bmw vs porsche

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Page 1: Bmw Vs Porsche
Page 2: Bmw Vs Porsche

BMW

Page 3: Bmw Vs Porsche

Rivalry Among Existing

Competitors

Threat of New

Entrants

Bargaining Power of Suppliers

Bargaining Power of Buyers

Threat of Substitutes

PORTER'S 5 FORCES

Page 4: Bmw Vs Porsche

Rivalry among existing competitors:

+ some competitors of the same size

+ Low industry and market growth rates

+ Barriers to exit are high (production facilities)

→ High

PORTERS 5 FORCES

Page 5: Bmw Vs Porsche

Threat of New Entrants:

+ high initial investments and fixed costs

+ limited access to specialized suppliers

+ existing players have close customer relations (e.g. long-term service contracts)

+ customer loyalty

→ Low

PORTERS 5 FORCES

Page 6: Bmw Vs Porsche

Bargaining Power of Buyers:+ Buy large volumes (e.g. company car for many

large companies)+ Switching to an alternative product is relatively simple and

not related to high costs+ Products are undifferentiated and can be replaced

with subsitutes− Customer knows about the

production cost of the product→ Medium

PORTERS 5 FORCES

Page 7: Bmw Vs Porsche

Bargaining Power of Suppliers:

+ Supplier’s products are customized and valuably differentiated

+ high switching costs to alternative suppliers

+ JIT production

− Market is dominated by many suppliers (sub suppliers)

→ High

PORTERS 5 FORCES

Page 8: Bmw Vs Porsche

PORTERS 5 FORCES

Threat of Substitute Products & Services:

+ close customer relationship

+ brand loyalty of customers is high

− No penalties or low switching costs for customers

− Current trends

→ Medium

Page 9: Bmw Vs Porsche

STRENGTH:WEAKNESSES:Strong brand image

•• Strong R&D capabilities

(DM)• Strong product

innovation• High employee

productivity Motocycle as niche product

•• US military

service• High quality

suppliers• Steady decrease

in Co2 emissions• Strongest product: 3

Series

SWOT Analysis

• Poor performance of BMW in asian markets

• Declining production and deliveries

• Lack of scale compared to competitors

• High wages

• Too less strategic alliences

Page 10: Bmw Vs Porsche

OPPORTUNITIES:THREATS:• Car industry on road to recovery

• Poised to benefit from increasing demand for hybrid electric vehicles

• Growth in Asia• Growing used car market in UK

• Moderate growth in global cars market• Rising green awareness

SWOT Analysis

• Competition in the global automotive market

• Currency risk

• Environmental protection regulations

• Recession in US and Europe

• Rising green awareness

Page 11: Bmw Vs Porsche

PORSCHE

Page 12: Bmw Vs Porsche

Rivalry Among Existing

Competitors

Threat of New

Entrants

Bargaining Power of Suppliers

Bargaining Power of Buyers

Threat of Substitutes

PORTER’s 5 FORCES MODEL

Page 13: Bmw Vs Porsche

• The threat of new entrants is very low in the automobile industry. The industry is very mature and it has successfully reached economies of scale.

Barriers to Entry (High)Capital Requirement Brand equity Knowledge (Technology) Product differentiation. Large economies of scale

Threat of new entrants (Low)

Page 14: Bmw Vs Porsche

• Competition between suppliers is high as a contract with Porsche represents a significant opportunity.

• Porsche make their own engine parts and partnership by large suppliers (such as VW), which provide core components, could reduce Porsche potential to exercise bargaining power.

Bargaining power of suppliers (Low)

Page 15: Bmw Vs Porsche

• The buyers also are a significant portion of the industries revenue. If they can not keep their buyers happy then they risk losing them to their competitors.

• The reasons why the power is not completely high is that the buyers are not large and few in number. Finally customers are willing to pay premium for the brand.

Bargaining power of buyers (High)

Page 16: Bmw Vs Porsche

• Direct substitute for Porsche in luxury sport car industry For examples: 1) BMW X6 M is slightly faster than the Cayenne Turbo 2) Mercedes-Benz ML63 is less expensive than the

Cayenne but slower 3) Audi Q7 is the slowest of the Pack but has more interior

space and torque • However each model has its own distinct advantage and

disadvantages when compared.

