Porsche
PORSCHEPresented by:Abdilahi Abdi Karim G1224243Issa Muktar
AdanG1235591Musliza MusaG1236556Siti Maisawah SewandiG1237154
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Outlines3Porsches backgroundCase summaryIssues highlightSWOT
analysisTOWS analysis5 forces modelRecommendation/ future
outlookReferences
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Porsches Background
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Porsches BackgroundHistory of Porsche
I couldnt find the sports car of my dreams, so I built it myself
(Ferdinand Porsche)
Ferdinand Porsche founded the company in 1931, with main offices
in the centre of Stuttgart, Germany.Initially, the company offered
motor vehicle development work and consulting, but did not build
any cars under its own name.
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Porsches Background6One of the first assignments from the German
government to design a car for the people, the "Volkswagen". This
resulted in the Volkswagen Beetle, one of the most successful car
designs of all time. The Porsche 64 was developed in 1939 used many
components from the Beetle. On 15 December 1945, Ferdinand was
arrested for war crimes, but not tried.
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Porsches Background7During his 20-month imprisonment, Ferdinand
Porsche's son, Ferry Porsche, decided to build his own car, because
he could not find an existing one that he wanted to buy. He also
had to steer the company through some of its most difficult days
until his father's release in August 1947. The first models of what
was to become the 356 were built in a small sawmill in Gmnd,
Austria.
Tagline: Porsche. There is no substitute
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Porsches Background8Our Mission Statement:We are committed to
provide impeccable service to ourdemanding clientele of premium
cars.Pay our customers with the greatest possible attention and
care in all aspects of the business.To create a connection in the
workplace, with shared passion for our vision and goals. To have
motivated, hard working and empowered employees.Maintain commitment
to our corporate social responsibility.
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Porsches Background9Our Vision:Look towards the future with the
knowledge of our past.Passion - our commitment touches our hearts
and minds to develop our company further with time.Leadership - the
courage to shape a better future and be flexible and
proactive.Innovation - we search, we imagine, we create , we
delight but at the same time honour and protect the traditions and
policies of our franchises.Our vision for the future is to
represent both volume and premium brands and be the number one
company in terms of after sales and customer service.
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Porsches Background10Our Values:Responsibility: Our
responsibility is care for our customers and value our employees
and be sensitive towards social and environmental issues.Trust:
Work hard daily to build mutual trust with our colleagues and
partners.Teamwork: Respecting and valuing our employees and
creating a positive work environment.
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Case SummaryThe 911
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Case Summary12 Porsche independent and successful car maker for
over 100 years Fell victim to the 2008 financial crisis failed to
secure the capital needed to acquire a controlling stake in VW Auto
Group. In 2010 reverse takeover Porsche forced to hand over keys to
VW By 2011 produced 5 models with a combined total of 40 different
trim levels Increased diversification brought higher shareholder
returns.
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Case Summary13Global economy struggle and recession,
unemployment in US and Europe have made consumers extremely
sensitive. Climate for most automakers in 2007 was challenging,
same for Porsche Porsche competes in a market segment where
relatively few can compete Requires sizable capital investments
Porsche has a accumulated a wealth of technology expertise and
employs some of the brightest engineering minds in the world
Porsche has consistently developed class-leading technologies that
competitors find difficult to imitate
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Case Summary14Porsche has been diversifying its international
scope.Porsche has been providing the best long-term reliability of
any brand in the US Porsche has forged strategic partnerships with
other automakers to keep its business on the cutting edge Customers
buy Porsche because of its innovative features, exceptional
styling, and European origin Porsche has been able to produce equal
performance and prestige, yet at more affordable prices range
compared to BMW M6, Mercedes-Benz SL-class, etc
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Case Summary15VWs plan is to integrate the Porsche brand into
the group by the end of 2011 via a multi-stage transaction:Porsche
is expected to contribute to the group synergy and help other
brandsPorsche would no longer solely focus on it is traditional
target customer Porsche would instead be forced to appeal multiple
consumer segmentPorsche faces risk of diluting its brand,
alienating its customer base.
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Issues HighlightThe Cayenne
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Issues Highlight17Porsche is under financial crisis because in
2008 it failed to secure the capital needed to acquire Volkswagen,
instead in 2010, there was a reverse takeover and Porsche was
acquired by VW.Porsche will face a problem of moving its executives
and experienced management by VW into key roles with other
automotive brands as part of integration plan into VW Family.
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Issues Highlight18Potential Brand dilution will happen since its
switching from focus approach to broader market to extend the
Porsche product line.How the market would react to multiple sports
cars offerings from Audi, Lamborghini, Porscheetc.Porsches greatest
challenge would be the impeding CAF regulations (regulations that
could spell an end to Porsches sales in its number one market,
US).
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PESTLE AnalysisThe Macan
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PESTLE Analysis20POLITIC/LEGAL:Creating more fuel efficient
sport cars. New regulation, such as CAFE in the US and government
control in communist/socialist countries. Under the direction of
President Obama, the National Highway Traffic Safety Administration
and the EPA increased the mpg requirements for all cars in the US
through an old emissions policy known as Corporate Average Fuel
Economy (CAF).
