Preview

Porsche Changes Tack

Better Essays
Open Document
Open Document
1920 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
Porsche Changes Tack
Porsche Changes Tack
“Yes, of course we have heard of shareholder value. But that does not change the fact that we put customers first, then workers, then business partners, suppliers and dealers, and then shareholders.”
Dr. Wendelin Wiedeking, CEO, Porsche

An Overview of Porsche AG, 2005
• • Porsche is a publicly traded family controlled company Porsche is a relatively simple company by product line, having three existing and one newly proposed products:
• • • • 911 – the only model produced and assembled completely by Porsche Boxster – licensed manufacturing with Valmet of Finland Cayenne – co-manufactured with Volkswagen of Germany Panamera – to be completely Porsche (at least that’s the plan)

Will Porsche’s new strategy actually create shareholder value?

• • • •

Porsche’s profitability has been extremely impressive over the past decade – particularly for an automaker Porsche has followed a strategy with both the Boxster and the Cayenne which uses a combination of licensing, out-sourcing, and in-sourcing to leverage other people’s money As a result of its strategy, Porsche has enjoyed an industry leading return on invested capital (ROIC) But two major announcements in the summer and fall of 2005 seemingly indicate that Porsche is changing directions:
• The Panamera will be manufactured in-house, with Porsche’s own money • Porsche has invested 3 billion in taking a 20% interest in Volkswagen (Germany), one of the worst performing automakers in the world

1-2

Porsche Changes Tack: Case Questions
1. What strategic decisions made by Porsche over recent years had given rise to its extremely high return on invested capital? 2. Vesi wondered if her position on Porsche might have to distinguish between the company’s ability to generate results for stockholders versus its willingness to do so. What do you think? 3. Is pursuing the interests of Porsche’s controlling families different from maximizing the returns to its public share owners?
1-3

Exhibit 1 Porsche’s

You May Also Find These Documents Helpful

  • Satisfactory Essays

    What Ken believes about creativity that it is a process of having original ideas with value because you can't be creative if you don't do something.…

    • 528 Words
    • 2 Pages
    Satisfactory Essays
  • Satisfactory Essays

    BMW case study

    • 679 Words
    • 2 Pages

    The goal BMW should strive to achieve is to sell 100,000 units by end of the year 1996 which translates to about 10% year on year sales growth from the year 1992. This goal also means BMW gets about 8% market share of the luxury automobile sector in the year 1996 considering 3% annual growth rate in the luxury segment. This goal is realistically achievable given that the efforts of the ‘Second Great Opportunity’ have already started yielding results with a 23% unit sales increase for the year 1992. This is also very important to have this goal in order to keep up the momentum gained by the recent revamped advertising campaigns and strategies implemented. There can be an argument to make the goal as to increase market share to 10% but to achieve this figure the number of unit sales needed is higher than the capacity of BMW to produce vehicles and makes it come close to a mass producer which is clearly not in the BMW’s global strategy.…

    • 679 Words
    • 2 Pages
    Satisfactory Essays
  • Powerful Essays

    Porsche C7

    • 961 Words
    • 8 Pages

     Porsche did not start off as an automaker, but rather a firm that sold design and…

    • 961 Words
    • 8 Pages
    Powerful Essays
  • Powerful Essays

    Volkswagen of America

    • 1561 Words
    • 7 Pages

    Ferdinand Porsche designed the Volkswagen automobiles during the 1930 in Germany. The original vehicles, targeted at the mass market. Were intended to transport a family of five at highway speeds, use modest amount of fuel, and remain within financial reach for most people. The company’s signature platform by the late 1940s was the Beetle, which with its rounded styling and reliable air-cooled engine, became internationally popular. For about 20 years, sales of the Beetle hurtled skyward, propelling the company’s total worldwide vehicle sales past a million in 1955 and to high point in 1969. Although popularity of the Beetle declined throughout in the 1970s and its importation was discontinued in the U.S late in that decade, production of Beetles in Latin America continued in the U.S late in that decade, production of Beetle in Latin America continued into the 1990s. It remains the best selling car of all time.…

    • 1561 Words
    • 7 Pages
    Powerful Essays
  • Satisfactory Essays

    This skyrocketing growth of VW shares was not caused by financial indicators of the car producing concern. It was caused by speculative stock-exchange events triggered by declaration of Porsche owners made public on Saturday. Porsche declared intention to raise their share in Volkswagen not to 50% as it was previously planned but to 75%. The investors were mostly shocked by news that Porsche, whose block of shares of Volkswagen was 42,6%, had already bought options on 31,5% of VW ordinary shares.…

