Pennzoil’s Major Business Units
Oil & Gas
Bottled O il Drum Oil Installed O il
M otor O il F ilters Other
Pennzoil HQ
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
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Oil Co. Value Chain Buyer Value Chain
Industry Value Chain
Motivations ? Strategic alternatives ? Better off ? Cost of entry ?
Ashland Oil’s Major Business Units
Refin ing
Bottled O il Installed O il
Valvoline Chem ical Asphalt D istribution
Ashland Oil
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
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