INDIAN INSTITUTE OF MANAGEMENT, KOZHIKODE

ZOOMCAR
Strategic Management Project Report

GROUP 11
Akriti Prasad PGP/21/131
Arpita Dwivedi PGP/21/137
BE Vignesh PGP/21/138
D Santhosh Iniyavan PGP/21/142
Priyanka Prasad PGP/21/168
1. INTRODUCTION

2. Analysis of the External Environment

3. Scenario Planning

KEY FOCAL ISSUE:

The expansion of the company will the key focal issue of Zoomcar

DRIVING FORCES:

The key driving forces for Zoomcar are as follows:

1) Economic growth
2) Competition
3) Government Regulations
4) Fuel Prices
5) Demography
6) Tourism Industry
7) Internet penetration
8) Increase in disposable income
9) Technology
10) Environmental norms

CRITICAL UNCERTAINITIES:

The critical uncertainties for Zoomcar are as follows:

1) Economic growth
2) Competition
 Implications and Options of Scenarios:

LOW

Competition
HAPPY-GO-LUCKY SMOOTH SAILING

Implication: Options: Implication: Options:

1. More number of 1. Strategic tie-ups 1. More number of 1. Expansion in different

customers with hotels, customers cities
companies, tour
2. Low competition 2. More load on the 2. Expansion in different
planners etc.
servers segments like 2-wheeler
3. More loyalty of the
2. Mergers with other renting, carpooling etc.
existing customers
companies
3. Increase prices
3. Focus on budget
cars
4. Focus on luxury cars
Economic Growth options
SLOW HIGH
W
Implication: Options: Implication: Options:

1. Very few customers 1. Strategic tie-ups 1. Lesser number of 1. Strategic tie-ups

with hotels, customers with hotels,
2. Very less revenue companies, tour companies, tour
generation planners etc. 2. No loyalty of the planners etc.
existing customers
2. Focus on budget 2. Increase band
cars loyalty initiative like
loyalty points
3. Merging with other
companies 3. Lower Prices

DOOMED HIGH FIGHT CLUB

NARRATIVES OF THE SCENARIOS:
LOW
Happy-go-Lucky
Competition
Here the competotion is very
low but the ecomony is going
through a recession. So this
will result in lesser number of
customers and lesser
spendings. Company would
need to make sustainable long
term startegies.
SLOW
Doomed
In this scenario it is very
difficult for the company to
expand due to economic
slowdown and very high level
of competition. The company
would be struggling to survive
so there is no chance of
expansion.
Smooth Sailing
This is a the dream scenario
where the economy is also
thriving and the competition is
also less. People in general will
have a high disposal income.
Company can readliy expand
its operations.
Economic Growth
HIGH
W
Fight Club
The economy is thriving but
the industry is very
competatitive. The customer
have many options and the
prices too are very
competitive. The company
may need to offer discounts to
attract customers
HIGH
4. Analysis of Resources and Capabilities
VRIO analysis is done as a complement to a PESTEL analysis. As the PESTEL analysis is
largely focused on the macro-environment, VRIO is used to analyze the situation inside the
organization or the company i.e., its resources, their competitive potential and possible
implication and contribution on the improvement in the targeted area or for the respective
resource. Such an analysis or assessment is then used in areas such as in the strategic
management of development in various areas or for decision making about the advantage of an
external or internal process and the securing service (e.g. outsourcing decision).

 If the concerned resource is analyzed to be not valuable to the company it should be

outsourced because it is not adding any value
 If the resource is analyzed to be valuable but is not rare the company is in competitive
conformity. It means that the company is at par with the competition,
 If the resource satisfies valuable and rare criteria but it is not expensive to be imitated,
it is a non-sustainable and temporary competitive advantage. Other companies might
successfully imitate it in due course of time, hence, the resource losing its competitive
advantage
 If the resource is valuable, rare as well as expensive to be imitated but is substitutable,
the resource become expensive for the company (unused incurred costs)
 If the resource is valuable, rare, expensive to be imitated as well as non-substitutable,
it becomes as permanent competitive advantage or sustainable competitive advantage
for the company. These resources and capabilities constitute the core competencies of
the company and are the primary drivers of the growth of the company

Key Resources and Capabilities of Zoomcar:

Tangible Resources:

1. Financial Capabilities: Zoomcar recently achieved a financial milestone of turning

EBITDA positive in December 2017, owing to 40% growth in its revenue in2017.

2. Technological Capabilities: With introduction of platforms such as ZAP subscribe, tech

enabled cycle sharing service PEDL, which includes solar battery charging, real-time
GPS tracking and built in alarms, officially extending the Zoomcar platform into realm
of multi model urban utility. Also, they have Mobile applications for convenience of
the users.

