Final Essay Example | Topics and Well Written Essays - 2500 words

Final - Essay Example he company continued the production of sports car over the next few decades, only venturing outside the sports car market in the 21st century with Cayenne Porsche being released in 2003 and then Panamera Porsche being released in 2005 (Henderson &Reavis, 2009). Nevertheless, the early 1990s were not good business years for Porsche, which saw a slump both in its production and market, such that the company was only selling 14,000 during this period, having been able to sell over 50,000 units before. Regardless of the upheavals in the car product market, the engineering services market for Porsche remained stable, owing to the fact that the company was offering the engineering services to virtually all automobile makers in the market through its Porsche Engineering Group (PEG). It is out of this trading activity that Porsche was able to earn around 60% of its pre-tax profits, with the product market making up for the rest 40% of the company’s revenues (Leffingwell, 2011). Porsche’s move towards acquiring the Volkswagen Group started in 2005 when the company acquired a 20% stake in the company, which was then followed by an increase in the percentage of the shares acquired to 31.5% by 2007. However, the acquisition of Volkswagen by Porsche has remained a controversial issue, owing to the fear that the company’s products will degrade in value, while the customers for the Porsche’s engineering service might eventually quit their engagement with the company, due to its partnering with a large automaker, which produced and sold over 6 million vehicles in 2007 (Henderson &Reavis, 2009). It is this fear that poses the risk for Porsche’s possible loss of revenues, owing to the fact that the engineering services sold to the other automakers contributed the highest percentage of Porsche’s annual revenues, and thus the cutback in selling these services will affects the company’s financial position and profitability. The acquisition of Volkswagen also threatens to