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1. When Porsche decided to enter the SUV market with its luxury Cayenne model, it surprised the auto industry by locating its new assembly plant in Leipzig in eastern Germany. Many observers believed that Porsche should have located the plant either in central or eastern Europe where labor costs were very low, or (like Mercedes and BMW) in the US where it would be close to its major market. Using the criteria outlined in Figure 15.3, can you explain Porsche’s decision?
2. In Strategy Capsule 2.3 (Chapter 2), we observed that Ford’s profitability was low primarily because its costs were high. Using the value chain shown in Figure 9.4 and what you know about Ford (including the information in Strategy Capsule 2.3), what suggestions would you offer as to how Ford might lower its costs of producing cars?

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