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Porsche AG (A): True to Brand? Harvard Case Solution & Analysis
Porsche AG (A): True to Brand? Case Solution
Porsche was founded by Ferdinand Porsche who started this business with his son and son-in-law. Porsche is one of the leading manufacturers of sport vehicles.Porsche started to operate as a company that designs almost every type of vehicle. The company has a strong brand name and is renowned for its quality design and performance. The company has strong historical business performances and achievements. However,the increasing competition has led to think for a change in the business strategy of the business.
Wendelin Wiedeking is the CEO and chairman of the company. He is considering launching Sport-Utility vehicle SUV under the Porsche house to compete in the global market successfully and to diversify its products.
The company started its journey from 1948, and built total 52 cars till 1949 in a small garage in Gmund, Austria. The first car ever produced by the company was the Porsche 356. During 1950s, Porsche incorporated its own engines in the 356 model which gave the car more horsepower. The Porsche 911 was launched, which was a legendary car of the company. The production of 911 started in 1964. Moreover, Carreraa new car based on 911 models was introduced in 1999.
Porsche also launched front-engine models in the early 1970 s with 4 cylinders; one model was 924 in 1976 and the other was 928 in 1978. The model 928 was the company's first vehicle with the V-8 engine. During 1991, there was crisis faced by the company due to the recession as dollar exchange rates reduced as compared to German currency and high production costs. In 1993, Wiedeking became the Company's CEO. In 1997, Porsche introduced a new model Boxster and to cater the increasing demand, the company established its assembly site in Finland. Porsche designed a water cooled 911 and was introduced in the Frankfurt Show. Currently,Porsche is planning to introduce its new vehicle range that will be SUV sport-utility vehicle.(History, n.d)
Porsche's CEO Wendelin Wiedeking wants to expand the company's vehicle range with the Sports-utility vehicle SUVs to compete in the current global market. Although this new product will be against the company's traditional vehicles and class of cars however, it is an opportunity to further increase the company's profitability as this range of vehicle has established market. Moreover, the production capacity is another problem for the company and it is planning whether to produce it outside Germany or focus on other options.
Company's strategy
Porsche follows the concept of lean production so that labors are multi-skilled and can operate in different multi-purpose machinery and it requires less supervision. This has benefited the company in low cost in production and less wastage in the production process.
The company has reduced the size of its workforce in line with the company's campaign to be lower on production cost and that helps the company prosper.Moreover, most of the employees that were laid off were of middle management.
The company has promoted an environment where employees are encouraged to share the ideas and make suggestions for the improvement. They were also given rewards and gifts for their positive and effective suggestions.
The company has focused more on options to get the production costs toward lowest level. In this regard, it has applied a strategy to make new vehicles with the design that also fits to use common mechanical parts so that it can achieve economies of scale and have reduced per unit cost. An example of this is the new Boxster that can use the parts of 911 in the assembling, which has resulted in low cost and as both vehicles share common parts there is an increase in efficiency of the production.The company also improved and redesigned its existing models, which resulted in entirely new models in the same class..................
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