Automotive Industry and Porsche Production Line

Shona L. Thomas- Porsche Case Study 1. ) General Environment Factors for Porsche: A. ) Demographic segment for Porsche is Age and Income distribution. Porsche target age is group is consumers is male over the age of 40 in addition to an average income of 180k a year. That has a positive effect on this segment because they have defined their niche audience that best responds to their line of cars. B. ) Political and Legal segment directly affects the future production of Porsche vehicles with regulatory gas mileage requirements and EPA guidelines.If the 2020 CAFE plan is implemented in North America Porsche will not be able to sell cars in North America. Political issues and governmental decisions affect the development of the local economy as for example the increase of oil prices during the Iraq war and the drop of the dollar compared to other currencies, they can also have an influence on sales in the automotive industry. This is a negative effect as the VW sales group has laid a p lan to exceed GM and Toyota in sells by 2018 but with pending EPA guidelines this may create a definite challenge.C. ) Technological segment for Porsche is leading in product innovation, factory applications and knowledge. Porsche production line has the ability to manufacture two cars seamlessly at the same time without losing any production time or driving cost up. Their technology is a positive and is evident because they offer consulting services to competitive and noncompetitive automobile companies. 2. ) Porsche brand is so strong and unique that the only two forces I can thoroughly support are Threat of new entrants and bargaining power of Buyers. A. Porsche has a threat of new entrants due to automobile manufacturers such as BMW, Nissan and GM. However Porsche has product differentiation and Capital Investments. Porsche is also known for prestige, variety of Porsche emblems and its full line up. Consequently BMW, Nissan and GM have all produced one or two comparable cars. B. ) Bargaining power of Buyers is relevant because due to recent economic recessions internationally the price point of Porsches automobiles they followed suit of other competing luxury brands and released more affordable automobiles such as the Cayenne.The production of the Cayenne set record sales for Porsche. Therefore this is a high force. 3. ) The two major competitors of Porsche are BWW and Audi. BMW as designed models such the Z4 and Audi has designed models such as the R8 to compete with Porsche's Cayman and Boxter. Prices points on both models are within the same range as the aforementioned Porsche brands. These two models (BMW and Audi) both have competitive points in regards to engineering, exclusivity and service.The future actions of BMW and Audi that show evidence competitive activity is both automobile companies are creating a more modern design which is attracting more consumers, more drive power options for an economical price and puts luxury and comfort versus Porsc he sports then luxury. 4. ) The most important Value Chain areas for Porsche are: A. ) Management Information Systems- Joint venture with MHO has led to awards such as Silver Partner service and SAP Channel Partner Gold. The performance and oriented approach allows Porsche to consistently implement new design, technologies and functionalities.Porsche at purchased ownership in MHP and later purchased a controlling share which lead to new business techniques and technologies. The MIS has created sustainable competitive advantage through superior operating performances and the ability to respond with flexibility and quickly to changes in technology. They are superior to each competitor as they do not patent their technological gains but allows others to copy. B. ) Supply Chain Management: Porsche SAP technology Leipzig has created a seamless distribution in logistics. Within the same plant, the two models, Panamera and Cayenne can be built simultaneously.Each model requires a high degr ee of integration and cooperation with other Porsche plants. As parts are delivered every hour, the flows of goods are real-time. No inventories, any waiting times, but the highest degree of precision and flexibility. Even if faced with a change on short notice, production will be able to stay in synch. Porsche is the leading manufacturer in the world and is superior to all other competitors for the aforementioned reasons. C. ) Marketing and Sales: In 2011 VW group inclusive of Porsche and other brands ranked number 3 in the world trailing Toyota and GM.However in Europe the VW group leads sales amongst competitors. Porsche relates their increase in marketing and sales to the CRM processes in SAP. All systems are originated in German but the data is also shared North America as well as Canada. North America and Canada represents the biggest market for the car manufacturer almost 40 percent of all luxury cars are sold there. The second reason is that the orientation of the pilot proj ect toward a non-German market prevented a focus that can be considered too German influenced. 