What s driving Porsche PPT

Topics: Porsche, Automotive industry, Volkswagen Group Pages: 5 (666 words) Published: June 28, 2015
WHAT’S DRIVING PORSCHE?
CASE STUDY

CASE FACTS
 Founded in 1931 by Ferdinand Porsche
 Started by selling design and engineering services to other car makers and was established as an engineering firm.

 In 1934, Hitler commissioned Porsche to make a people’s car or a Volkswagen.  In 1938, the first plant dedicated to manufacturing of WV was opened.

 In 1948, Porsche produced the first branded sports car and within 2 years produced the Porsche 365 series.

THE TURNAROUND
 Between 1986 and 1993, Porsche’s sales had fallen and the company was on the verge of bankruptcy.
 Focused on building new core competencies in lean manufacturing and synchronized engineering.
 Decided to extend the product line beyond sports car niche.

 In 2003, Porsche introduced the Cayenne in collaboration with WV.  In 2005, Porsche announced to launch a luxury sedan, Panamera in 2010.  By 2007, Porsche became the world’s most profitable car maker.

 Porsche’s income topped $9.4 billion on revenue of $ 10 billion.

ISSUES
 Potential Brand dilution will happen since its switching from focus approach to broader market to extend the Porsche product line.
 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.

SWOT ANALYSIS
STRENGTHS
Strong brand image

Strategic alliances with other
automakers

WEAKNESSES
Small compared to competitors

Weak financially – victim of 2008
financial crisis

Skilled workforce
Consistently innovative with
class-leading technologies
Customer loyalty

Conflict between the executives and
management of Porsche and VW

SWOT ANALYSIS
OPP0RTUNITIES

THREATS

Wealth of resources upon joining the VW
group

Losing competitive advantage

Supportive manufacturing infrastructure
in Germany

Efficient international expansion –
greater economies of scale, increases
market penetration

Intense competition from automobile
giants.

5 FORCES MODEL
1) 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
7

5 FORCES MODEL
2) 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.
8

5 Forces Model
3) 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.

9

5 FORCES MODEL
4) 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.

10

5 FORCES MODEL
4) 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...
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