According to Exhibit 1 and Exhibit 2, Porsche showed an unfavorable performance in 1993 and 1994. The stock price hit the bottom, and the company suffered from a heavy deficit (-73.9 million euros). To overcome this situation, in 1996, Porsche abandoned its dependence on one or two expensive sports car models and launched the Boxster, a zippy new two-seater with an entry-level price. Based on the success of the Boxster, Porsche was trying to diversify its product lines by entering the sport-utility vehicle (SUV) market. By the late 1990s, the SUV market was the intensely competitive market, as many major manufacturers offered various product lines. However, according to Exhibit 4, the size of the premium SUV market size doubled in 1998. The
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Also, Porsche needed the diversification of its product lines to improve its financial situation by reducing Porsche’s dependence on the sports car market and expanding Porsche’s target market. Therefore, I think that entering the SUV market was one of the good choices Porsche could have made. Other options Porsche could have adopted were finding another blue ocean, such as the electric car market or the official merchandise market. Since developing electric car technology requires a large, long-term investment, I would not have recommended this option for Porsche, which needed to recover its financial situation in the short term. The SUV might be the better choice. However, I would have recommended launching official Porsche merchandise, such as an official Porsche jacket, an official Porsche lighter, and an official Porsche pen. Launching official Porsche merchandise could be the way to fully utilize the Porsche’s strength, which is the superior brand image, without requiring a large investment. This option would have allowed Porsche to approach the potential customers in the public with the wide-range goods that sell …show more content…
Porsche was also considering the internationalization of its production to reduce the production costs and take the location advantages. In my opinion, Porsche should locate its new plant in the United States of America. There are five reasons for this selection. First, according to the case article, the USA has the largest SUV market in the world. Being close to the largest market would maximize efficiency of customer service and shipment in terms of cost and time, since the largest number of the Porsche’s SUVs would be sold in the USA. Porsche would also save an import tariff in the USA, the largest market. Second, according to Exhibit 6b, the labor costs in the USA are lower than in Germany. However, the USA’s infrastructure and image still fits high-end manufacturing. Favorably, the similar quality standard of manufacturing is expected in the USA, even though the production costs in the USA are lower than in Germany. Third, the US dollar is a hard currency that has stability and liquidity. This would save Porsche from the currency risk. Fourth, “made in USA” would not cause the negative effect on Porsche’s branding. Some sensitive customers may care about it, however, some customers in the USA, which is the largest SUV market, may like the locally-produced cars. Moreover, the USA is well-known for high-quality production and superior technology. Therefore, the branding
Also, Porsche needed the diversification of its product lines to improve its financial situation by reducing Porsche’s dependence on the sports car market and expanding Porsche’s target market. Therefore, I think that entering the SUV market was one of the good choices Porsche could have made. Other options Porsche could have adopted were finding another blue ocean, such as the electric car market or the official merchandise market. Since developing electric car technology requires a large, long-term investment, I would not have recommended this option for Porsche, which needed to recover its financial situation in the short term. The SUV might be the better choice. However, I would have recommended launching official Porsche merchandise, such as an official Porsche jacket, an official Porsche lighter, and an official Porsche pen. Launching official Porsche merchandise could be the way to fully utilize the Porsche’s strength, which is the superior brand image, without requiring a large investment. This option would have allowed Porsche to approach the potential customers in the public with the wide-range goods that sell …show more content…
Porsche was also considering the internationalization of its production to reduce the production costs and take the location advantages. In my opinion, Porsche should locate its new plant in the United States of America. There are five reasons for this selection. First, according to the case article, the USA has the largest SUV market in the world. Being close to the largest market would maximize efficiency of customer service and shipment in terms of cost and time, since the largest number of the Porsche’s SUVs would be sold in the USA. Porsche would also save an import tariff in the USA, the largest market. Second, according to Exhibit 6b, the labor costs in the USA are lower than in Germany. However, the USA’s infrastructure and image still fits high-end manufacturing. Favorably, the similar quality standard of manufacturing is expected in the USA, even though the production costs in the USA are lower than in Germany. Third, the US dollar is a hard currency that has stability and liquidity. This would save Porsche from the currency risk. Fourth, “made in USA” would not cause the negative effect on Porsche’s branding. Some sensitive customers may care about it, however, some customers in the USA, which is the largest SUV market, may like the locally-produced cars. Moreover, the USA is well-known for high-quality production and superior technology. Therefore, the branding