Pennzoils Major Business Units

1
Pennzoils Major Business Units
2
Portfolio by Revenue

• Motor oil dominates

3
Portfolio by Profit Volume

• Other dominates (?)

4
Portfolio by Profit Ratio
5
Portfolio by Capital Outlay

• Most spent on Oil Gas

6
Portfolio by Asset Efficiency Ratios
7
Quick Lube Industry

• OPPORTUNITIES
• Need for convenience
• Vehicle complexity
• Trend toward DIFM
• Increase in miles driven

• THREATS
• Extended drain intervals
• Leasing cars
• Escalating land costs
• Increased competition
• Industry consolidating
• Vertical integration

8
5-Forces Model of Quick Lube Industry

• Potential
• Entrants
• Low capital cost
• Brand name oil

(?)
(-)

• Buyers
• Low switching
• costs
• Price sensitive

• Suppliers
• Commodity
• market

()
(-)
Rivalry

• Marketing
• Price Cutting

• Substitutes
• Do-it-yourself

(-)
9
Vertical Integration via Acquisition
10
Related Horizontal Diversification
Q-Lube
11
Bottled Oil Costs (Data from Case)
Oil Marketing dominate
12
Installed Oil Costs (Data estimated)
Labor and Overhead significant
13
Industry Value Chain
Oil Co. Value Chain
Buyer Value Chain

• Motivations ?
• Strategic alternatives ?
• Better off ?
• Cost of entry ?

14
Pennzoil Strategic Alternatives
15
Pennzoil Strategic Alternatives
16
Pennzoil Strategic Alternatives
Electric, Fuel Cell, or Hybrid Engines?
Honda Insight
Toyota Prius
17
Ashland Oils Major Business Units
18
Valvoline
VIOC - DIFM
Bottled - DIY
19
Quick Lube Industry

• OPPORTUNITIES
• Need for convenience
• Vehicle complexity
• Trend toward DIFM
• Increase in miles driven

• THREATS
• Extended drain intervals
• Leasing cars
• Escalating land costs
• Increased competition
• Industry consolidating
• Vertical integration

20
5-Forces Model of Quick Lube Industry

• Potential
• Entrants
• Low capital cost
• Brand name oil

(?)
(-)

• Buyers
• Low switching
• costs
• Price sensitive

• Suppliers
• Commodity
• market

()
(-)
Rivalry

• Marketing
• Price Cutting

(-)

• Substitutes
• Do-it-yourself

21
Bottled Oil Costs (Data from Case)
Oil Marketing dominate
22
Installed Oil Costs (Data estimated)
Labor and Overhead significant
23
Valvoline Strategic Alternatives?
24
Valvoline Strategic Alternatives
25
Valvoline Strategic Alternatives
Electric, Fuel Cell, or Hybrid Engines?
Honda Insight
Toyota Prius