Expert answer:Need business and finance help with Technology Gia
Answer & Explanation:Case Analysis: PorscheRead the Porsche Case Study in the Case Study section of the text.Write a summary of the case study. In your summary be sure to include a discussion of Porsche’s competitors, competitive rivalry, competitive behavior, and competitive dynamics.Your summary should be a minimum of 2-3 double-spaced pages and must be in your own words. Use APA style. You must include 3-5 references. Only one reference may be from the internet (not Wikipedia). The other references must be located within the Grantham University online library. Only the body of the paper will count towards the page requirement. Please see the rubric below.reference.docxporsche_case_study.docx
reference.docx
porsche_case_study.docx
Unformatted Attachment Preview
Reference:
Hitt, Michael A., Ireland, R Duane, Hoskisson, Robert E. (2013). Strategic
Management: Competitiveness & Globalization, 10th Edition. Cengage Learning.
Porsche
INTRODUCTION
Porsche is one of the most prestigious sports car brands in the world. This case
explores the complexities associated with integrating into a new parent company.
Porsche’s entire identity and business model is subject to change as Volkswagen shuffles
executives across product lines and implements new strategies to become the world’s
leading automotive group.
Background information on the external environment is provided that discusses
economic and political challenges, industry characteristics, global trends, and existing
competitors. Factors that have contributed to Porsche’s market and financial success are
highlighted as well and include product quality, innovation, strategic partners,
diversification, and customer loyalty.
Now under the umbrella of the Volkswagen Group, corporate objectives will
strongly influence Porsche’s strategic direction. As this is likely to involve a dramatic
shift from current business practices, several concerns are surfacing. An in-depth look at
the company’s strengths, weaknesses, opportunities, threats, product line positioning
against competitors, and anticipated changes in strategic direction will lead to a better
understanding of the circumstances Porsche is facing and will suggest protective
measures needed to prevent deterioration of its brand and competitive advantages.
•
•
•
•
Using a SWOT analysis framework, evaluate the factors in Porsche’s internal and
external environments. Be sure to specify strengths, weaknesses, opportunities, or
threats that are new to the company as a division of Volkswagen Group.
Review the mix of products offered under the Porsche brand. How do the models
compare against competitor products in the marketplace?
How will Porsche’s strategy change under Volkswagen ownership?
What does this mean for the future of the company?
A situation analysis of Porsche’s current circumstances reveals the strengths and
weaknesses from within the firm and the opportunities and threats from the external
environment that will influence the company’s strategy moving forward. The grid on the
following page details the results of the situation analysis. Highlighted statements are
conditions related to Volkswagen’s acquisition of the sports car maker.
STRENGTHS
WEAKNESSES
Powerhouse in international racing
High shareholder returns from
diversification initiatives
▪ Financial strength to sustain sizeable capital
investments
▪
▪
Models not customized for foreign
markets
▪ Loss of Valmet contract – new Boxter/
Cayman production facility not yet
operational
▪
1
Porsche
Porsche
Engineering expertise
▪ Niche product offering – supercar
performance at more affordable price level
▪ Product quality; high rankings in long-term
reliability
▪ Manufacturing excellence; best car factory
in the world
▪ Innovative technologies generated through
racing programs
▪ Brand name/image maintained by emphasis
on manufacturing quality, craftsmanship,
design, and technological R&D
▪ Lean manufacturing practices enabled by
fewer models
▪ Vehicle performance and handling
▪ Leader in sports car segment
▪
▪
Flat sales of traditional 2-door high
performance models
▪ Higher costs; unable to take advantage of
lower labor costs and production in major
markets due to the need for tight control
of manufacturing processes to maintain
craftsmanship, quality, etc.
▪ Departure from niche strategy
(introduction of SUV and sedan models
to grow sales) may have already
weakened Porsche brand
▪
▪
Backing of VW resources
OPPORTUNITIES
THREATS
German engineering capabilities,
workforce, and manufacturing
infrastructure
▪ Other sports car makers struggling to
manage cash flows and changing
ownership; industry instability may open up
market gaps
▪ New trends for sports car enthusiasts
▪ Enormous expansion in China – most
rapidly growing economy in the world has
the potential to become Porsche’s largest
region within just 2–3 years
▪ More diversification
▪
▪
Loss of executives to other VW brands
VW distribution network – especially for
international growth
Lingering effects of global economic
recession; unemployment level in US
▪ Oil prices; fuel costs
▪ Environmental consciousness
▪ Impending CAFE standards in US (where
Porsche has 26% of its sales); may be
unable to compete in US after 2020 if
policies are enforced
▪ Failure to keep up with trends important
to target customers
▪ Unpredictable behavior of Chinese
government and uncertainty related to
undervalued Chinese currency
▪ Economic and political risks of
international expansion
▪ Changing customer preferences
▪
Intra-corporate sports car competition
▪ Loss of brand value for loyal Porsche
purists
▪
At present, Porsche offers five high-performance vehicle models, including three
sports cars, an SUV, and a sedan. With hybrid versions of the Cayenne and Panamera, the
entire line includes 40 trim levels. In addition, the company produces “track-ready” race
cars. Porsche’s distinguished product line is detailed below, along with new product
introductions which are already in the pipeline.
