Product-Line Strategy at Porsche: The Effect of New Models on the Porsche Brand and the 911 SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

Case Study SWOT Analysis Solution

Case Study Description of Product-Line Strategy at Porsche: The Effect of New Models on the Porsche Brand and the 911

The Porsche 911 has long been the face of the company's product line. Over the years, Porsche has added models priced either above or below the 911, but only the lower-priced models have sold well. Porsche seems to struggle between what an executive calls the "pull of the market" and the "tug of brand equity." This case provides an opportunity for students to analyze the optimal breadth of a product line that will balance sales, profitability, dealer satisfaction, and long-term brand health and customer satisfaction.

Authors :: Paul W. Farris, Eric Kang, Jordan Mitchell

Topics :: Sales & Marketing

Tags :: , SWOT Analysis, SWOT Matrix, TOWS, Weighted SWOT Analysis

Swot Analysis of "Product-Line Strategy at Porsche: The Effect of New Models on the Porsche Brand and the 911" written by Paul W. Farris, Eric Kang, Jordan Mitchell includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Porsche 911 facing as an external strategic factors. Some of the topics covered in Product-Line Strategy at Porsche: The Effect of New Models on the Porsche Brand and the 911 case study are - Strategic Management Strategies, and Sales & Marketing.

Some of the macro environment factors that can be used to understand the Product-Line Strategy at Porsche: The Effect of New Models on the Porsche Brand and the 911 casestudy better are - – there is increasing trade war between United States & China, digital marketing is dominated by two big players Facebook and Google, competitive advantages are harder to sustain because of technology dispersion, wage bills are increasing, cloud computing is disrupting traditional business models, increasing government debt because of Covid-19 spendings, increasing commodity prices, talent flight as more people leaving formal jobs, increasing household debt because of falling income levels, etc

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Introduction to SWOT Analysis of Product-Line Strategy at Porsche: The Effect of New Models on the Porsche Brand and the 911

SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Product-Line Strategy at Porsche: The Effect of New Models on the Porsche Brand and the 911 case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Porsche 911, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Porsche 911 operates in.

According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.

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SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix

SWOT analysis of Product-Line Strategy at Porsche: The Effect of New Models on the Porsche Brand and the 911 can be done for the following purposes –
1. Strategic planning using facts provided in Product-Line Strategy at Porsche: The Effect of New Models on the Porsche Brand and the 911 case study
2. Improving business portfolio management of Porsche 911
3. Assessing feasibility of the new initiative in Sales & Marketing field.
4. Making a Sales & Marketing topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Porsche 911

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Strengths Product-Line Strategy at Porsche: The Effect of New Models on the Porsche Brand and the 911 | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The strengths of Porsche 911 in Product-Line Strategy at Porsche: The Effect of New Models on the Porsche Brand and the 911 Harvard Business Review case study are -

Highly skilled collaborators

– Porsche 911 has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Product-Line Strategy at Porsche: The Effect of New Models on the Porsche Brand and the 911 HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.

Successful track record of launching new products

– Porsche 911 has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Porsche 911 has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.

Ability to recruit top talent

– Porsche 911 is one of the leading recruiters in the industry. Managers in the Product-Line Strategy at Porsche: The Effect of New Models on the Porsche Brand and the 911 are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.

Digital Transformation in Sales & Marketing segment

- digital transformation varies from industry to industry. For Porsche 911 digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Porsche 911 has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.

Effective Research and Development (R&D)

– Porsche 911 has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Product-Line Strategy at Porsche: The Effect of New Models on the Porsche Brand and the 911 - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.

High brand equity

– Porsche 911 has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Porsche 911 to keep acquiring new customers and building profitable relationship with both the new and loyal customers.

Ability to lead change in Sales & Marketing field

– Porsche 911 is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Porsche 911 in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.

Analytics focus

– Porsche 911 is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Paul W. Farris, Eric Kang, Jordan Mitchell can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.

Diverse revenue streams

– Porsche 911 is present in almost all the verticals within the industry. This has provided firm in Product-Line Strategy at Porsche: The Effect of New Models on the Porsche Brand and the 911 case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.

Superior customer experience

– The customer experience strategy of Porsche 911 in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.

High switching costs

– The high switching costs that Porsche 911 has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.

Training and development

– Porsche 911 has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Product-Line Strategy at Porsche: The Effect of New Models on the Porsche Brand and the 911 Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.

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Weaknesses Product-Line Strategy at Porsche: The Effect of New Models on the Porsche Brand and the 911 | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The weaknesses of Product-Line Strategy at Porsche: The Effect of New Models on the Porsche Brand and the 911 are -

Skills based hiring

– The stress on hiring functional specialists at Porsche 911 has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.

Capital Spending Reduction

– Even during the low interest decade, Porsche 911 has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.

Aligning sales with marketing

– It come across in the case study Product-Line Strategy at Porsche: The Effect of New Models on the Porsche Brand and the 911 that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Product-Line Strategy at Porsche: The Effect of New Models on the Porsche Brand and the 911 can leverage the sales team experience to cultivate customer relationships as Porsche 911 is planning to shift buying processes online.

High cash cycle compare to competitors

Porsche 911 has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.

Slow to harness new channels of communication

– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Porsche 911 is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Product-Line Strategy at Porsche: The Effect of New Models on the Porsche Brand and the 911 can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.

