Example Of Case Study On Porsche- Final Case Study And Strategic Plan

Type of paper: Case Study

Topic: Company, Business, Vehicles, Products, Market, Cars, Sales, Management

Pages: 9

Words: 2475

Published: 2021/02/21

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Abstract

Porsche, a dominating automaker in the motor car industry, has become a world renowned brand and the desire of every petrol head in the world. The company has a wide range of products that is catering to various segments of the world.
The company was founded by Ferdinand Porsche and designed its first car on the request of Adolf Hitler. A few years later, it introduced its first ever sports car which become an instant hit. The company continued its road of success till it hit a speed bump in the 1990’s. After a change of CEO, the company started to gain profitability as well.
Describing the company’s 4 P’s, its strategy was one that complimented the company very well. Its pricing was up to the mark and so were their products, promotion and placement. The document goes on to explain the current situation of the company; the expansion of its operations manufacturing into other countries and reaching its sales target well before hand.
In the financial analysis, the company’s sales per country have been discussed with China becoming a leading market for Porsche. The SWOT analysis describes the strengths of the company which are more than its weaknesses. The company faces little threats and a lot of opportunities.
The organizational structure of the company has been discussed followed by the strategic planning. It would be of advantage to the company if it started investing in other segments as well and creating Green cars as per customer demands.
Porsche seems to have a bright future, as per the prediction of many renowned sources, and the effective management team may lead the company to new heights.

Introduction

One of the leading sports car brand, a company’s whose cars are already booked in advance for an upcoming year, engineering that is known to be the best in the world and is outsourced to many other motor companies, all this belong to one company only; Porsche.
Porsche is one of the dominant players of the motor car industry with sales reaching higher and higher as years keep passing and its value in the eyes of the consumers keeps growing. Porsche keeps rising above the expectation limits of its consumers in terms of shape, engineering, quality, efficiency, the whole package as a matter of fact.
With a wide product range offering sports car to SUV’s, Porsche has become one of the most desirable brands in the motor car industry. With many rivals trying to grab the market share, Porsche has managed to maintain and even grow its sales over the year.
Not only in terms of cars, but also the engineering division of the company, the service that has been outsourced to many other brands with completes confidentiality. It is known to have the best engineers working under them and producing top of the notch products for both the company itself and the other clients. It is one of the most reputable products and services motor companies.

Brief History

Porsche was founded by Ferdinand Porsche, and his Ferry Jr. and his son-in-law Anton Piech (who happened to be the son of the Volkswagen chairman) in 1931. The company did not start making cars until much later, but only offered engineering services.
Porsche got to design its first car, the Volkswagen Beetle, under the request of Adolf Hitler, who was looking for a “people’s car.” In 1948, Porsche took its big break and decided to make its first ever sports car. When the car hit the market, it made staggering sales for a new product and a new company name in the market.
Porsche has been a leader when the profitability of the company is compared with that of its competitors. But the company has not always been profitable, in the 1990’s the company experienced a down turn in its revenue. The reason for this is mostly believed to be the decline of the US economy, a major part of the revenue for Porsche came from the US. After a threat of bankruptcy and a takeover, Porsche appointed a new CEO Wendelin Wiedeking, who was responsible for a 180 degree turn around for the company. The CEO implemented lean manufacturing within the organization, along eradicating overtime and many other managerial decisions, which turned the outlook of the company . The company’s bleak situation started to see a brighter future.
With its growing product line, mostly thanks to Wendelin, Porsche started to capture and dominate not only the sports car market, but also the SUV and the Sedan market with its Porsche Cayenne and Porsche Panamera, sales of the company shot up drastically. And with the launch of Porsche Boxster, the company had advance booking of the car for many years.
The 1970’s gave rise to the export market of Porsche as Japan started to become one of the biggest markets. The sales of the cars jumped to 500 in the late 1970’s. a successful increase in exports was witnessed by the company for a period of time as other countries started to import Porsche cars as well.
Porsche Engineering performed incredibly over its years present in the market. The company started to expand its engineering services and even set up an office in the US.
Many automobile companies had their projects completed by Porsche engineering, which promised no misuse of design and concept and offered complete confidentiality to its clients.
In the 2000’s, Porsche gradually started to obtain share of Volkswagen. They began with 20% shares, and eventually ending up obtaining 50% share of the company.

Porsche and its 4 P’s

With its incredible performance in the market for years, Porsche is still leading the market with its brilliant marketing tactics and its product, price, promotion and placement.
Product: Porsche’s incredible product line tends to speak for its self. Porsche’s Boxster, though this car generates lower revenues than other cars manufactured by the company, it is still an instant sell out. This product also faces tough competition from other companies making similar products. Porsche Cayenne, a product that has been positioned just right, faces few competitors and seems to have a brighter future for the next 3-4 years. Porsche 911 though faces tough competition, is still a leader in its market and generates more revenue for the company than any of the other cars. Porsche Panamera, though it had some bugs, but after the issues had been fixed, the car become an instant hit and is a leader in its category as well. It faces tough competition as well with lower end automakers. Porsche Carrera GT, faces tough competition but a hot seller in the sports car category (Evtimov, Khorlin, Kessel, & Mar, 2004)

Price:

The pricing of each product of the company has been done relative to its competitors pricing while keeping in mind the target market as well.
The pricing of the Boxster was finalized keeping in mind a target market a little lower than what they had been catering to in the past, hence the pricing was considerably lesser than that of its other products. In comparison with its competitors and the product and its quality, the pricing of each product has been impeccably done.

