Strategic Management and Business Analysis

The assignment requires the application of various strategies to manage and analyze a business. The student is asked to consider different market conditions and develop appropriate responses. This includes focusing on market penetration, internal management improvements, and technology updates. The assignment also involves referencing relevant literature and providing examples from the automotive industry.

Porsche comparing with Audi
and Peugeot

Table of Contents
INTRODUCTION...........................................................................................................................3
1.0 Report objectives...................................................................................................................3
1.1 Case context of the analysis..................................................................................................3
1.2 Overview of the organization................................................................................................3
1.3 Current key issues and rationale for choosing the organization...........................................3
2.0 FINANCIAL ANALYSIS ........................................................................................................4
2.1 Profitability...........................................................................................................................4
2.2 Liquidity and 2.3 Leverage ..................................................................................................6
2.4 Investors ...............................................................................................................................8
3.0 STRATEGIC ANALYSIS.......................................................................................................10
3.1 Macro environmental analysis............................................................................................10
3.2 Micro environmental analysis.............................................................................................11
3.3 Key Performance Indicator.................................................................................................13
4.0 PROPOSED STRATEGY- ANSOFF MATRIX.....................................................................13
4.1 Market penetration..............................................................................................................13
4.2 Market Development...........................................................................................................14
5.0 LIMITATIONS OF FINANCIAL ANALYSIS......................................................................14
5.1 Limitations of PESTLE model............................................................................................14
5.2 Limitations of Porter's Five Forces.....................................................................................15
CONCLUSIONS............................................................................................................................15
6.1 SAF analysis........................................................................................................................15
7.0 RECOMMENDATIONS MODELLING................................................................................16
7.1 Scenario forecasting- Best case scenario............................................................................16
7.2 Scenario forecasting- Worst case scenario..........................................................................16
REFERENCES..............................................................................................................................17

INTRODUCTION
Business analysis is a technique of identifying the needs of business and determining
solutions to them. Solutions may include change in the process, change in organization policy,
change in the strategies and other changes that could be best for the organizational
business(Williams and Dobelman, 2017). It can be also said the scanning of business
environment in order to identify the problems and framing suitable solutions to them for
betterment and growth of business.
1.0 Report objectives
 To identify key issues through financial analysis in a selected business organization.
 To determine the strategic analysis by scanning the business environment and current
performance of the organization.
 To propose different strategies for the improvement of the organizational issues.
 To determine the drawbacks of the financial analysis.
 To recommend the strategies and effective measures for improving the performance and
overcome the issues by organization.
1.1 Case context of the analysis
In order to analyse the business issues three organizations namely- Porsche, Audi and
Peaugeot. All of them are car manufacturing companies and consist in the same industry.
1.2 Overview of the organization
This report is based on the study of Porsche company which is a German automobile
manufacturing company that deals in manufacturing of sports cars, SUVs and Sedans. The
company was founded in 1931 in Stuttgart, Germany and currently serves its automobile
products world wide and consists of revenues of €21.533 billion and has 24,481 employees
working for it.
1.3 Current key issues and rationale for choosing the organization.
The major issue is regarding the low profitability of Porsche company in the market as
compared to its competitors that is posing threat for the company in survival and deal the
competitors. The reason behind choosing this organization is to understand the issues faced by an
organization while competing with other firms in the same industry and what alternative

solutions or plan of action can be implemented to overcome this issues and attain a better growth
rate and market share in the industry.
2.0 FINANCIAL ANALYSIS
2.1 Profitability
Profitability ratios
Net income of Porsche Company- (Numbers in Euros €)
From the above figure it can be observed that the net income of Porsche has number of
fluctuations in every 6 months. It can be noted that during June 2017 income was €1866 millions
which had a drastic fall in December up to €1412 million. Again it rose up to €1904 million in
June 2018 and went down in December 2018 up to €1570 million. This was due to changes in
the market demand by the customers and other environmental factors(Financial ratios of
Porsche, 2019).
Net income for Audi Company-

It can be observed from the above income statement of AUDI The net income has been
declined in December 2018 with a big amount difference between €218,781 to €148813. Again it
can be observed that there is a rise in the net income of AUDI in march 2019 to €183172. This
shows that the company has the better income capacity and higher profitability among its
competitors in the industry.
Net Income for Peugeot-