Low market penetration in new markets

– Outside its home market of Porsche 911, firm in the HBR case study Product-Line Strategy at Porsche: The Effect of New Models on the Porsche Brand and the 911 needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.

High dependence on star products

– The top 2 products and services of the firm as mentioned in the Product-Line Strategy at Porsche: The Effect of New Models on the Porsche Brand and the 911 HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Porsche 911 has relatively successful track record of launching new products.

Ability to respond to the competition

– As the decision making is very deliberative, highlighted in the case study Product-Line Strategy at Porsche: The Effect of New Models on the Porsche Brand and the 911, in the dynamic environment Porsche 911 has struggled to respond to the nimble upstart competition. Porsche 911 has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.

Increasing silos among functional specialists

– The organizational structure of Porsche 911 is dominated by functional specialists. It is not different from other players in the Sales & Marketing segment. Porsche 911 needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Porsche 911 to focus more on services rather than just following the product oriented approach.

High operating costs

– Compare to the competitors, firm in the HBR case study Product-Line Strategy at Porsche: The Effect of New Models on the Porsche Brand and the 911 has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Porsche 911 's lucrative customers.

Need for greater diversity

– Porsche 911 has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.

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Opportunities Product-Line Strategy at Porsche: The Effect of New Models on the Porsche Brand and the 911 | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The opportunities highlighted in the Harvard Business Review case study Product-Line Strategy at Porsche: The Effect of New Models on the Porsche Brand and the 911 are -

Identify volunteer opportunities

– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Porsche 911 can explore opportunities that can attract volunteers and are consistent with its mission and vision.

Low interest rates

– Even though inflation is raising its head in most developed economies, Porsche 911 can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.

Lowering marketing communication costs

– 5G expansion will open new opportunities for Porsche 911 in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Sales & Marketing segment, and it will provide faster access to the consumers.

Increase in government spending

– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Porsche 911 can use these opportunities to build new business models that can help the communities that Porsche 911 operates in. Secondly it can use opportunities from government spending in Sales & Marketing sector.

Learning at scale

– Online learning technologies has now opened space for Porsche 911 to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.

Building a culture of innovation

– managers at Porsche 911 can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Sales & Marketing segment.

Using analytics as competitive advantage

– Porsche 911 has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Product-Line Strategy at Porsche: The Effect of New Models on the Porsche Brand and the 911 - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Porsche 911 to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.

Leveraging digital technologies

– Porsche 911 can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.

Finding new ways to collaborate

– Covid-19 has not only transformed business models of companies in Sales & Marketing industry, but it has also influenced the consumer preferences. Porsche 911 can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.

Remote work and new talent hiring opportunities

– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Porsche 911 to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Porsche 911 to hire the very best people irrespective of their geographical location.

Reconfiguring business model

– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Porsche 911 to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.

Reforming the budgeting process

- By establishing new metrics that will be used to evaluate both existing and potential projects Porsche 911 can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.

Redefining models of collaboration and team work

– As explained in the weaknesses section, Porsche 911 is facing challenges because of the dominance of functional experts in the organization. Product-Line Strategy at Porsche: The Effect of New Models on the Porsche Brand and the 911 case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.

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Threats Product-Line Strategy at Porsche: The Effect of New Models on the Porsche Brand and the 911 External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The threats mentioned in the HBR case study Product-Line Strategy at Porsche: The Effect of New Models on the Porsche Brand and the 911 are -

High dependence on third party suppliers

– Porsche 911 high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.

Capital market disruption

– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Porsche 911.

Backlash against dominant players

– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Porsche 911 business can come under increasing regulations regarding data privacy, data security, etc.

Technology disruption because of hacks, piracy etc

– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.

Consumer confidence and its impact on Porsche 911 demand

– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.

Shortening product life cycle

– it is one of the major threat that Porsche 911 is facing in Sales & Marketing sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.

Technology acceleration in Forth Industrial Revolution

– Porsche 911 has witnessed rapid integration of technology during Covid-19 in the Sales & Marketing industry. As one of the leading players in the industry, Porsche 911 needs to keep up with the evolution of technology in the Sales & Marketing sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.

Instability in the European markets

– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Porsche 911 will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.

Increasing wage structure of Porsche 911

– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Porsche 911.

Stagnating economy with rate increase

– Porsche 911 can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.

Increasing international competition and downward pressure on margins

– Apart from technology driven competitive advantage dilution, Porsche 911 can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Product-Line Strategy at Porsche: The Effect of New Models on the Porsche Brand and the 911 .

New competition

– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Porsche 911 in the Sales & Marketing sector and impact the bottomline of the organization.

Easy access to finance

– Easy access to finance in Sales & Marketing field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Porsche 911 can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.

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Weighted SWOT Analysis of Product-Line Strategy at Porsche: The Effect of New Models on the Porsche Brand and the 911 Template, Example

Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Product-Line Strategy at Porsche: The Effect of New Models on the Porsche Brand and the 911 needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants. We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –

First stage for doing weighted SWOT analysis of the case study Product-Line Strategy at Porsche: The Effect of New Models on the Porsche Brand and the 911 is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.

Second stage for conducting weighted SWOT analysis of the Harvard case study Product-Line Strategy at Porsche: The Effect of New Models on the Porsche Brand and the 911 is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.

Third stage of constructing weighted SWOT analysis of Product-Line Strategy at Porsche: The Effect of New Models on the Porsche Brand and the 911 is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Porsche 911 needs to make to build a sustainable competitive advantage.

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