Porsche

Porsche's History

Describe Porsche’s history and its 4Ps (Product, Price, Place, and Promotion).

Explain the current situation of the organization in the market (industry, market, and general environment analysis).

Assess the financial performance and condition of the organization.

Conduct a SWOT analysis (strengths, weaknesses, opportunities, and threats) to determine areas that offer opportunities for change.

Choose three or four areas from your SWOT analysis and explain why the areas you have chosen are essential to your strategic plan.

Describe your recommended organizational structure.

Explain your plan to measure the success of your strategic plan.

Your paper must be 10 pages in length (excluding the title and reference pages) and be formatted according to APA style guidelines In addition to the text, you must use at least five scholarly sources. Remember to incorporate information that you have learned from this course as well as your personal experience.

The world’s auto industry is changing with new strategies used in the manufacturing line and new business challenges arising. The car companies have responded to these challenges in a more effective and efficient ways with examples being the incorporation of new technology and using fuel efficient technique during the production process. Porsche, over the years, has gained popularity as one of the best manufacturers of luxury and sport utility cars worldwide. The success of the company is based on the fact that it has been for years developing quality products for its customers. The firm, over the years, has made a significant investment in innovation and technology to achieve quality and efficiency (Lester, 2007)

Dr. Ferdinand Porsche was the founder of the Porsche industry. He started his engineering work around 1930. He developed a small firm which was famously known for an innovative approach when it came to car design. Under the request by Hitler and signing a contact with him, Porsche engaged in the production of sports cars that would be part of the Auto-Union Grand Prix in 1939 despite oppositions from the Nazi Regime that didn’t comply with his innovative ideas. Porsche design firm moved to Australia after the second world war. The company concentrated on servicing and repairing of different automobiles. However, in 1946, the team channeled their focus on various designs of sports cars. With the aid of Swiss financiers who funded the production of racing sports car designs the company created a lightweight model sports car mainly from the Volkswagen Beetle design. In 1948 the prototype was on the road, and small-scale production of it was started by the end of the same year. The firm grew and produced an average of five cars a month. It was the very same year that Porsche company signed an agreement with Volkswagen allowing the company to make use of the large corporation’s service organization in the whole of Australia and Germany. The first Porsche 356 was manufactured in 1950 and a year later the company had produced a total of 500 cars while six months later the company had a total of 1000 Porsche cars produced. It was the same year that Porsche died having left a legacy, and the company image was rapid gaining popularity among the (Boschen, & Barth,1984).

Porsche 4ps

In 1956 the Porsche company unveiled 10, 000th Porsche Car moving production line while celebrating their Silver Anniversary. Almost 70 percent of Porsche car models that were manufactured were exported in the mid-1950s. In the 1960s the company expanded production regarding the number of employees and the physical space of production. The company developed a service shop, a new sales department. A spare parts center and a car delivery unit. By December 1960, 39, 774 cars were produced having certified four quality control certificates. These certificates were for the transmission, engine, measurements and general vehicle examination and it was the same year that the company reported a 108 Million revenue earned people (Amor, 2013).

The Porsche 356 model was similar in design to the Volkswagen Bettle in the early 1960s.  However, in 1964 the company led by Dr. Ferry Porsche designed the 911 Porsche which had a more elegant look and the engine situated at the back of the car. A year later the production of Porsche 356 stopped, and the company concentrated on Porsche models 912, 928 and 924.

Until 1970 the company was under a joint ownership of Piech and Porsche families. However, by 1971 the company revenue rose to DM 900 million and the two families realized the company needed reorganization as it was growing so fast. The family decides to use its holding into a single organization with Dr. Ferry Porsche and his sister presiding over the board of directors. The company went public in 1973 under the name Porsche AG.

Japan grew into one of the biggest markets for Porsche AG automobile. The numbers grew from 122 in 1975 to 500 in 1978, an approximate number sold in United Kingdom and Switzerland. However, the company earned more revenue in Japan especially after the Japanese import laws required the modification and transportation be incorporated in the value of the car. The boom season was realized by the company in the 1980s. In 1981 of all the cars produced 70 percent were exported with America accounting for 40 percent of Porsche AG total sales people (Amor, 2013).

During the 1990s, however, the market collapsed. The effect was pointed at the US slowdown in its economic growth and its negative impact on the number of cars imported. Furthermore, a concern was made on the increasing prices of Porsche automobile over the years. To counter this loss, the Piech and Porsche families in 1992 hired a new engineering and manufacturing experts, who reduced the working hours of the workforce. He also hired Japanese consultants who streamlined the production process. He initiated an update of the 911 model making it more attractive. After experiencing a loss over a period of time, the company started earning profits again in 1996.In 1998 Ferry Porsche died and just before his dead he had to announce a joint venture with Volkswagen aimed at building a suburban utility vehicle (SUV) starting 2002. It was this year that sale in the US and the whole world rose. The company over the years hopes to remain competitive in the automobile industry (Henderson, & Reavis, 2009).

