 2005; Loose et al., 2006)
such as “Car-sharing is a service offering direct access for its members to a fleet of cars
distributed throughout an urban area, which is less costly than owing a car and more
flexible than conventional car rental” (Sioui, L., Morency, C., & Trépanier, M.,2013),
“Car-sharing or short-term auto use provides a flexible alternative that meets diverse
transportation needs across the globe while reducing the negative impacts of private
vehicle ownership, such as congestion, inefficient land use, energy consumption and
emissions (Shaheen, S. A., & Cohen, A. P.,2007) but the most precise is the following: “A
distinct business process wherein car-sharing operators typically provide their members
with short-term vehicles access from a network of unstaffed and distributed
neighbourhood locations”.
The basic idea of car-sharing is that the consumers want to have a temporary
access to goods and services and pay for them rather than to buy or own things.
Ownership is not the ultimate expression of consumer desire (Chen 2009; Marx 2011). It
is actually an access-based consumption model similar to these models of sharing public
goods or services such as borrowing books from public library or using public transports
(Belk 2010; Botsman and Rogers 2010; Gansky 2010; Giesler 2006). In our case the
consumer acquires consumption time with the car and pays a proportionate price without
any transfer of ownership taking place ( Durgee and O’ Connor, 1995).
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Car-sharing originated in Switzerland and in 2006 there were almost 348.000 car-
sharing members worldwide sharing nearly 11.700 vehicles ( Shaheen and Cohen 2007).
Its growth started in the late 80s but the pace in each country was not homogeneous. In
Europe appeared between the 40s and 80s but the concept didn’t become popularized
until the early 90s.It gets more and more attention and this can explain why large
organizations as Zipcar, Greenwheels, Cambio Car and CityCarClub have expanded to
multinational operators (Shaheen, S. A., & Cohen, A. P.,2007).
In particular car-sharing is a new mode of urban transportation in which the
customers have a short-term access to fleet of shared vehicles, enjoying the benefits of
private vehicle and at the same time avoid the burdens of vehicle ownership
(Shaheen,1999; Shaheen, S. A., & Cohen, A. P.,2007). Thus, customers have a relative
low cost and flexible transportation alternative ( Zhou B. & Kockelman K. M. , 2011). In
that way car-sharing will increase individual mobility while reducing personal vehicle
travel and ownership leading to a more sustainable mobility behaviour (Burkhardt &
Millard-Ball, 2006; Martin et al., 2010; Nobis, 2006).
In car-sharing industry three main business models can be identified: traditional,
one-way and peer-to-peer ( leVine, 2012):
Traditional car-sharing: An organization (firm) owns a fleet of cars
which it rents out on a short-term basis. The fleet is scattered over multiple
neighbourhoods and stationed at dedicated parking places assigned by the
municipality. Users have to return the car where it was picked up, and are
charged both for kilometres and for the time the car is not at its parking
space.
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One-way: In this model the cars do not have to be put back at the parking
space where they were picked up as in traditional car-sharing. Although it
is more user-friendly and potentially much cheaper than traditional car-
sharing, a potential problem is that cars are stationed in places where there
is low demand (Weikl & Bogensberger, 2013).
Peer-to-peer: The sharing of privately owned cars. The car-sharing
company has an intermediating role providing the platform with the
location, availability and price of each car. Their revenue comes from
charging a percentage of the rental fee (leVine, 2012). There is a variety of
car models compared to the other car-sharing models due to the fact that
everybody shares its own car. It can occur manually via a personal key
swap between renter and owner or automatically via apps and a device
installed in the car.
Car-sharing is an alternative sustainable mode of transportation which can reduce
the negative impact of the exorbitant use of private cars. This mode of transportation is
dependent on the flexibility the car can provide and fills a gap left by other modes, such
as public transit, the personal car and the taxi (Britton and World Carshare
Associates1999; Jemelin and Louvet 2007;Millard-Ball et al. 2005).It is not widespread
and people have poor understanding of it and of its merits as it is a new concept of car
use ( ECO_MO Foundation 2006; Yamamoto et al. 2006). Knowledge is power and it is
important for the car-sharing expansion to increase public knowledge about the nature of
this service.
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2.6 Car-sharing’s impacts
Among the types of transportation related to cars such as car rental services,
vehicle leasing or taxi services, car-sharing is believed to have multiple advantages for
both the society and individuals (Shaheen & Cohen, 2013a).Specifically, these
advantages can be categorized as transportation, environmental, land use or social effects
( Shaheen, S. A., Schwartz, A., & Wipyewski, K.,2004; Katzev, R.,2003; Shaheen, S. A.,
Meyn, M., & Wipyewski, K.,2003). Recent studies reveal a reduction in privately owned
cars (Rydén, C., & Morin, E.,2005) and the tendency to sell the personal vehicle after
joining the car-sharing program (Rydén, C., & Morin, E.,2005; Muheim, P.,1996; Baum,
H., & Pesch, S.,1994).
People who are part of a car-sharing organization can reduce their costs for car
purchase, parking lot fees and operation costs. The service supplier has to take care of all
the operational costs such as maintenance, taxes and insurance and in this way people are
able to use a private car at a lower cost than having on their possession their own car
(Ohta, H., Fujii, S., Nishimura, Y., & Kozuka, M.,2013;Shaheen & Cohen,2013a).
Additionally, log-term and short-term rental are available, on a regular or occasional use
basis, and reservations are hour-based, which makes car-sharing more flexible than
conventional car rental (Shaheen & Cohen,2013a; Sioui, L., Morency, C., & Trépanier,
M.,2013).
The variety of the cars and the opportunity for the customer to choose the car he
wants is also an asset which creates a competitive advantage among the other modes of
transportation. It creates a good environmental image and it is one of the more
innovative components of sustainable transportation schemes (Steininger, Vogl & Zettl
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1996; Goldman & Gorham 2006). Studies conducted in Europe indicate a large reduction
in vehicle kilometres travelled (VKT)( Rydén, C., & Morin, E.,2005).The reduction in
vehicle ownership and VKT results in the lower greenhouse gas (GHG) emissions and air
pollution and mitigating the congestion (Rydén, C., & Morin, E.,2005) (ECO-MO
foundation 2006). Many car-sharing organizations include low emission vehicles, such as
gasoline, electric hybrid cars, in their fleets (Shaheen, S. A., Meyn, M., & Wipyewski,
K.,2003;Cooper, G., Howe, D. A., & Mye, P.,2000).
Furthermore car-sharing has beneficial social impacts. Households can gain or
maintain vehicle access without bearing the full cost of a car ownership (Shaheen, S. A.,
Meyn, M., & Wipyewski, K.,2003; Litman, T.,2000).Different market segments like low-
income households and student can be benefited from participating in car-sharing
(Shaheen, S. A., Schwartz, A., & Wipyewski, K.,2004).In general car-sharing is a flexible
alternative mode of transportation which enhances a more sustainable and environmental
friendly lifestyle.
Despite the factors that facilitate car-sharing there are some others that limit its
expansion. This service requires planning and reservation beforehand and in case that
there is not access or availability of the car at the user’s residential area then he might be
discouraged to use this service. Additionally the lifetime of these cars is shorter than the
private ones because they are used more often resulting a frequent replacement. This can
be characterized as advantage and disadvantage at the same time since the replacement is
costly but new and more environmentally efficient models are available to the people
(Meijkamp and Theunissen,1997a). The development of a dense network of lots for car-
sharing cars users, such as on-street and transit-based parking is an important issue
26
(Millard-Ball, A., Murray, G., & ter Schure, J.,2006; Brook, D.,2004 January). This
shortage of parking slots combined to the cost for operate them make it hard for car-
sharing to develop in a rapid pace. Also the lack of legal definitions and restrictions for
car-sharing has created challenges for legal shared-vehicle parking especially in
European countries (eg.Italy).Thus supportive parking policies are a key opportunity for
car-sharing in these countries (Shaheen, S. A., & Cohen, A. P. (2007).
