2024

PORSCHE AG
COMPANY
ANALYSIS
Introduction
After being Chief Engineer, Ferdinand A. Porsche founded his own company in 1931 in Stuttgart, Germany
(Porsche, 2022). Porsche is one of the most successful automotive manufacturers in the world with a focus
on the premium segment. The major products sold by Porsche are cars of the models 911, Panamera, 718,
Macan, Cayenne, and Taycan. The cars are sold via distributors and licensors across the world, as
Porsche is in the American, European, Middle Eastern, African, and Asian markets. Production sites are in
Germany, Slovakia, and Malaysia (Porsche Spokane, 2018). The Executive Board exists of 8 members,
and the Chairperson and CEO is Oliver Blume. As Porsche is a German company, it also has a
Supervisory Board (Porsche AG, n.d.). Porsche is a subsidiary of Volkswagen AG and has 4 subsidiaries,
including Porsche Consulting and Porsche Engineering. In 2022, 47% of Porsche’s revenue is made up by
cars sold in the SUV segment of cars. The total revenue was US$16.7 billion, earned by a total market
share of 0.96% in revenue. In the segment of sports cars, Porsche sold 6.6% of all sports cars sold
(Statista, 2023). The company had its Initial Public Offering in 2022 with the largest market capitalization in
Europe of US$84.5 billion (Porsche newsroom, 2022).
Their first and most iconic model is the 911 in all its forms. However, the Macan, the compact SUV, is the
best-selling car (indiGO Auto Group, 2022). But what makes Porsche so successful and iconic, and what
may be a future threat?

Leadership
The CEO of Porsche, Oliver Blume, started to work for Porsche in 2013 as the member of the executive
board responsible for logistics and production. In 2015, he became the Chief Executive Officer at Porsche,
and in 2022, he started to serve as CEO of Volkswagen AG (Porsche Newsroom, n.d.) (Volkswagen
Group, 2022).
Mr. Blume once said that the most exciting thing for him in his job was happy customers. Furthermore, his
opinion on autonomous driving is that the last car ever with a steering wheel will be a Porsche (EBS
Symposium e.V., 2020). This shows clear values. The CEOs values, being to be customer-centric and to
focus on the fun of driving, clearly align with the brand’s identity. Looking at the vision statement of
Porsche, which says that cars from Porsche should be special, and saying that Porsche’s identity can be
described with the words “Herzblut” (enthusiasm), “Pioniergeist” (entrepreneurial), one family and
sportiness, the values of the company and the ones expressed by Mr. Blume are fitting to each other
(Vomma, n.d.).
His ambitious goal-setting regarding being carbon neutral in 2030, and his focus on credibility express this
innovative, entrepreneurial, and customer-focused identity. The aspect of sportiness can be found in his
communicated mindset of bringing innovation from the racetrack to the road (Bloomberg Television, 2023).
Oliver Blume thinks that the characteristics most valued by his employees are honesty, commitment, and a
positive outlook (EBS Symposium e.V., 2020). In Daniel Goleman’s model of Emotional Intelligence, these
traits would support the aspects of self-management, and inspirational leadership, which fit into the

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category of relationship management.

Contributing to one of the values of Porsche, “One family”, at the Le Mans race, Porsche has a camping
site just for its employees. Oliver Blume was the neighbor of many of his employees, when he decided to
camp there as well. After meeting him in the waiting line to get breakfast on the camping site, many
employees commented on this later on, explaining how meaningful it was to see that their CEO was
sleeping in the camp with them and that he was standing in line in shorts and a shirt just like everyone else,
chatting with the employees.
This behavior is a sign of good adaptability skills contributing to the category of self-management in
Goleman’s model, since he seemed to be relaxed and humble when talking to the employees. Further, it
shows that he has great organizational awareness, a component of social awareness, since he knows what
is important for his employees, and embraces the thought of Porsche being one family by lowering the
power distance (Porsche Newsroom, 2023).

Competition
The competitiveness of Porsche in the automotive industry can be assessed with Porter’s Five Forces. The
profitability of a specific industry can be estimated because it depends on the bargaining power of suppliers
and buyers, the threat of substitutes and new entrants, and industry rivalry. To understand how the
company’s business model works, we have to take a look at the forces forming the industry.

