Jiffy Lube International, Inc. (Abridged)

Abstract

This is an abridged version of Jiffy Lube International (UVA-BP-0303), intended to highlight strategy issues and focus less on the economics of franchising. See abstract of original case.

Excerpt

UVA-BP-0417

JIFFY LUBE INTERNATIONAL, INC. (ABRIDGED)

In November 1988, Jiffy Lube's chief executive officer (CEO), Jim Hindman, was pondering the future of his company from his offices at the company's Baltimore, Maryland, world headquarters. Less than 10 years ago, he had purchased a tiny franchise chain of retail fast-oil-change centers and turned it into the internationally recognized industry leader. In fact, the industry had literally grown simultaneously with his company. Jiffy Lube International (JLI) now boasted about 1,000 mostly franchised centers and reported over $ 250 million in systemwide revenues (including those of its franchisees) during the fiscal year ended March 31, 1988.

Despite its phenomenal growth and the fact that JLI now had about three times as many centers as its closest competitor, the company was under considerable pressure from the financial community and the press. The price of JLI's common stock was at its lowest point ever, and the business press had been increasingly negative in its assessment of JLI's financial condition. Moreover, a Washington-area TV station (located next door to JLI's headquarters) had recently broadcast a damaging news segment that suggested that consumers were taking considerable risks by having their cars serviced at local Jiffy Lube centers; and a Philadelphia TV station was planning a five-part segment there soon.

During the last several months, Hindman and his senior management team had formulated a new strategy to take Jiffy Lube through its next phase of development. The emphasis was to shift from growth to consolidation. Because the elements of this new strategy had not yet been widely communicated outside the company, Hindman thought now would be a useful time to consider where the company was going, in light of where it had been.

The Jiffy Lube Service Concept

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Keywords: milgram, service industries, management, strategic market planning, strategic planning