Another important factor is the fuel and engine technologies of the cars that car-
sharing offers. In most countries car-sharing fleets are composed of primarily
conventional gasoline vehicles. Alternative and more sustainable fuel vehicles are more
expensive and cannot be integrated into car-sharing’s fleets. Hybrid vehicles are costly
and other fuel vehicles (Electric Vehicles) bring operational barriers such as limited
vehicle range, fewer fuelling station and member inexperience (Shaheen, S. A., & Cohen,
A. P. (2007).
Vehicle insurance is an expensive operational cost and an important issue that
needs to be solved. Finding insurance and especially one that secures young driver, lower
income drivers, older or international drivers requires a quick and effective solution
(Shaheen, S. A., Cohen, A. P., & Roberts, J. D., 2006).
Last but not least is the role of technology in car-sharing. Automated technologies
vary from country to country so it cannot be the same progress in every country. For
example in developing countries, the lack of reliable phone or internet service will
discourage the potential customers to use these kinds of utilities even if the companies
provide them.
27
3. Methodology
This chapter outlines the research design of this study and is subdivided into 5
parts that describe in depth the building blocks of the research. The first part interpret the
research questions and the purpose of the study followed by the chapter two in which a
more detailed description of the research strategy will take place. The next parts, three
and four and five analyze the process of choosing the sample of this study, the criteria
taking into account and the analysis of the data.
3.1Research questions
The purpose of this research is to examine the internationalization of New
Ventures in the car-sharing industry with regard to business models and the countries of
internationalization. This dissertation aims to enhance the literature review as it concerns
the car-sharing industry and its operation in domestic and foreign markets. From car-
sharing firms’ perspective, the objective is to evaluate the different business models and
draw the pros and cons of each one in the expansion strategy of car-sharing firms.
From this the main research question of this study is: Which strategies and business
models in car-sharing industry are ideal regarding the market penetration in foreign
countries?
In attempting to answer the main research question described above, the
following sub-questions arise:
- Which of the existing business models applied in car-sharing are the most
successful?
28
- What is the best business model that a car-sharing company will use to
internationalize and which entry strategy will follow?
- What are the barriers and restrictions a New Venture will face to the new
country and which policies and regulations support car-sharing services?
In our study we will try to answer these questions but we will go a step further
and examine the relationship business model and the right expansion strategy that can
lead the car-sharing’s New Ventures to the success.
3.2 Research design
The literature review reveals that there is scope for further investigation in the
internationalization of car-sharing and the parameters which influence the successful
expansion. The selected literature was based on recent articles and cited articles in the
fields of new ventures, car-sharing and business models, internationalization and
restrictions.
In order to conduct the specific academic research qualitative methodological
approach was used. Qualitative research tries to understand and to interpret phenomena
and to make sense of the latter (Denzin & Lincoln, 2000). The research question can be
better answered with this methodology since the purpose of the study is to comprehend
the phenomenon of car-sharing’s internationalization and to develop further observations
to the existing knowledge of this industry based on empirical evidence in the case study
approach (Yin, 2003).
The methodology design of this dissertation can be imprinted as multi-staged
29
framework inspired by the approach of Loane, Bell & McNaughton (2006). In this
dissertation the specific framework consists of four stages starting with the literature
review on internationalization and car-sharing. The next phase constituted the data
collection from secondary data sources, such as articles and firms’ websites, and the
selection of an adequate sample. In order to verify the collected data and possible missing
data an e-mail was sent to the companies so as verify the existing data and also collect
primary data. The last two steps analyses the data gathered and make conclusion and
recommendations.
3.3 Sampling
In the previous chapter reference was made to internationalization and car-sharing
industry. The business models are the unit of analysis for the penetration of car-sharing
firms in new markets and the main criterion for the data analysis of this paper.
At the first stage of the data collection an extensive research was made in the
automotive industry. Specifically all the firms in this industry are potential sample cases
but the dissertation aims to shared transportation and 26 car-sharing firms were collected.
Subsequently a research for secondary data was conducted through LexisNexis database.
Financial Times and Automotive News were the two sources of the data collected for
each car-sharing firm from 1995 until 2015. After that, a database of 13 companies was
conducted since there weren’t articles for the others 13.Information for these 13
companies was gathered from several sources such as articles, company websites and
internet search engines. Based on the data in the next stage 2 companies were chosen for
in depth analysis.
30
The final selection of the companies was made according the adequacy of
information for an extensive analysis of the business models and the internationalization
behaviour of the companies. To be more precise, the chosen companies fulfil the criteria
mentioned below:
Being a car-sharing firm and not just a part of automotive industry
Clear and identifiable business model
Big and popular firm with a vision for further expansion to new markets
Adequate information in English via internet database and articles about
the firms
To sum up, in the first stage 26 companies were considered and secondary data
was gathered ending in a sample of 13 car-sharing firms. The sample of these 13 firms
was divided into groups based on the adequacy of information. So group 1 is composed
of the firms with adequate sources (2 firms) and group 2 with inadequate sources (11
firms) Thus, the final sample to be analyzed is group 1, 2 firms with different business
models and different internationalization behaviour.
31
Figure 1 Research Design
3.4 Data collection
The primary idea of the data collection is the available information from
secondary data and especially from newspapers and companies’ websites. An analysis of
them will provide information concerning the business model on each company, the
internationalization behaviour. Both cases will be divided into seven sections. The first
section will outline the general data about the company such as year of foundation,
performance. The second and third sections explain the operation procedure and the
Business model and
internationalization behaviour
Conclusion
Internationalization of
NEW VENTURES
Car-sharing and Business
models
Pre-screening (26 firms)
Sample according to criteria
fulfilment (26 firms)
Secondary data collection (13
cases)
Insufficient secondary data
(11firms)
Sufficient secondary data (2
firms)
Final sample
Theory
Research stage1
Research stage2
Research stage3
Overall Analysis
32
business model respectively. The next two sections interpret the overall
internationalization behaviour of each company and its expansion strategy. Finally, the
last two will be an in depth analysis of the company in two different cities.
As a last step a verification of the validity of information was conducted. A letter
was sent to each company to read and check the gathered data and support the research
by the possible missing data.
3.5 Data Analysis
In the analysis section, an in depth analysis will be conducted to each case
independently and then a comparison to the different business models and penetration
strategies among them. For this reason 2 cities were chosen, New York and Madrid,in
which both companies operate. Based on research design by Loane et al. (figure 1) a
selection rate of 50% was observed.
Due to the lack of time and especially of information only two firms could be
analyzed, different in business model. The two cases are Car2Go and Zipcar. The
documents of these 2 cases were gathered and imported in NVivo 10.2 software program
for qualitative analysis. For each city, codes were used for the business model of the
companies based on the building blocks derived from Baden-Fuller’s business model
framework. After the round of coding additional information was gathered from the
citations of the coded documents in order to have a more explicit and complete final
results.
Finally, qualitative data has to be appraised and interpreted carefully since a
possible new emerging pattern can change all the previous analysis and subsequently the
33
results.
4. Findings
This section will outline the characteristics of the 2 car-sharing companies and
examine the different business models and the internationalization behaviour of them.
The analysis shows that car-sharing firms are relatively new. Only one firm is launched
before 2000, GreenWheels (1995).Except for GreenWheels, Zipcar out of 25 firms is the
oldest one with starting date 2000 and Car2Go follows in 2008.