ECONOMIC: Global recession in US and Europe and increase in fuel
prices. Oil prices were at record highs, topping $100 a
barrel.Consumers were extremely price sensitive and unemployment in
the US hovered around 10%
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PESTLE Analysis21SOCIAL/ENVIRONMENT: More environmentally
conscious population
TECHNOLOGY: The seven-gear Porsche Doppelkupplung (PDK)
systemThe Porsche Torque Vectoring (PTV) systemEquity interest in
MHP-IT Technology groupLeader in R&D, constant pressure from
other sports car manufacturers
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SWOT Analysis22The Boxster
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SWOT Analysis23
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SWOT Analysis24
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TOWS AnalysisThe Cayman
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TOWS Analysis26STRENGTHSS2. Stuttgart plant the best car factory
in the world
S3. Consistently innovative with class leading technologies
S6. Strong brand image
S8. Lean production practices
S10. Skilled workforce OPPORTUNITIESO1. Strong economic support
in homeland Germany
O2. Supportive manufacturing infrastructure in Germany
O6. Wealth of resources upon joining the VW group SO STRATEGY
1:Maintain and improve product quality of current models and
develop new models through continued innovation and technological
advancement
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TOWS Analysis27STRENGTHS:
S1. Best quality for comparatively low prices long-term
reliability for high-performance cars, sedans, SUVs, trucks, etcS4.
Strategic alliances with other automakersS5. Diversification SUV
(Cayenne), 4-door sedan (Panamera)S7. Customer loyalty those who
value innovation and independenceS9. All models (except
Boxster/Cayman) are produced in GermanyOPPORTUNITIES
O3. Expansion to ChinaO4. Efficient international expansion
greater economies of scale, increases market penetrationO5. Global
strategy same models for the whole world leads to bigger
international marketO6. Wealth of resources upon joining the VW
groupSO STRATEGY 2Increase efforts into emerging markets especially
China and expand product line to match untapped customer bases
preference
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TOWS Analysis28STRENGTHSS3. Consistently innovative with
class-leading technologies
S4. Strategic alliances with other automakers
S10. Skilled workforceTHREATST2. Alienation of customer baseST
STRATEGY 1Continuous improvement of quality through technological
advancement to maintain and improve the brands prestige
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TOWS Analysis29STRENGTHS
S2. Stuttgart plant the best car factory in the worldS3.
Consistently innovative with class-leading technologiesS4.Strategic
alliances with other automakersS6. Strong brand imageS7. Customer
loyalty those who value innovation and independenceS8. Lean
production practicesS10. Skilled workforceTHREATS
T3. Losing competitive advantage
T4. CAF regulations to be enforced in 2020 will cause Porsche to
lose its US market shareST STRATEGY 2Innovate and focus on fuel
efficiency through hybrid and electric vehicles
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TOWS Analysis30WEAKNESSES
W1. Concentrates more on exportation vs international expansion,
acquisition and licensing
W2. Small compared to competitors
W3. Weak financially victim of 2008 financial
crisisOPPORTUNITIES
O1. Strong economic support in homeland Germany
O2. Supportive manufacturing infrastructure in Germany
O3. Expansion to China
O4. Efficient international expansion greater economies of
scale, increases market penetration
O5. Global strategy same models for the whole world leads to
bigger international market
O6. Wealth of resources upon joining the VW groupWO STRATEGY
1Develop sister companies that focus on affordable sports car for
middle class customers
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TOWS Analysis31WEAKNESSES
W5. Conflict between the executives and management of Porsche
and VWOPPORTUNITIES
O6. Wealth of resources upon joining the VW groupWO STRATEGY
2Create a comprehensive group agreement with Volkswagen
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TOWS Analysis32WEAKNESSES
W1. Concentrates more on exportation vs international expansion,
acquisition and licensing
W2. Small compared to competitors
W3. Weak financially victim of 2008 financial crisis
W4. Dilution of brandTHREATS
T1. Alienation of customer base
T2. Losing competitive advantage
T3. CAF regulations to be enforced in 2020 will cause Porsche to
lose its US market shareWT STRATEGY
Maintain focus on niche market segment and producing current
models
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5 Forces ModelThe 911: Turbo
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5 Forces Model341) THREAT OF NEW ENTRANTS (LOW)The threat of new
entrants is very low in the automobile industry. The industry is
very mature and it has successfully reached economies of scale.
Barriers to Entry (High)Capital Requirement Brand equity
Knowledge (Technology) Product differentiation. Large economies of
scale
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5 Forces Model352) SUPPLIER BARGAINING POWER (LOW)
The automotive industry is composed of powerful buyers who are
generally able to dictate terms to their suppliers. Although
supplier products are vital to production, their transactional
power over Porsche is usually low. Competition between suppliers is
high as a contract with Porsche represents a significant
opportunity. Porsche make their own engine parts and partnership by
large suppliers (such as VW), which provide core components, could
reduce Porsche potential to exercise bargaining power.
