1. Pennzoil’s 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 Motivations ? Strategic alternatives ?
Oil Co. Value Chain
Buyer Value Chain
Motivations ?
Strategic alternatives ?
Better off ?
Cost of entry ? 69

14. Pennzoil Strategic Alternatives

15. Pennzoil Strategic Alternatives

16. Pennzoil Strategic Alternatives
Electric, Fuel Cell, or Hybrid Engines?
Honda Insight
Toyota Prius

17. Ashland Oil’s Major Business Units

18. Valvoline
VIOC - DIFM
Bottled - DIY 69

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