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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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

3 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

4.2 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

4.2.7. Zipcar New York ...58

5. Discussion and Implications ...63

5.1 Discussion ...63

5.2 Further research proposal ...68

6. Conclusion ...69

7. Limitations ...70

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5 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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9 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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10 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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12 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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13 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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14 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

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15 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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16 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

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17 (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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18 (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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19 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

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20 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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21 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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22 Car-sharing originated in Switzerland and in 2006 there were almost 348.000 car-sharing members worldwide car-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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23  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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24 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

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25 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

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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-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.

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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 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?

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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).

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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.

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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.

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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

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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

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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.

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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

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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

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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.

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 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

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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

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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)

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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

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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

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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

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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.

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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.

Individuals and professionals

-Simple Business Model (users pay for the service per minute, per hour or per day)

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)

Car2Go app, Car2Go website -Networked

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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

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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

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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

Individuals, professionals , families

-Simple Business Model (users pay for the service per minute, per hour or per day)

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)

Car2Go app, Car2Go website -Networked

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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:

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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.

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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

Internationalization of new ventures : car-sharing firms

Master Thesis