2
Porsche
Porsche
Current Product Line
1964
1996
2002
2005
2009
(20)
(4)
(4)
(3)
(7)
911
Boxter
Cayenne
Cayman
Panamera
famous sports car with 20 variations
mid-engine production sports car
SUV
hard-top version of Boxter
4-door sedan
Planned New Product Introductions
Ready to launch
2013
Cajun
unnamed
smaller, more fuel-efficient SUV
smaller version of Boxter
Porsche competes mainly with other luxury brands along such dimensions as
price, speed, interior features, style, power, and other options. Competitor products found
in the marketplace are matched against Porsche’s models in the table below.
Model
Cayenne
Very
competitive
arena.
Panamera
Fastest
luxury sedan
in the world.
Boxter/
Cayman
Porsche 911
Priced from
$130K–
$245K
Competitor Products
Comparison of Features
BMW X6M
Slightly faster
Mercedes-Benz ML63 AMG Less expensive
Slower
Audi Q7
Slowest of the pack
More interior space and torque than ML63
BMW M5
Sporty luxury sedan
Slower
Mercedes-Benz S65 AMG
Only model to offer standard gear box
Smoother ride
Higher rankings in spaciousness/comfort
Audi S8
Slowest of the group
Exceptional interior quality
BMW (James Bond) Z3
More luxurious angle
Now the Z4
Mercedes-Benz SLK
Slightly less horsepower
Fewer sport options
Audi TT
cont.
Ferrari Enzo
Aston Martin V12 Vanquish
Lamborghini Murcielago
Bentley Continental GT
BMW M6
Mercedes-Benz SL-Class
Audi R8
Supercars – extremely expensive
Prices range from $250K–$400K
Porsche is equal in performance and
prestige, but more reasonably priced
Nissan GT-R
Excellent performance
Lack some of the aspects of sports
performance
3
Porsche
Porsche
Lower price tags
Lower pedigree
Dodge Viper
Porsche’s SUV and sedan are the sportiest options in their respective segments,
and all Porsche models exceed the standards of their automotive class. Though GM,
Lexus, and Nissan offer a couple of models at Porsche’s price/performance tier, they lack
the pedigree and variety of the Porsche line. With the exception of supercars, competitors
in the product summary above compete with broad product lines in multiple segments.
Corporate oversight by Volkswagen will impact the following elements of
Porsche’s strategy.
Ownership
Status
Porsche
Independent and highly
successful car maker
Level/Type of Low
Diversification Single-level business
Objectives
High shareholder returns
Grow sales
Maintain brand prestige
International Global – standardized models
Approach
across country markets
Entry Mode
Export – from single
production facility
Innovation
Inimitable technology
developed through racing
programs
Competitive
Prestige
Advantage
Engineering excellence
Price/quality value
Strategy
Focused differentiation
Volkswagen
One division (among several premium
sports car makers) within the world’s 3rd
largest automotive corporation
Moderate to high
Related constrained diversification
Integrate with VW family
Extend product line
Increase production
Transnational – models modified to
satisfy local preferences
Greenfield ventures – from 62 flexible
production facilities worldwide
Technology shared with other companies
in the VW Group
Production and distribution synergies
Best practices leveraged across brands
Broader differentiation
Diversification. As a new member of the Volkswagen team, Porsche will no
longer exist in isolation. VW will be seeking economies and sharing opportunities across
brands. In fact, corporate leaders have already communicated expectations for Porsche to
share innovation, manufacturing, quality, technology, R&D, components, and platforms
to contribute to VW Group synergy.
Firms presume that the sharing of activities and resources will result in increased
competitiveness and better returns for all participants. VW certainly expects to achieve
greater market power and the ability to block competitor moves through multipoint
competition. The corporation anticipates the transfer of core competencies maintained by
Porsche, and the assignment of key Porsche executives to other brands is one way to
facilitate this transfer. Not only is the loss of key members of the top management team
4
Porsche
Porsche
detrimental to the company, but any new demands on Porsche will deflect attention away
from the division’s singular focus.
Synergy. Synergy exists when the value created by divisions working together
exceeds the value of operating independently. Because cost does not have a prominent
role in Porsche’s strategy, the benefits of integrating with VW may not be immediately
apparent. The corporation does not seem to bring as much to the table as Porsche. The
resources and activities VW offers to share do not enhance Porsche’s product features
and are not necessary to heighten the company’s ability to compete.
