Made by

• 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.

ECONOMY

• 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

SECTORS

• 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

TRANSPORT

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

• 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

1) INTRODUCTION

• 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) INTRODUCTION BMW Group

23 production and assembly plants in 13 countries

1) INTRODUCTION Production

12 R&D plants in 5 countries

1) INTRODUCTION Research & Develpoment

1) INTRODUCTION Market Share

77%

16%

6%

1%201

3

1) INTRODUCTION Sold Cars in brands

BMW 16,55,138

Mini 302,183

Motorcycles 82,631

Rolls Royce 3630Total 21,17,9

65

2) MARKET ANALYSIS

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

• 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

Rivalry Among Existing

Competitors

Threat of New

Entrants

Bargaining Power of Suppliers

Bargaining Power of Buyers

Threat of Substitutes

2) MARKET ANALYSIS Porters 5 Forces

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

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

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

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

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

• Franchise system

2) MARKET ANALYSIS Distribution Channels

• branding• brand loyalty• brand awareness

• global positioning• positioning in established

markets• positioning in growing markets

• innovation rate• differentiation

• hybrid

2) MARKET ANALYSIS Key Success Factors

3) COMPETITIVE LANDSCAPE

World Ranking of manufactureres in cars sold 2013 in thousands

1.Toyota2) G.M.

3) VW4) Ford

5) Hyundai

6) PSA7) Honda8) Nissan

9) Fiat10) Suzuk

i...

12) Daimler...

14) BMW...

41) Porsche 0 2.000

4.000

6.000

8.000

Cars

Commercial Vehicles

3) COMPETITIVE LANDSCAPEMarket Structure

3) COMPETITIVE LANDSCAPEDirect Competitors

3) COMPETITIVE LANDSCAPEIndirect Competitors

3) COMPETITIVE LANDSCAPECars sold (2013)

0 325.000

650.000

975.000

2.300.000

Porsche

85.900310.000

975.000

1.183.000

21,80,000

Lexus

Mercedes

Audi

BMW

3) COMPETITIVE LANDSCAPENet sales in million € (2013)

0 12.500

25.000

37.500

50.000

Porsche

7.46612.680

41.318

29.840

50.000

Lexus

Mercedes

Audi

BMW

3) COMPETITIVE LANDSCAPEEmployees (2013)

0 25.000

50.000

75.000

100.000

Porsche

12.202Lexus

11.520

97.00058.0

11

100.041

Mercedes

Audi

BMW

1) INTRODUCTION

1) INTRODUCTIO

NPORSCHE• 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

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

Rivalry Among Existing

Competitors

Threat of New

Entrants

Bargaining Power of Suppliers

Bargaining Power of Buyers

Threat of Substitutes

3) PORTER’s 5 FORCES MODEL

• 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 MODELThreat of new entrants (Low)

• 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 MODELBargaining power of suppliers

(Low)

• 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 MODELBargaining power of buyers (High)

• 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 MODELThreat of substitutes (Medium)

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

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

6) PORSCHE’s STRATEGY 2018

We’ve always been ambitious.And we’ll make sure it stays that way.

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.

Thank you for yourattention.

QUESTIONS?