Globalization of Jiffy Lube
Essay Preview: 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. 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 worlds major component manufacturers. The UK is home to the worlds 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