Question 1: Analysis of Car2go Business Model
Car sharing services have erupted in the last few years and grew into a fledged industry. As a form of disruptive innovation, car sharing has established itself as an alternative for building more sustainable transportation systems, and it is becoming more popular across the world with the number of increased companies that are operating in major cities. Car2go was founded in 2008 as a subsidiary of Daimler Ag in Ulm, Germany. The company currently covers approximately 30 cities in eightcountries in Europe and North America. The business model of Car2go is the same in every location offering a fleet of rental cars operating in major cities and provides their services to the most significant central areas in cities.
This section uses the Business Model Canvas (BMC) to analyze the company’s business model. The fleet of cars operated is composed of Smart ForTwo vehicles that are powered by gasoline or electric power. All the cars have a strong visual identity where they are painted white and blue with company name and logo that serves to increase brand recognition. The company offers subscription fee upon registration and rental fees, which are the two primary revenue streams. The vehicles are located on their websites through the use of a smartphone or direct in the street where they are packed. The company’s primary customer segments are young adults and corporate clients. The car2go value propositionis based on delivering an innovative and environmentally friendly transport system that offers urban mobility that is flexible. Customer services are automated which are provided through the firm’s website and mobile application. To leverage its operations, the firm works in partnership with local authorities that offer public spaces for packing. The primary partnership is with Europcar.The firm also establishes collaboration with its clients encouraging them to fuel the cars in exchange for extra minutes of service (Ferrero et al., 2017).
Question 2: Ongoing and Emerging Transportation Industry Trends
The decline of new car sales and ownership in the UK is not unique as it is part of an emerging trend among wealthy economies and car sharing is growing rapidly as a flexible and affordable solution. The automotive industry is likely to witness more changes in the next decade due to factors such as the accelerating pace of disruptive innovation and value chain digitisation among others (Miller, 2017). Car sharing technology is likely to impact the domestic economy positively since it will reduce congestion in cities in terms of parking and traffic as well as the reduction of environmental pollution. Car2go competitors include Zipcar, Uber and Blue Torino.
Zipcar is a direct competitor that was launched in 2000 as a traditional car sharing services in the U.S. The main competitive advantage for Zipcar is its wide selection of vehicles in the city that is dispersedthroughout. This can be attributed to the period that the company has been operating, the members have an option of booking a BMW, a small sedan or a cargo van depending on the kind of errand they are undertaking. Blue Torino is also a direct competitor run by BolloreGroup; it is somewhat recent and has limited coverage that offers a modern form of car sharing similar to Car2go. The principal competitive advantage is that the car sharing company operates cars that are entirely powered by electric power thus attracting consumers who are eco-friendly. The services target frequent, occasional and tourist users and offers a wide variety of service plan. Uberis an indirect competitor whose most significant competitive advantage is its mobile app that connects drivers and riders. The brand benefits from its strong network effects and low maintenance expenses. The main elements of the Car2go successful business model are; global operations, good pricing model, superior access to vehicles and network effects as early movers.
Question 3: Proposals for Car Sharing Market
Almeida et al. (2017)propose the development of a support decision system that makes it easier for customers to choose car-sharing services that are based on user preferences. The support mechanism can increase the number of people opting for car sharing services since the user can get the best available cars depending on their preferences. The support mechanism can also include a feedback section regarding the quality of services offered such that the firm providing the car services can improve and incorporate more customers. Alternatively, the car-sharing platform can include individuals who own cars through peer-to-peer car sharingwithout having to own all the vehicles they manage, and this can help increase the accessibility of vehicles available.
Customer retention and brand loyalty are very significant;therefore, the best way to grow the business is to use the data available and setting up feedback loops to understand the existing customers better. In the process, the firm will focus more on improving its services rather than attracting new clients and thus when customers derive value out of the brand they are more likely to be more open for upgrades, and they can easily recommend the services to new users. The car-sharing service can alternatively focus on filling up loopholes that other firms are not offering thus differentiating itself from the rest instead of stealing customers from competitors.
Millennials value saving money and protecting the environment, consequently social media attributes to the reason why millennials drive less. Thereforethe primary target customers would be young adults under the age of 35 years living in cities, eco-friendly, and they `spend a lot of time on the internet, for instance, they work from home. Secondly, the other target customers would be digital nomads or tourist who travel from city to city for work or recreation purposes. These are individuals conversant with the sharing economy, and thus car sharing services will offer them affordable and easily accessible means of transportation.
Question 4: Car2go as a Disruptive Innovation Case
Ovsepian (2016)stipulates that disruptive innovation is based on the concept of innovation of services and technologies that are disruptive. The idea of disruptive innovation begins with the creation of concept and theory that is based on disruptive technologies that can only achieve the predicted value once a compatible business model are figured out and actualised. Car sharing technology practised by Car2go is based on a disruptive business model, sharing economy, and eco-friendly technologies thus deeming it as a perfect disruptive innovation case.
