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BUS 402 - Strategic Management & Business Policy
Instructor: Dr. Gregory Goussak
October 16 , 2017
Starting out as an engineering firm, Porsche is now an automotive manufacturer that specializ es in building luxury sports cars and SUV's . Porsche is an exceptional company that generates the majority of its revenue from selling the luxury vehicles it builds . In 2016 alone, their profits were posted at $4.1 billion (Stock, 2017). This prestigious company has consistent success as evident by the financial reporting each year due to the organization having a comprehensive business strategy, called Porsche Strategy 2025 ("Porsche Strategy", n.d.) , that push them forward.
Company History, Products and Major Competitors
Porsche had humble beginnings. Established in 1931 by Dr. Ferdinand Porsche in Stuttgart, Germany, Porsche was originally an engineering and design company. Adolf Hitler himself wanted Dr. Porsche to solve the delays of the production of the Volkswagen, since his firm designed the vehicles. While doing this, Porsche had designed a sports version of the Volkswagen . " Working from the basic design model of a Volkswagen Beetle, the company created a lightweight sports car, and the Porsche design office became an automobile factory. The prototype of the Porsche sports car was on the road by March 1948 " ("History of Porsche AG", n.d.) . By the 1960's , the company had decided it needed to expand. The physical plant was expanded to include a sales department, service shop and delivery department. Additional workers also helped production to increase ("History of Porsche AG", n.d.). A major shift started in the late 1990's and has continued through today. They've worked their way up to be one of the most profitable automotive business across the globe. On the Bloomberg website, Stock (2017) says this about the profits per car: " it's on pace to net about $17,250 a car ".
Today, Porsche is well known all around the world. They have facilities around the world. The company has divided its geographic location into the four sectors: Americas, Germany, rest of Europe, and Rest of world. According to the Annual and Sustainability Report 2016 (2017) on the Porsche website, they have six vehicles that were delivered: 911, 918 Spyder, Boxster/ Caymen , Cayenne, Macan and Panamera. I ts main competitors are BMW, Audi, Ferrari, Jaguar, Mercedes, and Lamborghini . Jaguar F-Type, Mercedes-Benz SLS, Lamborghini ‘Cabrera', Audi R8 and BMW M8 are fierce competition for the Porsche 911 ( Schleier , 2017) .
Financial Performance and Condition of Organization
right1735455 Morningstar Financials (2017) has Porsche now in recovery f rom prior years of financial woes by having a net income of $1,374,000 euro. In analyzing the data provided, for the most part, the company has perfo rmed well until around 2008/2009, when due to high cost of the vehicles and low working capital caused the company to give the reins to Volkswagen. However, below is a table of Porsche's 5-year financials.
("Annual and Sustainability Report 2016", 2017)
As shown by the above table, the Porsche organization is making a very strong come back in the market. Their profits per vehicle are above any other company in the market and now that they have a crossover SUV that is financially geared toward middle class families, they are extended their marketplace reach and increasing profits even further. The overall condition of the company seems to be improving each year.
Below is a SWOT analysis of Porsche . This will provide an overall look at the company's strengths, weakness, opportunities, and threats that the y will have to use, adapt and overcome.
Porsche is known for having high-quality, high-performance vehicles. This leads to customer loyalty and has created a strong brand image for the company. Their innovative products and parts have led to the organization having many strategic alliances throughout the industry . Keeping customers happy has enabled the company to have profits higher per vehicle than any other automobile maker in the industry.
One of Porsche 's biggest weaknesses is that it is relatively small compared to other automobile makers. Being smaller means less production than companies such as Ford. It has been said that by
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