Victor Alamo
Sandra Enriquez
Philipp Sayler
Doug Smith
Company Name: Porsche
Industry: Automobile Manufacturing
BACKGROUND
Since one member of our team has work experience with auto manufacturer
Porsche, we decided to study their value chain and make use of his first hand knowledge.
Combining information from the web and his experience, we created the following value chain:
Product
Dev. & R&D
SCM Production
Sales &
Marketing
Drilling down further into these four stages of the value chain, we can define the following value adding tasks performed in each phase of the business:
Product
Dev. & R&D
• Market & Product Research
• Innovation leader in car design and engine technology
• Administer around 3550 valid worldwide patents
(add 100/a)
• Offering engineering expertise & services to other companies
• Attracting & recruiting talent
SCM
• Lean Manufacturing model / JIT
• Outsourcing keeps focus on engineering , while providing flexibility
• High quality standards are enforced
(Suppliers)
Production
• JIT final assembly
• Retain design production capabilities
• Focus on their capability of engine production
• Support Product
Development
(prototypes, preseries)
• Ensure superior quality
Sales &
Marketing
• Global central integrated marketing
• Really know their target customers
• High brand equity
• Sales through independent dealers
(outsource) -> easing financial risk
• Financial Services to customers
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OUR ANALYSIS
Value Chain Stages 2 & 3
Our analysis of both the second and third phase provided no ideas for improvement. In fact when we examined the specific tasks performed, we determined
Porsche had implemented ample innovation to create a very lean process. Porsche is able to maintain a tight control over their supply chain and production that can easily serve as a benchmark in the industry. However, when comparing the value chains of other companies to Porsche, ideas did begin to cluster around fourth phase.
Phase 4: Sales & Marketing
Porsche’s sales strategy, similar to most car manufacturers, requires a network of independent dealers. Each dealer has their own commercial interests and business structure and acts as a middle man between Porsche’s German headquarters (“HQ”) and the end-consumer (“Buyer”). In developed markets like North America and Europe this works well. Porsche maintains an extensive knowledge of the Buyer since information flows freely between the dealerships, Buyers, and HQ. However, in emerging Asian markets this market relationship is missing. Having a middle man seems to be an obstacle to obtaining any essential data the Buyer may provide. Currently, the dealers guard their direct relationship with the Buyer, holding it as their own strategic business advantage. They see no incentive in sharing Buyer information with Porsche.
Emerging Market Dealerships
Porsche R&D,
Marketing
Buyers
Our team assumes that a direct flow of Buyer information is critical for future product development, marketing success, and creating greater overall value for the company, dealers, and eventually the Buyers themselves. When comparing other company value chains, we believe Wal-Mart is a great example of a company that uses a seamless flow of information to their advantage.
Wal-Mart achieves this success with an IT system that shares consumer information with suppliers. By sharing (in real time) a direct connection of store information, Wal-Mart facilitates better market research and ultimately better product development. In this sharing environment, the supplier can actually better serve Wal-
Mart in terms of price, product availability, and customer focus. In Wal-Mart’s value chain there are also three players with the Wal-Mart stores sitting atop a triangle of
Customers and Suppliers. Although there is no direct link between the Wal-Mart’s
Customers and the Suppliers, the integration of electronic systems creates a pass-through of information. So how Porsche could use a real time technological information flow to improve their relationship with Buyers in emerging Asian markets?
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OUR PROPOSAL
Create a Business Case
Our team proposes an idea that we believe should be developed into a business case for creating a flow of customer information from the Buyers directly to Porsche HQ.
This idea would bypass the current dealership information flow control and at the same time resolve the lack of dealer incentive to share that information with Porsche. We believe the information flow we propose will empower Marketing and Product
Development with additional value adding capabilities.
Our Idea: The “10,000 km Recalibration” Package
We propose that Porsche improve the direct flow of customer information by creating an additional, optional sales package. This 10,000 km Recalibration package
(“Package”) would include a recording device installed on the car to record driver behavior and driving patterns. The information would be reviewed by Porsche engineers who would recalibrate the car’s computer, tailoring the car specifically to the driver for enhanced performance according to the driver’s skill. Here we assume the driver and
Buyer are one in the same.
The Package Adds Value for Everyone
This package would create a value add for all three parties currently involved in the sale of Porsche cars. As a premium add-on to the standard Porsche price, the Package would create additional revenue for dealers while providing incentive for them to encourage a direct Porsche-to-Buyer relationship. The Package would encourage the
Buyer to share information as we assume Porsche drivers would want a car specifically tailored to them. Finally, the Package would provide Porsche the direct link to the end customers they currently lack. The benefits of this link are discussed in greater detail below but would be further developed by the business case.
How the Package Functions
This information would be collected for the first 10,000 km and then transmitted directly from the Buyer to Porsche HQ in Germany. The exact means of collecting and transmitting this data is left for the business case, but our team imagines some sort of chip attached to the car computer or even something so simple as a USB port on the car computer used to download the information to a common flash drive for transmission via email. Regardless how the information is sent, it should be easily done by any Porsche
Buyer personally and without necessary assistance from the dealership. Again, the objective is to establish a direct link between the Buyer and Porsche.
The information, once emailed, would be received by a Porsche engineer who would respond immediately “taking ownership” of the customer. This engineer would also arrange to transmit the recalibration specs to the car. The details of this transmission would also be left to the business case. However, we again recommend this process not necessitate dealer involvement as they may control, restrict, or manipulate the data.
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The Positive Impact of Direct Customer Information Flow
We believe the direct flow of information provided by the buyer can be used to enhance the marketing campaigns launched in Emerging Markets where Porsche is attempting to gain presence. By receiving a benefit for sharing, we believe the Buyer will be more willing to share personal data if that request is linked to the information recorded by the car computer. This personal data information can be used by the Sales &
Marketing department for creating customer profiles, etc. and should be further developed as part of the business case proposal. It is important to note again that the best information would flow to Porsche without being filtered, manipulated, or restricted by the dealers.
The initial flow of information transmitted for the recalibration is not the only
Buyer data information we foresee as a product of the Package. We envision the Package initiating an on-going relationship between the Porsche technician and Buyer; a relationship through which the Porsche technician may introduce Buyer to other programs and initiatives. For example, based on the driving information recorded and transmitted by the cars’ computer sensors, the Porsche technician may recommend training classes or videos that improve the Buyer’s driving skill. Via email or a personal telephone call, the technician could suggest the driver practice a specific skill, for example, “cornering”, at a traveling Porsche road show or download a tutorial from the web. Again, these possibilities should be expanded and enhanced with a full business case but the focus should remain building a direct and on-going relationship with the
Buyer.
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