pennzoil’s major business units. portfolio by revenue n motor oil dominates
TRANSCRIPT
Pennzoil’s Major Business Units
Oil & Gas
Bottled O il Drum Oil Installed O il
M otor O il F ilters Other
Pennzoil HQ
Portfolio by Revenue
Oil & GasMotor OilFiltersOther
Motor oil dominates
Portfolio by Profit Volume
Oil & GasMotor OilFiltersOther
Other dominates (?)
Portfolio by Profit Ratio
0
1
2
3
4
5
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9
10Oil & GasMotor OilFilters
Portfolio by Capital Outlay
Oil & GasMotor OilFiltersOther
Most spent on Oil & Gas
Portfolio by Asset Efficiency Ratios
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8Oil & GasMotor OilFilters
Quick Lube Industry
OPPORTUNITIESOPPORTUNITIES Need for convenienceNeed for convenience Vehicle complexityVehicle complexity Trend toward DIFMTrend toward DIFM Increase in miles drivenIncrease in miles driven
THREATSTHREATS Extended drain intervalsExtended drain intervals Leasing carsLeasing cars Escalating land costsEscalating land costs Increased competitionIncreased competition Industry consolidatingIndustry consolidating Vertical integrationVertical integration
5-Forces Model of Quick Lube Industry
SuppliersSuppliers• Commodity market
BuyersBuyers• Low switchingcosts• Price sensitive
SubstitutesSubstitutes• Do-it-yourself
PotentialPotential EntrantsEntrants• Low capital cost• Brand name oil
RivalryRivalry
• Marketing• Price Cutting
(+)
(?)
(-)
(-)
(-)
Vertical Integration via Acquisition
Related Horizontal Diversification
QQ--LubeLube
Bottled Oil Costs (Data from Case)
OilPackageLaborFreightMarketing
Oil & Marketing dominate
Installed Oil Costs (Data estimated)
OilLaborOverheadMarketing
Labor and Overhead significant
Oil Co. Value Chain Buyer Value Chain
Industry Value Chain
Motivations ? Strategic alternatives ? Better off ? Cost of entry ?
Pennzoil Strategic Alternatives
Pennzoil Strategic Alternatives
Pennzoil Strategic Alternatives
Honda Insight Toyota Prius
Electric, Fuel Cell, or Hybrid Engines?
Ashland Oil’s Major Business Units
Refin ing
Bottled O il Installed O il
Valvoline Chem ical Asphalt D istribution
Ashland Oil
Valvoline VIOC - DIFM
Bottled - DIY
Quick Lube Industry
OPPORTUNITIESOPPORTUNITIES Need for convenienceNeed for convenience Vehicle complexityVehicle complexity Trend toward DIFMTrend toward DIFM Increase in miles drivenIncrease in miles driven
THREATSTHREATS Extended drain intervalsExtended drain intervals Leasing carsLeasing cars Escalating land costsEscalating land costs Increased competitionIncreased competition Industry consolidatingIndustry consolidating Vertical integrationVertical integration
5-Forces Model of Quick Lube Industry
SuppliersSuppliers• Commodity market
BuyersBuyers• Low switchingcosts• Price sensitive
SubstitutesSubstitutes• Do-it-yourself
PotentialPotential EntrantsEntrants• Low capital cost• Brand name oil
RivalryRivalry• Marketing• Price Cutting
(+)
(?)
(-)
(-)
(-)
Bottled Oil Costs (Data from Case)
OilPackageLaborFreightMarketing
Oil & Marketing dominate
Installed Oil Costs (Data estimated)
OilLaborOverheadMarketing
Labor and Overhead significant
Valvoline Strategic Alternatives?
Valvoline Strategic Alternatives
Valvoline Strategic Alternatives
Honda Insight Toyota Prius
Electric, Fuel Cell, or Hybrid Engines?