The chapter is subdivided into 2 parts for the 2 different companies.
4.1 Case Car2Go
4.1.1 General data
Daimler automotive corporation started its Car2Go operation in the German city
of Ulm, in 2008, and nowadays is active in 25 European and North American cities.
About 500,000 customers enjoy the limited mobility around every corner.
The basic idea of Car2Go is to use cars intelligently instead of owning them.
People can use public transport for their daily commute without the concern of searching
for parking spaces. Car2Go comes to fill the gap between public and private transport.
People who don’t own a car but they need a car to do their jobs now can rely on car2go:
they are always available and offer maximum mobility without fixed locations. The
operating concept is simple, you can find a car open it via the car2go app in wherever
place you are. You drive to your destination, you park it and that is. You move around and
save money at the same time without harming the environment.
Its flexible prices make car2go the best way to share a car. It is a new model of
34
transportation which offers freedom to each user making the mobile life easier, more
beautiful and environmental friendly. The EcoShore guarantees and measures the
environmental impact of your driving style which proves how important is the ecological
awareness for Car2Go. It evaluates three factors: accelerating, steady driving and
coasting. These factors are measured in a scale from 0 to 100 to estimate how green the
driving style of each customer is. Thus with the careful, forward-looking driving leads to
less fuel consumption and causes fewer emissions.
(https://www.car2go.com/en/austin/company/)
4.1.2 Car2Go in action
In order to use Car2Go service you need to:
1) Click on "Become a member" and fill in your information
2) Bring your driver's license and social security card to your nearest shop
3) Download our car2go app
4) Jump in and drive and enjoy your freedom with car2go
(https://www.car2go.com/en/wien/company/)
After the successful registration and download the only thing you need to do is to
confirm the general terms and conditions of each country. This step is required once for
each country. Then the procedure is the same in all countries, use the car at short notice
(up to 48 hours single rental agreement) and without reservation if you wish. The
company offers exclusively Smart Fortwo vehicles in two types, gasoline powered and
electric powered. Their size, the agility and the easy parking space make them ideal for
the city. It is easy to check the availability of car2go by using the app, or online via
35
Google maps or directly on the streets. Then the only thing you can do is to reserve the
car2go via internet up to 30 minutes before driving or via the app which can help you to
find the nearest available Car2go and rent in on the spot or reserve it in advance.
4.1.3 Business model
Car2Go - which is backed by car manufacturer Daimler and rental group
Europcar – introduced its free-floating car-sharing system. The service breaks with the
normal car club model by allowing members to make one-way journeys and leave club
cars in any residential parking space (Michael Kavanagh, 2013). Registered users pick up
an available Smart, use it for as long as needed, and return it to designated locations in
the city. Specifically, the user don’t need to return the vehicle to the location from which
Figure 3 Car2Go
36
it was obtained but the vehicle must be parked in an approved spot when the user is done
with it( Vince Bond Jr., 2015)
This business model differentiates from the typical companies which offer urban
drivers short-term rental programs, which users can reserve a car and pick it up from a
specific spot and then to return it back to the parking spot. It is a service similar to taxi
since the user can pick up a car in one spot and drop it off near his destination. The
parking flexibility of this business model is an advantage compared to other business
models and plays an important role for the expansion of this type of car-sharing firms.
Its two-seater cars are chargeable per minute but can be left anywhere in a legal
parking space within designated areas of a city, such as Islington in London (Henry Foy,
2013).
According to Mr. Schmidt, head of marketing for Mercedes-Benz in Stuttgart, the
service is simple: “You just drive from A to B where there is a parking space, the system
calculates how long and how far, and your bank account will be debited” (Diana T.
Kurylko, 2010).
Car2go provides a new way of free-floating car-sharing service, particularly in
these three areas:
By the minute: Members pay only for the time they use the car, by the
minute with no time restriction, with discounted rates for hourly and daily use.
On demand: Members can use the first available car2go they find via the
Smartphone app, the car2go vehicle finder at car2go.com or the customer call center,
or by simply locating an available car2go on the street.
37
Free floating: Members can pick up and drop off any car2go anywhere
within the car2go Home Area - in any legal on-street parking space. Members do not
need to drive the car back to its original location or commit to a predetermined amount
of time.
(Portland, Ore., July 2012).It’s Electric: First 100 Days of car2go Service in Portland -
Brings in 6,000 Members and 30 New Emissions-Free Cars)
In general the main characteristics of the one-way business model are the followings:
Book up to 30 minutes ahead
Return to any parking space in designated area
Two-seater Smart cars
Charge per minute or per hour or per day
(Henry Foy, 2013)
4.1.4 Internationalization Behaviour
Car2Go started its operation in the German city of Ulm in 2008. Seven years
later it has expanded in more than 25 cities in two continents, Europe and USA. Daimler
launched Car2go in a joint venture with the rental company Europcar Autovermietung
GmbH (Diana T. Kurylko (2010)).
First, Car2go expanded to Austin, Texas in 2009, then this year to Hamburg -
where Daimler works with rental agency Europcar - and Vancouver (John Reed, 2011).
“More than 80,000 rentals have taken place this year,” said Nicholas Cole, CEO of
Car2go N.A., based in Austin. Car rental gains more importance and this is obvious by
statements of automakers: while Daimler described Car2go's initial steps in Ulm as a
38
pilot, it now claims to have 20,000 users registered, in a city with a population of
170,000. "Obviously, we have a first-mover advantage," says Mr Heinrich, car2go’s
founder and chief executive.
Subsequently a table with the cities of penetration and the start date is presented below:
Country Start date
Netherlands(Amsterdam) 2011
U.S(Austin) 2010
Germany(Berlin) 2012
Canada(Toronto) 2012
U.S(Minneapolis) 2013
U.S(Columbus) 2013
Germany(Hamburg) 2011
Italy(Florence) 2014
Germany(Frankfurt) 2014
Germany(Dusseldorf) 2011
Germany(Cologne) 2012
U.S(Washington) 2012
Italy(Milan) 2013
U.S(Denver) 2013
Canada(Montreal) 2013
Germany(Munich) 2013
U.S(New York City) 2014
U.S(Seattle) 2012
Germany(Ulm) 2008
Italy(Rome) 2014
U.S(San Diego) 2011
U.S(Arlington) 2015
Sweden(Stockholm) 2014
Germany(Stuttgart) 2012
Italy(Turin) 2015
Canada(Calgary) 2012
Canada(Vancouver) 2011
U.S(Portland) 2012
Besides those cities Car2go tried to penetrate in other cities too but with no success.
Mercedes-Benz maker launched its Car2go scheme in the UK in 2012, starting in London
before tending the scheme to Birmingham. But soon Daimler abandoned its project
Table 3 Car2Go
39
having troubles in capturing the interest of consumers and coordinating a fluid network of
cars and parking spaces. An important issue to be solved is how to distribute the cars
evenly across the city. For instance, London’s bicycle sharing scheme uses a fleet of
Lorries to ensure an even spread of bikes and spaces. The Frost & Sullivan consultancy
has said that there could be 800,000 car club members by the end of the decade in
London compared with about 170,000 members today. The one-way model is expected to
account for almost half of car-sharing trips in London by 2020, from about 15 percent
today (Andy Sharman (2014)).
Car2Go is a fast emerging firm in the car-sharing industry. It is not at the same
height as Zipcar which is the leader of car-sharing firms but it expands in a rapid pace.