3. Fulfilment Centers: Serving in more than 20 cities across India, Zoomcar provides easy
accessibility to fulfilment centers across the cities which enable easy car rental services,
and also on door deliveries.
4. Marketplace Model: Zoomcar recently adopted the marketplace model for its
operations, in June 2016. Adopting the marketplace model has enabled the company to
reduce operational costs and increase its revenues. In this model, the core cost structure
is pretty low. Since Zoomcar is not the owner of the cars, they don’t incur the variable
or fixed costs of owning a car, hence, operational costs are very low.

5. Organic Growth: Unlike ecommerce and other mobility start-ups, whose marketing
costs constitute a major percentage of their spending, Zoomcar claims to have largely
relied on organic growth to keep its marketing cost under 10% of its total revenue.

6. Service Experience: For a company that gets 65%-70% of its traffic via the organic
route, the biggest source of brand discovery for people still remains word of mouth,
customer service ought to be paramount. People come to Zoomcar because of terrific
service experience, no effort is spared to resolve the concerns of disgruntled customers.
Customer experience has seen massive improvement over the last one year. Multiple
alerts and notifications sent to customers such as whenever they use hard braking and
clutching, or low fuel, and about zero offence in accident-prone areas during the
journey. Close monitoring of every complaint and sharply focused on resolving them.
Zoomcar has over 2 million users and the repeat ones come back at least 4-5 times a
year.

7. Innovation: Zoomcar has been named by Fast Company as one of the Top 10 Most
Innovative Companies from India for 2017 out of thousands of enterprises surveyed
across the world to identify the companies inhibiting the most notable innovations of
the year and thoroughly assess the impact of those initiatives on their business,
profitability, industry, and the larger culture.

8. Green Mobility: Zoomcar is also planning to explore the scope in the electric vehicles
space in the country. In November 2017, the start-up launched e2oPlus vehicles on the
Zoomcar by entering into a partnership with Mahindra Electric to accelerate electric
vehicle adoption in Hyderabad and Mysuru. Intended to encourage sustainable, eco-
friendly and less polluting modes of transport in these cities, the initiative will make
these electric vehicles available to residents and visitors looking to rent a car. Zoomcar
and M&M also intend to extend the initiative to other cities in the country, like
Hyderabad, Delhi and Chandigarh, in due course of time.

9. Reputation: Backed by marquee names like automaker Ford, Sequoia Capital and Nokia
Growth Partners, it aims to clock a cumulative million trips this quarter. Relying on
organic growth for traffic, company depends largely on word of mouth marketing.
There has been a compounding growth in customers in the last 1 year, and the trend is
expected to continue in the next few quarters. Zoomcar has hence build reputation, not
just amongst the customers but also amongst the crucial investors in the market.
 10. Product Range: From Sedan and Hatchbacks to SUVs and Luxury, Zoomcar offers a
plethora of options to choose from for the consumers. They run more than 3,000 cars
across the country at the moment. The company aims at driving 25,000 cars in India in
the next two years owing to the exponential growth in customers and investment
opportunities at hand. ZAP is expected to account for 85-90% growth with several
thousand-people waiting to enroll. Current enrolment in Zap is over 600 users.

Resources and Non- Result

Valuable Rare Inimitable
Capabilities substitutable

Financial Capabilities Y

Technological
Y Y
Capabilities

Fulfilment Centers Y Y Y

Marketplace Model Y Y

Organic Growth Y

Sustainable
Service Experience Y Y Y Y Competitive
Advantage

Sustainable
Innovation Y Y Y Y Competitive
Advantage

Sustainable
Green Mobility Y Y Y Y Competitive
Advantage

Sustainable
Reputation Y Y Y Y Competitive
Advantage

Sustainable
Product Range Y Y Y Y Competitive
Advantage
5. Business-level Strategy of the Organisation
Business Level Strategy is what positions the company in the market as desired by the
company. It is what the company wishes the customers to perceive their company as. This also
sends out a statement to all its competitors as how the company plans to compete with its rivals.
Business Level strategies are very crucial for the success of a company, especially for a
company like Zoomcar that not only is a relatively new entrant, but the entire concept of Car
Rental industry is new and especially to a market like India. Let’s start with analyzing the
Business Level Strategy using Porters business strategies.

Analyzing Using Porters Strategies

Zoomcar follows Cost Leadership Strategy

This is an industry that caters primarily to two industries primarily. One is the Leisure
Travelers and the Business Corporates. Both these industries are highly price sensitive.

