“Does IT Matter?” Assignment

ZipCar
1. Zipcar/Porter’s five forces analysis
Threat of New Entrant
Zipcar’s use of a simple IT solution to find, reserve and use a car sharing service creates a slight barrier for new entrants. However, there is a constant threat to Zipcar in new car sharing companies and established car rental agencies adjusting their corporate strategy in order to enter the hourly rental industry. The barriers to entry are the high costs of inventory and creating an IT solution that is at least equal to Zipcar’s. Although these are barriers, they are barriers that can be mitigated by companies and therefore enter the car sharing industry.

Bargaining Power of Buyers
Due to the market being overloaded with customers and potential customers, buyers don’t pose much of a threat to Zipcar. Customers will demand low cost solutions but don’t have much ability to directly affect the pricing model by Zipcar or other rental agencies. If pricing were to become too much for the customer, the bigger threat is from substitutes. So as a whole, customers have limited bargaining power in the car rental business.

Bargaining Power of Suppliers
Suppliers have very little bargaining power with car sharing companies such as Zipcar. The market is saturated with many options for vehicles that Zipcar can choose which company they want to field their fleet of vehicles with. Companies such as Zipcar possess more power over their suppliers as they can enter into strategic alliances with car manufacturers such as Ford or GM and in turn negotiate better pricing for the vehicles in their fleet.

Industry Competitors
Zipcar faces stiff competition from traditional car rental agencies that have a longer record of good customer service. Although Zipcar seized the opportunity for the car sharing model for customers who only need a vehicle for a couple hours