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Zipcar is an example of a dynamic firm that seeks to expand their services to countries in different zones in the world. In essence, it has experienced success in its area of specialization. Zipcar offers automobile rental services. Consequently, it gives room to the customers to have flexible access to shared vehicles within a defined time limit. It is one of the automobile service providers in the United States. Moreover, it has expanded to other nations such as Canada, U.K, Spain, and Austria. It is critical that Zipcar penetrates the market in other countries. These include Japan and Singapore. The company will utilize a global strategic plan to embrace the worldwide the market. It is essential to note the strategy must ensure sustainability of the product on the global market.
There are reasons that account for the selection of these countries. First, it is admissible that Japan and Singapore have different market features and expectations. However, they differ in their consumer trends. Japan has high population. Consequently, it means that there are many people who would desire the automobile services. Moreover, Japan is a mature market. It is therefore, expected that people there will readily respond to the idea of shared vehicles within a specified time. It is fundamental to note that Zipcar seeks to meet the needs of urban dwellers by enhancing accessibility to car sharing. Japan also has an extensive base of car consumers. In essence, the use of cars has become a vital part of life of the Japanese. Venkateswaran (2012) emphasizes that an extensive market base is a fundamental qualification when a business seeks to penetrate any market. Japan comes third in Market Potential Index. Its market size is 20%.The market growth rate is promising and is weighted at 48%. It has a high intensity of 76% (Michigan State University, 2014). Moreover, the consumption capacity is 100% due to the market being mature. They have sufficient infrastructures, which facilitates trade within the country. Risk assessment reveals 90% safety in doing business in the country. Its overall score is 54%. Japan also has an attractive cultural, legal and political system. It is a constitutional monarchy that embraces democracy. The trade regulations are also favorable for both the local and international Investors. Japanese also have an established cultural orientation towards cars. In other words, they have a preference for car as their primary source of transportation within the country.
The overall market potential Index rank for Singapore is position 5. It has a small market size. However, the growth rate is 75%. It indicates the potential of the Zipcar industry to flourish in Singapore. Moreover, it has a market intensity of 76% (Michigan State University, 2014). The consumption capacity stands at 33%. It is fundamental to note that Singapore has established commercial infrastructure. Consequently, automobile business can perform well in the country. Its market receptivity is 89%.The risk assessment of the nation is 90%. In other words, there is a minimal risk of doing business in Singapore. The overall score of the country is 49% (Michigan State University, 2014). Singapore is evidently a promising zone for Zipcar. The political and legal factors are also favorable in the country. In fact, the government has introduced attractive regulations that appeal to investors. The policies that they formulate encourage credit services. They also have a tax policy that is acceptable for international investors. The political system of the country is also democratic. In fact, it takes after the Westminster model of parliamentary democracy. As a result, there is peace and stability within its borders. The following factors and provision of the MPI make Japan and Singapore reliable areas for the automobile services. Both countries offer a promising future to Zipcar.
The mode of entry that Zipcar should utilize in penetrating the two countries is franchising. Jeyarathnam (2008) indicates that it is a strategy where one party gives another business party the right to use its trademark and business system or operations to create and market goods and services according to defined specifications. In other words, Zipcar identifies a well-established automobile service business in the new market and strikes a business deal with it. Zipcar franchisee pays a certain fee. As a result, they gain recognition. Moreover, they also have the public image of creation and delivery of products that meets the standards of the country. In other words, the two business share brand identification and distribution system. However, it is vital that both parties have a comprehensive understanding of the business and legal corollary of their relationship. It is critical to admit that Franchising would work well in countries such as Japan because of their background in the manufacturing and assembling of vehicles. In fact, Japan is one of the world most celebrated industries that make vehicles.
Franchising has valuable advantages to Zipcar as it penetrates Japan and Singapore. First, it gives them an established customer and brand base. In essence, Zipcar benefits from the customer loyalty of the franchiser (Rajagopal, 2009). It is because consumers need time to build confidence in a product or services. They are usually hesitant to try out new products in the market. Zipcar does not have to start marketing afresh. Moreover, they will gain marketing support. It is because an established company can benefit from the network for a national campaign. The mode of entry is critical in ensuring minimal financial investment of Zipcar. It is also crucial to note that Zipcar will have access to all the proprietary methods that the franchiser utilizes. In other words, they will know all the trade secrets. The strategy also reduces the potential risks that Zipcar can face in the new market. In other words, the market growth risk is low. Consequently, they can generate a high financial return.
However, the advantages make it difficult for Zipcar to use strategies such as Greenfield and Joint Venture as a mode of entry. In essence, Greenfield is a foreign investment where the parent organization starts a new business in a new area by constructing new operation facilities (Rajagopal, 2009). In other words, Zipcar penetrates the market without the use of another firm or middlemen. The strategy has two limitations that make it inappropriate. First, the cost of investment is high. It is because of the massive fraction of the money that is necessary to start up a business. There are vital elements that are necessary for the establishment of a business in a new region. It is apparent that Zipcar may have to start from scratch should they utilize such a strategy. The logistics of locating a strategic zone, government regulations and distribution makes it a difficult venture. Secondly, there is a high risk of doing such business. Consequently, it is not the best strategy for Zipcar. On the other hand, Joint Venture seems an attractive strategy for Zipcar. It is when two or more organizations team up and create a new entity that is distinct from their parents (Rajagopal, 2009). However, it is highly appropriate in areas that face challenges in their political, social and technological systems. Japan and Singapore have stable legal and political elements. Joint ventures also lock the primary parents from a long-term association.
The discussion, therefore, reveals Singapore and Japan to be the new markets that Zipcar should go to and franchising to be the best entry mode that Zipcar can utilize in its desire to penetrate these markets. It ensures an extensive customer base. Moreover, Zipcar will have access to proprietary information. Joint Venture and Greenfield strategies have limitations that do not favor the company. Zipcar must plan and utilize an appropriate strategic mode that will ensure its stability.