Leisure travelers

 India is a country that is very conscious of cost with more than 65 % of the country
classified as middle class
 These are the people who rent cars when they travel during holidays
 This segment of people is very cost conscious
 Since the cars are the same regardless of the competitors, it’s very difficult to
differentiate with the aspects of cars
  This leads to low level of loyalty with respect to the cars Zoomcar can offer

Corporate Customers

 These are big firms that use it primarily for pickup and drop services of employees
 They tend to offer huge business to car rental firms
 The comfort or any extra features offered by zoom cars are least of any concern to these
firms.
This leaves Zoomcar to pursue with no other option but to follow Cost Leadership strategies.
Since Zoomcar is a startup trying to rival with other start-ups, the strategy itself is to bleed
the balance sheets and consolidate in the market. They offer multiple products such as Zoom
Lite, Zoom Classic and Zoom XL to pursue to cater to a broad segment of customers.
They also offer HatchBacks, Sedans and SUV’s, which again reiterates their strategy to scoop
in a wide range of potential customer, i.e. from a cost-conscious group (like students on a trip
might prefer a sedan to keep their cost at minimum), a family trip might entail a sedan as the
size of the family is generally four to five. Cars such as Dzier, Indigo and Verna can keep the
overall cost moderate by providing a decent experience as well as some monetary savings.
SUV’s are also available to cater to big families/rich individuals who look for a sheer driving
pleasure. Most part of the revenue comes from the HatchBack segment. Zoomcar also offers
time/distance wise charging which makes the cost attractive to buyers of both categories I,e
who travel short distance and to people who travel on long trips.

Deals/Offers: This is one of most important marketing strategy of Zoomcar, they offer extra
kilometers for free if certain threshold is driven. They also have the policy of offering
discounts on the charges that they charge on per kilometer.
The other type of discounts is by partnering with banks such as Axis where the payments via
the bank’s credit/debit will earn mileage points or a certain % discount on the final rent.

Recommendations:
Zoomcar must expand to Tier-2 cities than focusing too much on Metropolitan cities. This is
because most of the revenue comes from Tourist sector and most of the tourist sites are
located in Tier-2 cities. Most of the source for car renting in Zoomcar are in big cities such as
Delhi, Mumbai, Pune, Bangalore, Chennai and Kolkata. The cars made available at in and
around the tourist sites can help to attract more traction as not all tourist places can be driven
to from these big cities.
They can tie up with Hotels in tourist places which will become a natural platform for the
tourists to rent Zoomcar. This a big market as not all will have a smart phone.
They must give an array of payment options from Net banking, Credit/Debit cards and also
UPI which is expected to make a big impact on the payment space.

6. Corporate-level Strategy of the Organisation

Market Penetration: It is increasing the market share in the existing market with the
existing product. This is being achieved by Zoomcar by giving attractive discounts. The
discounts vary from Per kilometer discount to extra free kilometers in certain places to attract
more new customers.
Recommendation: They can target the discounts around festive/ holiday season rather than
offering discounts round the year. This is because the most of the tourist are active during
these seasons.

Market Development: This not something that Zoomcar is pursuing but can pursue in
future. The corporate sector uses rental cars extensively but Zoomcar hasn’t tapped into this
sector. With the large fleet of 8000 cars, Zoomcar can venture into this sector. This is a huge
market with round the year stable revenue.

Product Development: Since product development is about introducing new products

for existing markets, Zoomcar have entered bicycle renting business. They have started a
venture called PEDL, which are predominantly to cater for tourists to encourage to take a
cycling tour in tourist spots, especially hill stations. The advantage of this is that they can rent
the cycle in one PEDL outlet and give it back in some other location. It’s also priced very
attractively at Rs. 15/per hour. It can easily be rented via PayTm wallet which makes it very
convenient. This is also a platform to show Zoomcar’s initiative to encourage people to move
towards a pollution free environment.

Diversification:
Currently zoom cars has not diversified into any other market understandably because of
being a start-up that was launched in 2012. 6 years is too short to diversify as the market is
also at very early stages. Below are possibilities that can be looked upon in future.

A. Related Diversification
Taxi: With its massive fleet that’s growing every year, zoom car can try venturing into Taxi
market and compete with the like of Uber and Ola as it is being funded by Ford. It too has a
well-established mobile App platform and a good connect with banks and other payment
partners. The Taxi market in India looks very attractive with a CAGR 11% till 2021.

B. Unrelated Diversification
Since Zoomcar is into car rental business, just to promote their brand image and brand
visibility, they can get into merchandising and apparel business. T-Shirts and caps can be
made or at least outsourced. The other business that could be more relevant is Toy cars. They
can outsource the manufacturing, even to countries like China and Taiwan where these can be
made at a cheaper cost than India. These can be used to sell to their own tourists initially and
can be perhaps expanded to other markets as well.