Promotion:

Currently, Porsche has the most observed and visited Face book page. The promotion is now mostly being done through various social media pages and mostly events to induce more customer interaction. Though the company has taken leverage of traditional marketing as well, but it is more consumer oriented and has been focusing on digital marketing more for its promotion. It also relies on the word of mouth technique, for clients and car experts to refer the driving experience to other petrol heads.

Placement:

The company has placed its product as per the targeted countries. As the main revenue for the company is generated from the US, Porsche has its offices and dealers available in the country. The second highest sales are generated from China, a relatively new market to Porsche but have been growing since. The company also sells its cars in Europe, Asia, Australia, etc. and has dealers and its offices located in various countries, catering to the need of the people of the respective country. Porsche has also placed its product in underdeveloped countries as well, where it sees potential to grow. The placement has been well analyzed and strategized before hand and the decision for expansion has been implemented, and mostly has resulted in success for the company (Three Steps to an Effective Strategy, n.d.).

Current Situation

The ever increasing sale of the company indicates that the demand for its products has been increasing as well. This has driven the need for Porsche to expand its production and take it outside of Germany. Though the main production plants are situated in their home country only, but with the launch of the new edition of Cayenne, the company has decided to take its operations outside of Germany to Slovakia. Since the labor and production cost is cheaper in that area, the profitability of the company is expected to increase as well.
The high demand for the company’s products has required the company to invest more in its operations and research and development. The company spends more on its research and development than any other company. This is one of the factors that the company is leading in the automobile industry. The company needs to supply enough products to meet the demands of its ever increasing customer base, due to this the company keeps investing in its operations and production as well.
Porsche has also been contributing to the profit earning of Volkswagen. This is due to the high demand for high end luxury cars, which Porsche produces with the help of Volkswagen (Team, 2014).
It has been communicated by the CEO of Porsche that the company is said to hit its target of selling 200,000 vehicles by the end of 2015, 3 years in prior to the actual target. With its new production plant ready to produce cars, it has the capacity to produce more of Porsches new product Mecan.
It is said that the company will exceed its profitability level predicted and it is expected to grow in the upcoming years (BOSTON, 2014).

Financial Analysis

After the slump in sales and revenue witnessed by Porsche in the 1990’s, the company started to regain its sales and revenues as time progressed. In the financial year of 2010/11 the operating profit of the company increased a little more than seven times than what it was taking it up to 395 million Euros, where as in the previous year, the recorded operating profit had been 52 million Euros. This goes to show that the revenue of the company had risen by 80.3% since the last year.
Sales varied by the products. Higher demand for the SUV and luxury sedan caused a rise in sales for Cayenne and Panamera, while the sales for Boxster and the other sports car decreased from what it was before.
In Europe the overall sales for Porsche increased by 63%. An 82% rise in sales in America, while in the rest of the world, including Asia, sales grew by 126%. China proved to be an exponential market for the company which was the reason why it witnessed such tremendous growth in Asia (IHS, 2010).

SWOT Analysis

Porsche holds more strengthens and opportunities than the combination of threats and weaknesses. Since Porsche has been driving on its full potential it has, therefore, many strengths associated with itself. Porsche has made such a strong brand identity that just by looking at its emblem; people are able to recognize the company it belongs to. The brand has also created an aspiration of the car not only in the minds of petrol heads, but an average consumer as well. Internationally, the brand has managed make a strong presence. Since the company has around 2,300 engineers working under itself, it is one of the most self sufficient and the most advance in engineering and technology and designs of motors.
Porsche has a very strong product line; it caters to almost all of the market segments and is a success and a leader in mostly all of them. The cars that are available are top notch and highly desirable. The company has also generates its revenues from selling its products in different countries around the world. Porsche has an advantage that it uses to its full potential, and that is the capabilities and the product of Volkswagen, which has proved work wonder for the company in the past. The company has a loyal customer base, which spreads word of mouth marketing and keeps coming back for more (Jurevicius, 2013).
The requirements of the clients are steadily changing to more eco friendly cars and that fact that Porsche does not produce any of those; it is steadily becoming a weakness for the company. Another weakness for the company is the relatively low revenue generation of the company than that of its competitors. The company, though catering to a large customer base, is still missing out on some products that it should definitely invest in.
The fact that the world is becoming more eco friendly and are starting to prefer eco friendly cars, poses as an opportunity for Porsche.
If the company enters the green car sector as well, it is bound to rule over that with their expert engineering and designing. The company can also look into other product lines and manufacture that in order to grow its revenue base. In order to gain the opportunity of increasing their product line and tapping a larger market, Porsche can look into mergers and acquisitions of other companies, for example Volkswagen. Tapping the under developed market is also an opportunity for the company to grow their sales further.
The company does not seem to have many threats except the unsteady fuel prices. Since the fuel prices are mostly rising than falling, the fuel consumption of the cars becomes more costly, putting a price burden on the consumer. Also since the prices of raw materials and labor force is increasing as years pass, the overall production cost of the cars may increase over the years as well. The company may witness a massive loss their PEG client data base due to the takeover by VW. Another threat for Porsche is the heavily fluctuating economic conditions of Europe and the US, two of the biggest markets for the company, which may result in the loss of sales.