Product

Product

Porsche company is considered one of the greatest sports car company in the world. Their products are of high performance because of their production and manufacturing strategies. The car, unlike most car enterprises that are produced in a production line is not built on an assembly line. They are hand made from start to the end.  The company uses materials such as aluminum, carbon fiber and fiberglass that has a direct general reduction in the car’s weight. More so, these articles portray the property of being much stronger compared to the conventional metals like sheet metal and steel. The body of the car is painted using custom colors like “Porsche Red”. Upon finishing painting the body, a huge oven is applied on top of the paint to keep it from chipping or bubbling. It is through this careful production process that the company products are rated among the best in the world. This has been backed up by the Initial Quality Study which ranked Porsche company the top of the list regarding the quality of their products. This was between 2006 to 2008. The company is also involved in the production of high performance and exclusive automobiles which are by far preferred by the majority of the buyers (Goi, 2009).

The prices of Porsche cars models are determined by the differentiated strategy and technology used in the production of each Porsche model. This Means that the company charges extra cash for an additional premium and better quality (Kuo, Ahn, & Aydin, 2013).  The difference in prices are brought about by the different design, engine size and capacity, gear levels, sports version, and fuel consumption. For example, the pricing technique used for Porsche for the three series is competition based pricing as most of other competitors’ product such as the BMW, Audi, and Ferrari in the three series based their prices in comparison with the competitor's products. The increased car production firms and creating a significant profit will prove useless if none of their products are bought due to loss of existing customer as they chose to buy cheaper car products from the rival firms (Gummesson, 1995).

The company’s headquarters are in Germany. However, the Porsche company sell their products within and outside the country. The company uses a big marketing dealership to export their products to countries such as the USA and the European countries. The company also has a system of Imports for the non-dealer countries. It has also set up production plants in various countries throughout the world hence expanding their market base.

Price

Porsche has different marketing techniques from mobile marketing to the use of email. The company is also prominent in the use of online marketing through the help of Cramer-Krasselt. The firm also carries out promotional campaigns and does advertisements in televisions through favorite channels. They take advantage of commercials broadcasted in New York and other cities, especially during news and sports sections.  The company frequently conducts market research to assess the extent of their promotional campaign and thus deterring the results of their marketing campaign (Goi, 2009).

Porsche rose its holding in the Volkswagen company from 31 to 51 percent in the year 2008 giving it the majority owner of the enterprise. The engineering and design were the brand mark of Porsche, and it was through this that the company had a competitive advantage. Through a customer design development company, the company engineering group made a wide range and expertise production of automobile available to clients from the different production plants the company had.  It was feared that combining the R&D functionality of Porsche and Volkswagen could weaken Porsche engineers and demotivate them. This was so because Porsche company had realized profits over the years through the production of the quality car. But this was not the case with Volkswagen as it concentrated its efforts more on volume. There was the doubt that if the engineers from the two firm were associated then, Porsche AG could quickly lose its ability to sell its external engineering to other OEMs as the company would be sharing it the strategy with Volkswagen. It being the most profitable automobile maker by the year 2007, the company management had to come up with a way of ensuring that the incorporation of Volkswagen did not negatively affect Porsche. And from the year 2006 to 2008 Porsche was in the top ranking regarding quality production a study done by Initial Quality Study. The company spent 12% of its revenue on R&D. This was approximately 19% of the company’s employees working in R&D facility compare to Volkswagen's 6.6% (Henderson, & Reavis, 2009).

With today's global economy, Porsche has been adjusting its marketing strategies over the year. The company aims at setting an optimal environment where their wide range of Porsche car products they can sell. The company aims at providing an optimal and favorable environment from which consumers could purchase their products and the company continuously male profit. To analyze the current situation factors of the general industry, the current market and the business environment are crucial to examine (Buček, 2010).

Place

To successfully analyze the general situation in the Porsche Industry factor like technological trends, Demographic, economic, political, social cultural and Global trends are hard to ignore. Each of this minor factor plays a huge role in the general determination of the Porsche environment.

The Porsche company has ever since been adopting the new technology in their production process. The advancement of technology over the years has made it possible for the company to produce high-performance sports utility cars. The Porsche company, in 1999 bought and stake and played a key role in the control of Mistake Hofmann and Partner, a firm specializing in information technology (Steinhauser, 2004). The company in the improved its production processes and systems, Data processing and run of application in their automobile products. An increase in the production processes in the Porsche company was realized regarding quality and the quantity output. The IT department also played a role in the learning of new technique and technologies was used in the production process. An impact on the manufacturing of Panamera, Carrera GT, and Cayenne happened in the same production plant in Leipzig, Germany. The use of technology also made it possible for the company to develop a cutting-edge technology that was hard to copy by other automobile industries for example Porsche DoppelKupplung ‘s seven-gear and the Torque Vectoring known to be reliable in performance (Lester, 2007).