From the above table it can be observed that there has been rise of income for Peugeot
Company since December 2017 from €669 million to €1481 million in June 2018 which is
almost more than double. There has been slight decline in the income growth in December 2018
but again it rose up to €1832 million in June 2019. Thus it can be observed that the growth rate
of the company is on the tremendous rise in one year of its operations.
From the above analysis of the profitability and the net income of all three organizations
it can be concluded that AUDI company is the market leader and is giving tough competition to
both Porsche and Peugeot company in terms of profitability and the income. This is due to the
variety of Car products served by AUDI that has created a brand name and preference in the
minds of customers across the world. Also, the growth rate in terms of income and profitability is
higher of Peugeot as it as made its profitability three times higher in one year of its operations
with steady growth rate of profits.
2.2 Liquidity and 2.3 Leverage
Liquidity and Leverage Ratio of Porsche-

From the above figure it can be observed that the quick ratio is 6.86% and the current
ratio comprises of 6.89 % which is quite better for the company. Current ratio is also called as
liquidity ratio for the company. The total leverage ratio that includes debt to equity ratio is 0.4%.
Liquidity and leverage ratio of Audi-

From the above figure it can be observed that the liquidity ratio of AUDI comprises of
the current ratio of 1.58 and the quick ratio of 1.16. Further it can be observed that of the
leverage ratio for the company is 2.85 and the total debt to equity ratio is 3.45(Financial ratios of
AUDI, 2019).

Liquidity and Leverage Ratio of Peugeot-
From the above figure it can be observed that the liquidity ratio for Peugeot company
comprises the Quick ratio of 0.76 and the current ratio of 0.97. Further it can be observed for the
leverage ratio by debt to equity of 43.1% and the total debt to equity of 56.26%.
2.4 Investors
Investors in Porsche company-
From the above table it can be observed that the about 30.8% of the company is being
owned by shareholders and there are 345 shareholders for Porsche company. There are overall
47,221,342 shares being held by these shareholders.

Investors in AUDI company-
From the above table it can be observed that only 0.11% of the company's total capital is
being held by shares. The company consists of only 11 share holders with the holding of 48,748
shares by them.
Investors in Peugeot company-
From the above table it can be observed that 37.29% of the company's overall capital; is
in the form of shares held by the company. There are total of 469 share holders who holds
337,438,021 of shares for the company.
The above analysis of the investors states that the Peugeot company comprises more of
share capital than AUDI and Porsche with a large number of shares held by the company by the
investors.

3.0 STRATEGIC ANALYSIS
3.1 Macro environmental analysis
PESTEL
Macro
Environmental
factors
Overview and impact on business
Political Factors Political factors include the political instability among different
countries and the regulations being framed by the government for the
business operations and policies. Porsche serve its products worldwide
and the have its dealings in different countries. The regulations by
government for the car manufacturers may be different in all countries.
The ease of doing business as well as political tensions between the
countries will affect the business of the company. For Example the
tensions between US and China in relation to trade affects the business
of automobile industry as due to its products servings in both the
countries.
Economic Factors The economic factors directly affects the business of automobile
industry as the demand for luxury and expensive vehicles falls due to
economic crises globally. However the taxes on high priced vehicles are
usually high in several countries which affects the selling of those cars
in the market. The developed countries with higher purchasing power
results in higher sales as well as profitability for automobile industry
and the countries with lower purchasing power results in low sales and
profits for the company. Hence it can be observed that the economic
conditions and factors mainly affects the business of automobile
industry(Kumar and Maqbool, 2018).
Social Factors The market of automobile industry is also affected by the social factors
and trends. Every year new models of cars are been released after

keeping the trends and preferences of people in mind by the automobile
manufacturing companies. The various models like SUV will be
preferred in some cultures or countries like middle-east and models like
Sedan will be preferred in crowded countries like India and China and
hence these factors must be considered by automobile companies before
launching their products ion the market.
Technological
Factors
Technological factors are the most important components for
automobile industry and their products. The market leaders in the
industry spend a huge investment in research and development to invent
latest technological advancement in car manufacturing that could
influence the people to buy them(Chereau and Meschi, 2018). The idea
of low fuel emissions and higher mileage is being mainly considered in
the list of technological advancement of automobile companies and
hence they affect the business of the different companies through these
components.
Environmental
Factors
These are the trending factors in the current markets. They are related
components to environmental; protection and the elements such as
carbon emission from the cars, fuel efficiency etc. The companies in
automobile industry have to highly focus on the production of low
carbon emission vehicles in order to meet the environmental needs and
sustainability.
Legal factors Law is the vital element affecting the profitability for automobile
industry. Vehicles are sold in the international market and are subject to
quality and safety products according to the laws. The pollution laws are
been strictly implemented by different governments that to be followed
by vehicle manufacturing companies. Another law includes regarding
the safety of vehicles for the passengers after accidents etc. are been
risen that affects several manufacturers of automobile industry.

