Business Strategic Management: History of Porsche (BUS402)

Business strategic management: Porsche strategic plan
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Business strategic management: Porsche strategic plan
Having a clear strategic plan is of great importance in helping a business organization to increase sales and attain a sustainable competitive advantage (Abraham, 2012). From the perspective of an executive with Porsche AG, this paper provides a detailed strategic plan to grow this multinational firm over the coming 3 years. The history of Porsche AG is described in addition to the company’s 4 Ps of marketing mix. The firm’s current situation is discussed and an assessment of its financial performance is provided. Furthermore, this paper provides a detailed analysis of Porsche’s SWOT analysis, and the recommended organizational structure for Porsche is described.
History of Porsche
Porsche is a well-known car maker that has mainly specialized in the production of sports cars. Porsche has been successful in manufacturing sports cars that are renowned for reliability, quality, as well as performance. Most of all, this German car manufacturer is famous for making prestigious automobiles that could be utilized for daily driving (Porsche, 2016). This firm was founded in the year 1931 by Ferdinand Porsche. Ferdinand Porsche was initially Volkswagen’s engineer, and the first Porsche car produced was actually made from the machinery that made Volkswagen Beetle cars (Hall-Geisler, 2015). Porsche 64 was the name of the first Porsche car produced by the firm, which was in the year 1938. This vehicle gained so much popularity and fame in Germany and other parts of Europe, and this marked the beginning of the successful time in Porsche history (Hall-Geisler, 2015).
As a result of the impending World War 2 during the 1940s, Porsche developed a number of designs for heavy tanks and ceased its car production since the Volkswagen factory it was using was being razed. Even so, Porsche returned to car manufacturing in 1947 and developed a Grand Prix racing car in Austria (Porsche, 2016). Ferdinand Porsche died in the year 1951 and Ferry Porsche, his son, took over the firm. In 1963 at the Frankfurt International Automobile Show, the world renowned Porsche 911 was released featuring a rear air cool engine concept. The company went public in 1972, and introduced Porsche 924 and 928 which were produced in Stuttgart. The company’s 956 model was the most successful sports car in the ‘80s. In 1983 at Detroit Motor Show, the company released the Porsche Boxter model (Porsche, 2016). At the moment, the firm is owned by Volkswagen AG. It focuses in the production of supercars, hypercars, sports utility vehicles, sedans, as well as high-performance sports cars.
Porsche’s 4 Ps
Product: in the marketing mix of Porsche, this is the strongest P. Porsche is today one of the prominent brands in the world’s automobile market. The company produces an extensive range of automobiles that are sold not just in the European and North American markets, but also in the African, Australian, South American and Asian markets. These car products include sports cars such as Porsche Cayman introduced in 2006, Porsche 911 introduced in 1963, and Porsche Boxter introduced in 1996; the sports utility vehicles (SUV) Porsche Cayenne which was introduced in the year 2003 and Porsche Macan introduced in 2012; and the sedan Porsche Panamera which was introduced into the world in the year 2009 (Porsche, 2016). These car products are high-end exclusive sports cars, a luxury sedan and an SUV. All these are high quality and high performance cars.
Promotion
Even though the marketing strategy used by Porsche AG has for a long time been focusing on the precision engineering, safety as well as luxury of its automobiles, competition from other luxury sports car makers such as Ferrari, Mercedes-Benz, Lamborghini, Lexus, Jaguar, Bugatti, BMW, Aston-Martin, and Audi has compelled the company to adjust its product so as to suit the changing attitudes of consumers (Hall-Geisler, 2015). At the moment, the company’s marketing strategy is more focused on presenting a more approachable, fun loving, and energetic side of Porsche AG. The other marketing strategy that Porsche employs is the company’s decision to reduce the price of its cars in order to make the cars more affordable to more customers (Fifield, 2012).
