Porsche’s History and 4Ps
Porsche was established in 1931 by Ferdinand Porsche and his relatives (Henderson & Reavis, 2009; FundingUniverse, 2000). Porsche started its operations by selling a unique design to the automakers, and this activity was considered as its primary source of income. Surprisingly, the role of Hitler in the Porch’s history cannot be underestimated, as he appointed Porsche to develop a car for personal use (Henderson & Reavis, 2009; FundingUniverse, 2000). The presence of this event contributed to the development of Volkswagen Beetle, VW Type 60, and led to the growth of the individual plants for the production of Volkswagen (Henderson & Reavis, 2009). The next step was the introduction of sports cars, for which Porsche is highly known today. As for the present operations, the company provides vehicles, services, and various derivatives to enhance the experience while using the automobiles (Henderson & Reavis, 2009).
The 4Ps perspective helps discover each element of Porsche’s strategy in detail and access the value proposal. Starting with the evaluation of the product, Porsche focuses on its cars, as its source of revenue and image builder. The company depicts the quality as a core component to comply with the corporate value statements (Scholz, 2014). To ensure excellence, the firm utilizes outsource engineering to assure the quality of the processes while establishing trusting agreements with the suppliers (Henderson & Reavis, 2009). Based on the facts provided above, Porsche’s products are referred to as a luxury and a reasonable investment.
As for the price, it is high due to the belonging to the luxury and premium car segment in the market. The price could be discovered as a priority for the development of a sufficient strategy due to the presence of other features such as design and quality. These aspects provide the rationale for the current price to quality ratio. Speaking of promotion, it implies utilizing the advertisements while targeting the audience with a high level of income (Scholz, 2014). In this case, Porsche’s well-established brand image can be viewed as a potential driver for the development of a coherent representation of the company in the market. As for the place, Porsche dealerships are present around the world due to the international nature of the firm (Scholz, 2014). The location of the dealerships in the metropolitan areas has a high correlation with the marketing strategy, as the company tends to establish its selling locations close to the cities due to its essentiality to reach the target audience.
Current Position in the Market
The current place of the company in the market has to be assessed to determine its level of competitiveness at different stages. Consequently, the present position in the industry has to be evaluated to discover Porsche’s competitiveness by utilizing Porter’s five forces analysis to measure position while evaluating its possibilities and capabilities for development (Dobbs, 2014). Based on Porter’s theory, the threat of new entrants is one of the aspects, and it is low due to the necessity of high investment in the industry and strong competitors.
As for the substitutes as the second component of Porter’s analysis, they are introduced by the products of competitors such as DaimlerChrysler AG, Fiat S.p.A.; Ford Motor Company; General Motors Corp., Mazda Motor Corp., Mitsubishi Group, Nissan Motor Co. Ltd., PSA Peugeot Citroen S.A., Renault S.A., Saab Automobile AB, and others (FundingUniverse, 2000). However, Porsche has outstanding quality, which cannot be replaced, and the rivalry is not as high as for other firms. Furthermore, the bargaining power of suppliers is low due to the presence of the manufacturing plants, and the bargaining power of buyers is medium, as the company uses a niche strategy to deliver its products to the target audience. Based on the evaluation of all elements of Porter’s analysis, the general competition on the sports cars’ market is high, as all of the brands tend to focus on the delivery of the high quality.
The situation in the market is another aspect, which has to be determined in detail to understand the current strategy of the company. In this case, Porch’s well-established brand image and coherent managerial style could be considered as the definers of the company’s success and its outstanding performance among competitors. The company has an insignificant market share due to the focus on the niche market and limited population, which can purchase the product successfully. To conclude the presented factual information, Porsche can be considered as a leader in the sports car industry due to the powerful brand and exceptional demand (Lester, 2007).
Lastly, the general understanding of the economic image is needed, and the general economic environment has to be assessed to highlight the potential development of events in the automotive industry. This analysis is vital since it will summarize the core trends and contribute to the understanding of Porsche’s strategy. In this case, the year 2016 is projected to be the start of the development of the new economic crisis due to the adverse trends in the economy (Elliot, 2016). This aspect will have a negative influence on the productivity of the companies due to the limitations of sales and constantly and rapidly increasing costs of production. Subsequently, this matter has to be considered as one of the primary components of the strategic planning to eliminate the drawbacks in the following three years.