Organizational Structure

Currently the CEO of Porsche has taken over the major decision making roles of the company and is overlooking the entire structure and the processes and happening of the company. He has under him, the CFO, CEO Porsche France, CEO Porsche North America, CEO Europe, communications, investment management, strategic and Porsche AG all reporting to him (The Official Board, 2015).
Though the CEO has turned the company around and taken it to new heights, it is suggested that the organizational structure becomes more distributed. The heads of each region should be given more power and the heads should be reporting to him directly.
The important heads, such as that of production, engineering etc, should also have access to the CEO so that they can voice their concerns to him.
The heads should be broken down into managers. Since that company has the policy of hiring more interns than salary based people, the company should also change that and hire more employee resources as that is more effective since they would have more benefits offered to them to keep them motivated.

Strategic Plan

In the future, Porsche should look into the manufacturing of green cars as well. A company needs to stay updated with the ever changing consumer needs, and it would be advantageous for Porsche to design a car that is not only a sports car but a hybrid as well. The company can also offer its green car engineering services to other companies, in order to gain revenue from that section of the company as well.
Another venture that the company can look into is manufacturing of other vehicles, like buses or pickup trucks. This would increase the sales revenue of the firm considerably and would be of need for many people in the market.
Wanting to come into direct competition with Toyota would be a marvelous move for the company as there are not many competitors that can measure up to the manufacturing and offering of Toyota. If Porsche was to enter that market then it would be able to gain the market share of it, especially since it is a brand that has already established itself in the niche upscale market and is known for its technology and engineering and design (Edmondson, 2006).
Porsche should also look into designing more models for female drivers and young adult. This would increase the target market of the company and attract more consumers. Tapping the developing countries of the world would also help them capture those markets before the rest of the competition, and set a name or its self in the market. It would greatly help the company up its revenues and sales (Edmondson, 2006).

Conclusion

Porsche is already a leading company when it comes to the automobile industry. It has dominated the market for years by offering high end high quality products to the niche market that it caters to.
Though the company has experienced a down turn in its life time, it has mostly experienced years of progress and profitability, which it continues to do till date.
The company has been working strategically already, but there are a few places where it lacks and a few opportunities that it needs to grab and extract. Since the company has effective operations management, it has managed to streamline all its operations and productions and has no excess inventory or costs. If the company implements some of the strategies presented above, like green car design, it is bound to capture more of its target segment and create revenues in comparison to its competitors.
Porsche is a strong brand identity and together with VW is has managed to achieve many goals that it set out to. The future outlook for the company seems to be extremely bright and with the every impressive models and designs, Porsche is bound to become the leader of the automobile industry, someday.

Works Cited

The Official Board. (2015). Retrieved April 8, 2015, from http://www.theofficialboard.com/orgchart/porsche-se
BOSTON, W. (2014). Porsche to Hit Sales Target by 2015. The Wall Street Journal .
Edmondson, G. (2006). Porsche's 'King Looks to Expand Empire. Bloomberg Business.
Evtimov, A., Khorlin, A., Kessel, H. C., & Mar, M. (2004). Should Porsche Build a Sedan As a Forth Product Line? (Sub-question: Should it expand at all?). BEM 106.
IHS. (2010). iHS. Retrieved April 8, 2015, from https://www.ihs.com/country-industry-forecasting.html?ID=106599583
Iqbal, N. (2014). Management of operations of Porsche. Academia.
Jurevicius, O. (2013). Strategic Management Insight . Retrieved April 8, 2015, from http://www.strategicmanagementinsight.com/swot-analyses/volkswagen-swot-analysis.html
Team, T. (2014). Forbes. Retrieved April 8, 2015, from http://www.forbes.com/sites/greatspeculations/2014/09/03/volkswagens-operating-profits-boosted-by-porsche/
Three Steps to an Effective Strategy. Porsche Consulting – THE MAGAZINE.
Zoeller, S. (2014). Stephen Zoeller's Marketing Blog. Retrieved April 2015
Porsche AG History. (n.d.). Retrieved April 2015, from Funding Universe : http://www.fundinguniverse.com/company-histories/porsche-ag-history/
Henderson, R. (2009). What’s Driving Porsche? MITSloan Management.

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