Porsche Strategic Plan to grow Business in the next three years Year

Porsche: Company Analysis – Strategic Plan to grow Business in the next three years 1

Porsche:Strategic Plan to grow Business in the next three years

Year

PorscheHistory:

Itwas in the year of 1931 when Porsche had its humble beginnings. Thecity of its origin is Stuttgart in Germany. It was only after 17years, in 1948 when the company started making cars under the name wenow know, Porsche. Talk about innovation in automobiles, and Porscheimmediately comes to mind, especially in the niche market of “SportsAutomobiles and Cars”. It has stayed that way for more than sixtyyears now! Surprisingly for such a huge brand, it is not a volumewise company. (Porsche History, 2014).

The911 – perhaps the most famous of Porsche models – is when allchanged for the better for Porsche. Sales increased across the board,particularly with a large amount of business coming from Asiancountries, such as Japan.

MarketingMix:

Product:There are two terms that a Porsche marketer would use to describe thecars that come out the Porsche assembly – Classy and Sporty. Thisbrand is not the everyday utility vehicle, obviously. The prices areon par with luxury brands. In return, buyers are rewarded withautomobiles that come with top of the line performance. Not toforget, the latest in automobile technology.

Pricing:There is no doubt that this is a premium brand that demands premiumprices. It is important for Porsche to maintain high prices, toensure that feeling of exclusivity for its riders.

Place:As stated previously, Porsche is not after volumes. That means, thestandard car dealership networks just don’t work here. All Porschecars are sold through an exclusive dealer network. In any givencountry, the number of dealers might not be more than a few dozen.

Promotion:A brand such as Porsche needs no promoting, but of course, premiumcustomers demand premium style of advertising. Selective advertisingthat targets top spenders of the world.

AutomobileIndustry Analysis:

Basedon their latest bulletin, the company has a new plan – Strategy2018. The idea behind this new plan is to create a cohesiveexperience that spans purchasing as well owning the car. They arelooking to continuing what they have done so far. Further, they wantto make it even better. (Porsche History, 2014).

Rightnow, there are a couple of things they are focusing on:

  • There is a new concept that is playing the rounds in the automobile premium category. That is called “Luxury Plugin Hybrid”. Incorporating this concept, is the Panamera S E-Hybrid. The concept is about using electric power to run the car’s engine.

  • One of the first super sport cars ever, 918 Sypder, has been introduced by the company at the Frankfurt Auto Show.

Sofar, 2015 has been a good year for Porsche. The sales of the latestedition of 911 and JZM are off the charts. With revised, increasedprices the company is going to make a lot of money when the fiscalyear ends. As is always the case, Porsche drives a huge percentage ofits revenue back into research and development. This is why the carscome with the latest in technology, to be the finest sports carsavailable in the world.

EnvironmentAnalysis:

Thereis a growing concern with making cars powerful, while also keepingthem environmentally friendly. To this effect, Porsche R &amp D hasensured that all of its cars meet the strictest emission standards asprescribed by the nations in which it sells the cars. This is madepossible with the VarioCam Plus technology.

FinancialPerformance and Condition or Organization:

Period Ending

Jun 30, 2014

Mar 31, 2014

Dec 31, 2013

Sep 30, 2013

Total Revenue

– &nbsp

– &nbsp

– &nbsp

– &nbsp

Cost of Revenue

– &nbsp

– &nbsp

– &nbsp

– &nbsp

Gross Profit

– &nbsp

– &nbsp

– &nbsp

– &nbsp

Operating Expenses

Research Development

– &nbsp

– &nbsp

– &nbsp

– &nbsp

Selling General and Administrative

– &nbsp

– &nbsp

– &nbsp

– &nbsp

Non Recurring

– &nbsp

– &nbsp

– &nbsp

– &nbsp

Others

– &nbsp

– &nbsp

– &nbsp

– &nbsp

Total Operating Expenses

8,000&nbsp&nbsp

8,000&nbsp&nbsp

16,000&nbsp&nbsp

16,000&nbsp&nbsp

Operating Income or Loss

(8,000)

(8,000)

(16,000)

(16,000)

Income from Continuing Operations

Total Other Income/Expenses Net

– &nbsp

– &nbsp

– &nbsp

– &nbsp

Earnings Before Interest And Taxes

(8,000)

(8,000)

(16,000)

(16,000)

Interest Expense

(10,000)

(10,000)

(40,000)

(40,000)

Income Before Tax

– &nbsp

– &nbsp

– &nbsp

– &nbsp

Income Tax Expense

(2,000)

(2,000)

88,000&nbsp&nbsp

88,000&nbsp&nbsp

Minority Interest

– &nbsp

– &nbsp

– &nbsp

– &nbsp

Net Income From Continuing Ops

870,000&nbsp&nbsp

870,000&nbsp&nbsp

470,000&nbsp&nbsp

470,000&nbsp&nbsp

Non-recurring Events

Discontinued Operations

– &nbsp

– &nbsp

– &nbsp

– &nbsp

Extraordinary Items

– &nbsp

– &nbsp

– &nbsp

– &nbsp

Effect Of Accounting Changes

– &nbsp

– &nbsp

– &nbsp

– &nbsp

Other Items

– &nbsp

– &nbsp

– &nbsp

– &nbsp

Net Income

870,000&nbsp&nbsp

870,000&nbsp&nbsp

470,000&nbsp&nbsp

470,000&nbsp&nbsp

Preferred Stock And Other Adjustments

– &nbsp

– &nbsp

– &nbsp

-&nbsp

Source:Porsche Finance (2014)

      • This is a premium brand, so those looking for something cheaper are obviously left out.

