Strategic ManagementM26BSS

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Introduction German sports carmaker

Founded by Ferdinand Porsche in 1947

Focus on the luxury niche segment

Merger with Volkswagen Group

« I couldn’t find the sports car of my dreams, so i built it myself ! »

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External Analysis - PEST analysis Political: Environmental-friendly company which

innovate in the decrease of CO2 emissions

Economic: Importance of increase of wealthiest people to expand its size market

Socio-cultural: Social mobility should be upward

Car should be considered as a symbol of leisure and social success

Technological: Investment in innovation is essential to provide high technology products

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External Analysis - PEST conclusion

External Analysis - Strategy Group Analysis

Competitors in the same industry:◦ Ferrari◦ Maserati◦ Lamborghini◦ Aston Martin◦ Lotus◦ Bugatti

Variables : Price/Sportiveness

External Analysis - Industry Life Cycle

External Analysis - PORTER analysis Threat of new entrants:

New entrants have to make economies of scale and to have a strong brand image to face the competition.

Threat of substitutes:

Car is the most flexible means of transportation. So, it is not subject to threat of substitutes.

Power of Supplier:

As Porsche has 9 suppliers, they need to be the best and efficient at the innovation level. They are under pressure. It is a low threat.

Power of Buyer:

As the car is flexible, buyer used to choose this mean of transportation. With the development of leasing, their power increases.

Competitive Rivalry:

The market is considered as mature. High competitive rivalry 7

External Analysis – PORTER conclusions

Internal Analysis - Resource Audit

Human: Number of staff, skills, experience…

Physical : Building and equipment, materials

Financial: Global accounts, Control system…

Intangible: Customer loyalty, price premium…

Internal Analysis - Value Chain

Human resources

Number of staff: 13.043 employees in the 31 October 2010. There are composed by manager, engineers, salesman, operating employees.

Skills : Training centre around the world and in Germany give the necessary base of skills to the employees.

Training: “ MAX S.p.e.e.d” training program : 24 months of formation for the employees of the company.

Motivation: Motivation is driven by financial incentives: a percentage of the annual turnover is allowed to the employees according the company's result.

Recruitment: Recruitment policy in Porsche is quite clear: Porsche wants high qualified staff. The recruitment processes start until the training centre

Internal Analysis - Value Chain

Physical resources R&D facilities: the Research and Development centre in

Germany develops high quality products and try to innovate and create a competitive advantage.

Configuration: The plant configuration is a concentration of every department of the production in a closest place. But some spares part need to be taken from other locations and sometimes other countries.

Sources: Porsche is outsourcing a part of the production in Finland. Some spare parts are procured by the outsourcing plant. Porsche has also built a strong network of suppliers to provide the best products.

Costs: High materials costs due to the high technology and the quality offered by Porsche cars

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Internal Analysis - Value Chain

Financial resources

Internal funds generation: The major source of the internal funds generations is the retained profit of the company. This major part is a risk because of the dependence of the result of the company may influence this generation.

Control systems: the management of the financial service is submitted to an internal control by the company: any transactions need to be defined clearly for a perfect transparency.

Taxation system: the tax rate of the company is quite high: 25.4%.This high rate can decrease the retained profit of the company

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Internal Analysis - Value Chain

Intangible resources Technology – ‘know how: Porsche is always seeking to

produce high quality products including the new technologies for the engine, the design, aerodynamics

Production systems: Porsche has adopted the Japanese production model: keep a high quality product in avoiding waste and overproduction

Customer, supplier and competitor information : Porsche is using SAP CRM software called Trillium Software who enables an efficient communication with its supplier and its customers thanks to the ICTs

Price premium : Porsche offers guarantees of high technologies and high performance products to their customers.

Organisation reputation : Porsche was awarded by the price of the most prestigious automobile brand by Luxury Institute. 13

SWOT AnalysisStrengths Weaknesses

- Organisation reputation- Procurement/Purchasing- Strong brand- Strong image- Concentration on a profitable niche segment- High quality products- Optimized value chain- Personnalisation of the brand- Very high margins

- Marketing & sales- Lack of diversification- Focus on the luxury segment leads to restrictive growth in this segment - Dependence on external innovation suppliers- Dependence on Wiekeding as a manager

Opportunities Threats

-Total GDP and GDP per head growth rates-Consumer expenditures and disposable income-Expand the product line-Increase of the well-off in the emerging countries-Possibility of conquesting new markets-Entering new segments through involvement in Volkwagen-Abolishment of VW law would lead to stronger influence-Technological synergy with Volkwagen

- Foreign trade regulations-‘Green’ issues that affect the environement -High ecological standart in the car industry-strong competition rivalry-dependence on oil-Association of Porsche’s brand with Volkwagen

Organisational Purposes

Vision: To remain committed to its own values, to be the leader in the marketplace offering high quality cars with most advanced technologies

Mission: German luxury car manufacturer with strong values

‘I could not find the car I would been dreaming of. So, I decided to build it myself’

Objectives: - conquest new markets

- reach new customers

- reinforce environmental concern

- develop hybrid cars

BCG Matrix

Quality Price Matrix

Ansoff MatrixA. Market penetration•Porsche 911 carrera•Porsche boxster•Porsche cayman

•North America•Germany•Middle East•New Zealand•Australia

B. Product Development•Porsche cayenne•Porsche panemera•Cayenne hybrid

•Switzerland•South Eastern Europe•Canada•Hong Kong•Japan

C. Market development •Merger between Porsche and VW

•Asia pacific•China •Russia •Middle East•India

D. Diversification• Porsche Panemera

•Porsche Design

Ansoff Matrix

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Market penetration/Consolidation Porsche 911 Carrera

Porsche Cayman

Porsche Boxster

Porsche Turbo

Consolidation / Downsizing North America: -

- Financial Crisis

- Real Estate

Ansoff Matrix (cont.) Germany:

- unstable economic conditions

- increase in gas price

- over taxation on vehicles.

Maintain Market share

- Australia

- New Zealand

- Middle East

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Ansoff Matrix(cont.)Market development Merger between Porsche and Volkswagen, enabled them

target new audiences.

Asia Pacific, china, Russia, India, Brazil (BRICS) and the Middle East. Were the international markets.

Product Development Modified products development: -

- Porsche Cayenne

New product development: -

- Porsche Panemera

- Porsche Cayenne Hybrid

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Ansoff Matrix (cont.)Subsidiaries : - Switzerland

- Japan

- Hong Kong

- Canada

- South East Europe.

Diversification Related vertical forward movement

- Porsche Panemera

Unrelated diversification

- Porsche Design

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Recommendations

Merger: Take advantage of Volkswagen's strengths

Take precautions to maintain the Porsche’s brand image

Technological Keep focusing on innovation in order to respond to

customer’s

requirement

Diversification Develop the diversification strategy to attract new

customers and enlarge the scope of its target audience.

Conclusions

High competitive rivalry

Strong brand image due to the well management of Porsche since the beginning (success story)

Environmental issues may have an effect on brand image: needs to focus on eco friendly strategies.

Customer satisfaction is driven by the projection of Porsche’s lifestyle through its products.