Family Feud

Family FeudBilly Duck IVTony AlvarezShane GarnerNick Tarasiewicz

INTRO BDIV1Outline of PresentationEconomic, Governmental, and Technological Characteristics of the Federal Republic of Germany, and the State of QatarBarriers of Entry in the Federal Republic of Germany and the State of QatarProfile of Volkswagen Group AG, Porsche SE, and the Qatar Investment AuthorityProfile of key corporate leadership of Volkswagen Group AG, Porsche SE, and the Qatar Investment AuthorityInvestment Activities of Porsche SE and Volkswagen AG (2005-Oct 2008)Investment Activities of Volkswagen AG, and the Qatar Investment Authority in regard to Porsche SE

Economic Characteristic of the federal republic of Germany5th largest economy in the worldNational GDP of USD 3.367 TrillionNational GDP per capita of USD 39,100According to the VDA vehicles sales resulted in EUR 2.8 Million in revenueEUR 2 Million of that was in exportsFederal Ministry of Economics and Technology indicates the auto industry accounts for 20 percent of industry revenue.

NT3Economic ProfileGermany also specializes in industrial machines, chemicals, and precision electronicsAlso known for technological advances in iron, food, and ship buildingBrands such as BASF, Trumpf, Bayer, Miele, ZF Systems, and Siemens dominate the market in subtle ways

NT4Government Characteristics of the Federal Republic of GermanyParliamentary Federal Republic officially- die Bundesrepublik DeutschlandCapital is Berlin, with 16 other federal states- BundeslnderGermany was divided until a peaceful reunification in 1990Current Chancellor is Angela Merkel of the Christian Democratic Union (CDU)Lower House of Government: German Federal Diet-BundestagUpper House of Government: Federal Council- BundesratThe German Federal Constitutional Court is the supreme judicial entity within Germany- Bundesverfassungsgericht

NT5Technological Characteristics of the Federal Republic of GermanyResearch and Development is a large percentage of investment with EUR 19.6 billion per annum. 30 percent of all university graduates have a degree in natural sciences or engineering.Germany also has the highest amount of patent filings at around 3,650 per annum.

NT6German Financial IncentivesLowest growth of labor cost per annum at 1.6 percentHighest productivity in the EurozoneSubsidized working capital loans, bridge loans, and investment loans for innovative start ups

NT7Economic Characteristic of the State of QatarGDP of USD 189 billionGDP per capita USD 87,717Strong growth rate of 6.3 percentLow unemployment rate of 0.5 percentQatars primary exports of liquefied natural gas, and petroleum products totaled USD 117.7 billionQatar needed to import USD 23.49 billion in machinery, food, and chemicals

NT8Government Characteristic of the State of QatarEmirate: a political territory ruled by dynastic Muslim monarchCapital is DohaThe country is ruled by the Al-Thani familyChief of State: Emir Hamad bin Kalifa Al ThaniLegislature has only limited advisory power

NT9Governmental AspirationsThe State of Qatar wants to invest heavily in the knowledge economy Investments in Porsche SE, Vodafone, Credit Suisse, and LVMH to diversify economyMany US universities are building branch campuses at Qatars Education CityThe State of Qatar has partnered with Deutsche Bahn to develop railway infrastructure in Qatar.2.5 percent of national GDP per annum is dedicated to Research and Development activitiesNT10Financial Incentives in qatarRelocation to a Free Trade zone, or the Qatar Science and Technology Park provides:Corporate tax exemptions100 percent foreign investmentDuty-free import of goods and servicesUnrestricted repatriation of capital and profits

NT11Barriers of entry in the federal republic of GermanyGermany is ranked 98th of 183 economies on the ease of doing businessBureaucracy in Germany is prohibitive in attempting to do construction, and taxesGermany is much more efficient at commercial conflict resolution, and contract enforcementEurozone instability could pose a barrier of entry to companies without sufficient resources to hedge the instability

