2. • Largest national economy in Europe
• It is the fourth-largest by nominal GDP in the world
• Also the fifth-largest by GDP.
• Germany recorded the highest trade surplus in the
world worth $285 billion.
• Germany is the third largest exporter in the world with
$1.511 trillion exported in 2014.
3. • GDP of about $3.915 trillion(2014)
• GDP per capita $48,228
• Service sector- 70%(of GDP)
• Industry- 29.1%
• Agriculture- 0.9%
• Exports account for 41% of national output
4. • With its central position in Europe, Germany is an
important transportation hub. This is reflected in its
dense and modern transportation networks. The
extensive motorway (Autobahn) network that ranks
worldwide third largest in its total length and features a
lack of blanket speed limits on the majority of routes
5. Overview of German Auto Industry
•Germany - one of the top 5 automobile manufacturers
•VW, Audi, BMW, Daimler, Porsche all come from germany
•The largest share of passenger car production in Europe with over
29% market share (France - 18%, Spain - 13%, UK - 9%)
•Car-making accounts for 17% of German exports
•60 million new cars are being produced in Germany every year
6. 6
• Increasing competition from China and India
• EU Emission Regulations
o 130 grams of CO2 per kilometer to be met by 2012
o Only 6 German-made models meet the target
o Hybrid Cars - competitive advantage
• Ernst & Young Study: Germany needs to double its efforts in R&D in order to
keep its leading position
• Shifting Focus (Similar to Computer Technology)
Main challenges of the industry
8. • Founded In Munich,1917
• Acquisition Of Rolls-Royce In
2003
• 2013
• 2 Million Cars Sold
• 1,16,230 Employees
• Revenue €80.4B
• Most Sold Car: 3 Series
1)
INTRODUCTIO
N BMW Group
9. 23 production and assembly plants
in 13 countries
1) INTRODUCTION
Production
10. 12 R&D plants in 5 countries
1) INTRODUCTION
Research & Develpoment
14. Product-oriented:
All Companies That Offer A Combination Of
Luxury And Powerful Cars With A High Level Of
Quality And Service
Customer Oriented:
Car Manufacturers Such As Lexus (Toyota), Audi
(VW), Porsche (VW), Mercedes-Benz (Daimler).
2) MARKET
ANALYSIS Market
definition
15. • The respective market for BMW consists out of the
premium segments of the global passenger car and
motorcycle market.
• BMW is one of the leading luxury car manufacturers in the
world.
2) MARKET
ANALYSIS Market
definition
17. Rivalry among existing competitors:
+ some competitors of the same size
+ Low industry and market growth rates
+ Barriers to exit are high (production facilities)
→ High
2) MARKET ANALYSIS
Porters 5 Forces
18. Threat of New Entrants:
+ high initial investments and fixed costs
+ limited access to specialized suppliers
+ existing players have close customer relations (e.g. long-
term service contracts)
+ customer loyalty
→ Low
2) MARKET ANALYSIS
Porters 5 Forces
19. Bargaining Power of Buyers
+ Buy large volumes (e.g. company car for many
large companies)
+ Switching to an alternative product is relatively simple and
not related to high costs
+ Products are undifferentiated and can be replaced
with subsitutes
− Product itself of strategic importance to customer
− Customer knows about the production
cost of the product
→ Medium
2) MARKET ANALYSIS
Porters 5 Forces
20. Bargaining Power of Suppliers:
+ Supplier’s products are customized and
valuably differentiated
+ high switching costs to alternative suppliers
+ JIT production
− Market is dominated by many
suppliers (sub suppliers)
→ High
2) MARKET ANALYSIS
Porters 5 Forces
21. 2) MARKET ANALYSIS
Porters 5 Forces
Threat of Substitute Products & Services:
+ close customer relationship
+ brand loyalty of customers is high
− No penalties or low switching costs for
customers
− Current trends
→ medium
32. 1)
INTRODUCTIO
N
PORSCHE• Founded In 1931
• Headquartered in Stuttgart
• 70% of Porsche cars ever built are still on the road
• First Porsche office was opened in Stuttgart
• Offered consulting services
• Motor vehicle development work
33. History of Porsche
“I couldn’t find the sports car of
my dreams, so I built it myself”
(Ferdinand Porsche)
• Ferdinand Porsche founded the company in 1931, with
main offices in the centre of Stuttgart, Germany.
2) PORSCHE’s BACKGROUND
35. • The threat of new entrants is very low in the automobile
industry. The industry is very mature and it has successfully
reached economies of scale.
Barriers to Entry (High)
Capital Requirement
Brand equity
Knowledge (Technology)
Product differentiation.
Large economies of scale
3) PORTER’s 5 FORCES MODEL
Threat of new entrants (Low)
36. • Competition between suppliers is high as a contract with
Porsche represents a significant opportunity.
• Porsche make their own engine parts and partnership by large
suppliers (such as VW), which provide core components,
could reduce Porsche potential to exercise bargaining power.
3) PORTER’s 5 FORCES MODEL
Bargaining power of suppliers (Low)
37. • The buyers also are a significant portion of the industries
revenue. If they can not keep their buyers happy then they
risk losing them to their competitors.
• The reasons why the power is not completely high is that the
buyers are not large and few in number. Finally customers
are willing to pay premium for the brand.
3) PORTER’s 5 FORCES MODEL
Bargaining power of buyers (High)
38. • Direct substitute for Porsche in luxury sport car industry
For examples:
1) BMW X6 M is slightly faster than the Cayenne Turbo
2) Mercedes-Benz ML63 is less expensive than the Cayenne but
slower
3) Audi Q7 is the slowest of the Pack but has more interior space and
torque
• However, substitute do not offer the same quality as Porsche.
• Porsche has been able to produce equal performance and prestige
yet at more affordable prices
3) PORTER’s 5 FORCES MODEL
Threat of substitutes (Medium)
39. Porsche is under financial crisis because in 2008 it
failed to secure the capital needed to acquire
Volkswagen, instead in 2010, there was a reverse
takeover and Porsche was acquired by VW.
Porsche will face a problem of moving its executives
and experienced management by VW into key roles
with other automotive brands as part of integration plan
into VW Family.
4) ISSUES WITH PORSCHE
40. Potential Brand dilution will happen since its switching
from focus approach to broader market to extend the
Porsche product line.
How the market would react to multiple sports cars
offerings from Audi, Lamborghini, Porsche…etc.
Porsche’s greatest challenge would be the impeding
CAFÉ regulations (regulations that could spell an end to
Porsche’s sales in its number one market, US).
5) ISSUES HIGHLIGHT
41. 6) PORSCHE’s STRATEGY 2018
We’ve always been ambitious.
And we’ll make sure it stays that way.
42. 7) VW’s STRATEGY 2018
• To become : “The most successful and
fascinating automaker by 2018”
• Porsche will help VW achieve its goals by sharing
its technology with other VW brands, increasing
production and diversifying the Porsche product
line
• VW has seen the success of Porsche’s recent
diversification and is looking for an even broader
offering.
