Globalization Of Jiffy Lube

Globalization Of Jiffy Lube

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Section 1: Country Analysis
The task at hand is to take an honest look as to the likelihood that our Jiffy Lube franchise would be able to become established and grow once established in the countries France and the United Kingdom. Given the following evidence and details about the current situations in each of these countries along with a few tidbits of information about their economies and general markets, one should be able to better understand the possibilities that lie within each country.
First we will take a look at France. Over the past few years in France, "franchise" has evolved from a concept into a truly viable economic model. For the tenth straight year, the number of franchises in France has increased steadily by 3-5 percent in 2003. That same year, 55,880 stores opened in France, 34,745 of them as franchises – an increase from a 57.8 percent share in 2002 to 61.2 percent in 2003. The number of companies in France using franchises rose from 719 to 765 over the course of 2003, an increase of about 6.4 percent. French franchises are also exported with 179 networks located outside of France. This shows that the opportunity for a reputable franchise to become established in France is continuing to grow. The overall acceptance of American franchises is beneficial when contemplating how the community will take to a business opening shop.
The automobile sector is a prime example of the increase in franchises in France, representing 11.2 percent of franchises in France in 2003, an increase of 10.2% over 2002. Out of the 34 automotive companies in France with franchises, seven of them (or 20.6 percent) have an international presence. French franchises have not only survived the repeated economic crises of recent years, but have even become economic models in their performance and success. It is apparent that everybody needs transportation, and that transportation needs to be maintained. The growing market in the automobile sector demonstrates positive signs that a facility like Jiffy Lube would be able to acquire business.
There are three main business activities in the automotive sector: rental, repair, and other services. Of the three, automotive rental franchises have increased the most. Given this, a potential idea would be to team up with some of the rental facilities, and offer them special discounts or service options. We could offer pick up and delivery, customized service, or a number of different amenities to gain continued business.

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I believe that this would be a good starting point in order to gain clientele, and demonstrate our potential as a solid repair and maintenance facility. Looking at the other sectors, all are considered to have significant growth potential. Overall, the number of franchises within each of the three activities continues to expand with all three seeking more entrepreneurs to continue this expansion. The number or franchises found in these three automotive sectors increased from 1,789 in 2002 to 2,177 in 2003. Furthermore, there is still much more room for growth, giving the automotive sector a promising future. This evidence proves that we would be moving into a reactive market. We would not have to bear the initial pioneering costs, and we can pull from secondary data by looking at our local competitors. Another benefit is being able to look at pricing to evaluate whether we can offer more competitive prices, and still maintain our business at the growing level.
There are several examples of French companies that succeeded very well in expanding the number of franchises in 2003. Etape Auto (for auto repairs), Glastint and Bell-Auto (for auto services), and Continental Rental (for auto rentals) share the strategy of increasing franchises and carry this out through strong recruitment and ensuring a steady and durable development of their different automotive sector activities. The franchise business follows certain important steps to reach its objectives: 1) acquire a niche in the market by developing an organized and homogeneous distribution network in both France and then internationally; 2) prove abilities as leaders in the field; and 3) validate logo and product. All of these aspects are very important when considering the entry into a foreign market. We will be attempting to serve a large yet particular market. People not only want the service, but more importantly care about the level of care that they receive. Long gone are the days of "wam bam, thank you mam". People want to believe that their needs are important. Everybody does need regular vehicle service, but in general, people will pay more for the quality of that service. This is where effective management will come in to play, getting everyone involved and on the same page as a team with a primary goal clearly defined is crucial to the success of the business.
Next on the agenda is to look at the United Kingdom. Though a few of the following facts are not specific determinants, they do aid in the overall picture when considering the entry to the UK.
The automotive industry is a pivotal part of the UK manufacturing sector. Automotive firms are leaders in global best practice in many areas of manufacturing and provide a key source of improvement for the UK manufacturing sector as a whole. Altogether seven global automotive companies manufacture cars in the UK, together with a number of truck, van and bus companies and many of the world's major component manufacturers. The UK is home to the world's most successful motor sport industry and a number of leading independent automotive design firms, and is increasingly becoming a centre for engine production. Also note that the UK economy has now enjoyed 53 consecutive quarters of GDP growth. The service sector in the UK accounts for about 75 percent of GDP, while the manufacturing sector accounts for around 20 percent. The service sector continues to be more resilient than manufacturing, and it is this part of the economy that will account for the bulk of GDP growth this year.
Automotive businesses are leaders in many areas of manufacturing, purchasing, product development and logistics. Major inward investors have brought with them world best practice and the skills and knowledge of the industry provide a key source for improvement across the UK manufacturing sector as a whole. The automotive manufacturing sector contributes around 9 billion pounds value-added to the economy, and accounts for 0.8% of GDP, 6.2% of manufacturing value-added and 11% of total UK manufactured exports. Some 210,000 people are employed in the design and manufacture of vehicles and components, and a further 570,000 in the motor trades which supply, service and repair vehicles in the UK.
In 2006, 1.4 million cars and around 208,000 commercial vehicles were produced in the UK. Of these, 77% of the cars and 66% of the commercial vehicles were exported to a variety of markets. Europe is the main destination, with significant sales in North America and Asia. There is increasing evidence to show the continued growth of the automobile industry in the United Kingdom. Though not all divisions can be tapped for business sake from a franchise such as Jiffy Lube, there is still the factor of having numerous opportunities to work with. In addition we can get a very broad and also detailed look at the current industry to find which avenue would best suit out abilities and our needs.
The United Kingdom is very receptive to American goods and services. With a $1.9 trillion GDP, the United Kingdom remains the United States' largest European export market and fourth largest export market worldwide. The UK government's economic policies generally seek to sustain job creation. As a result, the United Kingdom has adopted a number of new labor laws, including the working time directive, although derogating from certain parts of this. This demonstrates a couple a points that are important. First is the reception of the goods and services. When entering a foreign market, it is important to research the views of those that you are going to directly serving. As stated previously, everyone needs maintenance for their vehicles and people invest a lot in their vehicle so it is very important to them who is caring for and working on their vehicle. Having a general trust of American goods and services is quite beneficial in getting started.
Looking at a few of the difficulties, it is important to know that the size, maturity and openness of the UK market are also its greatest challenges. U.S. companies seeking to enter this market, or expand their market share, face tough and well established competition from both domestic and third country competitors. While this may be, it shows an atmosphere much like the United States, and when looking at an establishing the franchise Jiffy Lube the outlook looks positive. At the very least, using such a large market to start with and gain credibility, and at the same time learning to adapt to a foreign market would work to our advantage. This would then open the doors for further expansion.
The UK has a highly developed professional services market that is well regulated. A wide variety of service providers is available to support U.S. companies doing business in the UK, from the largest global firms to small niche players. Using such providers would only benefit the company in becoming established. Working with such companies, we could develop a marketing mix that is appealing and customer focused. In addition, gaining ties with local entities in order to open doors to possible business.

