Chapter 2 Strategic Planning for Competitive Advantage

Porsche worked tirelessly on their new 991 designation 911 to fend off new attacks from Jaguar with the new F Type that offers a more visceral experience for a lower price than the 911. And the new SLS inspired Mercedes AMG GT that is built to compete directly with the Porsche. With the new 911 Porsche decided to change fundamental things about the car, like moving the engine so it now sits in front of the rear axle rather than behind it, and switching from the traditional hydraulic steering systems to a electromechanical unit. They also opted not to offer a manual transmission in their new GT3 which had long been heralded as the last super sports car that offers a manual box. These changes that Porsche has been making can be seen as part of their product development strategy. A strategy that they hope will keep the 911 the most desirable option not only for fans of the 911 but for any prospective customer in the sports car market.



In 2003 Porsche started an RS program for their 996 GT3 to meet the needs of a growing segment of the market that wanted a lighter, track ready version of their sports cars. The cars had to meet circuit regulations, so things like a roll cage, the five point harness and a fire extinguisher was included in the car when it shipped from the manufacturer. These cars had to be able to set fast lap times on Sunday, but still be usable enough to drive to work on Monday. When the 996 GT3 RS launched it was going up against Ferrari's answer to the track day market, the 360 Challenge Stradale. Porsche showed Core Innovation with their RS program and even though the 360 CS went on to become a legendary Ferrari, the GT3 RS was such a commercial success that it became the standard for all track day cars.

The sports car market is rapidly growing. In recent years we see china quickly becoming one of the largest consumer markets for luxury sports cars. In response to this we see manufactures building cars that satisfy the needs of this growing market. Lamborghini has tailored their new Huracan to be more appealing to the Asian market by giving it softer styling cues and making it easier and safer to drive quickly on the road. The Star sports car for Porsche in China is the 911 and they have gone a different route than Lamborghini. Instead of tailoring a car for the market Porsche offers the same package but invested more in distribution by opening more dealerships. As it stands Lamborghini is set to see a 5% increase sales for 2014 while Porsche is expected to see an increase somewhere in the low double digits.

Preforming a SWOT analysis on the Porsche 911 would show that its greatest strength is its heritage. The name 911 is one shrouded in tradition. It has a chassis that has been continuously develop for 50 years and one of the most iconic silhouettes in history. Its weakness would be the changes that they have been making to keep the car relevant and desirable. By making these changes like not offering the manual transmission Porsche is alienating a very core group of Porsche fans in order to be desirable to a wider audience. This results in Porsche building a car that might not enjoy the longevity and deity status among car enthusiasts as the older air cooled 911s do. It is also likely that these newer cars will never be considered classics. 
External Opportunities for Porsche is the emerging Asian market. They can use that 50 years of heritage to create the same following that it enjoys in the United States and Europe. These nations like Korea, Beijing, Singapore, India are changing socially and economically, and the nouveau riche wants something that represents their status without showing how recently it was acquired. Finally their threats, Porsche has long been at the top of the sports car range and after a decade or so of running unchallenged it is facing very strong competition from both Jaguar and Mercedes AMG. How Porsche will respond to their new challengers remains to be seen.

Even though Porsche does not enjoy the competitive cost advantage it does have the Product service advantage over its competitors. One of the ways Porsche continues to maintain a good relationships with its customers is by building parts for their cars long after they are legally obligated too. Porsche is also a well known brand name usually looked upon with respect even by people who are not car enthusiasts.

The product itself is a performance orientated car sports car that has 50 years of history, race wins and engineering advances under its belt. Alot of people grew up with Porsche and Lamborghini on their bedroom walls and when they became adults the Porsche still resembles what they day dreamed about as children. Porsche understands distribution and they spend alot of money on making sure that they can get their cars where people want them. They are currently investing in doubling the number of dealers in China by 2015. And they recently opened the Porsche Centre Chengdu Airport in China which serves as a dealership, showroom, customer service desk and a place for enthusiasts and customers to see a full line up of all the Porsche models. Porsche does not price competitively, the new 991 911 is the most expensive Porsche 911 ever made. In the face of new competition we may see a change in the pricing strategy from Porsche.