A huge market exists for automobile tune-ups, oil changes, and lubrication service for more than 250 million vehicles on U.S. roads. Some of this demand is filled by full-service auto dealerships, some by Walmart and Firestone, and some by other tire/service dealers. However, Rapid-Lube, Mobil-Lube, Jiffy-Lube and others have also developed strategies to accommodate this opportunity.

Rapid-Lube stations perform oil changes, lubrication, and interior cleaning in a spotless environment. The buildings are clean, usually painted white, and often surrounded by neatly trimmed landscaping. To facilitate fast service, cars can be driven through three abreast. At Rapid-Lube, the customer is greeted by service representatives who are graduates of Rapid-Lube U. The Rapid-Lube school is not unlike McDonald’s Hamburger University near Chicago or Holiday Inn’s training school in Memphis. The greeter takes the order, which typically includes fluid checks (oil, water, brake fluid, transmission fluid, differential grease) and the necessary lubrication, as well as filter changes for air and oil. Service personnel in neat uniforms then move into action. The standard three-person team has one person checking fluid levels under the hood, another assigned interior vacuuming and window cleaning, and the third in the garage pit, removing the oil filter, draining the oil, checking the differential and transmission, and lubricating as necessary. Precise task assignments and good training are designed to move the car into and out of the bay in 10 minutes. The business model is to charge no more, and hopefully less, than gas stations, automotive repair chains, and auto dealers, while providing better and faster service.

Discussion Questions

1. What constitutes the mission of Rapid-Lube?

2. How does the Rapid-Lube operations strategy provide competitive advantage? (Hint: Evaluate how Rapid-Lube’s traditional competitors perform the 10 decisions of operations management vs. how Rapid-Lube performs them.)

3. Is it likely that Rapid-Lube has increased productivity over its more traditional competitors? Why? How would we measure productivity in this industry?

Uber Technologies, Inc. The S41 billion dollar firm Uber Technology, Inc., is unsettling Uber, as there are real overhead costs. Uber’s costs, depending the traditional taxi business. In over 40 countries and 240 mar on the locale, may include insurance, background checks for kets around the world, Uber and similar companies are cha drivers, vetting of vehicles, software development and mainte- lenging the existing taxi business model. Uber and its growing nance, and centralized bing. How these overhead costs com list of competitors, Lyft, Sidecar, and Flywheel in America, and pare to traditional taxi costs is yet to be determined. Therefore fledging rivals in Europe, Asia, and India, hink their smart mproved efficiency may not be immediately obvious, and phone apps can provide a new and improved way to call a taxi ctract provisions are significant (see This disruptive business model uses an app to arrange rides usa/terms) between riders and cars, theoretically a nearby car, which is tracked by the app. The Uber system also provides a history of he model is finding volunteer drivers at inopportune times. A rides, routes, and fees as well as automatic bng. In addition sober driver and a clean car at 1:00 am. New Year’s Eve does driver and rider are also allowed to evaluate each other. The cost more. Consequently, Uber has introduced “surge” pricing services are increasingly popular, worrying established taxi ser Surge pricing means a higher price, sometimes much higher, than vices in cities from New York to Berlin, and from Rio de Janeiro ormal. Surge pricing has proven necessary to ensure that cars to Bangkok. In many markets, Uber has proven to be the bes and drivers are available at unusual mes. These higher surge fastest, and most reliable way to find a ride. Consumers world prices can be a shock to riders, making the surge price” a conten- wide are endorsing the system as a replacement for the us ous issue taxi ride. As the most established competitor in the field, Uber is putting more cars on the road, meaning faster pickup times which should attract even more riders, which in turn attracts Discussion Questions even more drivers, and so on. This growth cycle may speed the demise of the existing taxi businesses as l as provide sub- stantial competition for firms with a technology-oriented model similar to Ubers In addition to growing regulations, a complicating factor in . The market has decided that Uber and its immediate compet tors are adding efficiency to our society. How is Uber providing that added efficiency? The Uber business model initially attempts to bypass a

2. Do you think the Uber model wl work in the trucking number of regulations and at the same time offer better service and lower fees than traditional taxis. However, the traditional

3. In what other taxi industry is fighting back, and regulations are mounting The regulations vary by country and city, but increasingly spe- cial licensing, testing, and inspections are being imposed. Par s: Wall Street Journal January 2, 2015), B3, and (Dec. 18, 2014), DI: of the fee charged to riders does not go to the driver, but to and industry? areas/industries might the Uber model be used?

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