It is evident that Car2go is a project that was conceived and executed as an innovative initiative. The plan was implemented to take advantage of the vast crowdsourcing services and the trends of sharing economy during its initial stage. Currently, the firmis continually implementing their services through user and operational technologies as well as experimenting with new car technologies to improve their services. The firm fleet of cars are developed explicitly for the urban environment, which are easy to park, and fuelling is economic (Bartman, 2015). Unlike the traditional model of car sharing offered by Zipcar, Car2go rentals are one-way, and users are not required to book in advance; therefore, the service was unique and created an entirely new market.
Geissinger et al., (2018)argues that the advent of widespread information technology and cheap computing system has resulted in the emergent of new business models and competitive turbulence. Research reveals that disruptive innovation is more straightforward, more affordable, more reliable and convenient than the already established technologies. The innovations usually advance at a rapid rate, have fast penetration in the market, and have broad-based markets with significant impact on the economy. Therefore, the key areas that characterise Car2go as a business model that is based on disruptive innovation include the use of new and advanced technology such as mobile internet to facilitate their services, a shift from the traditional way of commuting to sharing, tapping new markets and displacing the already established automotive industry. Car2go has also led to the realignment of major firms in the sector such as BMW, which is adapting the car-sharing business model.
Question 5: Companies Using Digital Technologies to Bring Transitions from Property to Use
Airbnb is a company that uses digital technology to transition from owning a property to use. Airbnbservice allows ordinary people to rent residents to tourist at affordable prices as compared to hotels. Like Car2go the application enables individuals to share their residents with tourist at a fee and has enjoyed extremely rapid growth since its inception in 2008 as well as having impacted the tourism accommodation landscape tremendously (Guttentag &. Smith, 2017). Its success can be attributed to offering affordable accommodation unlike the hotel industry thus allowing people to travel more conveniently.
Consumers in the post-mobile age are prioritizing accessibility over ownership. eBay makes it easier for consumers to buy, sell or donate their products. The company has similar characteristics as Uber and Airbnb, and it justifies a higher valuation. The website is one of the most trusted marketplaces where buyers and sellers meet and exchange goods. For instance, if a customer wants to upgrade to a new phone model, eBay offers them a platform to sell their old model in their market place, where someone else benefits from the product.
Lending Club is a similar platform that uses digital technology to operate a credit marketplace at a lower cost than traditional banks’ lending system. It is a market place that connects borrowers and investors. The service is a peer-to-peer lending application that allows quick access to loans at competitive prices for borrowers and good returns for investors. Like Car2go, the service allows people to share their resources at an affordable rateusing digital media.
Uber is a ride-sharingalternative to traditional taxis; it can be perceived as a car hiring service that uses mobile technology to dispatch drivers and manage fees. Uber drivers use their vehicles to offer discounted rides to Uber customers. The service is highly convenient, affordable and of high quality. Over the years, the concept utilised by Uberhas been adopted by other taxi services platforms with the aim of providing affordable transport services using digital technology. The main reason for its success is the fact that it does not own any cars but instead only offers the digital platform where it connects drivers and passengers, offers easy and stress-free payment methods, and it is easily accessible.
Almeida, F., Silva, P. & Leite, J., 2017. Proposal Of A Carsharing System To Improve Urban Mobility. Theoretical and Empirical Researches in Urban Management, 12(3), pp.1-13. https://arxiv.org/pdf/1710.04119
Bartman, 2015. Confronting A New-Market Disruption Part 3 — Car2go. [Online] Available at: https://www.hbs.edu/forum-for-growth-and-innovation/blog/post/confronting-a-new-market-car2go [Accessed 24 February 2019].
Ferrero, F., Perboli, G., Stefano, M. & Vesco, A., 2017. Business models and tariff simulation in car-sharing services. ICT for City Logistics and Enterprises, (http://staff.polito.it/guido.perboli/GUEST-site/docs/2017-Tax_carSharing-business-models.pdf), pp.1-29.
Geissinger, A., Laurell, C. & Sandström, C., 2018. Digital Disruption beyond Uber and Airbnb—Tracking the long tail of the sharing economy. Technological Forecasting and Social Change, (https://www.sciencedirect.com/science/article/pii/S0040162517306212?via%3Dihub).
Guttentag, D. &. Smith, S., 2017. Assessing Airbnb as a disruptive innovation relative to hotels: Substitution and comparative performance expectations. International Journal of Hospitality Management, 64(https://www.researchgate.net/publication/315907012_Assessing_Airbnb_as_a_disruptive_innovation_relative_to_hotels_Substitution_and_comparative_performance_expectations), pp.1-10.
Miller, R., 2017. The six trends driving change in the automotive industry. [Online] Available at: https://www.ey.com/en_gl/automotive-transportation/the-six-trends-driving-change-in-the-automotive-industry [Accessed 24 February 2019].
Ovsepian, V., 2016. Car2go, a Car Sharing Service through the Lens of Disruptive Innovation. Roskilde University, (https://core.ac.uk/download/pdf/43033172.pdf), pp.1-41.
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