4.1.5Expansion Strategy
Strategy plays an important role in the effective implementation of the services
and expansion for Car2Go. Europcar and Car2go focus to provide a simplified,
innovative, price worthy and flexible services to the customers. It is the first one which
introduced the innovative one-way concept and this differentiates it among its rivals
(Andreas Grosse Halbuer, Statesman , September 2010). Daimler first tested the program
in Ulm, Germany with Mercedes-Benz employees and opened the program to city
residents afterwards. (Diana T. Kurylko, 2009). This car-sharing pilot program took place
in Austin, the first city in which Car2Go was expanded, and since then the expansion
strategy was based on it. It takes place in the host countries to create dedicated street
spots for shared cars from companies like Zipcar and to identify the chances of success of
this business model (Gabe Nelson, 2015)
40
Car2Go’s free floating system is far from the traditional system and this makes its
firm’s specific advantages unique (FSAs). Simultaneously these FSAs in combination
with the pilot program generate competitive advantage and consequently first mover
advantage (FMA) in the host countries which is beneficiary for the profitability and
operation of the firm. While Daimler described car2go's initial steps in Ulm as a pilot, it
now claims to have 20,000 users registered, in a city with a population of 170,000.
"Obviously, we have a first-mover advantage," says Mr Heinrich, car2go’s founder and
chief executive (John Reed, 2011).
Middle and upper middle class of people are the target group of Car2Go (Andreas
Grosse Halbuer, Statesman , September 2010).Specifically, Car2Go CEO Nicholas Cole
said. "One of the greatest lessons that we've had is that Car2Go is for everyone. ... We
have to market to all types of people within our operating area." (Nora Naughton, 2014)
.Daimler has expanded Car2Go in partnership with other companies such as the joint
venture with the rental company Europcar Autovermietung GmbH in Hamburg, Germany
(Diana T. Kurylko (2010)).Equity joint venture is a safe entry mode because the risk
exposure is not so high as in an wholly owned subsidiaries and at the same time reduces
the distance between home and host countries. The liabilities are shared to both Car2Go
and its partner and therefore the risk of the success of the test program is shared
respectively.
The general expansion of Car2Go primarily has focused to areas where the
public transportation is difficult to reach like Brooklyn. Thomas McNeil car2go Brooklyn
General Manager says “With more than 2,000 members already residing in these
neighbourhoods — all of which can be difficult to reach via public transportation — it
41
was a logical step to expand.” (Brooklyn Daily Eagle, April 2015). Also Nicholas Cole,
the Austin-based president and CEO of Car2Go North America claims that “Reaching
10,000 members so rapidly in Austin is just the beginning of Car2Go's success in North
America. In 2011, we will continue to expand to other North American cities where there
is a demand for innovative and forward-thinking transportation solutions.”
4.1.6.Car2Go Madrid
4.1.6.1 Business model
Car2go strengthens its position in Europe by expanding in Madrid in 2015. This
model of urban mobility was a private initiative of Car2Go, the subsidiary of carmaker
Daimler, with the authorization of the City of Madrid
(http://www.elmundo.es/madrid/2015/11/11/56432cd746163fa0438b45a9.html ).
The new model of Car2Go operates one-way point-to-point rentals which allow to
its members to rent electric cars without fixed station for collection and return at the
price of 0.19 euro/min. Thus after the use of the vehicle, it can be left at any place in blue
or green central zone of the capital without paying extra for parking or having to put it
back at the initial parking space (one- way model).In this model you can book the vehicle
as long as desired but only one vehicle every two hours so as the concept of free fleet is
available to the whole community of Car2Go (https://www.car2go.com/es/madrid/faq/ ).
The service works via the Car2Go mobile application, the website or accessing directly to
the first free Car2Go vehicle.
The fleet operates two-passenger vehicles, Smart Fortwo, and Madrid is the first
city in which 100% of cars will be electric
42
(http://www.elmundo.es/madrid/2015/09/10/55f09de8268e3ee7128b45b0.html).
"With our electric car-sharing offer the locals a new and easy way to supplement
their mobility options and improve the transport network in the city, fully sustainable
way," says Thomas Beerman, CEO of car2go Europe.
(http://www.nuevatribuna.es/articulo/consumo/madrid-contara-mayores-flotas-car-
sharing-electricas-mundo/20150926130701120569.html).Furthermore this service
coincide with the beliefs of Manuela Carmena,,major of Madrid, who claims that “ideas
to try to reduce the level of pollution in the city is necessary”
(http://www.elmundo.es/madrid/2015/09/09/55ef4783268e3e68508b459e.html)
4.1.6.2 Customer segments
Car2Go in Madrid addresses its service to everyone needs a mode of
transportation in the city. It is ideal for individuals and companies who wish to pursue
any route within a defined area in the city of about 85 squares km
(http://www.nuevatribuna.es/articulo/consumo/madrid-contara-mayores-flotas-car-
sharing-electricas-mundo/20150926130701120569.html ).
4.1.6.3 Monetization
Car2Go in Madrid is relatively new, November 2015, and thus the rates are still
not set. In general the pricing system is transparent to minute payment without minimum
usage time.
The rates will be similar to those of other European capitals. For example in
Rome users pay 0.29 euro per minute without a minimum of time-, 14.9 euro per hour
43
and 59 euro per day up to 50Km per rental. If someone exceeds the 50Km limit then he
has an additional charge of 0.29€ per km.
(http://www.elmundo.es/madrid/2015/09/10/55f09de8268e3ee7128b45b0.html).
In addition, from 2016 there will be a one time charge of 19 euro as an
administration fee of registration
(http://www.elmundo.es/madrid/2015/11/11/56432cd746163fa0438b45a9.html). Rental,
charging, insurance, parking (in authorized areas) and maintenance are included in the
rates.
4.1.6.4 Value chain-linkages
As it was mentioned above (4.1.6.1) Car2Go in Madrid is a 100% private
initiative of the company. But the realization of the innovative system of electric cars
could not be done without the collaboration with Madrid City Council and with the
municipal government in general. In addition, Car2Go had to organize its service under
the provision of the Department of Mobility and Environment and adapt to current
regulations. (http://www.nuevatribuna.es/articulo/consumo/madrid-contara-mayores-
flotas-car-sharing-electricas-mundo/20150926130701120569.html )
Overall the institutional environment in Madrid was favourable for Car2Go since
the policy of Madrid’s major was to insist on promoting the use of public transport
(http://www.revolvy.com/main/index.php?s=Car2Go ).
The following table 4 gives an overview of the different choices of Car2Go business
model in Madrid as discussed above.
44
As it was mentioned above (4.1.6.1) Car2Go in Madrid is a 100% private
initiative of the company. But the realization of the innovative system of electric cars
could not be done without the collaboration with Madrid City Council and with the
municipal government in general. In addition, Car2Go had to organize its service under
the provision of the Department of Mobility and Environment and adapt to current
regulations. (http://www.nuevatribuna.es/articulo/consumo/madrid-contara-mayores-
flotas-car-sharing-electricas-mundo/20150926130701120569.html )
Overall the institutional environment in Madrid was favourable for Car2Go since
the policy of Madrid’s major was to insist on promoting the use of public transport
(http://www.revolvy.com/main/index.php?s=Car2Go ).
The following table 4 gives an overview of the different choices of Car2Go business
model in Madrid as discussed above.
Business Model Blocks
Description
Indentifying the
customers
Individuals and professionals
-Simple Business Model (users pay for the service per minute, per
hour or per day)
Customer engagement
Flexible, economical and sustainable short trips in the city
convenient for parking.
-Bus system ( “one-service-fits-all” car service)
Monetization
Priced according to usage time
-Value pricing (subscription package fee. Pay the value created
per minute, hour or day)
Value chain-linkages
Car2Go app, Car2Go website
-Networked
Table 4 Business model Car2Go Madrid
45
4.1.7.Car2Go New York
4.1.7.1 Business model
Car2Go entered New York City in 2014 as a wholly owned subsidiary of Daimler.
