Case 6: Porsche
Summary of Key Issues:
This paper gives a brief overview of the Porsche car company. Essentially, the Porsche brand has been in existence over years and has undergone various strategic changes that enabled the car brand cut a niche in the motor racing sector. Internal management changes, entry of Volkswagen group and design changes have led to tremendous transformation of the Porsche brand.
1-Using a SWOT analysis framework, evaluate the factors in Porsche’s internal and external environments. Be sure to specify strength, weakness, opportunities, or threats that are new to the company as a division of Volkswagen Group?
Porsche integration with Volkswagen Company led to a shift in the business model within the company. There are threats, strengths, opportunities that developed from this deal.
It led to brand visibility and advertising of the Porsche brand.
There was the creation of better engine designs with 500 horsepower.
There is increased chance of engineering capabilities.
There is increased competition for the Sports Utility Vehicle (SUV) cars hence lowering Porsche market share.
The company is not diversified in its product line.
Despite linking with Volkswagen, the company is still small in size and obtains small revenue compared to other car manufacturers.
Collaboration with Volkswagen leads to increased products and services.
There is the chance of developing innovative new car features.
There is a better chance of increasing the market share.
Economic challenges and political issues have a direct impact on the business.
Competition from other car manufacturers threatens business growth.
Currency fluctuation and exchange rate figures have a direct impact on the business.
2– Review the mix of products offered under the Porsche brand. How do the models compare against competitor products in the marketplace?
The Porsche line of cars are meant for the wealthy individuals. Porsche has five car models; the 911, Cayenne, Boxter, Panamera and the Cayman. The main competitors for the Cayenne model are the BMW X6, Audi Q7 and Mercedes Benz ML63. Difference in features are found in aspects such as speed, interior design and cost. On the other hand, the Panamera is regarded as the fastest luxury cars among its competitors: the Audi S8 and Mercedes S65 (Hitt, Duane and Robert 323). Cayman and the Boxter compete against their rivals in terms of their reliability.
3-How will Porsche’s strategy change under Volkswagen ownership?
Volkswagen has great expertise in design and innovation of car brands. This partnership with Porsche will lead to innovation, and an increase in the number of cars produced. Additionally, the engineers are experts hence they create customized products. The market share will also rise, and the Porsche will be visible in many markets and countries.
4-What does this mean for the future of the company?
This implies that Porsche is placing itself at a competitive advantage over its competitors. The company is using the Volkswagen partnership to increase market share and revenue for its stakeholders. There is also the possibility of being the leading manufacturer in SUV vehicles.
- Porsche should maintain its business strategy and not change due to new deals with other companies.
- There should be widespread investments in research and design to maintain its competitive advantage.
Every business entity needs to understand its business model and its competitive advantage. Acquisitions and partnership ought to be made for the sake of enhancing such business models and not breaking them.
Hitt, Michael A, Duane. Ireland, and Robert E. Hoskisson. Strategic Management: Competitiveness and Globalization. Cincinnati: South-Western College Pub, 2012. Print.