LGT4105 International

Operation Management
Individual Case assignment
Cheung Hoi Nam 13085684d

LGT 4105 INTERNATIONAL OPERATION MANAGENET

Q.1
Car-sharing can be viewed as a short-term and more flexible type of car-rental.
Firstly, in terms of target customers, car-sharing usually target on dwellers and people who look
for an alternatives to car ownership and have demand for short-duration usage. While for car-rental
services, it aimed to customers who need a car replacement or is used for long-duration usage. For
examples, business traveler and other visitors.
In terms of charges, car-sharing service is usually charged on an hourly basis, also, other car
expenses such as the gas and insurance are also included in that hourly fee, and the customers need
to to pay that additionally by their own. While for car-rental service, the renter is required to full the
fuel tank and return the car in the same way they receive it.
In terms of accessibility, car-sharing maybe more convenient as it allows unattended access to the
car by the customers, where he/she only need to complete a few procedures online. This is achieved
by the advance in technology and an mechanical lockbox mounted on or near the car. While for carrental service, renters would have to meet with the company representatives and probably do some
paper work on the terms of agreement before accessing the car.
Q.2
According to Table 1, for the cities with most number of Zipcars and highest Zipcars to population
ratio (t.p.r.) , Boston and San Francisco, their bus t.p.r.(0.0022 and 0.0012 respectively) and subway
t.p.r.(0.0014 and 0.0004 respectively) are also relatively low. This may implies that places where
public transportation system is not highly popularised may attract more users for Zipcars, as
citizens who are not satisfied with the public transportation would have to adopt other substitute,
such as buying a private car or in this case buying the service provide by Zipcars. Compare with
these places, Hangzhou where the population is high but the public transportation system such as
bus and subway system is scarce, thus, with a relatively low bus t.p.r. may also be able to gain a
success in car-sharing service like Zipcars.
However, when we refer to the two cities with the lowest Zipcars t.p.r., London and Atlanta, it
raised out some other issues. For London, it only has a Zipcars t.p,r, of 0.0001 has both relatively
high figures in bus and subway t.p.r., which seems to match with the idea raised in the first
paragraph. Yet, when we look at Altanta, it is also a place with relatively low bus and subway t.p.r.,
0.0012 and 0.0008 respectively, its Zipcars t.p.r. is still low. In this case, it may implies that we also
have to concern with some other factors such as the geographical environment and Zipcars
marketing and development in the place.

Q.3
Assume 200 is the average hours used for both private and car-sharing users per year
Let X be the required hourly fee for car-sharing service can outperforms private car in terms of
cost.
200X + 2500 < 41950
X < 197.25
The hourly fee has to be below 197.25.
LGT 4105 INTERNATIONAL OPERATION MANAGENET
2

Required break-even prices

Mid-level model (Volkswagen)

Let n be the required hourly price

Let n be the required hourly price

In order to be competitive, the price of car-sharing must be lower than self-owning a car (in a
hourly basis), while can slightly be higher than car rental (given that car-sharing is
Q.4
Market advantages: One thing differentiate Omnipay-Hangzhou and Zipcar-Boston is their
current and potential market. For Omnipay, they currently focused in Hangzhou, where there is a
population of 8,700,000 , which is very high compare with Boston (617,594) and even all US
cities. Therefore, it seems that Omipay in Hangzhou may has a larger potential customer base when
compare with Zipcar in Boston. Yet, if it is considered in the full scale, Omnipays operation is still
major in Hangzhou, while Zipcar has already developed branches in 50 cities worldwide.
Moreover, the development of car-sharing business in China is still in an early introduction stage,
with few competitors. However in USA, the development has already proceed to a growth stage,
where different competitors has involved.
Government support: Both company has received support from their local government. However,
in Boston, the government seems to be more supportive as it used its contracting authority to
require the local developers and parking facility owners to work with car-sharing company like
Zipcar. While in Hangzhou, government focused more on financial support, giving out funding and
cheaper land.
Expertise: In terms of expertise, Omnipay is a Chinese software company registered in 2006,
which focuses on two major product line - OmniTransport and Omnipay. Which is about R&D in
green traffic system, including its major business, bike-sharing, and electronic payment system. For
its current operation in bike-sharing, the company has used technologies like RFID cards, software,
and multimedia terminal, for the payment, and operation of their business.
Compare with Omnipays multi dimension business model, Zipcar mainly focuses on car-sharing
business and is a leading company this service. Zipcar is a USA based company that was found in
2000, and it now has over 8,000 vehicles and serves over 565,000 members worldwide.
Critical technologies: As stated previously, Omnipay majorly focused on bike-sharing business
and in order to develop car-sharing service, the company has to customise its existing electronic
system on bike-sharing to fit the car-sharing requirement. Given the larger size and more expensive
nature of car, the company has to consider and develop some measures. For instance, The company
has to setup a new station and corresponding system for the storage of the vehicles. While
technologies like real-time positioning system like GPS are also required, for the company to
monitor the usage capacity and status. Also, the technologies on security measures, like the
mechanical lockbox and other monitoring system to make sure their car are in good condition and
free from malicious damage, and also better firewall and encryption to prevent the sensitive
information of clients to be stolen.
LGT 4105 INTERNATIONAL OPERATION MANAGENET
3

Q.5
Pros: One of the major advantage of piloting the car-sharing service in Xiasha Higher-Education
Park in Hangzhou is it allows the company to test and try to operate car-sharing service, before
implementing it into real business. It provides a controlled environment for the company to test
their ideas. Also, given the places characteristics of college town, with nearly 350,000 college
students, it may be a potential market for car-sharing service, given the previous research by Zhang
(2010) stated in the article that car-sharing services customer are typically well-educated, and also
the experience from Zipcar where they are attracted by Bostons savvy customer base and many
carless students.
Moreover, Xiasha is an Economic and Technological Development Zone ETZ, which usually
provides more preferential policies, government support, higher autonomy business environment,
and more available resources to the investing companies. Given in the article, it also states that
Xiasha Park is the largest education conglomerate in the whole Zhejiang province and provides
high-quality workforce and technology and research resources. These are all resources and
production factors that are beneficial to car-sharing company, like Omnipays own development.
Cons: Yet, Xiashas special condition as may also lead to some drawbacks for car-sharing piloting
experiment. Xiasha has a relatively small and identical background of population and this limited
the development of car-sharing. In Xiasha, the majority of people are college students, who have
limited financial income, and are unlikely to be able to afford the car-sharing service. Additionally,
Xiasha is also an ETZ where different benefits are provided to the corporations, therefore, it cannot
reflect the real situation of other cities and places in China, and the results and implications may not
be used for generalisation.
Overall, it seems that Xiasha is a suitable place for piloting car-sharing service in Hangzhou.
Because car-sharings development is still at an very early stage in China, and there are many
things for related parties to get used to and learn. The risk is high, but the financial and scale of the
related company is not. Therefore, places like Xiasha does offer good opportunity for similar
development.
References:
Shaheen, S., Sperling, D., & Wagner, C. (1998). Carsharing in Europe and North American: past, present, and future.
Millard-Ball, A. (2005). Car-Sharing: Where and how it succeeds (Vol. 108). Transportation Research Board.

LGT 4105 INTERNATIONAL OPERATION MANAGENET