Moving in the city and its suburbs without car is difficult and the public transport is either
slow or expensive. Thus Car2go comes to fill the gap in the transportation network with
the small vehicles which can be located, reserved and opened with a mobile app leaving
the car anywhere in the city (one-way model)
(http://www.crainsnewyork.com/article/20150810/TRANSPORTATION/308099998/car2
go-could-redefine-the-way-new-yorkers-get-around-town ).
This new model is a novelty in car-sharing in USA since all the other car-sharing
companies offer the traditional, round-trip model. Moreover, this type of model is more
flexible than the traditional one a critical issue has been raised, the parking space. In
many North American and European cities the company pays for the right to park on the
streets or to specific metered parking spots but New York does not issue parking permit
or metered parking zones. Free parking is one of the main competitive advantages of the
firm but New York impedes the development of it. “In New York, parking is going to be
different than in other cities but we would come to an agreement that would make sense
for us and the city” Katie Stafford, a Car2Go spokeswoman, claimed.
4.1.7.2 Customer segments
Car2Go in New York addresses its service to everyone needs a mode of
transportation in the city. It is ideal for individuals and professionals who need a quick
transportation during the day. Due to the simplicity of the concept of the service Car2go
46
promotes itself to families too. Families or big companies in general, with many members
who do not fit in a car can grab a Car2Go and move around the city facilitating their
transportation.
4.1.7.3 Monetization
Car2Go has developed a single pattern of pricing throughout the USA. Thus the
rates in New York are the same to the other cities of operation in the USA. In particular,
users have to pay one time sign up fee of $35 and afterward he will be charged $0.41per
minute, $14.99 per hour and $84.99 per day up to 150 miles.
If someone exceeds the limit of 150 miles then there will be an additional charge of
45cents per mile (https://www.car2go.com/en/newyorkcity/what-does-car2go-cost/)
4.1.7.4 Value chain-linkages
Car2Go started its expansion in USA after the success of its pilot program in
Austin. The institutional environment in USA and especially in New York city is
favourable to car-sharing firms since Zipcar operation started earlier than 2014.
Partnerships with other firms or government have not been established with the exception
of the parking issue. Due to the legislation and the fact that New York doe not issue
parking permit the need for a partnership was necessary. Hence Car2Go started
negotiations with a private company for parking spaces near LaGuardia and JFK . The
negotiations also started with the municipalities on expanding the parking options to
include metered spaces
(http://www.crainsnewyork.com/article/20150810/TRANSPORTATION/308099998/car2
47
go-could-redefine-the-way-new-yorkers-get-around-town ).
The overall operation of Car2Go can be supported by private companies and
government for the supplementary activities of the service. But still it is unclear for
Daimler why make sense a partnership for automaker company with car-sharing services
4.2 Zipcar “Wheels When You Want Them”
4.2.1 General Data
Antje Danielson and Robin Chase founded Zipcar Company in Cambridge,
Massachusetts in 2000. About 900,000 customers enjoy this service throughout the
United States, Canada, the United Kingdom, Spain, France, Austria and Turkey, making
Zipcar one of the world's leading car rental networks (Zipcar reports fourth quarter and
full year 2012 results, 2013).
It is not just about fewer cars, less congestion and less pollution but it is about
Business Model Blocks
Description
Indentifying the
customers
Individuals, professionals , families
-Simple Business Model (users pay for the service per minute, per
hour or per day)
Customer engagement
Flexible, economical and sustainable short trips in the city
convenient for parking
-Bus system ( “one-service-fits-all” car service)
Monetization
Priced according to usage time
-Value pricing (subscription package fee. Pay the value created
per minute, hour or day)
Value chain-linkages
Car2Go app, Car2Go website
-Networked
Table 5 Business model Car2Go New York
48
understanding why those things are a problem and finding sustainable solutions
(http://www.zipcar.com/about ) .That’s why Zipcar has become the leader for cars on
demand- it took the simple concept of car-sharing to new heights. Its basic idea is to
redefine the way people think about transportation. It tries to enable a simple and
responsible urban living. Zipcar allows its members to have a 24/7 access to thousands of
cars around the world. You can find a car via the zipcar app or online, reserve it and drive
to your destination. But in this operation concept you need to park it at the same parking
spot where it was obtained.
The company focused on three main customers:
Individuals- young people who don’t own a car but they need one
occasionally and families who sometimes need a second car.
Companies- there are more than 10.000 organizations using its facilities
and services for business programs.
Universities- there are more than 140 colleges using its campus car-
sharing services in U.S. (Essays, UK., November 2013)
Zipcar offers different kinds of membership and different charges, depending on
the membership, making it more accessible to the residents of each neighbourhood. Its
target is to be an integral part of vibrant communities of well-informed, connected people
who enjoy urban life and transportation options (http://www.zipcar.com). They will use
on-demand mobility which provides a timesaving service that frees up space in big cities
and saves the consumers’ money. Zipcar tries to meliorate car-sharing; make it easier,
faster and better, and is committed to its core values:
Obsess about the member experience
49
Be the best we can be
Deliver results Keep it simple
Have an impact
These values ensure that all the members of Zipcar team are working together to give
regular people the freedom to live life.
4.2.2 Zipcar in action
In order to use Zipcar service you need to:
1. Click on "Join Zipcar" and fill in your information
2. Review the driving record before you are approved to drive.
3. Receive the Zipcard in the mail or pick it up at a local Zipcar office.
4. Download our Zipcar app
5. Unlock the car with the Zipcard and start driving
( http://www.zipcar.com/ )
After the successful registration the only thing you can do is to wait three to seven
days for the Zipcard in order to be an active member in Zipcar. Thereafter the procedure
is the same in all countries, reserve a car for as little as one hour or as much as 7 days and
return it to the home location. The only restriction to the reservation is that you can drive
up to 180 miles during the course of reservation otherwise you will be charged for each
additional mile. The company offers a variety of cars, small vehicles or cargo vans and
BMW cars for special occasions. Using the website or the mobile app it is easy to find
and reserve the car of your preference.
50
4.2.3 Business model
Zipcar – a subsidiary company of Avis Budget Group – first introduced the
traditional car-sharing system.
Registered members have by-the-hour access to cars parked in their neighbourhoods
when they need them (Robert Wright,2013).
They reserve a car and pick it up form a dedicated place, they drive it as little as one hour
or as much as seven days at a time and they have to return the vehicle to the home
parking spot. It addresses to a significant group of people who don’t use a car very often
but they do want access to a car sometimes. It is the normal car club model in which the
members can make round trip journeys and leave the club cars in the dedicated parking
space it was picked up (Robin Chase, 2015). The company has more than 30 makes and
models, from Volkswagen Golf to vans, offering different fleets from city to city (Nora
Naughton, 2014).Robin Chase, founder of Zipcar, at her speech at TED conference
claimed that “'Green' choices need to work better and cost less than the status quo way of
Figure 4 Zipcar
51
doing things. People don't buy 'green.' They buy convenience, or service, or status, or
cost-savings, or an experience."(Robin Chase, Founder & Former CEO of ZipCar, On
Leadership and Innovation, March 2012). Zipcar tries to combine the characteristics
mentioned by Chase to its service so as to be favorable for both the environment and the
people. “Instead of investing in a car, we invest in a community” she states (Excuse me,
may I rent your car?, July 2012)
In general the main characteristics of traditional car business model are the followings:
Users can book months in advance
Car must return to designed space
Choice of different vehicles
(Henry Foy, 2013)
4.2.4 Internationalization Behaviour
Zipcar was founded in Cambridge, Massachusetts in 2000 by Antje Daniels and
Robin Chase. In 2013 Avis Budget Group purchased Zipcar and from then it operates as
a subsidiary of Avis Budget Group. Mr Norman says Zipcar’s “distinct and discreet”
headquarters two miles from Avis’ seat of power symbolises the parent company’s desire
for its subsidiary to retain a sense of independence (Henry Foy ,2013;Car-sharing zips
into a new era; Financial Times (London, England):12). In 15 years of operation the
company has more than 900.00 members and offers nearly 10.000 around the world.