The power of suppliers is low when there are lots of suppliers and switching costs are low. In general, the
this power is low since there are lots of suppliers, which at the same time have only a few customers
(Correa and Stricker, 2024). With that, these companies rely more on the manufacturer, than the other way
around. For example, the company Willi Elbe Group on the passenger car side of the business only has
Mercedes-Benz and BMW as customers besides the Volkswagen Group (Porsche AG, 2011)(Willi Elbe
Group, 2020), while the VW group had 63,000 supplier locations, a network that Porsche uses
(Volkswagen Group, 2024).

The power of buyers is high, when there are only a few, large customers, or the products offered are not
unique, but easily replaceable with the products of the competition. In this case, one has to differentiate
between a regular car manufacturer and a car manufacturer in the segment of luxury and sports cars.
There are many customers, and Porsche tries to be special as referred to in the company’s value statement
(Vomma, n.d.), and differentiate itself from other sports car manufacturers with a strong brand identity. This
is why the customer bargaining power is low. Switching costs are high, because of the potential loss of
exclusivity, and the general costs of a luxury car (MBA Skool Team, 2023).

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The 3rd force is the power of substitute products. This power is high when the relative prices of
substitute products decline.
For the automotive industry, substitutes would be traveling by public transportation, plane, or boat. For
Porsche, however, and in general luxury car manufacturers, this power of substitutes seems to be smaller
than for the industry average. The basic need of the customers of Porsche is still traveling from one
location to another, but it’s less important relative to other factors, such as the brand being a status symbol,
identification with the brand, and the driving experience. This makes the product fulfilling these customer
needs unique. One could argue about electric vehicles being a substitute, but since Porsche also produces
these cars, switching to this substitute would not damage Porsche, as long as it is a Porsche model. More
on that in the Strategy part of my analysis (MBA Skool Team, 2023).

The threat of new entrants is low for the industry, since there are high capital requirements and large
economies of scale, and Porsche’s strategic brand positioning even minimizes this threat regarding the
focus on strong customer loyalty and brand identification. New entrants would face high buyer switching
costs, and strong price competition between manufacturers, especially since the new entrant usually
doesn’t have bargaining power and economies of scale facing its suppliers (MBA Skool Team, 2023).
Further, with Porsche’s above-industry average investments in R&D, it’s very difficult to be more innovative
than Porsche (Statista, 2023) (Porsche Newsroom, 2024).

The last force applying pressure on the automotive industry is industry rivalry. In the automotive industry,
there are lots of competitors of Porsche as a car manufacturer, so this force is mediocre to strong.
Nevertheless, according to Oliver Blume, Porsche differentiates itself from other brands in the luxury sports
car segment, like Jaguar, Lamborghini, or Ferrari, by providing a unique combination of sportiness and
daily drivability (Norges Bank Investment Management, 2024). With high spendings on innovation, Porsche
tries to maintain the competitive advantage of being innovative and exclusive while being able to keep
costs down via economies of scale (Porsche Newsroom, 2024)(Norges Bank Investment Management,
2024). To tackle Chinese competition, Porsche’s strategic positioning is to not participate in price wars to
maintain the brand value, and to widen out the market share of 30% in the luxury EV market by introducing
new models as the Macan to the market.
Porsche’s strategic positioning focuses on maintaining customer focus, brand value, and creating a strong
differentiation to other brands by innovating, as seen recently with the patenting of the 6-stroke engine
(Salas, 2024). It is clear that the company has a good position in the industry, but will have to be resilient
against its competitors.

Strategy
Porsche’s competitive advantage is not clearly defined, but when taking a look at the statements from the
CEO I already used for the rest of the analysis, it is all about strong brand differentiation, innovation, access

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to economies of scale, and the unique balancing act of sport, luxury, and usability. Reviewing Porsche’s
success in racing, it’s clear that the core competencies lie in engineering, innovation, and transferring this
knowledge to their street-legal models (Petrány, 2014). The target customers of Porsche buy one because
they want to fulfill their dream of owning a Porsche, so in the end, it is all about the customer experience,
exclusivity, and, referring back to Porsche’s vision, making the products special to the customer (Norges
Bank Investment Management, 2024) (Vomma, n.d.).
If Porsche’s strategy was a good strategy, according to Richard Rumelt’s book Good Strategy, Bad
Strategy, it would include a diagnosis of problems that Porsche has, a guiding policy, and coherent action,
such as focusing resources or keeping consistency and coordination.
Regarding the diagnosis of problems that Porsche has, one can only guess whether these internal and
external analyses happened, since to the public, Porsche doesn’t name these problems. Regarding
Strategy 2030, Porsche addresses sustainability, customer experience, brand recognition, product
innovation in digitalization and electromobility, e-fuels, as well as organizational development like strategic
partnerships. Knowing this, the results of internal and external analyses could be that customers are
valuing sustainability, which could be problematic if Porsche doesn’t address this change and
developments in the EV market. Since Porsche also addresses organizational development and
digitalization, the diagnostics could also state that more internal efficiency, for example, through
digitalization, is important to keep the company profitable.
The guiding policy can be interpreted out of the mission statement. It is to be the brand for dream chasers,
which includes the employees. Also, the guiding policy mentions that processes should be as efficient as
possible and that employees should be trained, as well as involved in processes to accelerate
transformation and establish long-term thinking (Porsche Newsroom, 2022).

