Porsche Changes Tack Essay

American corporations and American society have been under the impression that shareholder primacy— corporate managers should be focused on the shareholder’s interest to maximize shareholder value— is the way to run a corporation, however, United States corporate law does not require directors of public corporations to maximize shareholders value; it is just one possible objective. American law protects the directors’ authority to sacrifice shareholders value in the quest of other corporate goals. Directors and executives of large corporations have the right to do “what is best for the corporation in the long run” (Stout page 46) they are free to run the corporation as they please and maximizing shareholder value is not the main concern for the corporation. Stout also argues that shareholders are neither owners, nor principals, nor residual claimants of the corporation. “Corporations are independent entities that own themselves” (Stout page 52) shareholders do not own the corporation they own shares of stock, which is a contract that provides restricted rights to the corporation. The belief that shareholders are the only residual claimants is a false statement because the corporation itself is the only residual claimant and the board of directors elects what to do with the left over residual funds. Finally, Stout argues that the lack of empirical evidence

The emissions-cheating scandal that Volkswagen was caught in hurt the German carmaker’s image, brand and reputation. Before the scandal, the general public held the Volkswagen brand in high esteem. Volkswagen has been a car brand that has been known for its reliability and quality. However, in light of the scandal, Volkswagen received a plethora of negative media exposure. A Reuters article stated that the Volkswagen could do harm to the

Did the Company grow too big to manage or did it expand to parts of the World maybe it shouldn’t have? This Author’s first car in 1987 was a GMC product, the Chevrolet Cavalier and was bought for it’s size, appeal and most of all it’s affordability.

Although Porsche is publicly traded, the company is controlled by only two stockholders, the Porsche and Piéch families. As the quotation by Holger Härter makes clear, the two families hold exclusive shareholder influence over management. An interesting point for class discussion is whether the families actually ever exercise these rights. It is not clear from the information or evidence presented that they influence or direct current management headed by Dr. Wendelin Wiedeking. They may simply agree with current leadership and therefore remain quietly

shareholder wealth maximization paradigm and the stakeholder theory. It aims to provide a fair and

Lamborghini is an Italian brand and manufacturer of luxury sports cars and is owned by the Volkswagen group. The logo is attributed to the brand founder Ferruccio Lamborghini whose penchant for Spanish bullfighting sport has taken its shape in the logo.

A.) Demographic segment for Porsche is Age and Income distribution. Porsche target age is group is consumers is male over the age of 40 in addition to an average income of 180k a year. That has a positive effect on this segment because they have defined their niche audience that best responds to their line of cars.

a. Traditionally Porsche has developed a low volume and increasingly fragmented auto market. The availability of these high end models created an image of exclusivity. And this image is very important to the Porsche customer and they want their car to represent how successful they are. For the traditional Porsche customer the 1st 3 steps in the buying decision may be skipped or gone through a bit quicker and go to steps 4 and 5 because they already know about the Porsche and they already know what they need in

Who was Ferdinand Porsche? He was a engineer and founder of the Porsche car company. Ferdinand Porsche became Technical Director and member of the Board of Management of Daimler Motor Company in Stuttgart, Germany. Sports cars likes the Mercedes were under his direction. His achievements were rewarded in later on, when the Stuttgart Institute of Technology awarded him an Honorary Doctorate in Engineering. Later he worked for Daimler house in Germany, together with Benz.

The Porsche Automotive Group firm has been considered to be a benchmark of precision within the market for decades. According to Henderson & Reavis (2009), “By 2007, Porsche had become the world’s most financially profitable automaker on an annual per unit basis.” They then go on to mention, “This is especially impressive when considering that Porsche produces over 100,000 vehicles annually.” From Porsche’s inception their focus has been firmly placed on the finer points of engineering. Sinse the 1930s this firm has been translating their expertise of engineering into the esthetic design of their vehicles. The quality and performance that Porsche has become known for has caused the public and private industries to consider their

Businesses undergo diverse changes in their aspirations to dominate the market, reduce on costs, and increase their efficiency and profit margins. Tracing these changes from the time the firm was started to its current position would reveal a significant amount of efforts that the company has had to put in to enhance its growth and success. The Porsche Company established in 1931 by Ferdinand Porsche together with his son has seen a fair share of these changes (Henderson & Reavis, 2005, p. 2). The company’s business model revolved around the provision of engineering services and vehicle designs to automakers. Porsche was called upon by the then Germany leader, Adolf Hitler, to come up with a car for the Germany population. The vehicle was known as the “people’s car” or “Volkswagen”. In 1948, the company rolled out its first car,a sport car that it continued to produce earning it a significant share of the market.

Since the establishment of the Porsche company in 1930, the company made use of the 4Ps of marketing. The 4Ps has been the primary marketing strategy for Porsche according to the CEO, Mr. Wendelin Wiedeking.

The invention of automobiles had been dated long back in history. From that day till now, it had not only made our lives easier but also simpler. From times back then till now many big automobile companies had came into existence, some of them were successful and some were not, thus going out of market and competition. Among them, Porsche and Volkswagen Group(VW) have emerged as one of the world leaders in automobile industry. Through years of hardwork and sheer use of technology and engineering developments, both of these companies have carved a name for themselves in their respective markets. But sometimes, bad management and several areas of conflict arise between two companies that can lead to its downfall. In this case too the CEO of Porsche, just wanted to administer each and everything according to his own ways and rules, but on the other hand the CEO of Volkswagen, even after facing huge loses wanted to continue on with his strategy because he was quite confident about his strategy and clearly had a broader outlook of the scenario. Therefore, due to having different mindsets, there was a conflict between the ideas of two which led to the decline of one of them. These conflicts can be summed up in the following couple of questions:

“Cookie-cutter” in marketing terms means products that are mass-produced; products must look alike and must not have any differences. Driven by the cheapest material and labor available, many car companies have given into building a “cookie-cutter” vehicle that is affordable to the masses than their competitors. Due to this trend, many car companies have lost their sense of uniqueness along the way because all cars produced are so similar. Porsche on the other hand have made it clear that they are a car company that will not fall into this trap of cookie cutter but design beautiful crafted cars to stand out from the rest. Porsche AG (shortened) has proven to be unique and outstanding in their own way from the start ever since Ferdinand Porsche, the founder, started the company in 1931 in Stuttgart, Germany.

“Corporate finance theory, teaching and the typically recommended practice at least in the US are all built on the premise that the primary goal of a corporation should be the maximization of shareholder value.”