Threat of substitutes (Medium)

Page 17: Bmw Vs Porsche

OPPORTUNITIES:THREATS:

SWOT Analysis

• Strong economic support in homeland Germany

• Supportive manufacturing infrastructure in Germany

• Expansion to China• Efficient international

expansion – greater economies of scale, increases market penetration

• Wealth of resources upon joining the VW group

• Alienation of customer base• Losing competitive

advantage.

Page 18: Bmw Vs Porsche

STRENGTH:WEAKNESSES:

SWOT Analysis

• Best quality for comparatively low prices – long-term reliability for high-performance cars, sedans, SUVs, trucks, etc.

• Stuttgart plant – the best car factory in the world

• Consistently innovative with class-leading technologies

• All models (except Boxster/Cayman) are produced in Germany

• Skilled workforce.

• Concentrates more on exportation vs. international expansion, acquisition and licensing

• Small compared to competitors

• Weak financially• Brand dilution• Conflict between the

executives and management of Porsche and VW

Page 19: Bmw Vs Porsche

DEBT RATIOS• Debt ratio is a solvency ratio that measures a

firm's total liabilities as a percentage of its total assets. In a sense, the debt ratio shows a company's ability to pay off its liabilities with its assets.

• Debt ratio• Debt to equity ratio• Equity ratio• Earning per share• Dividend yield ratio 

Page 20: Bmw Vs Porsche

DEBT RATIOS OF BMW

• Debt ratio

• Debt to equity ratio

• Equity ratio

• Earning per share

• Dividend yield ratio

• 0.27

• 1.13

• 0.24

• 9.89 (€)

• 3.18

Page 21: Bmw Vs Porsche

DEBT RATIOS OF PORSCHE

• Debt ratio

• Debt to equity ratio

• Equity ratio

• Earning per share

• Dividend yield ratio

• 0.201

• 0.55

• 0.368

• 2.01 (€)

• 2.99

Page 22: Bmw Vs Porsche

ACTIVITY RATIOS

• Activity ratios are financial analysis tools used to gauge the ability of a business to convert various asset, liability and capital accounts into cash or sales. The faster a business is able to convert its assets into cash or sales, the more efficient it runs.

• Inventory turnover ratio• Total asset turnover ratio• Fixed asset turnover ratio• Working capital turnover ratio

Page 23: Bmw Vs Porsche

ACTIVITY RATIOS OF BMW• Inventory turnover

ratio

• Total asset turnover ratio

• Working capital turnover ratio

• 5.8

• 55%

• (50)

Page 24: Bmw Vs Porsche

ACTIVITY RATIOS PORSCHE

• Inventory turnover ratio

• Total asset turnover ratio

• Working capital turnover ratio

• 5.97

• 67.79%

• (7.4)

Page 25: Bmw Vs Porsche

LIQUIDITY RATIOS

• A class of financial metrics that is used to determine a company's ability to pay off its short-terms debts obligations. Generally, the higher the value of the ratio, the larger the margin of safety that the company possesses to cover short-term debts.

• Cash & Cash Equivalents• Short-Term Investments • Accounts Receivable • Current Liabilities 

Page 26: Bmw Vs Porsche

LIQUIDITY RATIOS OF BMW

• Liquidity ratio = (Cash & Cash Equivalents + Short-Term Investments + Accounts Receivable) ÷ Current Liabilities

• 1.42 is the liquidity ratio of BMW company

Page 27: Bmw Vs Porsche

LIQUIDITY RATIOS OF PORSCHE

• Liquidity ratio = (Cash & Cash Equivalents + Short-Term Investments + Accounts Receivable) ÷ Current Liabilities

• 4.6 is the liquidity ratio of Porsche.

Page 28: Bmw Vs Porsche

PROFITABILITY RATIOS

• A class of financial metrics that are used to assess a business's ability to generate earnings as compared to its expenses and other relevant costs incurred during a specific period of time. For most of these ratios, having a higher value relative to a competitor's ratio or the same ratio from a previous period is indicative that the company is doing well.

• Gross profit margins • Operating margin • Return on assets • Return on sales

Page 29: Bmw Vs Porsche

PROFITABILITY RATIOS OF BMW

• Gross profit margins

• Operating margin

• Return on assets

• Return on sales  

• 0.20%

• 0.10%

• 4.02%

• 0.069%

Page 30: Bmw Vs Porsche

PROFITABILITY RATIOS PORSCHE• Gross profit

margins

• Operating margin

• Return on assets  

• Return on sales

• 1.19%

• 0.07%

• 4.65%

• 0.012%

Page 31: Bmw Vs Porsche