Operating in seven countries; USA, Canada, United Kingdom, Spain, France, Austria and
Turkey; (Zipcar reports fourth quarter and full year 2012 results (2013)).
"People in urban areas are getting rid of their cars, but we're not anti-car as a
52
society," IHS Automotive analyst Phil Gott said. "It's good to drive when there is room to
drive - there's nowhere to park in the city. Congestion is the big problem here." (Nora
Naughton, 2014).Thus, Zipcar has focused on metropolitan cities and university
campuses, densely populated areas with high parking costs and strong public
transportation systems. (“Zipcar Inc Prospectus”, 2011)
First, Zipcar expanded to Washington, DC in 2001 and in New York City in
2002.Three years later, in 2005 Zipcar hit the roads in San Francisco and moves to
Toronto, Canada in 2006. In this year, 2006, Zipcar moves to Europe and opens an office
in London. Next year, 2007, it reinforces its position in both in Canada and in the USA
by opening a new office in Vancouver and merging with Flexcar. Flexcar brought with it
close to 60.000 new members in new markets in West Coast such as Seattle, Portland,
Atlanta, Philadelphia, and Pittsburgh (Gates, D. (2007, October 30). Seattle's Flexcar
merges with rival Zipcar. Seattle Times).Finally in 2008 the merged Zipcar/Flexcar tries
to expand in the Southern California with no success. But Zipcar doesn't stop its
expansion strategy. In 2009 decided to penetrate to an another European country, in
Spain, by first acquiring a minority interest in Avancar , an on-demand car rental
company in Barcelona, and then by integrating with it in
2012(http://www.zipcar.com/press/releases/madrid).In 2010 Zipcar strengthens its
position in Uk by acquiring London-based car-sharing club Streetcar. Next year is the
year of big expansion for Zipcar. First it expands in Houston, TX region and then in
Greater Toronto and Hamilton in Ontario, Canada making a partnership with Metrolinx,
an agency of the Government of Ontario to improve the coordination and integration of
all modes of transportation
53
(http://www.metrolinx.com/en/aboutus/about_us_index.aspx).It also continues its
expansion in Europe in the capitals of France and Spain respectively. Last but not least in
2015 play goes to Dallas, TX in the USA and in Istanbul, Turkey.
Country Start date
U.S 2001
Canada 2014
Austria 2012
France 2014
Spain 2011
U.K 2006
Turkey 2015
4.2.5 Expansion Strategy
Expansion has been the main tool for driving business for Zipcar. Main
competitive advantage for Zipcar is its proprietary and efficient technology platform like
3G, GPRS, GPS and RFID. The platform allows for a host of integrated activities such as
“member sign-up, online and wireless reservations, keyless vehicles, fleet management
and member management” (“Zipcar Inc Prospectus”, 2011). Furthermore, Zipcar can use
its first mover advantage (FMA) to its rival, since it gained brand recognition and a 50%
market share in the car industry(Team, T. (2011, August 09)). The benefits from FMA,
established network, proprietary technology platform and superior knowledge are critical
to continue to expand in new market and to achieve high profitability.
The expansion to new or existing markets has created the constant need of
purchasing large quantities of vehicle. By moving to new markets Zipcar tries to maintain
its FMA and to raise the entry barriers to the latecomers. There is no government
regulation or restriction to prevent anyone from entering into car-sharing industry and
Table 6 Zipcar
54
this makes the firms to responsible for creating barriers to market entry (Essays, UK.
(November 2013)).
In this way it will expand its brand recognition and it will prevent large car rental
companies to enter the car share industry. The target market that Zipcar focus is
metropolitan hubs and university campuses. Zipcar uses as an expansion strategy mergers
& acquisitions in large metropolitan areas with similar characteristics as large U.S cities.
Flexcar, Avancar and Streetcar are some examples of its expansion strategy in critical
areas for the further international behaviour of Zipcar. Avancar and Streetcar were the
precursor for Zipcar in Europe. Merger & acquisition is the most effective method of
international growth since it reduces the distance between home and host country and
especially between two different continents, USA and Europe. It reduces the incoNew
Venturesenience and costs for implementing management and infrastructure in an area
where Zipcar has little cultural, legal or business expertise (“Zipcar Inc Prospectus”,
2011).
Zipcar’s American expansion in 2011 focused mainly on entering universities
and college campuses. It recognizes the 18-34 years old as the most important target
group, the “millennials” as it called, who influences both the popularity and the
expansion of the car-sharing market and constitute more than half of Zipcar’s
membership base (Zipcar’s College Campus Strategy Taps Its Target Market, March
23rd, 2012 by Trefis Team (http://www.trefis.com/stock/zip/articles/109583/zipcars-
college-campus-strategy-taps-its-target-market/2012-03-23 ). Students are more likely to
look for alternative ways of transportation to reduce their cost compared to personal car
ownership than any other demographic group.
55
4.2.6 Zipcar Madrid
4.2.6.1Business model
Spain is the second country in which Zipcar expands in Europe widening its
global network and membership. It started its services first in Barcelona in 2009 by
financing and then acquiring Avancar in 2012. After two years Avancar as a subsidiary of
Zipcar begun its operation in Madrid to offer a flexible, economical and sustainable
model of urban mobility.
The model offers the opportunity to its members to hire and drive cars by the hour
or by the day in locations close to their houses or their work (traditional model). The
service works via the Avancar mobile application , the website or by phone in which the
customers can have access 24h/24 and 7/7 to book a number of transport options.
Car-sharing as an alternative mode of transport attracts more and more members
because of the advantages, flexibility and effectiveness compared to private vehicles.
Massimo Marsili, European President of Zipcar says: "In a city where the
population density is increasing, the locals have many drawbacks to move. Traffic or the
scarcity and high price of parking in many areas of the capital, make the use of a private
vehicle. For this reason, Avancar is committed to help Madrid to face the traffic in the
city.”
It offers a variety brands of vehicle for different uses like Opel,BMW and
Peugeot and different models from the BMW 1 Series to the 3008 low-emission hybrid.
(http://www.avancar.es/press/releases/avancar-llega-a-madrid ).
56
Besides the particular use for private drivers, Avancar provides its service to
enterprises. It offers special tariff plans for professionals with reduces rates on week
days. The new Avancar Exclusive use, as it is called, offer the possibility to the
professionals to attend meetings away from its area of activity or transport goods
reducing the overall cost of enterprise for mobility. It is more economical, flexible and
quality over traditional leasing option. Under this program, companies can arrange car
hire reserved for his exclusive use, decide on the schedule, and parked near its facilities
under all the benefits flowing car-sharing (http://www.avancar.es/press/releases/nuevo-
servicio-avancar-uso-exclusivo-planta-cara-al-renting-tradicional ).
4.2.6.2 Customer segments
The customer segment of Zipcar in Madrid is mainly focused on individuals/young
people and professionals. It provides a mobility solution for personal or business needs
and guarantees the safety of having a vehicle at the desired day.
4.2.6.3 Monetization
As it was mentioned above (Customers 4.2.6.2) the target groups of Avancar are
individuals and professional. Each program ; the traditional Avancar program,and the
Business Avancar program; has different subscription and charge rates.