3.2 Micro environmental analysis
Porter's 5 forces
Competitive Forces Impact Elaboration
Threat of new entrants Weak It is difficult for the new brands to enter in the
automobile industry as it requires huge investment,
resources and capital to be a part of the industry. Along
with these the firms need to have better distribution
facility, manufacturing facility and skilled employees
and all these require higher investment by the company
and hence it keeps away the force of new entrants in the
market.
Bargaining Power of
suppliers
Weak The bargaining power of suppliers is weak in case of
automobile industry as the companies are associated
with number of suppliers and the raw materials are
available easily and thus it takes no longer time for the
companies to switch between the suppliers. Therefore,
there is less dominance of the suppliers in automobile
industry.
Bargaining Power of
Buyers
Moderatel
y Strong
The individual buyers of vehicles are the major
proportion of buyers in the list of automobile companies.
These buyers are highly concerned with the price of the
vehicles and are greatly affected with the low prices of
competitors and consists high bargaining power. Also
the government authorities who purchase the vehicles in
bulk, bargain for the products and hence this force acts
moderately strong for automobile industry(Dawes,
2018).
Threat of substitutes Weak The number of substitutes for the vehicles like cars is
less as the travelling through public transport like buses
and trains may not give an individual a comfort and the

on time reach to the destination than that of own car.
Hence this force act weak on the business of automobile
companies.
Rivalry among
competitors
Very
Strong
The competition in this industry is extremely high with
the vehicles of several big brands that provide best
comfort, prices and value for money to influence the
customers. Brands compete on the basis of quality,
design, technology, features and customer safety
elements that influence the different customers to
purchase the cars and posses tough competition for the
other companies in the industry(Filbeck and et.al.,
2016).
3.3 Key Performance Indicator
The following elements can be considered as the Key Performance Indicators for Porsche
Company-
 Revenue- Porsche attained a revenue of €56 million by the end of march 2019.
 Net Income- Porsche total net income was €1570 million.
 Return of Investment- The total return of investment of Porsche company is 10.69%.
 Assets- The company had the total assets worth €33691 at the end of December 2018.
4.0 PROPOSED STRATEGY- ANSOFF MATRIX
Ansoff Matrix is the growth strategy that is being implemented by the companies in order
to grow its market share through its existing products or by introducing the new products or the
company may enter into new markets as well(Richards and et.al., 2019). The following elements
of Market Penetration and Market development are been undertaken by Porsche to overcome its
profitability issue-

4.1 Market penetration
Market penetration is a strategy where the company seeks to attain the market growth
with the growth of existing product in the current market segments. Porsche can adopt following
strategies ion order to enhance its profitability and market share of the business in automobile
industry-
 Figure out the demand of their different products in vehicles such as Sedan, Sports Cars
SUVs and target the individual products to specific market as per the demand.
 Consider the culture of the people in a particular market and accordingly place the
product to influence the customers.
4.2 Market Development
Market Development is a process of expanding the business operations in new markets
with the existing products(Fleisher and Bensoussan,2015). Here Porsche may enter into different
markets with its products for initiating customers enlargement.
 Porsche may enter in the developing economies market with a low priced models that
could be afforded by the customers in that particular market.
 The company can also focus on its specific products segments and consider only them
during the new market entrance. This will turn up the market growth of Porsche and
generate better revenue through sale of products.
5.0 LIMITATIONS OF FINANCIAL ANALYSIS
Financial analysis only ascertain the company's growth rate, profitability, assets and other
facts and figures and only analyse the the company's performance in quantitative form. But the
other internal analysis such as performance of employees, their efficiency, management of the
company are been ignored here and the data regarding the internal environment of the company
is being ignored in case of financial analysis(Grant, 2016). Also some important elements such
as CSR of the company is being ignored as the main focus is diverted to the profitability. But in
the recent times the company must be performing of the well being of society as well along with
its profitability and expansion of the market share.
5.1 Limitations of PESTLE model
The following are the limitations of Pestle analysis-

