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Pennzoil's Business Units Portfolio: Motor Oil Dominates Revenue, Oil & Gas Dominates Capital Outlay

This analysis explores the major business units within Pennzoil's portfolio, highlighting the dominance of motor oil in revenue and the oil & gas sector in capital outlay. It also examines opportunities and threats in the industry, the 5-forces model of the quick lube industry, and strategic alternatives for both Pennzoil and Valvoline.

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Pennzoil's Business Units Portfolio: Motor Oil Dominates Revenue, Oil & Gas Dominates Capital Outlay

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  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. 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 Quick Lube Industry

  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 Oil’s Major Business Units

  18. VIOC - DIFM Valvoline Bottled - DIY

  19. 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 Quick Lube Industry

  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

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