This assignment describes, analyses and evaluates Porsche 's strategy
to enter the Chinese market for exclusive sport cars. On the basis of the literature review the assignment focuses on the general decision to enter the mainland's market and furthermore it particularly evaluates the chosen mode of market entry from cultural, automobile-specific, branding and promotional perspectives.
Table of Contents
1. Introduction
2. Literature Review
2.1 Market Entry
2.2 Joint Ventures to enter Markets
2.3 Joint Ventures to enter the Chinese Market
2.4 Joint Ventures to enter the Chinese Automotive Market
2.5 Joint Venture of Porsche and Jebsen to enter the Chinese Market
3. Management Implications
3.1 Evaluation of Porsche's Market Entry
3.1.1 Evaluation of the General Decision to enter Chinese Market
3.1.2 Evaluation of the Mode of Market Entry
3.1.2.1 From a Cultural Perspective
3.1.2.2 From an Automobile Perspective
3.1.2.3 From a Branding Perspective
3.1.2.4 From a Promotion Perspective
3.2 Recommendations
4. Conclusion
Research Objectives and Themes
This assignment aims to analyze and evaluate the market entry strategy employed by Dr. Ing. h.c. F. Porsche AG when entering the Chinese automotive market, specifically assessing the decision-making process and the choice of a joint venture as the primary market entry mode.
- Analysis of market entry strategies in emerging economies
- Evaluation of joint venture structures in the Chinese automotive sector
- Impact of cultural factors and "guanxi" on business operations
- Strategic branding and promotional challenges for luxury sports cars in China
- Operational recommendations for automotive manufacturers in mainland China
Excerpt from the Book
3.1.1 Evaluation of the General Decision to enter Chinese Market
Porsche’s decision in the late 90’s to enter the Chinese car market seems to be the right step to ensure long-term success in Asia. The following discussion focuses on external and internal reasons to underline this impression.
Firstly, whereas most of the world’s automobile markets remain static, sales in China have increased continuously over the last years. Although most Chinese people have not enough money to buy a car at all there are also groups of rich and affluent people. China’s economic growth in general has led and will lead to higher incomes in people republic (7.6-8.9% per year since 1998, The People’s Daily, 2003) and it is likely that in the long-term the number of potential customers for a Porsche car will increase significantly. The threads of a market entry in China are a high investment and due to guanxi-networks relatively low sales, problems with Chinese governments and as a result a non-competitive market position. Compared to the opportunities Porsche faces in China these risks are acceptable, especially an investment of 1.8 million € (showroom in Beijing, Porsche, 2001) is an appropriate rather a small investment for a market of 1.3 billion people and a company having an operating profit after taxes of 400 million US $ in 2000 (Porsche, 2001). Furthermore the market of sport cars in China does not yet really exist and being one of the first movers may give Porsche a significant competitive advantage.
Secondly, there are internal factors of Porsche AG that implied success of a market entry in China. Porsche has successfully sold its cars in Hong Kong since 1955 and the per capita sales in the former British colony are the highest in the world. Porsche has an existing sales organisation for the Asia-Pacific area and so they posses experience, know-how (respectively human resources) and infrastructure in the region.
Summary of Chapters
1. Introduction: Outlines the assignment's purpose to describe and evaluate Porsche's market entry strategy into China, focusing on the milestone of the first Porsche Centre in Beijing.
2. Literature Review: Provides the theoretical background on market entry modes, specifically focusing on joint ventures, the role of guanxi, and the peculiarities of the Chinese automotive market.
3. Management Implications: Critically evaluates Porsche’s decision to enter China and their specific mode of entry through various business perspectives, concluding with strategic recommendations.
4. Conclusion: Summarizes that the decision to enter the Chinese market and the choice of a joint venture were accurate and strategically sound.
Keywords
Porsche, China, Market Entry, Joint Venture, Automotive Industry, Guanxi, Brand Image, Promotion, Strategic Alliance, Foreign Market, Luxury Cars, Business Strategy, Distribution, Marketing, Investment.
Frequently Asked Questions
What is the core focus of this assignment?
The paper focuses on the market entry strategy of Dr. Ing. h.c. F. Porsche AG into the Chinese market, analyzing the effectiveness of their chosen approach.
What are the central themes discussed in the work?
The core themes include international market entry theory, the specific challenges of the Chinese automotive sector, the significance of local partnerships, and the adaptation of luxury brand values in a developing market.
What is the primary objective of this research?
The objective is to evaluate whether Porsche's choice of a joint venture with Jebsen Ltd. and their overall timing for entering the Chinese market were justified based on external and internal business factors.
Which scientific method is applied in this analysis?
The author uses a literature-based analysis, synthesising international marketing theories with empirical data and expert interviews to evaluate Porsche's specific strategic decisions.
What is covered in the main section of the paper?
The main section (Management Implications) dissects the market entry decision, evaluates the joint venture mode through cultural, automotive, branding, and promotional lenses, and offers concrete management recommendations.
Which keywords best characterize this work?
Key terms include Porsche, China, Market Entry, Joint Venture, Guanxi, and Luxury Automotive Marketing.
Why is "guanxi" considered vital for Porsche’s strategy in China?
Guanxi refers to the network of relationships that is essential for navigating the complex and often non-transparent legal and business environment in China, facilitating better access to government officials and customers.
How does the author view the "delivery time" challenge mentioned by the general manager?
The author identifies delivery times as a critical issue for Porsche customers in China and suggests implementing more flexible inventory management and local sales strategies to mitigate this.
What recommendation does the author make regarding production?
The author strongly advises Porsche to consider shifting production to mainland China to avoid high import tariffs and the disadvantages of separate distribution channels for imported versus local cars.
- Arbeit zitieren
- Karsten Klauenberg (Autor:in), 2004, Global Marketing - Market Entry of 'Dr. Ing. hc. F. Porsche AG' in China, München, GRIN Verlag, https://www.grin.com/document/185896