7. Opportunities for Growth

 Tie-ups with a single manufacturer

India has now choice of more than 10 major car manufactures in India viz. – Maruti Suzuki,
Hyuandai Motor India, Mahindra & Mahindra, Tata Motors, Honda, Toyota, Kirloskar,
Renault India, Ford India, Nissan Motor India and Volkswagen India (many more like
Skoda, GM India etc.) The Tie-ups with a single 4 wheeler manufacturer from the above
mentioned manufacturers who have a car to offer in every segment right from economy
hatch-back & Sedan, SUV, MUV, luxury Sedan etc. This strategy can preserve the interests
of the customers with wide choice and at the same time help in

(1) CAPEX (Capital Expenditure) – The business model right now follows EOQ
(Economic order Quantity) with any manufacturer who announce an offer in a certain
model. A fixed manufacturer (say for a period of 10 years) assures a much better price
over a longer period of time and hence brings down the Capital Expenditure incurred
each time.
(2) Annual Maintenance Contracts (AMCs) – Since the business existing in this newly
emerged operates will all kinds of manufacturers, it incurs a significant cost in the
maintenance of the vehicles. Since the customers do not have a sense of possession on
the rented cars, the maintenance of these cars is one perturbed matter at all time. If all
 the cars operated in the business is associated with a single manufacturer (as mentioned
above), an annual maintenance contract can be initiated that brings down the cost of
maintenance per car substantially exploiting the factor of economies of scale.

 Promotion to buy vehicles with the Commercial Registration:

All the personal users can start buying commercial registered self-driven permit cars (Black
number plate with yellow lettering). The personal house owned cars can then be rented out,
creating a pool of advantages as follows:

1. Huge pool of cars

2. Wide options - in terms of models available for the customer to select from
3. Quick delivery to customers - as one can find multiple cars in the same locality probably
known people increasing factor of reliability
4. Better use of house owned cars – House owned cars that are considered locking money
can now be used as a Cash flow generating asset.
5. Tourist cabs Market – these markets can be captured by providing a much cheaper mode
of transport and also an added attraction of that customer segment that prefer or love to
have their own personal vehicle even during rentals.
6. The government taxing on the registration plate (as mentioned above) can come down
as the revenues in such a scenario shall boost in this category (the white board
registration of the vehicles bear less tax) and the government can consider help promote
the same, thus creating a loop effect of more people opting for the same.

 Two wheeler Penetration

The two wheeler rentals can be the next possible segment. Although the same is now-a-
days found in few tourist places like Himachal Pradesh, Goa and metro cities like
Bangalore, New-Delhi and Mumbai (exclusively for the Motorbike enthusiasts renting
super bikes, Cruiser bikes, chopper bikes and touring bikes).

The same concept can be applied to all the regular two wheelers that levers the following:

1. Penetration into cities classified as Tier-I and Tier-II in phases.

2. Three-wheeler (auto-rickshaw) market – Capturing the auto-rickshaw public transport
segment that is
(a) More hassle free
(b) Cheaper
(c) Faster means of transport (assuming traffic rich places)

 Electric Vehicles Inclusion

While one segment of the cars in this business is rented for the purpose of long distance
commutes that expects the features of performance and comfort, the other segment is for
the city commutes that comprise multiple stops and therefore expects economical drive
 over performance and comfort. The potential customers in the latter segment are from those
job profiles viz. consultants, market researchers, vigilance officials of both public and
private sectors, arbitrators, entrepreneurs, auditors, tourist etc. who visit new cities or
places. The daily commute with in the city limits averages a 40 Km/hr speeds and a
maximum viable speed during the day of 60 Km/hr.

The electric vehicles are a great option considering the maintenance cost close to zero. The
average cost per Kilometer would also be in the range of Rs.1.25 to Rs.1.5 per Km, in
comparison to Rs.5.28 to 6.16 per Km for petrol cars and Rs.3.87 to Rs.4.5 for diesel cars.

A green initiative can also be a differentiation strategy to market our business and attract
more customers who share the same page of thought.

8. Conclusion
While every sector of business, although a new emerging sector, has its competitors along all
the stages of business life cycle, the future growth opportunities (mentioned) if tapped well and
played to our best advantage, the relative threat of the substitutes and new entrants can be
negated to a great extent, making us the market leader.
Thanks to the technology of mobile apps, the elastic market of transport, the price sensitive
customers, multiple car manufacturers that give us a wide pool of choice, existing expensive
transport system in new cities – all as a culmination have helped us open new gates for an
entirely new business venture that was non-existent 10 years back.
A constant check on the various parameters of - costing, improvement in the operational
efficiencies and competitor moves, in even intervals shall help the business elevate the financial
pedestal.
The long-term vision of the company can be to shift the company from a debt based financial
structure to an all levered (equity) company to evolve as an indomitable market player whose
future market strategies can also be penetration in other new developing countries, turning as
a global business model.