SG12Barriers of Entry in the State of QatarQatar is ranked 109th of 183 economies on the ease of doing businessIn Qatar construction, land ownership, and taxation rank very well in comparison to GermanyHowever bureaucracy in Qatar is quite prohibitive in commercial conflict resolutionWomens rights, and human exploitation are also negatives in conducting commerce in Qatar

SG13Profile of Volkswagen Group AGVolkswagen Group AG is headquartered in Wolfsburg, Niedersachsen in GermanyPrimary listing is on the Frankfurt stock exchangeAs of 10. May 2013 the stock was trading at EUR 150.53Maximum EUR 175.65 in January 2013Minimum EUR 110.80 in June 2012 Market capitalization of EUR 68 BillionTwelve different automobile brands

TA14

Porsche SE short squeezeTA15Profile of Porsche Automobil SEPorsche is a publically traded companyEstablished in 2007 to manage:Porsche Operating Business- Dr. Ing. H.c.F. Porsche AktiengesellschaftVolkswagen AktiengesellschaftConsists of Porsche Design Group, Porsche Consulting, and Porsche Engineering81.1% of IT consultant firm Mieschke Hofmann und Partner25% of engineering firm BertrandtOwnership is mainly by the Porsche and Pich FamiliesPorsche and Pich families show bitterness towards each other*****BDIV******16

Porsche/ Pich Family Tree*****BDIV******17Profile of the Qatar Investment Authority (QIA)Private government investment fund established in 2005Total expected assets of USD 115 billionThe QIA purchased 10 percent of Porsche SE QIA also purchased and acquired the options on 17 percent of Volkswagen AG

TA18Profile of Volkswagen Group Key leadershipProf. Dr. h.c. mult. Martin WinterkornCEO of Volkswagen AGChairman of Executive board of Porsche SEEngineer with Ph.D. in Metal PhysicsProcess Engineer at Robert Bosch GmbH1993 joined VW AG, head of quality assuranceResponsible for development of the new VW beetleIn 2007 was made CEO of VW AG

BDIV19Profile of Volkswagen Group Key leadershipHon.-Prof. Dr. techn. h.c Ferdinand K. PichChairman of the Volkswagen Group AG Supervisory BoardMember of the Porsche SE Supervisory BoardMechanical Engineer with Ph.D. Developed the Porsche 906, 917, and later the Audi 80, and 100Returned VW AG to profitability on the brink of bankruptcy in the mid-90sKnown for being an aggressive and demanding manager, firing anyone who makes the same mistake twice

BDIV20Profile of Porsche SE Key leadershipProf. Dr. Wendelin WiedekingFormer President, CEO of Porsche SEMechanical EngineerStarted at Porsche in 1983Made CEO in 1993Returned Porsche SE to profitability on the brink of bankruptcyPlanned the attempted VW AG takeoverCharged with Market Manipulation during the attempted VW AG takeover

BDIV21Profile of Porsche SE Key leadershipProf. Dr. Wolfgang PorscheChairman of the Porsche SE Supervisory BoardGrandson of Ferdinand PorscheFerdinand Pichs cousinEconomist with Ph.D. in Commercial Science

BDIV22Profile of Qatar Investment Authority leadershipHis Excellency Sheikh Jassim bin Adulaziz bin Jassim Al-ThaniMember of the Porsche SE Supervisory BoardMinister of Business and Trade (Qatar)BS from Suffolk UniversityMasters from Columbia in international affairs

BDIV23BackgroundThe automotive divisions of Porsche and VW have a history of sharing componentsPorsche has always remained independent Ferdinand Porsche originally developed the kdF-Wagen for the Third ReichPorsches son Ferry Porsche would develop the Porsche 356 which utilized many VW partsIn 1964 the Porsche 911 was released, and was a huge hit in the US, and EuropeIn 1972 Porsche was incorporated, which created an executive board