However, VW’s stronger presence in foreign markets does offer Porsche an
opportunity to tap into the parent company’s unrivaled distribution capabilities and to
extend its reach or penetration into new and emerging markets. (And, differentiation in
emerging countries is more successful with greater scale). Exporting generally reduces
the firm’s control over marketing and distribution functions, so access to VW’s
distribution network, knowledge, and marketing expertise in multiple markets should
improve Porsche’s competitive performance in foreign markets. It may also enhance the
company’s after-sales services. By looking at the company’s sales by geographical
market (refer to Exhibits 1A and 1B in the case), it is evident that there is indeed room
for improvement. This may become particularly important if Porsche is unable to sell in
the US market in the future.
New Objectives. As part of VW’s corporate restructuring initiatives for Porsche, a
change in leadership has placed an outsider, Mueller, into the top position of CEO. His
new objectives are dictated at the corporate level and are the driving force behind all of
the change that will soon rain down on the company. In addition to quickly integrating
Porsche into VW, he is charged with extending the company’s product line and nearly
doubling production within 5 years.
The recent addition of SUV and sedan models to the Porsche line was already
controversial to brand enthusiasts. These product introductions were successful in the
marketplace and generated profits to fuel the company’s growth when sales of traditional
high performance models were flat. Despite the positive aspects of lending the Porsche
name to new models, the strategy is unpopular among Porsche product loyalists. The
threat of spreading the brand too thin and damaging its appeal still looms. Also,
expanding beyond the 5-model/40-trim line portfolio increases the level of management
complexity and market risk for the company.
International Strategy. Retaining full control over operations will become difficult
as VW pressures Porsche to adopt its transnational strategy. VW promotes the use of
flexible engineering design and architectural processes, the sharing of compatible
components, and vehicle customization to satisfy regional consumer preferences. Though
the company will benefit from opportunities to incorporate product features that appeal to
local tastes, it fears that engineering and craftsmanship (which are manageable at one
manufacturing site) will be compromised. However, VW also strives for best-in-class
manufacturing and technology, as well as superior product quality, which parallels
5
Porsche
Porsche
Porsche’s culture of excellence. VW’s use of greenfield ventures to expand
internationally indicates that the corporation also values operational control and the
protection of proprietary knowledge. Consequently, the company should expect
cooperation from corporate leaders in efforts to maintain these sources of competitive
advantage.
Operating in multiple countries introduces greater complexity and uncertainty for
management and requires higher levels of coordination. Porsche can anticipate new
structural and integrating mechanisms imposed by VW to enhance interdivisional
cooperation. An organizational structure designed to maximize global efficiency and
local responsiveness in support of VW’s transnational strategy will help Porsche
overcome the lack of responsiveness to international markets inherent in its global
strategy.
Differentiation Strategy. Although both enterprises are committed to creating
value for shareholders, they’ve long used drastically different means of achieving this
goal. Shifting from a focused brand strategy to sell to a broader base of consumer
segments is not without some risk for Porsche. The company does not want to alienate its
loyal customer base or destroy the competitive advantage associated with its brand
prestige. The brand dilution that could result from expanding the product line further
presents a real dilemma for the company.
The narrow luxury market for high-end sports cars has a distinct profile. Porsche
enthusiasts are educated, professional, particular in their tastes, trend conscious, and
value innovative features, style, and links to European culture. Steps will be necessary to
protect Porsche’s historic image while diversifying and responding to changing consumer
preferences. In a way, the strategy being forced on Porsche does protect the company.
Narrow segments have a tendency to merge their preferences and tastes with broader
segment movements, which can render a focused strategy ineffective.
Conclusion. To take advantage of synergistic advantages, Porsche will have to
accept its loss of independence and increased pressure to maximize profit margins. To
pacify its demanding loyalists, the company should try to keep internal organizational
changes as invisible to the market as possible.
By far, the biggest risk for Porsche is the prospective loss of the US market. It is
hard to imagine, but should CAFE standards take root, over ¼ of the company’s sales
will evaporate in less than a decade. Therefore, it is essential for Porsche to achieve
synergies within the new corporate setting and to maximize gains in global markets (by
adopting new international business strategies and exploiting corporate relatedness
opportunities).
6
Porsche
…
Purchase answer to see full
attachment
How it works
- Paste your instructions in the instructions box. You can also attach an instructions file
- Select the writer category, deadline, education level and review the instructions
- Make a payment for the order to be assignment to a writer
- Download the paper after the writer uploads it
Will the writer plagiarize my essay?
You will get a plagiarism-free paper and you can get an originality report upon request.
Is this service safe?
All the personal information is confidential and we have 100% safe payment methods. We also guarantee good grades