An increased in miles per gallon (MPG) requirements by Environmental Protection Agency(EPA) for all automobiles through Corporate Average Fuel Economy and US government imposing highway traffic safety administrations has led the Porsche company to produce cars with fuel consumption economy. In Germany, the company enjoys a strong economic support. It enjoys union workers. They are protected by strong labor laws and support as the manufacturing employees constitute a total of 30% of the country’s labor force (Gemmiti, 1998).

In the year 2007, the fuel prices increased. This has caused consumers of the automobile to shy off from buying cars as they became price sensitive, especially with Porsche products as they used to consume a lot of fuel. The company with the aid of technological advancement re-engineered its engine fuel consumption offering a better gasoline efficiency and subsequently more horsepower like in the case of 911 Turbo. This provided a more efficient and economical drive for their customers (Wood,2008).

The company has had a significant trend over the years in the minds of people as they know the Porsche products to be of very high performance. The idea of the company producing more fuel efficient products has made people believe that the globe is going into a greener environment. This has led the company to continuously find new technologies in their products to provide the very same horsepower at a low fuel requirement (Weichold, 2016).

Promotion

e) Global trends

Starting in the mid 90’s Porsche company realized that the consumer needs had changed and their preference shifting toward the sports utility vehicles. The company decided to concentrate its line of production on the SUV coming up with Cayenne automobile (Stacy,2005).

In the automated analysis, particular focus is given to potential entrants, the bargaining power of suppliers and buyers and the availability of a threat due to substitute products (Saleem, Bellahsene, & Hunt, 2008).

The company enjoys a little possible entrance into the production line as they shy away from the huge capital they would have to invest to produce high-performance cars. This barrier to entry has presented little threat to the company especially when there is a possibility of production that could match and pose a threat to Porsche and affect its share of the market. Extensive research and developments over the years, the technological advancement in the production of Porsche automobile and brand recognition proves almost impossible for a new brand company to enter the market and pose a threat to Porsche company (Amor, 2013).

A vendor with bargaining power could only come in hand with the production of the raw materials that Porsche uses as the company is involved with the production of its engine parts with their models (Ealey, & Troyano-Bermúdez,2000).

The Porsche company only attracts earners with good capital incomes. Thereby the purchase of Porsche presents a particular class and some degree of innovativeness. Even with brands such as Bugatti and Lamborghini in the market, the brand poses a threat because there is only few firm that can provide the same quality, technology, and excellence. This is so real as most customer pay premium to acquire the brand (Ealey, & Troyano-Bermúdez,2000).

The risk of production of alternatives to the Porsche brand is so minimal as few companies can provide the product with the same technology, quality, and excellence as Porsche does (Amor, 2013).

The prices of Porsche cars ranges from $50, 000 to around $845, 000 having the segmented prices based on the different models. Porsche exercises market segmentation which involves subdividing the market into smaller groups which can easily be defined regarding the similarity of wants and needs. The company does this by two variable methods of descriptive and behavioral elements of their groups. The company is also targeting the young audience and the female gender. The company has recently made efforts to reduce the average age and increasing female owners of Porsche products (Saleem, Bellahsene, & Hunt, 2008).

Current Situation of Porsche in the Market

Upon the year 2015, Porsche company made history in the Organization. The company executive gave a report that the revenue the company realized profits of $3.8 and income of $24 billion. This surged to a 25% increase. The report also indicated an increase in the unit sale of 19% with 225, 000 cars all over the world. This has made the company achieve its target of selling 200, 000 cars worldwide three years ahead of the scheduled date. It was reported that the firm’s performance was extraordinarily attained even for the company’s standards. The company’s sales and overall financial performance have been attributed to the success of the crossover SUVs and the brand image of production of icon sports cars. The Macan and Cayenne accounted 68% of all the company’s sales. Having delivered 80, 000 units of Macan, it outsold the Boxster, Cayman, 918, 911 and Panamera combined (Deighton, Avery, & Fear, 2011).  The company’s largest market was China having sold more than 58, 000 cars. The USA was in the second position with total 52, 000 units sold to the county. The Porsche company sales continue to surge even after the Volkswagen cheating scandal that was brought to light in September. The company also has investments in a multi-billion-dollar project of all-electric Mission E car production. The E mission car powered by a high-performance battery will not be released to the market until the end of the decade (Newswires, 2016).