    • 637 Words
    • 2 Pages
    Satisfactory Essays
  • Satisfactory Essays

    *The main competitors at the time being are the German car producers BMW, Daimler-Benz and Porsche…

    • 271 Words
    • 2 Pages
    Satisfactory Essays
  • Satisfactory Essays

    b. VW responsible for major aspects of production, with only final assembly to be conducted by Porsche…

    • 350 Words
    • 2 Pages
    Satisfactory Essays
  • Good Essays

    Chevrolet has created many different types of automobiles over the last decade. The vehicles that Chevrolet has produced varies from large trucks to small eco-friendly cars. Today, Chevrolet still makes some of the best quality cars on the market. Chevrolet has been number one in car sales for a long time. Also, they have been the leader in market shares for the past ten years in the automobile industry (Maidenberg, 2015).Each one of Chevrolet’s cars have a distinct model and a creative framework. Chevrolet’s cars have evolved over the years. Also, they have competed with Ford sale for sale and has matched Ford sale for sale (“The Secret History,” 2011). After some car ideas failed and some succeeded, Chevrolet created the Corvette. The Corvette had its strengths because of its powerful engine. Also, another strength is the Corvette reached top speeds that no other automobile company could match at the…

    • 518 Words
    • 3 Pages
    Good Essays
  • Best Essays

    The strategic target customer for Porsche is an Xer who is 45 year-old, professional, and affluent male who earns over $100,000. Most of the customers became interested in Porsche while they were young; they are very brand loyal and acknowledge the country of origin of Germany is known for manufacturing well-built cars. In Canada, a Porsche was the second or third vehicle within a household. The main competition for Porsche are BMW, Audi and Mercedes Benz, while Aston Martin, Lamborghini, Ferrari and Maserati are the competitors for the higher priced Porsche model, 911 (Mark, 2011).…

    • 2095 Words
    • 9 Pages
    Best Essays
  • Good Essays

    Porsche Swot

    • 476 Words
    • 2 Pages

    The biggest weakness of Porsche is that it's strictly a luxury car company. Since they are strictly a luxury car manufacturers they do not sell that many cars compared to companies like Ford, Toyota and Honda. This is still not that big of a…

    • 476 Words
    • 2 Pages
    Good Essays
  • Good Essays

    Porsche Exposed

    • 806 Words
    • 4 Pages

    1. How does Porsche differ – operating structure, financial results, etc. – from other major…

    • 806 Words
    • 4 Pages
    Good Essays
  • Powerful Essays

    Throughout the century the sector turned out to be the pillar of the national economy. Germany's famous premier brands such as Porsche, Audi, Volkswagen, Mercedes-Benz and BMW are enviable all around the world (ACEA, European Automobile Manufacturers Association 2008).…

    • 2508 Words
    • 11 Pages
    Powerful Essays
  • Satisfactory Essays

    swot analysis of Uphone

    • 348 Words
    • 2 Pages

    Conclusion: The company is producing high end cars in order to attract the upper class of the society. The company is now focusing on making powerful cars with fuel economy. The technology used in the cars are almost used by every competitor car manufacture so the company…

    • 348 Words
    • 2 Pages
    Satisfactory Essays
  • Powerful Essays

    Porsche Changes Tack

    • 7668 Words
    • 31 Pages

    Yes, of course, we have heard of shareholder value. But that does not change the fact that we put customers first, then workers, then business partners, suppliers and dealers, and then shareholders. Dr. Wendelin Wiedeking, CEO, Porsche, Die Zeit, April 17, 2005.…

    • 7668 Words
    • 31 Pages
    Powerful Essays
  • Satisfactory Essays

    * New investment by Toyota in factories in the US and China saw 2005 profits rise, against the worldwide motor industry trend. Net profits rose 0.8% to 1.17 trillion yen ($11bn; £5.85bn), while sales were 7.3% higher at 18.55 trillion yen. Commentators argue that this is because the company has the right mix of products for the markets that it serves. This is an example of very focused segmentation, targeting and positioning in a number of countries.…

    • 2429 Words
    • 9 Pages
    Satisfactory Essays