WHAT’S DRIVING PORSCHE?

PORSCHE - There is no substitute

PORSCHE Founder - Ferdinand Porsche Year - 1931 Services - automotive financial

services, engineering services, investment management

Owner - Volkswagen Headquarters - Germany CEO - Porsche Matthias Muller Tag line - There is no substitute

WHAT’S DRIVING PORSCHE

Porsche has a strong R&D team Bringing the R&D function of two firms too close together could potentially weaken Porsche engineer’s sense of belonging and demotivate them.

Sales fell from 50k to 14k between 1986 – 1993. In 1948 Porsche produced its first brand sports car, Porsche

356 series rolled off production line. CEO Wendelin Wiedeking – lean manufacturing – lost

concentration on Porsche’s own car design – more concentration on outside engineering –decided to go beyond sports car niche.

WHAT’S DRIVING PORSCHE Porsche cayenne with VW touraeg’s chassis frame was introduced in the market with higher price than that of VW touraeg’s - leaded to brand corruption. People started to use Porsche cayenne for daily runabout and failed to understand the importance of the brand Porsche SUV – sales drop. Porsche could test or develop ideas that the company would not have been able to fund on its own. Porsche and VW signed an agreement under which Porsche was forbidden to design car for any other company between 1.0 through 1.3 engines under loose agreement.

Porsche scenario

PESTEL

Boston Box

SWOTPorter’s 5 Forces

Ansoff

Strategic Planning

Why this strategic planning?

Analysis is required in an organization during the following decisions

To launch a new product or service

Consideration of new route to market

Working as a part of strategic project team

Entering a new region or country

SWOT ANALYSIS

STRENGTH

High brand presence and reputation across globe

It has supreme style with sporty features

One of the most recognized top-of-the-mind and popular luxury car brands

WEAKNESS

Lacking presence in middle income segment which is expanding at a phenomenal rate

Very high maintenance and running cost in an extremely competitive luxury car market

SWOT ANALYSIS

OPPORTUNITIES Capitalize on exclusivity and increase

sales Future generation and concept cars Increasing manufacturing facilities

and distribution as well as servicing network

THREATS Government policies in some

countries Impending recession which may

decrease purchasing power

PORTER’S FIVE FORCE MODEL

INTENSITY OF RIVALRY AMONG COMPETITIORS Rivalry -extremely high Competitors such as Benz, Ferrari, Lamborghini etc.

THREAT OF NEW ENTRANTS New entrants are very low Due to the factors like capital, brand recognition, large economy etc.

THE THREAT OF NEW SUBSTITUTES

Similar frame to that of Volkswagen Touraeg Leads to brand corruption

However both models has its own advantages and disadvantages

BARGAINING POWER OF SUPPLIERS

There is no bargain as contract with Porsche represents a significant opportunity.

Also has a large supplier base VW.

BARGANINING POWER OF BUYERS

In this scenario the threat is moderate since the buyers are willing to pay higher price for a premium brand.

Bringing up VW and Porsche together – weaken Porsche’s engineers sense of

Belonging and demotivate them.

SOLUTIONS

Employees can be motivated by explaining them that the companies are collaborated hence must be considered as a single company and all employees must work together for the welfare of the company.

Employees can be made to work in two separate companies. Respect, Trust and value each other Show appreciation Foster two way communication.

“Loose agreement” between Ferdinand Porsche and VW’s Chairman – 40% of

Porsche’s development capacity belonged to VW over a certain number of years.

SOLUTIONS

Renegotiating the terms that the period of years is limited With the amount earned in certain period staring as a new

venture and not under Volkswagen group with the title “Porsche goes independent”

Renegotiating the terms and conditions in that the percentage of stake must be reduced to less than 25%

Outside engineering services would become very low since Porsche shares its

innovations and strategies with VW.

SOLUTION

Create a new company under parent company Porsche let this new company join hands with Volkswagen so that the Porsche can outsource its innovation and strategies.

Porsche could test or develop ideas that the company would not have been able to fund on

its own.SOLUTIONS

Raise money from donor groups, by conducting super events, Sister concerned company can be developed with the help of alumni

and designs can be created and outsourced. Based on the profit earned with Volkswagen after a few years of

agreement, start Porsche as an independent automobile venture. Porsche should accquire100% share of VW so that it will be the

holding company and there will be an increase in cash flow. To market about their new product so that it will create a

demand and their equity share increases

WHAT’S DRIVING PORSCHE?

VOLKSWAGEN