On the whole, to increase its communication with its target market, which comprises wealthy men and women aged between 18 years to 45 years, Porsche AG has shifted to consumer-focused advertising and seeks to maintain its accessibility to these rich consumers by using: television advertising, social media marketing, online advertising in its website, print media, direct mail, offering warranty under specific conditions, and establishing outstanding customer services at each of its point of sales (Homburg, Kuester & Krohmer, 2015). It is worth mentioning that Porsche AG has managed to create a reputation of exclusivity, quality, safety and high performance in its various car products, which has made Porsche AG a very recognizable brand all over the world. Its slogan, Engineered for magic, Everyday, helps in its marketing efforts.
Price
Pricing is an essential aspect of running any company. Abraham (2012) observed that proper pricing of a company’s products greatly affect the amount of money that come into the company. In addition, the price of a product will affect the ability of a company to target its ideal or target market (Homburg, Kuester & Krohmer, 2015). As a luxury, premium brand, Porsche employs price skimming, also referred to as premium pricing strategy. This implies that the German car-maker prices its car products above the normal market value so that the consumers deem that Porsche cars are more valuable in comparison to similar offerings (Fifield, 2012). Marketing managers at Porsche believe that even though the price might discourage or put off some customers, the higher cost would create a market perception that in the end would raise more revenues to the firm. Through price skimming, Porsche targets those buyers with the willingness to pay more (Homburg, Kuester & Krohmer, 2015).
Place/distribution
Porsche AG mainly sells its products through dealerships. Even though the firm is based in Stuttgart, it has dealerships all over the globe that sell the cars in showrooms. Porsche cars are mainly produced in Germany and then exported to various countries globally where they are sold to consumers. Consumers are able to enter the dealer’s showroom and shop for their Porsche (Fifield, 2012). In essence, Porsche has maintained a presence worldwide. In the North American market particularly in its largest market the United States, Porsche AG embraces American values and expectations.
Current situation of Porsche in the market
PESTE analysis
General environment analysis of Porsche including the company’s industry and market is best described using the PESTE analysis, which essentially stands for Political, Environment, Social, Technological, and Economic analysis. Political: luxury and sports car makers are under political pressure to produce automobiles that are more fuel efficient whose mile per gas (MPG) is low. In the United States, the mile per gas requirement was increased through the Corporate Average Fuel Economy policy, which requires that by the year 2020, all car importers and manufacturers should have a rating of at least 39 MPG for automobiles, and firms that breach this law would be fined $35,700 (Homburg, Kuester & Krohmer, 2015). This American legislation is a major threat for luxury and sports car makers such as Porsche, and may affect sports car makers negatively since they may not be able to sell to the United States.
Environmental: the environment is affected by vehicles in several ways. The most impact takes place when the vehicles are being utilized by the consumers. Many sports cars including Porsche 911, Boxter and Cayman models as well as Ferrari, Lamborghini and Bugatti models are designed for high performance and consume a significant amount of fuel when being driven. This means that a significant amount of natural resources is utilized in the form of fuel/oil. The number of environmentally-conscious customers is growing globally thanks to the rising concern for global warming (Hall-Geisler, 2015). This could be a significant challenge for high performance sports and luxury car manufacturers if they fail to respond by producing more fuel-efficient, eco-friendly cars. They could be affected negatively.
Social: fans of sports cars are generally unpredictable and few. These consumers are trend-conscious and are intrinsic to the high-end, luxury sports car market. As a result of their unique personality traits, these buyers prefer cars that are both fun and exciting (Hall-Geisler, 2015). Whereas other cars are largely built for function and affordability, fans of sports cars tend to mainly focus on design of the vehicle and its performance. These buyers prefer outstanding styling and innovative features over affordability, and include business people, top company executives, and wealthy sports personalities who earn over $350,000 annually. Porsche is likely to impact the industry in a positive way if it continues to innovate constantly.
Technological: to excel in the sports car and luxury car segments, continuous innovation is key, which in turn calls for very sophisticated technologies. Technologies change quickly with time. In the automobile industry, some car-makers such as Porsche, Ferrari, Mercedes-Benz and Lamborgini have managed to bui...