This project aims to investigate the benefits of the proposed merger for Volkswagen AG. Volkswagen and Porsche have merged as a sole group under the management of Volkswagen. VW has purchased 41% of Porsche and over the next years, the firms will integrate and merge with each other even closer. Porsche will keep its own brand and still operate independently to some extent.
The proposed Porsche and Volkswagen merger started in late summer 2009. Since I am a car enthusiast, I wanted to look at a car manufacturing company. Watching the news from Germany almost every day, I familiarized myself with the issue between Volkswagen and Porsche. Being a Porsche fan, I wanted to see what will happen with Porsche and investigated it. The German company Volkswagen AG is Europe's biggest carmaker and very well known throughout the world. Volkswagen AG owns nine brands including the own Volkswagen (VW) brand. Volkswagen's product portfolio consists of the brands Audi, Bentley, Skoda, Lamborghini and more. Each brand has its own character and operates as an independent entity on the market (Group).
This suggests that each brand caters for a specific market. Porsche AG is one of the most profitable manufacturers of the luxurious sports cars, Porsche. Porsche’s Chief Executive Officer (CEO) Wendelin Wiedeking made Porsche so successful until now. After Porsche obtained more shares of Volkswagen, Wiedeking wanted to take complete control over VW. This seemed impossible to many, as Volkswagen makes sales of $151 billion per year, which is about 16 times the size of Porsche, which generates sales of about $9.3 billion (Boston). Beginning in 2005, Porsche acquired a voting stake of 50.8% in Volkswagen. Porsche planned to increase these to 75% until the end of 2009 (Boston).
However, everything turned out the other way, VW took most control over Porsche and Porsche was forced to merge with VW. Porsche AG created these problems themselves by being too ambitious and ignorant to political relationships in order to successfully take control over a giant like VW. Wiedeking's disastrous attempt to buy VW has led him to resign as the CEO of the Porsche AG at the end of 2009 leaving Porsche with a debt of $13 billion. VW saw this as an opportunity to take control of Porsche. The battle has been going for over three and a half years.
Table of Contents
- Introduction
- Methodology
- Findings
- Analysis
- Conclusion
Objectives and Key Themes
This project investigates the potential benefits for Volkswagen AG resulting from its merger with Porsche AG. The analysis focuses on the short-term and long-term implications of this significant business combination within the global automotive industry.
- Assessment of the merger's impact on Volkswagen AG's sales and market position.
- Evaluation of the merger's influence on brand image and consumer perception.
- Examination of the potential for economies of scale and operational efficiencies.
- Analysis of the merger's effects on Volkswagen AG's competitive advantage.
- Discussion of the integration process and potential challenges.
Chapter Summaries
Introduction: This chapter sets the stage by outlining the context of the proposed merger between Volkswagen AG and Porsche AG, beginning in late summer 2009. It introduces the companies, highlighting Volkswagen AG's position as Europe's largest carmaker with a diverse portfolio of brands and Porsche AG's success in the luxury sports car market. The chapter details the history of Porsche's attempt to acquire Volkswagen, culminating in a reversal of fortunes that led to the current merger. The overall aim of the project—to assess the benefits of the merger for Volkswagen AG—is clearly stated.
Methodology: This chapter describes the research approach used in the analysis. It explains the reliance on secondary research, primarily online articles and websites, due to the unavailability of comprehensive financial documents at the time of writing. The limited access to financial data is acknowledged as a constraint on the scope of the analysis.
Findings: This chapter presents the key findings of the research. It indicates that Volkswagen AG is expected to see significant sales increases in the long term due to the merger. The merger's effect in expanding brand recognition and market penetration, particularly in the US market, is also highlighted. The potential for realizing economies of scale as a result of the increased size of the combined entity is also mentioned. Prior collaborative efforts on SUVs, like the Touareg and Cayenne, are cited as evidence for potential synergistic effects.
Analysis: This chapter undertakes a SWOT analysis (Strengths, Weaknesses, Opportunities, and Threats) of the merger. It emphasizes Volkswagen AG's significant size and global presence as a key strength, enabling it to compete effectively and pursue its goal of becoming the world's largest car manufacturer. The experience of Volkswagen AG in merging and managing diverse car brands is highlighted as another positive factor. However, potential weaknesses are also acknowledged, such as the potential for damage to Porsche's brand image due to being incorporated into a larger, mass-production company. The short-term benefits of increased revenue and the long-term advantages of achieving global leadership are discussed, along with the efficiency of integrating existing Porsche employees into the Volkswagen workforce. The successful collaboration on previous SUV models is mentioned as evidence of potential for future synergistic projects.
Keywords
Volkswagen AG, Porsche AG, merger, automotive industry, brand image, sales, market share, economies of scale, SWOT analysis, global competition, luxury sports cars, mass production, brand loyalty, integration, synergistic effects.
Volkswagen AG and Porsche AG Merger: A Comprehensive Analysis - FAQ
What is the purpose of this document?
This document provides a comprehensive preview of an academic analysis investigating the potential benefits for Volkswagen AG resulting from its merger with Porsche AG. It includes the table of contents, objectives and key themes, chapter summaries, and keywords.
What are the key themes explored in the analysis?
The analysis focuses on the short-term and long-term implications of the merger, assessing its impact on Volkswagen AG's sales, market position, brand image, operational efficiencies, competitive advantage, and the integration process. Specific areas of investigation include the potential for economies of scale and synergistic effects between the two companies.
What methodology was used in the analysis?
The analysis primarily relies on secondary research, such as online articles and websites, due to limited access to comprehensive financial documents at the time of writing. This limitation is acknowledged as a constraint on the scope of the analysis.
What are the key findings of the analysis?
The analysis suggests that the merger is expected to lead to significant long-term sales increases for Volkswagen AG. It highlights the potential for expanded brand recognition and market penetration, particularly in the US market, and the realization of economies of scale. The successful collaboration on previous SUV models (Touareg and Cayenne) is cited as evidence for potential synergistic effects.
What is the SWOT analysis of the merger?
The SWOT analysis identifies Volkswagen AG's significant size and global presence as a key strength. The company's experience in merging and managing diverse car brands is also highlighted. Potential weaknesses include the risk of damaging Porsche's brand image through integration into a larger, mass-production company. The short-term benefits of increased revenue and the long-term advantages of achieving global leadership are discussed, along with the efficiency of integrating existing Porsche employees. The successful collaboration on previous SUV models is mentioned as evidence of potential for future synergistic projects.
What are the chapter summaries?
The document provides summaries for each chapter: Introduction (context of the merger, company introductions, project aim), Methodology (research approach and limitations), Findings (key results of the research), and Analysis (SWOT analysis and discussion of benefits and challenges).
What are the keywords associated with this analysis?
Keywords include Volkswagen AG, Porsche AG, merger, automotive industry, brand image, sales, market share, economies of scale, SWOT analysis, global competition, luxury sports cars, mass production, brand loyalty, integration, and synergistic effects.
When did the merger attempt begin?
The document mentions that Porsche's attempt to acquire Volkswagen began in late summer 2009, ultimately resulting in a reversed situation leading to the merger discussed in the analysis.
What is the overall conclusion of the analysis (implied)?
While not explicitly stated as a conclusion, the overall implication is that the merger between Volkswagen AG and Porsche AG holds significant potential benefits for Volkswagen AG, both in the short-term (increased revenue) and long-term (global market leadership), despite potential challenges related to brand image and integration.
- Quote paper
- Anonym (Author), 2010, To what extent can Volkswagen AG benefit from the Volkswagen AG and Porsche AG proposed merger?, Munich, GRIN Verlag, https://www.grin.com/document/926099