5. The most significant financial and nonfinancial factors for Porsche are: Return on investments. Three Porsche product lines – the 911, the Boxster, and the Cayenne has had high operating margins compared to nearly any other major automobile manufacturer. The two newer product lines, the Boxster and Cayenne, had both been launched with the capital and technology from its other lines of cars. The Porsche Boxster was manufactured by Valmet of Finland under a licensed manufacturing agreement allowed Porsche to use means of financial support.Valmet owns its own factory and tools, and builds the Boxster for Porsche. This reduces the capital Porsche needs to support its own business significantly. The Porsche Cayenne was co-manufactured with Volkswagen. The Cayenne was assembled on the same production line as the Volkswagen Touareg therefore reducing the required capital to support Pors che’s business. 6. ) The strength is that Porsche has a high brand presence and reputation across the globe. Porsche preferred consumers are wage earners in excess of 250k. Few car models are available but it has a wide range of variants.They have built a trust worthy brand that has international recognition in the domestic as well as racing industry. A weakness of Porsche is that it lacks presence in the middle income segment which is the fastest growing of all classes. The cars have very high maintenance and running cost in an extremely luxury car market. The opportunities that Porsche has it that they can capitalize on its exclusivity and increase sales. They also have a sector of the company that has first class technology that will give them a competitive edge on future generation and concept cars.In addition to increased manufacturing facilities and distribution as well as a servicing network. The threats that face Porsche are the Governmental policies in some countries especially North America. The looming recession this may decrease purchasing power and the intense competition from automobile leaders. The top three competitors are BMW, Audi and Mercedes Benz. 7. ) The major competitive advantages of Porsche using VRIN are The most valuable capital this company has is its loyal customers with their sense of Porsche responsibility. The most aluable support for this company is its work force, technology and its tradition of outstanding performance. (Parity producing because other companies can re-evaluate their customer relations and change the scope of employees to gain the loyalty and recognition that Porsche has. ) Porsche is rare because the cars have a virtually untarnished reputation and are considered among the finest performance vehicles in the world. (Temporary competitive advantage because they BMW and Audi have models that compete with Porsche vehicles. ) Porsche technology is costly to imitate.Porsche has become a leader in automobile m anufacturing and advanced technology that has led to winning Performance awards. Therefore allowing Porsche to consistently implement new design, technologies and functionalities. (Sustainable competitive advantage because Porsche provides consulting to automobile manufacturers and have not patent protected their technological advances; therefore companies rely on them for the most up to date technology) Porsche is nonsubstitutable because lineup is quite broad for a specialty automaker and now even includes a luxury super sport sedan, the Panamera.Throughout its history, Porsche has exhibited amazing resilience, weathering changes in consumer tastes and the economic climate. (Competitive Advantage is the brand name. ) 8. ) Porsche uses Corporate Strategy. The overall scope and direction is to diversify business operations, further advance technology and work together to achieve particular goals. As part of its corporate strategy for 2018, Porsche wants to double its vehicle sales a nd increase its presence in the individual markets. This growth strategy is to increase the workforce by 50 % from its present level of 14,000 worldwide.Porsche is creating wide-ranging electric mobility vehicles in Germany and has launched the roll-out of three electric-powered Boxter cars. Electro mobility is one of the central challenges of the coming years. The engineers at Porsche want to contribute something in their usual high-performance way to meet the challenge. 9. ) 7s Implementation factors that are the most important is: 1)  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Strategy: plan to gain a sustainable advantage over the competition (BMW and Audi) 2)  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Structure: how people and tasks are rganized (Consulting and Automobile division) 3)  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Systems: processes and procedures that are currently in place (Manufacturing plants) 4)  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Style: leadership style (Brand imaging) 5)  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Staff: employees and their gener al capabilities (ongoing training) 6)  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Skills: competencies and skills of the employees (ongoing training) 7)  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Shared Values: culture, beliefs, values and traditions (Mission statement) 10. ) Two questions:Do you think Porsche will meet the CAFE requirements for 2018 or will they actually stop selling cars in North America? How will that affect the American Porsche consumer? Cadillac has now developed and launched a car that has a Ferrari engine how will that compare or will it compete with the Porsche Panamera? How will new entrants such as American based cars that is adding technology comparable to Porsche affect future market opportunity and ,undecided target consumers?