Porsche Strategy
Executive Summary:
Porsche is a reputable global manufacturer of economical sports car and is planning in expanding its operations in to SUV market. The strategy of Porsche has been the fine balance between externalizing the manufacturing of 75% of its components via contracts with suppliers, while maintaining core competencies in design, interiors, engines, and aesthetic values by internalizing the assembly and marketing. This has helped them to differentiate by offering brand value recognition, at the same time allowing them to collaborate design and manufacturing with other product lines, by minimizing their cost of production.
Automobile industry with an ever increasing supplier power and increasing buyer power is a very competitive market, but with creative ways of establishing additional revenue stream in form of royalty by leveraging human capital, coupled by other internal factors like process automation and flexible assembly lines, Porsche has all the right ingredients for a winning strategy. This is evident from the strong financials and analyst estimates of stock price indicating latent potential in the organization, a clear manifestation of the trust and corroboration of the outlook the market shares with the organization.
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Strategic Issues:
With every increasing supplier power, the imminent danger of new entrant and increasing Rivalry is always there. Contractual Theory seems to be the one of the corner stone of this Firms Model, and Porsche has to make sure it has very strong IP and Patenting rights to prevent IP leakage.
Though the capitalization of human resource may be a novel way to improve their bottom line, once again Porsche needs to be very cognizant of the attrition rate of the organization as part of the consulting efforts to different clients. The worst fear will come true if their clients get in to a position to not only absorb their resources, but
Porsche is a reputable global manufacturer of economical sports car and is planning in expanding its operations in to SUV market. The strategy of Porsche has been the fine balance between externalizing the manufacturing of 75% of its components via contracts with suppliers, while maintaining core competencies in design, interiors, engines, and aesthetic values by internalizing the assembly and marketing. This has helped them to differentiate by offering brand value recognition, at the same time allowing them to collaborate design and manufacturing with other product lines, by minimizing their cost of production.
Automobile industry with an ever increasing supplier power and increasing buyer power is a very competitive market, but with creative ways of establishing additional revenue stream in form of royalty by leveraging human capital, coupled by other internal factors like process automation and flexible assembly lines, Porsche has all the right ingredients for a winning strategy. This is evident from the strong financials and analyst estimates of stock price indicating latent potential in the organization, a clear manifestation of the trust and corroboration of the outlook the market shares with the organization.
____________________________________________________________________________________
Strategic Issues:
With every increasing supplier power, the imminent danger of new entrant and increasing Rivalry is always there. Contractual Theory seems to be the one of the corner stone of this Firms Model, and Porsche has to make sure it has very strong IP and Patenting rights to prevent IP leakage.
Though the capitalization of human resource may be a novel way to improve their bottom line, once again Porsche needs to be very cognizant of the attrition rate of the organization as part of the consulting efforts to different clients. The worst fear will come true if their clients get in to a position to not only absorb their resources, but