The Porsche case Summary


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The Porsche case Summary

  1. 1. Implementation of Key Performance Indicators as a Means ofCorporate Learning: The Porsche CaseStrategic issues:  Declining international sales  To get competitive advantage over other car companiesBackground of the case:Porsche AG is one of the world’s leading sports car manufacturers and was facing immensecompetition from its rivals in the same industry. The company executives were working hardto find ways to stay competitive and successful in the industry.They realized that the huge amount of data that they have with them through the network ofdealers can be of great use. The company decided to convert these data into profits byimplementing an innovative tool which would help in providing sufficient knowledge andlearning. Company decided to use the term Porsche Key Performance Indicators (KPI)instead of the original name “Balanced Scorecard”, since the company tried the tool at adifferent department before and failed to introduce.Goals of Balanced Score Card:KPI is a tool which measures the performance and suggests solutions to improve theperformance. The objective of implementing KPI in Porsche was to increase the internationalorganizational sales of the company with a team led by Mr. Schlegel, an expert on BalancedScorecard tool (KPI). The purpose of this KPI was to analyze the performance, sharing thevast source of data and comparing the different dealerships all over the world. As mentioned,KPI contained four main categories:  Financial  Internal business process  Customer  Learning/ growthThe use of this tool was to know about the performance of internal processes of the company,to learn about customer needs and the satisfaction level and also to know about the growthopportunities that the collected data may lead to. This would help Porsche to improve long-term strategies related to the dealership which would ultimately lead to improved internalprocesses. This would also help in indicating the problem areas for future improvements.Phases:The project team decided on a step-by-step approach and started with a few pilot markets toimplement the KPI. Involved Porsche dealerships were in Italy, France and UK. WithinPorsche European region, these three areas are the major markets where the dealerships were
  2. 2. on different levels of sophistication and scales. They all had the basic IT infrastructure inaccounting and communication technologies.The problem faced by Porsche was the resistance from the employees in including BalancedScorecard as a tool to turn dealership knowledge into profits as the concept was new and notyet widely accepted. To be a successful tool, proper flow of communication was requiredalongwith proper training of the dealers telling about the indicators to be reported and usedfor comparison.For this software was developed by the consultancy firm and proved to create manyadvantages such as:  Focusing on long term strategic action which prevents short sightedness revealing the potential for improvements.  Two-way communication between the dealership and the headquarters during all phases improving long-run profitability.Even though the company recently introduced a new model and training resources weremostly being used for that, it should have had the funding available for the training needs ofKPI project, which is a strategic initiative. Being a first mover is sometimes a disadvantagesince it requires more time devoted to training in different levels. In the case, regionalmanagers too had to be trained to provide their dealerships with consultation in respect toKPI. One of the challenges here is to make individual (dealer based) knowledge intoinstitutional knowledge. Previously the data available at the level of dealers were not usedeffectively and it is important to convince them and create buy in to share the data andknowledge properly and continuously. Submitted by: Gaurav Khatri PGFA1117 PGDM (G) Sec.A