 The macro environmental factors such as political, economic, social, technological,
environmental and legal. All these changes as per the time and does not remain constant
which creates difficulty in analysing them.
 There is no accuracy and relevancy in the data as due to hazards of information available
and it becomes difficult to interpret them and frame strategies as per the data available
through PESTEL analysis.
5.2 Limitations of Porter's Five Forces
 Porter's five forces is most widely used too for measuring the force of competition in the
market. But the main issue with it is that it does not consider time in determining these
five forces. The exterminate environment of business is always dynamic in nature and
changes as per the time and hence it becomes difficult to rely on these forces by the
company.
 Another drawback is that these five forces of competition only represents the snapshots
of the competitive forces in the market and it is not relevant that the factors considered by
this model are the only competitive forces and hence there are various new models
developed that considers several other factors in the market.
CONCLUSIONS
6.1 SAF analysis
Analysis Market Penetration Market Development
Suitability Market penetration will be
suitable for Porsche company
as a strategic tool to implement
as the company is already
performing in the market and
be able to apply marketing
strategies for sale growth
through this tool(Jenkins and
Williamson, 2015).
Market development will be
less suitable for the company
as the company is entering the
new market which may be
difficult to forecast the
conditions and assumptions by
the company without any
experience or knowledge of
new market.
Acceptability It may be acceptable as it will It will be less acceptable as it

attain profitability and incur
low financial risk for the
company.
will posses more financial
risks and uncertainty(Jami and
Bahar, 2016).
Feasibility The strategic tool will be
feasible as the company will
have to invest less resources of
finance in the existing market.
This tool will not be feasible
as the company has to invest
huge financial resources and
incur more cost for entering
the new markets.
Form the above both the strategies can be helpful for Porsche to attain its business growth
but market penetration is recommended due to the current scenario and condition of Porsche and
the company is earning lower profits.
7.0 RECOMMENDATIONS MODELLING
7.1 Scenario forecasting- Best case scenario
Porsche company can apply following strategies if the company is in good position and
earning more profits from the sales in the market and attaining the growth in the business-
 Invest the resources for developing the market share and expansion in different markets
to enlarge the business and also expand its operations worldwide.
 Invest more in research and development of the vehicles as the external environment is
dynamic in nature and the changes in the products is needed for long term survival in the
market.
 Spend amount in CSR activities which is very much important for business as to
contribute towards the society, sustainability and the environment in order to have good
trust among the communities and the societies.
7.2 Scenario forecasting- Worst case scenario
The company can apply following strategies in case of worst case scenario like lack of
profitability, growth and customer satisfaction in the market-
 Focus on market penetration strategies that is to attain growth in the existing market with
the existing products through marketing strategies of price fluctuations.

 Focus on the internal management of the organization and improve the management
strategies to increase the efficiency of employees and the growth of the organization.
 Bring up the changes in technology and features of its products to cater the demand for
customers in the market.

REFERENCES
Books and Journals
Jenkins, W. and Williamson, D., 2015. Strategic management and business analysis.
Routledge.
Grant, D., 2016. Business analysis techniques in business reengineering. Business Process
Management Journal, 22(1), pp.75-88.
Fleisher, C.S. and Bensoussan, B.E., 2015. Business and competitive analysis: effective
application of new and classic methods. FT Press.
Richards and et.al., 2019. Business intelligence effectiveness and corporate performance
management: an empirical analysis. Journal of Computer Information Systems, 59(2),
pp.188-196.
Dawes, J., 2018. The Ansoff Matrix: A Legendary Tool, But with Two Logical Problems. But
with Two Logical Problems (February 27, 2018).
Chereau, P. and Meschi, P.X., 2018. Choosing a Growth Strategy. In Strategic
Consulting (pp. 81-110). Palgrave Macmillan, Cham.
Williams, E.E. and Dobelman, J.A., 2017. Financial statement analysis. World Scientific Book
Chapters, pp.109-169.
Filbeck and et.al., 2016. Supply chain finance and financial contagion from disruptions:
Evidence from the automobile industry. International Journal of Physical Distribution
& Logistics Management, 46(4), pp.414-438.
Kumar, G. and Maqbool, J., 2018. Financial technology in the automobile industry.
Jami, M. and Bahar, M.N., 2016. Analysis of Profitability Ratios to Evaluation of
Performance of Indian Automobile Industry. Journal of Current Research in Science,
(1), p.747.
Online
Financial ratios of Porsche, 2019 [ONLINE] Available through
<https://www.investing.com/equities/porsche-financial-summary>
Financial ratios of AUDI, 2019 [ONLINE] Available through
<https://in.investing.com/equities/audi-financial-summary>