In particular,Avancar offers 3 subscription packages for individuals:
Light plan: from € 1/month,from € 7/hr and € 70/day
Smart plan: from € 5/month,from € 5/hr and € 50/day
Star plan: from € 15/month, from € 4/hr and € 40/day
57
( http://www.avancar.es/madrid/check-rates )
Business Avancar offers a subscription package for professionals of:
For 90 € per year and discounted rates week from 3.10 € per hour (rates HT).
For 30.99 € 7-to-7 Business
For 30.99 € the whole day
(http://www.avancar.es/madrid/business/check-rates)
There is also an additional annual fee for the company of 90 € + VAT .
In all programs fuel, maintenance, insurance and 80km per day are included in the rates.
If someone exceeds the 80Km limit then he has an additional charge from 0.25€ for each
additional mile.
(http://www.avancar.es/how#faqs)
4.2.6.4 Value chain-linkages
Zipcar started its expansion in Spain first by acquiring a minority interest in
Avancar in 2009 and then purchasing the majority ownership in 2012. Avancar operating
as a subsidiary of Zipcar was the critical key for Zipcar’s success in Spain and
expansion in Europe.
In particular in Madrid, Zipcar took advantage of the car fleet and the experience
of Avancar in Spain leading to success of the service. Massimo Marsili, European
President of Zipcar says: "In a city where the population density is increasing, the locals
have many drawbacks to move. Traffic or the scarcity and high price of parking in many
58
areas of the capital, make the use of a private vehicle. For this reason, Avancar is
committed to help Madrid to face the traffic in the city”.
(http://www.avancar.es/press/releases/avancar-llega-a-madrid )
The following table 7 gives an overview of the different choices of Zipcar’s business
model in Madrid as discussed above.
Table 7 Business model Zipcar Madrid
4.2.7 Zipcar New York
4.2.7.1Business model
New York was one of the first cities that Zipcar expanded in 2012. Residents of
New York can be benefited from Zipcar except for the traditional model through its
various programs like Company’s Zipcar for Business, FastFleet by Zipcar and Zipcar
Business Model Blocks
Description
Indentifying the
customers
Individuals and professionals
-Simple Business Model (users pay for the service but in different
rates according to the business model)
Customer engagement
Flexible, economical and sustainable model of urban mobility.
-Bus system ( “one-service-fits-all” car service)
Monetization
Priced according to the rates of each subscription package
-Value pricing (no subscription package fee. pay the value
created per hour or day)
Value chain-linkages
Avancar app,Avancar website or by phone
-Networked
59
for Government (http://www.zipcar.com/press/releases/GSA). The service works via
phone, company’s website or mobile app, where the members can find and reserve the
car near them for the time they needed and by using a company-issued card unlock and
start the vehicle.
The traditional model for individuals is the same like in Paris the pick-up and
drop-off system.
Zipcar for business offers discounted driving rates from Monday till Friday.
Employee members can have access to Zipcars close to their houses or work. In this way
businesses save money and reduce parking requirements contributing to the development
of environmental consciousness.
FastFleet and Zipcar for government program is a pilot program that aims to the
reduction of federal agencies’ cost, improvement of service and optimization of their use
of vehicles. “Zipcar is a smart solution that allows federal employees to have membership
access to a wide range of vehicles at locations across the city to meet the demands of
their job, while also allowing government agencies to reduce transportation costs,” said
Kaye Ceille, Zipcar president. By this pilot program agencies will reduce expensive taxi
rides, getting rid of some vehicles and buying fewer new ones. Federal employees will
use a special login so their agency can track the cost.
Last but not least Zipcar in March 2013 announced the expansion of its operation
to three airports in NYC, Newark Liberty, LaGuardia and John F. Kennedy, providing
Honda Civic and Nissan Sentra (http://www.zipcar.com/press/releases/zipcar-expands-to-
white-plains-ny). As Zipcar’s President Mark Norman noted “The availability of Zipcars
at airports will provide increased options for members who may not need a full day rental
60
car, or for those who need to travel somewhere not easily accessible by public transit”.
Thus the fourth car-sharing program, Zipcar for airports, is developed enriching the
services of Zipcar.
4.2.7.2 Customer segments
The customer segment of Zipcar in New York is the same as in Madrid, mainly
focused on individuals/young people and professionals. By providing a program for
government Zipcar attracts a totally new type of customers. The members are not just
professionals but federal government employees enjoying more benefits than the rest
professionals. Furthermore the innovative service in airports had resonance in a new
segment, this of travellers. Zipcar in New York did not serve just the ordinary people but
targets in new, particular segments aiming to expand its service not only among different
countries but among different customer groups.
4.2.7.3 Monetization
The various programs of Zipcar ; the traditional Zipcar program, Zipcar for business,
FastFleet and Zipcar for government program , Zipcar for airports,; addresses to different
groups which means different rates and subscriptions.
In particular, Zipcar offers 3 subscription packages without obligation for individuals:
Occasional driving: from $70/year ,from $9.25/hr and $84/day
Monthly driving plan: from $7/month,from $9.25/hr and $84/day
Extra value: from $50/month, from $8.33/hr and $75.60/day
61
For every plan there is an addition one-time application fee of $25
(http://www.zipcar.com/nyc/check-rates)
Zipcar for Proffesionals offers a subscription package for professionals of:
For $35 per year/driver and discounted rates week from
$9.25 per hour .
For $66 7-to-7 Business
For $76 the whole day
There is also a one-time additional sign-up fee of $75 when setting up a new account.
(http://www.zipcar.com/nyc/business/check-rates)
Zipcar for airports charges:
From $12 per hour and $89 per day
The toll charges is billed separately via E-ZPass® readers.
Finally, FastFleet and Zipcar for government program:
Federal agencies have their own contracts
Federal employees will use special login in order agency can track cost
4.2.7.4 Value chain-linkages
Zipcar’s expansion in New York started in 2013 with a partnership with Edison
ParkFast parking company leading to the introduction of 20 twenty 2014 Honda Accord
Plug-in Hybrids to Zipcar NY fleet. This partnership aimed to both the flexibility of
62
transportation and environmental behaviour. With the ParkFast charging stations New
Yorkers have an environmental friently way to move around the city. As Stacy Stuart,
Executive Vice President, Marketing and Human Resources at Edison Properties ,said
“Both companies are committed to providing people in New York and elsewhere with the
best possible driving and parking options. And with the arrival of Zipcar's Plug-in Hybrid
electric vehicles, combined with our ParkFast charging stations, New Yorkers now have a
new and environmentally friendly way of getting where they need to go”
(http://www.zipcar.com/press/releases/edison-parkfast-teams-with-zipcar-for-honda-
hybrids-in-nyc )
One year later Zipcar participates in the pilot program of General Service
Administration (GSA) Federal Acquisition Service for federal agencies and started a new
agreement. Thus, Zipcar is welcome to New York from both the residents and especially
the government which proves by this pilot program that it will support the car-sharing
service.. “Zipcar is a smart solution that allows federal employees to have membership
access to a wide range of vehicles at locations across the city to meet the demands of
their job, while also allowing government agencies to reduce transportation costs,” said
Kaye Ceille, Zipcar president.
Finally, Zipcar offers its service to the travellers in 3 different airports in NYC
developing a new linkage with the customers.
The following table 8 gives an overview of the different choices of Zipcar’s business
model in New York as discussed above.
Table 8 Business model Zipcar New York
63
5. Discussion and propositions
The following chapter is organizes as follows. Based on the obtained findings, section 5.1
will discuss the estimated results of car-sharing service and section 5.2 give
recommendations for further research.