Section Two: Client International Activities Report

Jiffy Lube is North Americas leading oil change service facility. Jiffy Lube has 2200 locations in the United States and Canada, 88% of which are franchised and the remaining facilities are company owned. Jiffy Lube has the need to open more locations to support the growing demand for service because in 10 years; the fast lube industry will need to expand to service more than 120 million vehicles a year, compared to about 80 million a year serviced in 1995. Currently Jiffy Lube centers service over 30 million customer vehicles each year.
Jiffy Lube's parent company Royal Dutch/Shell group has helped make the Jiffy Lube chain the most successful quick lube facility in North America by acquiring other quick lube chains and making Jiffy Lube twice as large as the nearest competitor. The Shell group also has a very strong international presence which will give Jiffy Lube an advantage over competitors when looking to go global. Shell is active in over 130 countries and employs over 100,000 people.
Currently Shell China is launching a joint venture in China with Shanghai Automotive Industry Sales Corporation. The joint venture consists of 10 pilot faculties in Shanghai with the plan to reach 600 faculties across China by 2015. Currently Chinese consumers purchase the third largest amount of new automobiles next to the United States and Japan. The Chinese automobile market is expected to grow 10% to 15% within five years.
Finical information for all Jiffy Lube locations could not be found but the annual report for Lucor Inc. last filed with the SEC in the year 2000. Lucor Inc. is the largest franchisee of Jiffy Lube stores. Lucor Inc. operates 128 Jiffy Lube services faculties across the United States. In the year 2000 the Jiffy Lube stores operated by Lucor Inc. had a gross profit of $83,093,718 and net sales of $107,287,910. The gross profit has grown by nearly $18 million and sales by nearly $25 million from the previous year. This information only supports the predictions for growth in the United States and abroad. The growth numbers are very exciting when compared to China as they are quickly approaching the United States in vehicle sales which can only lead to an increased need for service industries such as Jiffy Lube.
The expansion of Jiffy Lube into a foreign market looks to provide a very lucrative opportunity. In researching service industries in foreign markets such as China, Russia and many South American countries there is little or no competition in quick lube services. Many of the general maintenance services are performed by new car dealers and independent persons. A new venture called "Quick Lube Russia" implemented by Premier Auto Service LLC is an example of the opportunities in foreign markets. The main points Premier Auto Service LLC say create prime conditions are the Russian economic boom, with approximately 6% growth rate, the competitive advantage because the lack of competitors, and the market niche than can be filled by a Western styled service chain for automobiles.


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