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5 Forces Model363) BARGAINING POWER OF BUYERS (MODERATELY
HIGH)The buyers also are a significant portion of the industries
revenue. If they can not keep their buyers happy then they risk
losing them to their competitors. The reasons why the power is not
completely high is that the buyers are not large and few in number.
Finally customers are willing to pay premium for the brand.
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5 Forces Model374) THE THREAT OF SUBSTITUTES (MEDIUM)
Direct substitute for Porsche in luxury sport car industry For
examples: 1) BMW X6 M is slightly faster than the Cayenne Turbo 2)
Mercedes-Benz ML63 is less expensive than the Cayenne but slower 3)
Audi Q7 is the slowest of the Pack but has more interior space and
torque However each model has its own distinct advantage and
disadvantages when compared.
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5 Forces Model384) THE THREAT OF SUBSTITUTES (MEDIUM)
In these areas, the other substitutes available (e.g., walking,
mass transit, bicycles.) can be less costly than automobiles and
thus alternative modes of transportation are often preferred.
However, substitute do not offer the same quality as
Porsche.Porsche has been able to produce equal performance and
prestige yet at more affordable prices
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5 Forces Model395) INTENSITY OF RIVALRY AMONG COMPETITORS
(HIGH)
The level of rivalry in the industry is extremely high, luxury
Sports car industry produces a naturally competitive environment.
The industry brings together global giants (Ferrari, Lamborghini,
Mercedes Benz SL-Class, and Porsche ).
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The 918 SpyderStrategy 2018
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VWs Strategy 201841To become : The most successful and
fascinating automaker by 2018Porsche will help VW achieve its goals
by sharing its technology with other VW brands, increasing
production and diversifying the Porsche product lineVW has seen the
success of Porsches recent diversification and is looking for an
even broader offering.
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VWs Strategy 2018Volkswagen intends to deploy intelligent
innovations and technologies to become a world leader incustomer
satisfactionand quality.The goal is to increaseunit salesto more
than 10 million vehicles a year; in particular, VW intends to
capture an above-average share of growth in the major growth
markets.Volkswagens aim is a sustainable return onsales before
taxof at least 8%so as toensure that the Groups solid financial
position and ability to act are guaranteed evenin difficult market
periods. Volkswagen aims to become thetop employeracross all
brands, in all companies and regions; this is necessary in order to
build a first-class team.
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VWs Strategy 201843
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Porsches Strategy 201844
Weve always been ambitious.And well make sure it stays that
way.
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Porsches Strategy 201845The focus of our company has always been
on people whether its our customers or employees.At the same time,
the core element of our corporate objectives is value-creating
growth. This provides us with the means to invest in innovative
technologies, new products and, above all, in our workforce. Our
aim is to be market leader. We want to grow profitably the Porsche
way with enthusiastic customers and as an excellent, social and
family-friendly employer.We will also improve our processes and
develop new ones, while ensuring a good rate of return. We have
everything we need to achieve these goals: emerging markets,
fascinating vehicles and highly motivated staff.Talking of our
workforce, this is another area where we are looking to
significantly grow by 2018. This also includes expanding the
infrastructure accordingly.
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RecommendationsThe Panamera
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Maintain and improve product quality of current models and
develop new models through continued innovation and technological
advancementUtilization of wealth of resources Technology transfer
between brands under VW GroupAudis tagline Vorsprung durch Technik
which means Advancement through Technology ~ applicable to Porsche
nowExample: First ever fully automatic GT3, critisms from purists
but selling fast!
2. Increase efforts into emerging markets especially China and
expand product line to match untapped customer bases
preferenceResearch on prospective customers preference & tastes
through surveys, in-depth interview. Especially to China and Asia
Pacific (increase of percentage of sales and units sold)
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3. Continuous improvement of quality through technological
advancement to maintain and improve the brands prestige Matured
loyal customers will further appreciate that the brand name remains
prestigious
4. Innovate Focus on fuel efficiency through hybrid and electric
vehiclesR & D: Create a team specifically to study and develop
hybrid & electric vehiclesAverage mpg rating of 39 for cars as
the target before 20205. Develop sister companies that focus on
affordable sports car for middle class customers Volkswagen, Audi:
for middle to high income group Seat, Skoda: for low to middle
income group
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6. Create a comprehensive group agreement with VolkswagenUnder
this agreement;Volkswagen's solid financial base and Porsche's
independence will be preservedHigh growth, earnings and synergy
potential accompanied by job security.
7. Maintain focus on niche market segment and producing current
models Minimizing all of Porsches weaknesses and avoiding any
possible threats
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R. Duane Ireland et..al (2013). The Management of Strategy
Concepts and Cases.10th Edition
http://www.mbaskool.com/brandguide/automobiles/1822-porsche-automobile-holding-se.htmlhttps://itunes.apple.com/us/app/911-porsche-world-magazine/id537660792?mt=8http://www.strategicmanagementinsight.com/tools/porters-five-forces.htmlhttp://www.porsche.com/usa/aboutporsche/overview/strategy2018/http://www.volkswagenag.com/content/vwcorp/content/en/investor_relations/Warum_Volkswagen/Strategy.html
References
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51Thank You
Q&A session
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