Coherent actions include CO2 neutrality goals that can be separated into CO2 neutrality at specific
facilities, demanding renewable energy use from suppliers, and investing in R&D of synthetic e-Fuels. Also
in the fields of product and customer innovation, Porsche establishes actions to meet its goals by 2030, for
example by developing more EV racing cars, to leverage their competency of transferring technology to
their street models (Porsche Newsroom, 2022).
In total, Porsche’s 2030 strategy is sustainable and capable of adapting to future challenges while fostering
growth, because it finds a way to be compliant with electric vehicle regulations and expectations while at
the same time keeping the brand identity by using its core competency, the transfer of technology, to
maintain exclusivity, innovation, and performance.

Porsche is a strong brand, because it is internalized by everybody, the employees, and the customers,
while the management focuses on customer satisfaction on top. The unique identity of the brand is richly
communicated, so that it is understood and valued by the customer. For Netflix, the valuable offer is a wide
variability of popular movies on demand, for Porsche, it is a dream-fulfilling, high quality, high performance,
but daily usable status symbol.

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Artificial Intelligence

Artificial intelligence can be used to enhance customization, individualism, creativity, and connectivity, as
well as to lower the cost of cognition of the customer. However, the uniqueness of the brand of Porsche
and its identity must be maintained.
In class, we got to know a few ways of using AI as a company. First, customer personalization can be done
by using AI. At Porsche, the customer gets personalized recommendations in the car configurator that are
unique, and with a 90% rate of recommendations being adapted by the customer, the implementation is
successful (Porsche AG, 2021). To optimize customer service, Porsche also uses the open text mining tool
Qualtrics AI to manage and use its customer feedback, which can contribute to Porsche’s identity of being
a family, and with that, offering excellent and individual customer service to their family members, their
customers (AITHORITY, 2024).
Contributing to the competitive advantage of being very innovative and only selling high-quality cars, AI is
largely used for the development of technology inside the car. To be exact, to predict the battery range of
EV cars, and to analyze problems in the development of powertrains (Porsche AG, 2021). That being said,
the usage of AI supports the innovation strategy of developing all three technologies: EVs, combustion, and
hybrid engines.
But there are also risks that come with the usage of AI that can influence the future success of Porsche as
a brand.
Porsche is a luxury sports car brand. If people spend these high amounts of money on a car, it is important
to only make use of AI when improving the product and not when trying to save costs or time, for example,
in automating customer service. Consumer reactance, the resistance to AI-driven interactions, could
damage overall customer satisfaction. Another risk lies in Cybersecurity. Thefts may be especially
interested in cyber attacks on Porsche, since it has many influential customers, with their data shared with
AI tools of Porsche.

Conclusion
To conclude my analysis, it is clear that Porsche isn’t just another automotive manufacturer, and Porsche
customers aren’t meant to be only satisfied.
Porsche is a brand that stands for reliability, high performance, racing, enthusiasm, and luxury, while at the
same time being close to the people. It has a huge worldwide community of hard-working people who want
to fulfill their dreams.
Major risks of Porsche’s business operations are less momentum in the sale of EVs and hybrids, especially
in China, as well as supply chain issues (MacDonogh and Pham, 2024). With unsecured times in

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geopolitics including the possibility of high taxes on cars in the future, and the potential deindustrialization
of the German economy (Doshi, 2024), hedge funds are already shorting the Porsche stock (MacDonogh
and Pham, 2024). If Porsche manages to build on high ROI regarding their research & innovation
investments, they still might have a chance to dominate the luxury and sports car sector with keeping their
identity, but also offering competitive prices.
My decision to use Porsche for this assignment was taken because of my fascination for the automotive
industry and racing in general, and of course, because I want to own a Porsche once in my life.

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