BDIV24Investment Activities of Porsche SE and Volkswagen Group AG (2005-october 2008)Wiedeking the CEO of Porsche SE averted bankruptcy in 1993In 2005 Porsche purchased 18.53% of VW AGBy October 2008 Porsche SE acquired 42. 60% of VW AG, with 31.5% in optionsAt 75% a domination and profit transfer contract would be triggeredCash back to Porsche SE amounting to EUR 8 billionFall 2008 market crash prevented the acquisition of VW AG, caused a liquidity crisis at Porsche SEIncurred massive EUR 9 billion debt

BDIV25The Rescue of Porsche SEPorsche SE needed an outside investor to remain in businessQatar needed to diversify its economyThe QIA bailed out Porsche with a EUR 265 million loan, and purchased 10% of Porsche SEs stock, along with 17% of VW AGThe QIA received a Porsche R&D facility in DohaEUR 1.75 Million government loan to Porsche SE

BDIV26Ferdinand Pichs revengePorsche SE still needed financial supportVW AG is willing to help, but with strings attachedFerdinand Pich demanded an integrated approach where VW AG sold back 42% to Porsche SEVW AG purchased 49.9% of Porsches car making operationIn 2011 VW AG purchased remained 50.1% of Porsches car making operationThe Porsche Family lost control over its car making operation, and VW gained its 12th brand

BDIV27ConclusionThe Volkswagen Group AG Group Strategy 2018 focuses on positioning VW AG as the global economic leader among automobile manufacturers. Its four main goals:Deploy intelligent innovations and technologiesIncrease unit sales to more than 10 million vehicles per annumReturn on sales before tax to at least 8%Become the top employer across all brandsThe acquisition of Porsche will only add to VW AGs amazing profitability and growth

BDIV28Works Cited

Volkswagen Group Strategy [Fact sheet]. (2011). Retrieved May 16, 2013, from Volkswagen Group AG website: http://www.volkswagenag.com/content/vwcorp/content/en/the_group/strategy.html

Di Bitonto, S., Kolbe, M., & MacDougall, W. (2013). The Automotive Industry in Germany. Gesellschaft fr Auenwirtschaft und Standortmarketing mbH, (2012), 1-17.

Porsche and VW: What the Hell Happened? (2013, February). Automobile Magazine, 17.

Rise with Qatar [Pamphlet]. (2013). Doha, Qatar: Investment Promotion Department.

Annual Figures [Fact sheet]. (2012). Retrieved May 16, 2013, from VDA-Verband der Automobilindustrie website: http://www.vda.de/en/zahlen/jahreszahlen/

CIA World Factbook-Qatar [Fact sheet]. (2013, May 7). Retrieved May 9, 2013, from CIA World Factbook website: https://www.cia.gov/library/publications/the-world-factbook/geos/qa.html

CIA World Factbook-Germany [Fact sheet]. (2013, May 7). Retrieved May 8, 2013, from CIA World Factbook website: https://www.cia.gov/library/publications/the-world-factbook/geos/gm.html

Doing Business 2013-Qatar. (2013). Doing Business, (10), 1-115. http://dx.doi.org/10.1596/ 978-0-8213-9615-5

Doing Business 2013- Germany. (2013). Doing Business, (10), 1-114. http://dx.doi.org/10.1596/ 978-0-8213-9615-5

About us. (2013). Retrieved May 2, 2013, from The Qatar Investment Authority website: http://www.qia.qa/

Rauwald, C. (2013, April 24). VW Sticks to 2013 Forecast After Earnings Meet Estimates. Retrieved May 4, 2013, from Bloomberg website: http://www.bloomberg.com/news/2013-04-24/ vw-first-quarter-profit-drops-on-slide-in-european-sales.html

Jolly, C. (2013, March 19). No End to Falling European Car Sales. Retrieved May 9, 2013, from The New York Times website: http://www.nytimes.com/2013/03/20/business/global/ european-new-car-sales-down-10-2-percent-in-february.html?_r=2&