I. Strategic Profile and Case Analysis Purpose
Porsche is an automobile company which is highly successful in the manufacturing of high quality sports cars. In 2010, the organisation of Porsche faced a major change after a hostile takeover by Volkswagen Auto Group (VW). It also owns other companies such as Audi, Bentley, and Lamborghini making it the third world’s largest automobile manufacturer in the world. Volkswagen plans to gain the top position using a platform called Strategy 2018. To achieve this, VW plans to increase the limited production of Porsche through the development of new product lines such as sedans and SUVs aside from sports cars. It also wants to absorb the technology and innovation of Porsche and apply them to other automobile brands owned by VW. However, these plans represent a potential risk for the brand image of Porsche since these can negatively affect the perception of quality and loyalty among Porsche customers. Thus, Matthias Mueller, the new CEO of Porsche, needs to make a significant strategic decision. Muller has to decide effectively whether Porsche should diversify its production or focus on delivering its core competency which is the production of sports cars. In addition, Muller also needs to create a strategy that will prevent the potential brand dilution of Porsche.
II. Situation Analysis
The economic environment where the automobile industry operates is highly unstable and volatile. This is a result of the financial crisis and economic recession emerging in different countries. This situation can greatly affect the purchasing decision of customers.
Sports cars are a specialised segment in the automobile industry with a very specific target market which are the affluent race car enthusiasts. Even though there is a small market for this segment, each purchase constitutes very high profit margin. For this reason, a lot of automobile companies are also designing and manufacturing sports cars. This led to the increased competition for this segment in the industry. Porsche is the leading brand for sports cars in the world. On the other hand, Sedan and SUVs are also generating increased demand from the global market. This represents an opportunity that differentiated car manufacturers can take advantage. However, this segment already has numerous competitors. In general, there is increased competition in the automobile industry since buyers incur low switching cost as a result of high availability of various automobiles.