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WHAT’S DRIVING PORSCHE?
- There is no substitute
Founder - Ferdinand Porsche
Year - 1931
Services - automotive financial
Owner - Volkswagen
Headquarters - Germany
CEO - Porsche Matthias Muller
Tag line - There is no substitute
WHAT’S DRIVING PORSCHE
Porsche has a strong R&D team Bringing the R&D function
of two firms too close together could potentially weaken
Porsche engineer’s sense of belonging and demotivate them.
Sales fell from 50k to 14k between 1986 – 1993.
In 1948 Porsche produced its first brand sports car, Porsche
356 series rolled off production line.
CEO Wendelin Wiedeking – lean manufacturing – lost
concentration on Porsche’s own car design – more
concentration on outside engineering –decided to go beyond
sports car niche.
WHAT’S DRIVING PORSCHE
Porsche cayenne with VW touraeg’s chassis frame was
introduced in the market with higher price than that of VW
touraeg’s - leaded to brand corruption.
People started to use Porsche cayenne for daily runabout and
failed to understand the importance of the brand Porsche SUV –
Porsche could test or develop ideas that the company would
not have been able to fund on its own.
Porsche and VW signed an agreement under which Porsche
was forbidden to design car for any other company between 1.0
through 1.3 engines under loose agreement.
Why this strategic planning?
Analysis is required in an organization during the following
To launch a new product or service
Consideration of new route to market
Working as a part of strategic project team
Entering a new region or country
High brand presence and reputation
It has supreme style with sporty
One of the most recognized top-of-
the-mind and popular luxury car
Lacking presence in middle income
segment which is expanding at a
Very high maintenance and running
cost in an extremely competitive
luxury car market
Capitalize on exclusivity and increase
Future generation and concept cars
Increasing manufacturing facilities
and distribution as well as servicing
Government policies in some
Impending recession which may
decrease purchasing power
PORTER’S FIVE FORCE MODEL
INTENSITY OF RIVALRY AMONG COMPETITIORS
Rivalry -extremely high
Competitors such as Benz, Ferrari, Lamborghini etc.
THREAT OF NEW ENTRANTS
New entrants are very low
Due to the factors like capital, brand recognition, large economy etc.
THE THREAT OF NEW SUBSTITUTES
Similar frame to that of Volkswagen Touraeg
Leads to brand corruption
However both models has its own advantages and
BARGAINING POWER OF SUPPLIERS
There is no bargain as contract with Porsche represents a
Also has a large supplier base VW.
BARGANINING POWER OF BUYERS
In this scenario the threat is moderate since the buyers are willing to
pay higher price for a premium brand.
Bringing up VW and Porsche together –
weaken Porsche’s engineers sense of
Belonging and demotivate them.
Employees can be motivated by explaining them that the companies
are collaborated hence must be considered as a single company and all
employees must work together for the welfare of the company.
Employees can be made to work in two separate companies.
Respect, Trust and value each other
Foster two way communication.
“Loose agreement” between Ferdinand
Porsche and VW’s Chairman – 40% of
Porsche’s development capacity belonged to
VW over a certain number of years.
Renegotiating the terms that the period of years is limited
With the amount earned in certain period staring as a new
venture and not under Volkswagen group with the title “Porsche
Renegotiating the terms and conditions in that the percentage of
stake must be reduced to less than 25%
Outside engineering services would
become very low since Porsche shares its
innovations and strategies with VW.
Create a new company under parent company Porsche let this
new company join hands with Volkswagen so that the Porsche
can outsource its innovation and strategies.
Porsche could test or develop ideas that the
company would not have been able to fund on
Raise money from donor groups, by conducting super events,
Sister concerned company can be developed with the help of alumni
and designs can be created and outsourced.
Based on the profit earned with Volkswagen after a few years of
agreement, start Porsche as an independent automobile venture.
Porsche should accquire100% share of VW so that it will be the
holding company and there will be an increase in cash flow.
To market about their new product so that it will create a
demand and their equity share increases