5.1 Discussion
The findings have shown that the business models in car-sharing industry are
similar in all markets. Only the rates or special features are presented different among the
Business Model Blocks
Description
Indentifying the customers
Individual and professionals
-Simple Business Model (users pay for the service
but in different rates according to the business
model)
Federal government employees
-Two sided Business Model ( federal agencies pay for
the contract)
Customer engagement
. Wheels When You Want Them
-Bus system ( “one-service-fits-all” car service)
Monetization
Priced according to the rates of each subscription
package
-Value pricing ( subscription package fee plus share
of the value created per hour or day)
Value chain-linkages
Zipcar app,Zipcar.com website or by phone
-Networked
64
cities but the general principles and model remain the same. In addition, both companies
prefer an equity mode of entry modes, wholly owned subsidiary or equity joint venture,
which proves that car-sharing companies want to have control of their operation abroad
but at the same time to minimize the risk of failure. Any type of collaboration with local
companies, acquisition or joint venture, guarantees the easier entry and consolidation in
the foreign market. Except for the networking provide the local knowledge and
technology which are critical for maintaining the FSAs in the host country It also
weakens the distance between FSAs and CSAs and the institutional environment will not
be an obstacle since there is the local knowledge.
In particular the analysis of Car2Go verifies the statement above. The value
proposition is the same in both Madrid and New York, flexible, ecological and
sustainable short trips in the city. The model does not changes at all, is the same
everywhere. Only the rates change according the usage time but there are the same rates
throughout USA and Europe respectively. The target group is also the same but
depending on the city there might be more groups except for individuals and
professional.The vehicles are the same in all cities, Smart ForTwo, but the regulation
system varies from city to city. The parking conditions are different in New York
compared to Madrid. There is no specific parking space in New York in contrast to
Madrid which has free metered parking zones. The examples shows that even if the
business model is the same small differences in the host country can create problems or
adaptations in the model.
The following table gives an overview of the business model and entry mode of Car2Go
and how they interact.
65
City
Business
model(B.M)
adaptation
Entry mode(E.M)/
Expansion behavior
Interaction of B.M-E.M
1New York
Partners:
Private
companies for
parking near
LaGuardia and
JFK,
Municipality
Activities:
Negotiations for
parking space
Customer:
individuals,
professionals,
families
Fincancing:
Subscription
package + value
created by
minute or hour
or month
Equity mode
The same value proposition
and principles of Car2Go.
Business model is the same
with the difference of the
target groups (Car2Go
promotes the family service)
Developing relationship with
local authorities and
businesses.
Problem in parking space
The same rates within the
USA.
Madrid Partners:
Madrid City
Council,
Municipal
government
Activities:
Collaboration
with local
authorities for
the
Equity mode
The same value proposition
and principles of Car2Go.
Business model is the same
and the basic target group
(individuals-professionals).
Developing relationship with
local authorities and
businesses.
Table 9 Car2Go interaction
66
The analysis of Zipcar also verifies the statement above. The value proposition is
the same in both Madrid and New York, flexible, ecological and sustainable model of
urban mobility. The main target group, individuals and professionals, but New York
develops a new model for federal government employees. Its target group has different
subscription rates but charges are also per hour, month or year. The basic target groups,
individuals and professional, are in both cities but each city can enlarge its target groups
like New York with airoports and federal employees.
The following table gives an overview of the business model and entry mode of Zipcar
and how they interact.
development of
electric cars’
fleet.
Customer:
individuals,
professionals,
Fincancing:
Subscription
package + value
created by
minute or hour
or month
Free metered parking zones.
The same rates within Europe.
City
Business
model(B.M)
adaptation
Entry mode(E.M)/
Expansion behavior
Interaction of B.M-E.M
Table 10 Zipcar interaction
67
New York
Partners:
Edison ParkFast
, General
Service
Administration
(GSA),airports
in NYC
Activities:
Pilot program,
Collaboration
with local
authorities
Customer:
individuals,
professionals,
government,
airport
travellers
Fincancing:
Subscription
package + value
created by hour
or month
Equity mode
The same value proposition
and principles of Zipcar.
Business model is the same
with the difference of the
target groups (government,
airport travellers)
Different rates depending on
the subscription package.
Developing relationship, with
local authorities and
businesses.
Partnerships for a quick
expansion and operation under
the legislation.
Penetrating to new segment of
the market by partnerships.
Madrid Partners:
Avancar
Activities:
Conversion of
existing
established
network and
reliationships of
Avancar onto
Zipcar network.
Collaboration
with local
authorities
Equity mode
The same value proposition
and principles of Zipcar.
Business model is the same
and the basic target group
(individuals-professionals).
Different rates depending on
the subscription package.
Reinforces and exploits the
Avancar’s established network
and relationships in Spain.
68
5.2 Further research proposal
The findings and implications of the paper yield valuable insights for the
internationalization of car-sharing industry and establishes and area for further research.
To find out if the findings apply to the general industry a comparison should be
conducted. The similarities in the expansion strategy of Zipcar and Car2go can be the
criterion for the comparison with other car-sharing firms in order to find out if the
findings apply to the general industry.
This analysis focuses on the internationalization behavior from the firm’s
point of view. Subsequently studies should be conducted to concentrate on the
customer and the institutional environment. More precisely, the studies mentioned
above should taking in to account the resonance of car-sharing on the customers
and how regulations can facilitate and promotes green transportation.
Customer:
individuals,
professionals
Fincancing:
Subscription
package + value
created by hour
or month
Enhances Avancar’s FSA with
Zipcar’s FSA and takes
advantage of local knowledge
about the CSAs.
Weakens FSA and CSA
distance overcoming the LOF.
69
6. Conclusion
This research aimed to examine the internationalization behaviour of car-sharing
firms and how the business models changes in different countries. An exploratory
research has been conducted using the cases of Car2Go and Zipcar. The findings showed
that the main principles of the business models do not change in different market. The
companies may adapt to the market like in the case of Car2go in Madrid. In that case
Car2Go had to adapt to the institutional environment and cooperate with the municipality
to create the system of electric cars.In each country different partnerships are needed but
in both cases the business model does not change. It might change the rates or to be more
groups besides individual and professionals.
The findings also revealed that the ideal entry mode is the equity mode since in
this ways the distance of FSAs and CSAs weaken and simultaneously car-sharing firms
have the control in the foreign markets.Thus the firms can take advantage of domestic
knowledge of the host countries combined with the infrastructure knowledge of the
service. At present, there is not any regulation to protect car-sharing firms and thus they
are exposed to any potential rival.
Concerning the institutional environment, there is lack of proper regulation for
car-sharing firms giving space to car rental companies to enter in car share industry (John
Reed ,2011). Thus it is responsibility of the existing firms to create barriers to both
domestic and foreign market.
The rapid expansion of car-sharing requires support and a careful strategy of the
firms. Lack of business know-how and international experience in the host country may
harm the overall image of the firm.
70
7. Limitations
Although the dissertation was carefully prepared and important findings were
generated there are some limitations to be noted.
First of all, the research was conducted based on 2 car-sharing firms. The small
size of the sample cannot guarantee the generalization of the results but it can give a first
insight of how the car-sharing business models change in different countries.
Another limitation was the number of the cities compared. For both firms two
cities were selected one in USA and one in Europe in order to compare the models not
only in different cities/countries but in continents too.
The reasons for these limitations were mainly the lack of secondary data and
thereafter the limited time. As it was mentioned in the Sampling part (3.3), lack of
sources led to have a sample of two firms. Even though there was adequate general
information about these 2 firms, articles for in depth analysis for the cities were difficult
to be collected. Additionally, in many cases the articles were not written in English which
made their analysis more difficult.
For all of these reasons this study has limitations but the results can be constituted
as a comparison measure for further researches in the future. All these create for
continuous research and observation of car-sharing industry.
71
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