      • Fast cars use the latest in technology, and hence experience wear and tear. Maintenance costs are huge.

SWOT

      • The brand has always been strong, and it continues to be so. The word Porsche automatically means premium and high quality.

      • Pricing is at the top category in the entire car pricing ladder. Models are overpriced, which makes them seem as a desirable model.

      • Customers love their Porsche

SWOT

      • In some countries, especially Asian economies, red tape is a huge road block.

      • Porsche is a popular brand but there are others – Jaguar and Land Rover to name a few. These brands are always looking to upstage Porsche in its own game.

      • Porsche has never been about volume. Yet, the world seems to be getting richer every year. Captalize on the brand, and sell more cars is an opportunity here.

      • Hybrid cars are not yet a big thing for Porsche. This new segment is where the new set of customers will come from.

StrategicAreas To Focus On:

Evena company such as Porsche always has room to grow. That means, thereare areas where it is possible to recommend, to ensure its growth.

BrandEquity:

Evenin this short report, it has been mentioned several times about thebrand value that is associated with Porsche. With this in mind, thecompany should consider making more out of this incredible brandname. A premium brand such as this is all about making sure of afeeling. The feeling for the owners, that they are parting somethingunique.

Oneway of doing this is to enter new markets. With globalization, evermore companies are opening up their economies. This is creating newmillionaires every year. These are the type of customers Porscheshould go after.

MiddleSegment:

Itis a given that Porsche cannot be sold as a family car, nor a utilitycar. However, it is possible to make mid-range cars that carry someof the high end features. These cars could look premium without allthe things that come with the current models. Further, it is possibleto reduce the maintenance cost, appeal to the middle segment a littlemore.

ConceptCar:

Premiumcategory customers don’t care all that much about money, or evenfunctionality. They love to own unique products, and that meansPorsche can offer their concept cars. This could be a new productsegment altogether.

HybridCar:

Hybridcars are those that run on standard fuel, and also on electricity.Electricity is considered as an environmentally friendly fuel. Carsthat run on both, or just electricity are still pretty new andPorsche can be the leader in this young product category.

NewCompany Structure Proposed:

Theplan proposed has a target of the year 2018. The current plan focusesexclusively on geographic expansion. With that in mind, the followingcompany structure and associated strategies are being suggested. Thestrategy involves the topics of managing the expansion and operationsof the company.

Sl no.

Areas

Scope

1

Governing Management

Globally Managed

2

Operations

Regionally Managed

3

Sales

Locally Managed

4

HR Management

Globally Managed

5

Raw Material Procurement

Locally Managed but Global governance

Forthe above plan to succeed, it is important that there be a countrymanager. This country manager will be responsible for the everydaymanagement of the new operations.

Evaluatingthe Plan After Execution

Whena new plan is put into place, it should also include ways of checkingif it worked. Here, the evaluation plan has been presented. The threedifferent types of evaluators that can take care of this plan.

  1. Outside Auditors and Finances: The auditors are the guys who keep track of where money is going. They also document what amount of money is coming in. Auditors, will also make sure that everything is being done according to the plan.

  2. Steering Committee: A Steering Committee is that camp of agents who ensure that the plan is executed as per the plan itself. A lot of times, a great plan can lead to disastrous results because of poor implementation. This committee will make sure that a good plan won’t end up becoming a useless piece of paper.

  3. Hybrid Method: The above two methods depend on external teams or internal teams, each with a specific way of working. The hybrid method mixes the above two techniques. The internal team takes care of everyday implementation. The external auditing team ensures that the internal team is doing their job.

References

PorscheHistory (2014) PorscheAG History[online] published address at:http://www.fundinguniverse.com/company-histories/porsche-ag-history[accessedon 20th January, 2015]

Pricing(2014) Price[online] published address at:http://www.learnmarketing.net/price.htm[accessedon 20th January, 2015]

Porsche(2013) Porscheannual report[online] published address at:http://www.volkswagenag.com/content/vwcorp/info_center/en/publications/2014/03/Porsche_AR_2013.bin.html/binarystorageitem/file/Porsche-Download-e.pdf[accessed on 20th January, 2015]

Porschefinance (2014) Porschefinancial statement[online] published address at:http://finance.yahoo.com/q?s=PAH3.DE[accessed on 20th January, 2015]