Evaluate the Industry Environment in Which Porsche Operates
There have been rapid changes being witnessed in the global automobile industry. This, along with the adoption of new business strategies has created a stream of new opportunities as well as challenges (Amor, 2014). The volatile nature of the automobile industry has kept manufacturers on their toes. They are now required to apply sound strategies that will ensure their success in the shortest period possible (Ahrens, 2010). Whenever these result in challenges, they are also required to come up with efficient solutions. Porsche SE is among the leading manufacturers of luxury automobiles, both luxury and sport, in the world (Gamble & Strickland, 2013). It is based in Germany although it has a major presence in the world automobile markets such as Europe, Asia and the United States of America (Ahsen, 2006).
The success of Porsche in the automobile world has been due its long time ability to deliver efficient and quality products for its customer base (Hoskisson, et al., 2012). Given that its customer base comprises primarily of luxury car users, the company has had to make significant investments in the technology and innovation sector. This is to achieve its almost impeccable standards (Janes, et al., 2013). Although Porsche’s success lies majorly in its niche and small markets, the internal and external environmental variables have to a great extent resulted in transformation of the organization’s business approaches (Gamble & Strickland, 2013). This is owing to the deregulation of foreign markets by globalization and the increase in choices of automobiles for customers. Government regulation, economic recession, environmental protection concerns and rising fuel prices are some of the major fears that Porsche needs to deal with (Kulekci, 2010). This paper seeks to give an overview of the external and internal environment in which the Porsche industry functions. The paper identifies keys strategies that have elevated and also inundated the company.
Porsche has remained a profitable company for more than seventy years. This success has been due to several intertwined factors (Landau & Laun, 2010). Innovation, brand reputation, and design have been the three major factors to which Porsche owes its long lived success. Moreover, the acquisition of Volkswagen accorded Porsche the benefits that come from the combined effect by helping other brands improve their manufacturing innovation and brand quality (Sturgeon & Biesebroeck, 2013). However, despite all these, Porsche is faced by a superfluity of both external and internal forces. Factors such as the changes in political and legislative fields in the United States created major problems for Porsche (Amor, 2014). This is due the change in gas regulations that requires the minimum gas emissions to be less than 39mpgs per car by 2020. This means that Porsche cannot sell in American market, unless this law is enforced in 2020. Other challenges comprise of factors such as problems of cash flow management and economic challenges. Nevertheless, Porsche displays a strong manufacturing base in Germany and has sufficient brand equity to introduce and run other product lines.
Due to the excessive competition amongst manufacturers in the automobile manufacturing industry, some manufacturers focus solely on exclusiveness and emotional values (Thompson, 2013). These brands are known as premium brands. In an attempt to follow this line of manufacturing strategy, Porsche delved into the extension of its product line. This was because Porsche was suffering from the aging of brands and needed to extend its production line by diversifying its products (Gamble & Strickland, 2013). The acquisition of Volkswagen despite being a good strategy had grim effects on the brand as it diluted its position. This is because Porsche had been for a very long time been branded as a sports car that highly performs. The union between Porsche and Volkswagen meant that knowledge and technology platforms were shared between the two organization brands. While this acquisition was beneficiary to Porsche, it meant that it adopted alterations to its competitive strategy.
The product collection has currently widened, and the company has continued to achieve higher returns for its owner. It is expected that a stronger cooperation in their products will be achieved between Porsche and Volkswagen, especially now that Audi will strengthen the merger. (Kulekci, 2010). Porsche is one of the strongest and the most aggressive competitors in the sporty cars segment. The brand name of Porsche has proven the brand as a symbol of excellence and elegance as well as utmost technical performance and dexterity. Porsche has continued to preserve its significant image as one of the best manufacturers that produce great sporty cars for over a half a century (Landau & Laun, 2010). Porsche as a brand desires to extend globally. However, it experiences problems with its position strategy. Porsche has facilitated its engineering capabilities, which has continued to enhance its executive position among the major competitors. The organization’s research findings are often used as a reference by other organizations (Amor, 2014). The Porsche’s the future is bright. However, it needs to invest and diversify its product so as to fit in the upcoming new markets. The continuous globalization of the automobile market has diversified customer needs and thus created new demands. Porsche needs to have both clear and specific goals that will define new and effective strategies which will help the organization navigate the newly emerging economies such as Brazil. China, Russia and India (Janes, et al., 2013). These economies have more preference for utility than sports cars. Porsche thus has to prioritize the development of a strategy that will cover such emergent issues and provide long-term solutions.
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