Current Financial Condition of the Organization
The financial performance has to be evaluated to determine the company’s competitiveness and profitability, as it defines Porsche’s ability to remain a leader. In this instance, the company’s revenues and expenditures have to be assessed, as they define the company’s success. Additionally, the financial performance has to be compared with the incomes of other companies to determine Porsche’s perception in the market. Despite the limited market share, Porsche’s revenue tended to grow from 1999 to 2008 while maintaining the sales and productions at the same level (Henderson & Reavis, 2009). The statistics portray that the revenues are rather low compared to the incomes of other automakers such as Toyota, GM, VW, Honda, and Nissan, but expenditure on R&D to assure the quality of the products and provide a sophisticated design is the highest (Henderson & Reavis, 2009).
Despite the controversies in the financial reports, Porsche is considered as one of the most powerful car manufacturers and has an extended recognition in the world (Lester, 2007). The presence of this trend can be explained with the assistance of the focus of the competitors on the mass production while Porsche utilizes particular product lines for niche production. While summarizing the core findings of this section, it can be concluded that the financial condition can be regarded as suitable for the organizational performance, but the optimization of the expenditure and increase in sales and revenues have to be considered and considered.
Another matter, which has to be discovered before the determination of the introduction of the relevant strategic plan for the development for the recent future, is the condition of the organization, as it is highly dependent on the company’s financial performance. The role of the organizational state cannot be underestimated, as the interdependence of corporate structure and performance is present (Kribikova, 2016). In the context of Porsche, the organization has a sophisticated administrative structure to assure the efficiency of the company in the market while emphasizing the quality, design, and creation of a particular lifestyle. Despite the overall positive outlook, the questionable aspect is the usage of outsourcing engineering while establishing contracts and derivatives (Henderson & Reavis, 2009). The core drawback of this matter is the fact that it determines the risk of dependence on the substantial share of the revenues on the actions of the suppliers. In this case, the improvement is the necessity to minimize the presence of the negative consequences, and the described drawbacks can be considered as the primary areas for improvement while introducing the strategic plan to enhance the overall performance.
SWOT Analysis
In the context of the presented case, the SWOT analysis has to be conducted as it is an efficient instrument for the marketing planning to identify the company’s competitiveness while depicting strengths, opportunities, weaknesses, and threats. Alternatively, this type of evaluation assists in finding equilibrium between external and internal research to understand the positioning. (Everett, 2014).
. As for the Porsche’s internal advantages, the company’s recognition and brand image could be considered as the principal strength, as its emphasis on the particular niche while combining style, design, and lifestyle is critical. Its reputation is another asset, as Porsche is considered as a top recognized brand in the world due to the presence of its reputation (Lester, 2007). Based on the information provided above, the image of the company can be deliberated as being critical since it forms the associations among the individual users.
Notwithstanding the high recognition and revenues, the weaknesses are present and portray the company’s internal aspects, which can be considered as potential drawbacks for strategy development. In this case, the inconsistency of the expenditure could be referred to as a primary disadvantage, as the company spends a significant share of resources for research and development and manufacturing (Henderson & Reavis, 2009). Another drawback is the fact that the selected marketing niche is rather limited due to the absence of the product lines devoted to the middle-class segment (Henderson & Reavis, 2009). These matters have to be discovered as priorities while developing a strategy, as they have to be eliminated to reach the competitiveness of Porsche in the market.
The external influences have to be depicted in the form of threats and opportunities since they contribute to the discovery and development of the relevant strategical patterns. In this case, one of the potential risks is the rise in the prices of manufacturing due to the dependence on the partners. Another threat is the possible increase in the competition, as the competitors tend to expand their product lines to the luxury segment. Additionally, various governmental policies and economic fluctuations might negatively affect organization performance (Palmeira, 2014).
As for the opportunities, Porsche can focus on the enhancement of the design and innovation since new concepts tend to develop. The expansion of the service sector can be viewed as an opportunity, as it is regarded as the primary source of the organizational development and internationalization of this approach (Pluta-Olearnik, 2011). In this instance, these aspects have to be considered while developing the strategic plan, as these trends are growing in popularity in society.
Essentiality of Areas of SWOT to Strategic Plan
The inclusion of the SWOT’s findings while developing a relevant strategic plan is essential to determine the potential areas of Porsche’s development. Nowadays, the company actively utilizes its strengths, as they are depicted in the company’s marketing and pricing strategies. Consequently, the other features of the SWOT such as opportunities, threats, and weaknesses have to be improved and eliminated in the future to ensure the current positions in the market. In this case, the maintenance of the financial balance, the discovery of the additional partnerships, development of the sufficient service, and the introduction of the innovative solutions to increase its market share are considered as the primary aspects of focus while designing a strategic plan.