strengths

Considered among the key advantages of Porsche it the company’s outstanding brand mainly because of its excellent marketing strategies. The brand name helps the company attain a significant market share for their products. The company’s products are by far known for their robust, sturdy and elegant designs. The company has invested in creativity in engineering enabling it to introduce a range of products that satisfy the diverse wants of its customers (Mehrkens, 2004). The company also has established a loyal customer base. The need for high-end quality cars by the premium customers have also met to suit their lifestyle. Porsche, as compared to its competitors are agile as the company has form partnerships with the major players in the industry thus improving their operational capabilities. The company has significantly improved on their technological advancements making their production process faster, efficient and easy to conduct (Steinhauser, 2004).  The advanced technology has also cut down the cost of production and reduced the number of the labor force which in turn has an effect on a reduction in the workforce wage bills thus boosting the firm’s profits margins (Mehrkens, 2004).

Financial Performance and Condition

Despite Porsche’s success, the company has been associated with several drawbacks that the firm needs to improve. The company’s automobile is a massive consumer of fuel meaning an increased emission of carbon dioxide to our environment, hence pollution.  Some government through environmental campaign aiming at curbing environmental pollution have banned products from Porsche (Vargas-Hernández, & Guadalupe, 2005). This has put the Porsche company in a very challenging position. The company has also not offered an option to the class of people who opt out of the premium gas hence limiting their production to consumers who are comfortable with premium gas. This restricts the number of buyers. Another is that compared to the rival brands like Bugatti and Lamborghini, Porsche products are quite small. This has limited the volume and amount of sale of their products.    The pricing technique of Porsche is also a limiting factor as their product are only purchased by the wealthy class (Jones, 2006).

The company can embrace the environmentally friendly method of production by producing the right products, with the aid of advancement in technology, at a better fuel consumption rate but produce the very same horsepower (Weissach, 1977). This will boost the sales as many customers are willing to buy products that ensure their safety and health. The company has an opportunity in the SUV model cars as their market demand has been increasing over the years. The company can also enhance their sales in case they are to venture into the Hybrid Powered models (Håkansson, & Waluszewski, 2005).

The unpredictability of certain natural disasters such as hurricanes and tornadoes threaten the production process and cause the company losses. The global economy is another factor as it is prone to recessions (Kirstein, 2010). The firm is then inclined to incur losses as a result of the poor economic change. Just like all other automobile companies, Porsche experience a difficulty obtaining credit facilities and this limits their expansion capabilities. The companies also face stiff competition from other vehicle producers such as BMW and Toyota (Jones, 2006).

Environmental friendly mode of production

With the rise in environmental conservation campaigns as a result of global warming,  the issue of environmental degradation through excess consumption of fuel poses a significant threat to any firm involved in the production of the automobile. The company should embrace technological advancement with the IT department and dedicated and innovative engineers to come up with an engine system that consumes less fuel but has the same horsepower (Möser, 2011).

SWOT Analysis

The company faces stiff competition from other automobiles like BMW and Lamborghini (Kuo, Ahn, & Aydin, 2013).  Meaning that the firm has an obligation of devising a way in which it will ensure that the company stays in production.  Hence the company should monitor its competitor's strategies and work towards being on the same level with them. Porsche should use modern technologies to increase their quality of products and at the same time reduce the prices of their products to take advantage of the middle class who will also buy their products (Abdulhak, & Smith, 2011).

This is a technique of producing several different products to suit different peoples’ needs. Porsche company should conduct several market research and determine the need for various people in the world and then come up with various products to fulfill these wants (Möser, 2011).

Conclusion

Since the adoption of the new technology, Porsche company has been able to adopt the trending features that make the car unique hence an increase in the brand image (Stacy,2005). The engineers have come up with better fuel consumption, and this put Porsche on top when it comes to fuel efficiency and performance. The widening of its market base in a place like China has made the company increase its production process and sale and these attributed to the increased profit margins (Kuo, Ahn, & Aydin, 2013). 

The company should adopt a better and efficient fuel consuming cars to avoid the excess emission of carbon dioxide gas. Campaigns of environmental conservation may become tighter In the coming years, and this may kick out Porsche products. Different Porsche cars should be availed in the market to suit different peoples’ need. A market research should be conducted to determine the diverse taste and preferences of the people and the company to work to meet their wants (Wood,2008). The company should also reduce the price of their products for them to find new markets. The company should also open up more marketplace around the globe to make their products available all over the globe (Goldstone, 1997).

References

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Strategic Plan

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Ealey, L. A., & Troyano-Bermúdez, L. (2000). The automotive industry: a 30,000-mile checkup. The McKinsey Quarterly, 72-72.

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