Avis Car Rental’s announcement that they are buying Zipcar is a great strategic alliance example. Avis’ value-add is offering on-demand, short-term access to personal transportation without an ownership commitment. So is Zipcar’s. The only difference between the two is timeframe. Avis offers access by the day; Zipcar offers access by the hour.
There are several strategic advantages to this pairing:
Their peak demand periods are complementary. Avis sees peak demand during the week; Zipcar on weekends.
Their customers are complementary in that they all want on-demand access to vehicles, but the target demographic for each company is different. Zipcar serves customer who need personal, local transportation; the bulk of Avis’ customers are away from home and traveling for business.
Their systems are complementary. Both companies already track drivers and their licensing and credit information. Each company already tracks vehicles, their location and maintenance needs, and their availability. A common customer database should make it easier for customers to use either Avis or Zipcar as their needs change.
Both Zipcar and Avis need to acquire vehicles to serve their customers’ needs. They also both need to dispose of vehicles at the end of their economic life. Here, Avis’ backoffice fleet management division can absorb these processes for Zipcar and gain efficiencies without negatively impacting Zipcar’s customers.
The combined company will continue to serve two distinct sets of customers from a consolidated vehicle inventory, which should produce greater efficiencies.
I think the merger of Avis and Zipcar is a wise move. It reminds me of the combination of Baskin-Robbins and Dunkin Donuts; two complementary food service companies filling their customers’ needs from consolidated retail locations.
It took Allied Lyons Retailing almost three years to integrate Baskin-Robbins and Dunkin Donuts. With any luck, Avis’ and Zipcar’s consolidation can be completed much more quickly.
Can you think of another company that you can align with for strategic advantage? Have you identified an under-served market segment with needs complementary to your existing customer base?
The right strategic alliance can greatly boost your company’s profit and make you a much more formidable competitor.
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