The maintenance of finances has always been considered as a critical definer of the company’s success, as the monetary resources are substantial for the company’s success and have to be maintained. It could be said that the comparison of the revenues and expenditure on the research and development reveals an imbalance in financial resources. Apart from imbalance, another feature that affects financial performance is the dependence of the company on derivatives. This reliance has to be minimized by focusing on the core product, as it increases the risk of failure while depending on the external factors. In this instance, the optimization of these factors will contribute to the enhancement of productivity while highlighting the essentiality of sufficient distribution of the resources.
Service and innovation have to be taken into account, as these factors can contribute to the advancement of organizational performance. The enhancement of service quality will determine the creation of the additional value to the existing product line, and the interactivity and direct communication contribute to the development of the relevant relationships with the customers. This method can be a core reason for the development of new designs and products based on the consumer’s feedback, since, nowadays, the feedback is vehemently valued due to the necessity to find an individual approach to the customers (Libai, Narayandas, & Humby, 2002).
Innovation and design are vital, as the world is rapidly developing from a technological perspective. The customers are looking for new products, and it is essential to enhance and improve the quality of living and convenience (Jones & George, 2006). In this case, this approach will contribute to the improvement of the core values of the organization while cultivating the perception of an innovator in the car industry. It can expand the areas of operations of the company by creating favorable conditions for the growth of the customer’s base.
Recommended Organizational Structure
Based on the various analyses including SWOT and assessment of the industry, market, and a general environment, the recommended organizational structure has to be introduced, as the organizational arrangement defines the company’s success due to the ability for the sophisticated division of priorities and duties (Kribikova, 2016). The modifications of the organizational structure have to be introduced to develop new approaches based on the critical matters highlighted in the SWOT analysis. The duties and functions of the financial and R&D departments have to be modified to maintain the balance of the operations and assure the suitable division of the monetary resources. In this instance, a high attention has to be paid to the financial department, as it defines the company’s profitability and ability to function in the market while being competitive. In this case, monitoring of the financial resources has to be introduced to maintain balance and optimizing expenses and production costs.
Furthermore, substantial attention has to be paid to the research and development department, as it can contribute to the establishment of innovational approaches while emphasizing the vitality of innovation and design. In this instance, the ability to set relevant goals will have a beneficial influence on the capability of the company to build an image of an innovator. Simultaneously, a new department to maintain interactivity with the customers and assessing the feedback and developing new solutions has to be introduced. It will play a supporting role and help develop the products while satisfying the needs and wants of the customers. These types of departments have to be established in each location to cultivate a sufficient understanding of customers’ demands in different geographical regions.
A special entity for monitoring the quality of the services and discovering new methods based on the user’s feedback has to be created to assure the maintenance of the excellence of the services. While summarizing the findings, a new organizational structure will boost the company’s efficiency and enhance the loyalty of the customers, as the users tend to cherish the support and initiative of the producer. Simultaneously, the application of these administration principles will help minimize threats and weaknesses while using the opportunities.
Measurement of Success
This section reflects the guidance for the measurement of success to monitor the progress of the changes mentioned above within three years. In this instance, KPIs can be introduced to measure productivity at different levels (Samsonowa, 2011). As for the qualitative indicators, a customer satisfaction survey can be utilized to evaluate the ability of the company to enhance the quality of the services. The open-ended questions will be used to determine the changes in service quality every half a year for the three years to assure the presence of the progress, and the following topics will be addressed: the overall quality of the service, opinion about the speed of the delivery, company’s reputation, and communication with the personnel. Additionally, the frequency of the customer’s proposals regarding the innovational solutions will also define the ability of the staff to cultivate the interactive environment and friendly atmosphere in the company’s locations. The ratings will be used as supplemental information and the quantitative measure to ease the interpretation and analysis of the results.
As for quantitative KPIs, financial indicators can be used to assess the company’s productivity and efficiency. In this case, ROI can be utilized as one of the instruments, as it helps determine the profitability of Porsche. The turnover also accesses the productivity and efficiency of the organization. In turn, the speed of the services will be used to measure the quality of the services, as the presence of high speed reduces the waiting time and increases customer satisfaction. This matter cannot be underestimated, as it vehemently affects the perception of Porsche among its clients.
The goal-setting and sophisticated measurement system have a substantial influence on the ability of the company to remain competitive in the market while supporting its vision and core values. In this case, it will contribute to the development of Porsche in a positive direction while discovering various opportunities and measuring the performance.
References
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