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Insight

Understanding
Porsche’s Business Tactics
Amidst all the crises, Porsche is emerging as a formidable winner.
• Goal: Global industry leadership.
• Strategy: Brand differentiation based on
performance and quality.
• Governance: Decision-making influenced
by family values and vision.

The family’s values and vision are the


foundation for a planning process where
each critical factor adds synergy based on
a unity of purpose between the family and
the business.
The Porsche family and specifically,
Ferdinard Piech the VW Chairman, sees
combining Porsche (the firm that bears his
grandfather’s name) with the much larger
VW (founded by his grandfather) as mak-
ing strategic sense and strengthening the
family legacy.
This visionary family leader championed
the Porsche acquisition of VW but it is the

T
non-family Porsche CEO, Wendelin Wie-
deking and his management team that de-
livered the successful outcome.
It also important to recognise that ac-
cording to many market analysts the manu-

T
he global automobile industry is in a about Porsche’s secret weapon – committed facturing synergies between the two compa-
shambles, with a share in Ford Mo- family shareholders with a shared vision. nies would not be a strong enough reason
tor Company selling for less than a So how did Porsche, a specialty sports car for the merger.
Starbucks latte, and GM and Chrysler fight- manufacturer whose best-selling model is There is no value in slamming hedge funds
ing for their survival. the 30-plus-year-old 911, position itself to because they can play an intermediary role in
Somewhere in all this chaos the Porsche acquire VW its much larger sister company the world economic system but perhaps the
family has managed to create two highly- to become the automobile industry leader? best way to control their actions is not more
profitable automobile firms that are the There are never simple explanations for regulations but more firms like Porsche.
world leaders in designing, manufacturing business success but there are critical be- Short sellers are not a threat to well-run
and marketing cars. haviours that provide lessons for business and profitable companies that create value for
Mr. Jeremy Clarkson from the BBC Top families and perhaps all organisations to their stakeholders through growth and in-
Gear television show could probably explain consider about improving long-term per- creasing their stock price. The financial crisis
their success, “For crying out loud! They formance. Porsche is effective for a number is a serious challenge and despite all the pro-
make great cars!” Unfortunately, the recent of reasons including a strong alignment of tests and charges that Porsche took financial
media coverage on Porsche and VW seems their ownership and management groups advantage of the hedge funds the fact is that
to have missed this critical fact. based on what we describe as the Parallel Porsche beat them at their own game.
Porsche, which is jokingly referred to Planning Process (PPP). Putting things in perspective, the real
as “a hedge fund with a car showroom at- The PPP drives planning and decision- lesson we should consider is how more
tached,” does use hedging strategies but the making around five critical factors: values, companies can become driven by a long-
reason these two companies are the tar- vision, goals, strategy and governance. At term visions and values that create eco-
gets of the financial speculators is because Porsche we would describe the five PPP fac- nomic and social value.
they have sound business models and good tors as: Mr. Andrew Jackson, an early US presi-
growth prospects. • Values: World-class management, dent is quoted as saying, “One person with
The hedge funds do not care about Ford engineering leadership, and a long-term conviction (a vision) is a majority” – perhaps
or GM because there is only one scenario for ownership commitment. we should update this idea for our purposes
the future and it does not leave a lot to specu- • Vision: Unifying Porsche and VW under and recognise that a “business family with a
lation. Unfortunately the hedge funds forgot family ownership. vision is also a majority.” B.I.G

64 march 2009 B.I.G ...Read more in BIG MARCH 2009 Issue