Car sharing is a growing and competitive business in the United States. Scott Griffith, Chairman and CEO of Zipcar, is considered a leading authority in the industry. Under his command, Zipcar, which was founded in 2000 in Cambridge, Massachusetts, has evolved and expanded at a rapid pace. The company’s slogan, (“wheels when you want them”), is representative of today’s demanding and dynamic society. Griffith understands that customers want fast, easy service at the touch of a button. In response, Zipcar provides an alternative to the customary car rental experience. A simple online membership using a credit card and driver’s license number allows “zipsters” to access cars 24/7. The company keeps a fleet of vehicles, including eco-friendly Priuses and Minis. Members can select the make and model of their choice and reserve the length of time they require it for. Pick up sites are conveniently located at central and visible locations in major cities and on campuses. Once inside the car, just one swipe of a Zipcar card is required to access keys and drive away for the allotted time. No service agents, no waiting in line, no hassles. For as little as $7 an hour, members receive gas, insurance coverage and up to 180 miles of roadside assistance. Zipcar is governed by five core values which provide a general framework from which employees operate. Each value promotes providing customers with a leading and seamless car sharing experience. Employees have general job duties and follow general principles instead of adhering to specific rules for behaviour. This provides employees with the flexibility they need in order to work and problem solve quickly. Griffith recalls the actions of one employee who received a call from frustrated Zipster who was stuck in a traffic jam. The employee promptly consulted an appropriate map, and worked with the driver to navigate out of the traffic congestion. In an effort to ensure the driver’s total satisfaction, the employee took initiative and extended the original reservation in addition to providing a car credit for a future booking. Zipcar in turn recognized the employee’s swift and decisive action through a quarterly company web cast which the company uses to encourage and promote effective customer service. Providing exceptional customer service both on and off the road has its challenges. Zipcar pays close attention to the data that it collects to learn more about its customers. Griffith says that the company tracks employee response times to drivers, and monitors the percentage of issues that are resolved in a 24-hour time frame. When necessary, Zipcar calls in contract vendors and experts to help meet specialized service demands. The company also analyzes historical data trends in order to determine if changes in customer activity are driven by the company itself, or by external factors outside of the organization. Zipcar prides itself on having great relationships with its members and investors. Griffith says that car sharing can benefit key partners like municipalities, developers, and universities who are thinking about reducing their carbon footprint, lowering the cost of investment in building parking structures, and allocating those resources into other better investments. By providing easy access to cars and prime street parking, Zipcar and its stakeholders benefit from long term, win-win partnerships.
Zipcar is proving to be an effective transportation option in many large US and Canadian cities. In August 2011, the company signed a two-year agreement with Ford Motor Company to provide car sharing services to college students at over 250 campuses. Ford Motor Company provided the fuel-efficient Focus and Escape models as part of the University fleet. The agreement also offered students discounted rates on both the Zipcar membership fee and hourly rates on Ford vehicles. In 2009, Zipcar overcame cultural and language barriers and made a partial acquisition of Avantar, a Spanish car sharing business in Barcelona. Zipcar has a 60% ownership stake in Avantar, which also owns and operates a fleet of cars in another part of Spain. The acquisition provided Zipcar with an opportunity to learn about a new market and to determine what strategies and operating systems are most helpful and applicable when considering overseas expansion. While Zipcar is an established brand name and it continues to grow, the company’s performance has been plagued with inconsistencies and losses. In April 2011, the company reported a rise in sales of 41.8% over the previous year. However, expenses went up by 40.2% and losses increased to more than 14.5 million. The company also faces serious competition from business adversaries like Hertz, which threatened Zipcar’s bid for profitability when it implemented its own car sharing program, Connect. Despite wide fluctuations in quarterly profits, Zipcar remains firmly rooted in the belief that as society changes, car sharing will become an economical and viable community service. As more people and businesses look for environmentally friendly alternatives, car sharing will gain exposure and become a more familiar concept. The potential for the company to help set and direct driver trends on a global platform is enormous. 1. How did decision making at Insomnia Cookies change when the company grew and established a professional management team? Explain. 2. How were early decisions about store locations biased? Give an example of how each of the eight types of biases and other judgment shortcuts could lead to a poor choice of store location. 3. Was the decision to move to a retail model made using the rational decision-making process? Explain using the six steps of the model. 4. How does the management team at Insomnia Cookies use its diversity to its advantage in group decision-making? What cautions would you give them about the weaknesses of group decision making? 5. How is creativity approached at Insomnia Cookies? What recommendations could you make to increase the opportunities for the company to find creative, yet profitable, opportunities to expand?
1. As mentioned in the video, Zipcar is “responsive to dynamic customer needs and spikes in demand”. How is Zipcar’s organizational structure set up to maximize their ability to accomplish this? Explain.
2. Which type of organizational design do you think best describes the one currently in place at Zipcar? Explain.
3. Zipcar is expanding internationally at quite a fast pace. Since organizational culture and structure are often closely linked, how do you think Zipcar’s organizational structure would impact successful expansion into other countries?
4. If you were hiring new employees for Zipcar and wanted to be sure your new hires fit in well with the organizational structure, give 3 specific characteristics you would want to be sure these new employees had. Explain your reasons for choosing each.
5. Most organizations are greatly affected by changes that occur in the national and global environment. Do you think Zipcar’s organizational structure would make them more or less adaptable to changes like this? Please explain.