bmw vs porsche
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BMW
Rivalry Among Existing
Competitors
Threat of New
Entrants
Bargaining Power of Suppliers
Bargaining Power of Buyers
Threat of Substitutes
PORTER'S 5 FORCES
Rivalry among existing competitors:
+ some competitors of the same size
+ Low industry and market growth rates
+ Barriers to exit are high (production facilities)
→ High
PORTERS 5 FORCES
Threat of New Entrants:
+ high initial investments and fixed costs
+ limited access to specialized suppliers
+ existing players have close customer relations (e.g. long-term service contracts)
+ customer loyalty
→ Low
PORTERS 5 FORCES
Bargaining Power of Buyers:+ Buy large volumes (e.g. company car for many
large companies)+ Switching to an alternative product is relatively simple and
not related to high costs+ Products are undifferentiated and can be replaced
with subsitutes− Customer knows about the
production cost of the product→ Medium
PORTERS 5 FORCES
Bargaining Power of Suppliers:
+ Supplier’s products are customized and valuably differentiated
+ high switching costs to alternative suppliers
+ JIT production
− Market is dominated by many suppliers (sub suppliers)
→ High
PORTERS 5 FORCES
PORTERS 5 FORCES
Threat of Substitute Products & Services:
+ close customer relationship
+ brand loyalty of customers is high
− No penalties or low switching costs for customers
− Current trends
→ Medium
STRENGTH:WEAKNESSES:Strong brand image
•• Strong R&D capabilities
(DM)• Strong product
innovation• High employee
productivity Motocycle as niche product
•• US military
service• High quality
suppliers• Steady decrease
in Co2 emissions• Strongest product: 3
Series
SWOT Analysis
• Poor performance of BMW in asian markets
• Declining production and deliveries
• Lack of scale compared to competitors
• High wages
• Too less strategic alliences
OPPORTUNITIES:THREATS:• Car industry on road to recovery
• Poised to benefit from increasing demand for hybrid electric vehicles
• Growth in Asia• Growing used car market in UK
• Moderate growth in global cars market• Rising green awareness
SWOT Analysis
• Competition in the global automotive market
• Currency risk
• Environmental protection regulations
• Recession in US and Europe
• Rising green awareness
PORSCHE
Rivalry Among Existing
Competitors
Threat of New
Entrants
Bargaining Power of Suppliers
Bargaining Power of Buyers
Threat of Substitutes
PORTER’s 5 FORCES MODEL
• 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
Threat of new entrants (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.
Bargaining power of suppliers (Low)
• 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.
Bargaining power of buyers (High)
• 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.
Threat of substitutes (Medium)
OPPORTUNITIES:THREATS:
SWOT Analysis
• Strong economic support in homeland Germany
• Supportive manufacturing infrastructure in Germany
• Expansion to China• Efficient international
expansion – greater economies of scale, increases market penetration
• Wealth of resources upon joining the VW group
• Alienation of customer base• Losing competitive
advantage.
STRENGTH:WEAKNESSES:
SWOT Analysis
• Best quality for comparatively low prices – long-term reliability for high-performance cars, sedans, SUVs, trucks, etc.
• Stuttgart plant – the best car factory in the world
• Consistently innovative with class-leading technologies
• All models (except Boxster/Cayman) are produced in Germany
• Skilled workforce.
• Concentrates more on exportation vs. international expansion, acquisition and licensing
• Small compared to competitors
• Weak financially• Brand dilution• Conflict between the
executives and management of Porsche and VW
DEBT RATIOS• Debt ratio is a solvency ratio that measures a
firm's total liabilities as a percentage of its total assets. In a sense, the debt ratio shows a company's ability to pay off its liabilities with its assets.
• Debt ratio• Debt to equity ratio• Equity ratio• Earning per share• Dividend yield ratio
DEBT RATIOS OF BMW
• Debt ratio
• Debt to equity ratio
• Equity ratio
• Earning per share
• Dividend yield ratio
• 0.27
• 1.13
• 0.24
• 9.89 (€)
• 3.18
DEBT RATIOS OF PORSCHE
• Debt ratio
• Debt to equity ratio
• Equity ratio
• Earning per share
• Dividend yield ratio
• 0.201
• 0.55
• 0.368
• 2.01 (€)
• 2.99
ACTIVITY RATIOS
• Activity ratios are financial analysis tools used to gauge the ability of a business to convert various asset, liability and capital accounts into cash or sales. The faster a business is able to convert its assets into cash or sales, the more efficient it runs.
• Inventory turnover ratio• Total asset turnover ratio• Fixed asset turnover ratio• Working capital turnover ratio
ACTIVITY RATIOS OF BMW• Inventory turnover
ratio
• Total asset turnover ratio
• Working capital turnover ratio
• 5.8
• 55%
• (50)
ACTIVITY RATIOS PORSCHE
• Inventory turnover ratio
• Total asset turnover ratio
• Working capital turnover ratio
• 5.97
• 67.79%
• (7.4)
LIQUIDITY RATIOS
• A class of financial metrics that is used to determine a company's ability to pay off its short-terms debts obligations. Generally, the higher the value of the ratio, the larger the margin of safety that the company possesses to cover short-term debts.
• Cash & Cash Equivalents• Short-Term Investments • Accounts Receivable • Current Liabilities
LIQUIDITY RATIOS OF BMW
• Liquidity ratio = (Cash & Cash Equivalents + Short-Term Investments + Accounts Receivable) ÷ Current Liabilities
• 1.42 is the liquidity ratio of BMW company
LIQUIDITY RATIOS OF PORSCHE
• Liquidity ratio = (Cash & Cash Equivalents + Short-Term Investments + Accounts Receivable) ÷ Current Liabilities
• 4.6 is the liquidity ratio of Porsche.
PROFITABILITY RATIOS
• A class of financial metrics that are used to assess a business's ability to generate earnings as compared to its expenses and other relevant costs incurred during a specific period of time. For most of these ratios, having a higher value relative to a competitor's ratio or the same ratio from a previous period is indicative that the company is doing well.
• Gross profit margins • Operating margin • Return on assets • Return on sales
PROFITABILITY RATIOS OF BMW
• Gross profit margins
• Operating margin
• Return on assets
• Return on sales
• 0.20%
• 0.10%
• 4.02%
• 0.069%
PROFITABILITY RATIOS PORSCHE• Gross profit
margins
• Operating margin
• Return on assets
• Return on sales
• 1.19%
• 0.07%
• 4.65%
• 0.012%
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