Porsche is a company that prides itself in quality and customer satisfaction. Because of this customers are always considered to be first priority for the company. The only issue with this business method is that the shareholders do not feel valued. Porsche operates more like a family-owned firm instead of focusing mainly on shareholder value. While operating like a family-owned firm may be admired by some, it also has a downside. The company has been somewhat infamous for occasional stubbornness when it comes to disclosure and compliance with reporting requirements. Following these guidelines is a very important when trading publicly not only because it is a requirement, but also to establish trust with investors. Releasing reports based on the Sarbanes-Oxley Act as other companies do would greatly improve Porsche’s image.
Porsche sets itself apart from the many competitors in the auto industry because of the premium quality of the vehicles produced. It is because of this premium quality that Porsche is able to sell vehicles at such high ticket prices and continues to keep its customers satisfied. This success has created substantial shareholder value despite the company’s operating methods. Although Porsche has been very successful financially some may argue that it relies on currency hedging. Even though the currency hedging generated positive results it is still considered risky and shareholders would be happier if this strategy were no longer used.
In 2005 Porsche took a 20% ownership position in Volkswagen in order to eliminate possible hostile acquisitions of VW. This investment cost 3 billion Euros. Shareholders were not happy with this decision and felt yet again unvalued, especially since the family linkages between the two companies were well known. Non-family shareholders were concerned that Porsche’s leadership continued to pursue family objectives at the expense of its shareholders. Porsche could solve these...
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