COMPANY Case: Porsche: Guarding the Old While Bringing in the New
Porsche (pronounced Porsh-uh) is a unique company. It has always been a niche brand that makes cars for a small and distinctive segment of automobile buyers. In 2009, Porsche sold only 27,717 cars in the five models it sells in the United States. Honda sold about 10 times that many Accords alone. But Porsche owners are as rare as their vehicles. For that reason, top managers at Porsche spend a great deal of time thinking about customers. They want to know who their customers are, what they think, and how they feel. They want to know why they buy a Porsche rather then a Jaguar, a Ferrari, or a big Mercedes coupe. These are challenging questions to answer; even Porsche owners themselves don’t know exactly what motivates their buying. But given Porsche’s low volume and the increasingly fragmented auto market, it is imperative that management understands its customers and what gets their motors running.
Since its early days, Porsche has appealed to a very narrow segment of financially successful people. These are achievers who see themselves as entrepreneurial, even if they work for a corporation. They set very high goals for themselves and then work doggedly to meet them. And they expect no less from the clothes they wear, the restaurants they go to, or the cars they drive. These individuals see themselves not as a part of the regular world but as exceptions to it. They buy Porsches because the car mirrors their self-image; it stands for the things owners like to see in themselves and their lives.
Most of us buy what Porsche executives call utility vehicles. That is, we buy cars primarily to go to work, transport children, and run errands. Because we use our cars to accomplish these daily tasks, we base buying decisions on features such as price, size, fuel economy, and other practical considerations. But Porsche is more than a utility car. Its owners see it as a car to be enjoyed, not just used. Most Porsche buyers are not moved by information but by feelings. A Porsche is like a piece of clothing—something the owner “wears” and is seen in. They develop a personal relationship with their cars, one that has more to do with the way the car sounds, vibrates, and feels, rather than the how many cup holders it has or how much cargo it can hold in the trunk. They admire their Porsche because it is a competent performance machine without being flashy or phony.
People buy Porsches because they enjoy driving. If all they needed was something to get them from point A to point B, they could find something much less expensive. And while many Porsche owners are car enthusiasts, some of them are not. One successful businesswoman and owner of a high-end Porsche said, “When I drive this car to the high school to pick up my daughter, I end up with five youngsters in the car. If I drive any other car, I can’t even find her; she doesn’t want to come home.”
For its first few decades, Porsche AG lived by the philosophy of Ferry Porsche, Ferdinand’s son. Ferry created the Porsche 356 because no one else made a car like he wanted. But as the years rolled on, Porsche management became concerned with a significant issue: Were there enough Porsche buyers to keep the company afloat? Granted, the company never had illusions of churning out the numbers of a Chevrolet or a Toyota. But to fund innovation, even a niche manufacturer has to grow a little. And Porsche began to worry that the quirky nature of the people who buy Porsches might just run out on them.
This led Porsche to extend its brand outside the box. In the early 1970s, Porsche introduced the 914, a square-ish, mid-engine, two-seater that was much cheaper than the 911. This meant that a different class of people could afford a Porsche. It was no surprise that the 914 became Porsche’s top selling model. By the late 1970s, Porsche replaced the 914 with a hatchback coupe that had something no other regular Porsche model had ever had: an engine in the front. At less than $20,000, more than $10,000 less than the 911, the 924 and later 944 models were once again Porsche’s pitch to affordability. At one point, Porsche increased its sales goal by nearly 50 percent to 60,000 cars a year.
Although these cars were in many respects sales successes, the Porsche faithful cried foul. They considered these entry-level models to be cheap and underperforming. Most loyalists never really accepted these models as “real” Porsches. In fact, they were not at all happy that they had to share their brand with a customer who didn’t fit the Porsche owner profile. They were turned off by what they saw as a corporate strategy that had focused on mass over class marketing. This tarnished image was compounded by the fact that Nissan, Toyota, BMW, and other car manufacturers had ramped up high-end sports car offerings, creating some fierce competition. In fact, both the Datsun 280-ZX and the Toyota Supra were not only cheaper than Porsche’s 944 but also faster. A struggling economy threw more sand in Porsche’s tank. By 1990, Porsche sales had plummeted, and the company flirted with bankruptcy.
But Porsche wasn’t going down without a fight. It quickly recognized the error of its ways and halted production of the entry-level models. It rebuilt its damaged image by revamping its higher-end model lines with more race-bred technology. In an effort to regain rapport with customers, Porsche once again targeted the high end of the market in both price and performance. It set modest sales goals and decided that moderate growth with higher margins would be more profitable in the long term. Thus, the company set out to make one less Porsche than the public demanded. According to one executive, “We’re not looking for volume; we’re searching for exclusivity.”
Porsche’s efforts had the desired effect. By the late 1990s, the brand was once again favored by the same type of achiever who had so deeply loved the car for decades. The cars were once again exclusive. And the company was once again profitable. But by the early 2000s, Porsche management was again asking itself a familiar question: To have a sustainable future, could Porsche rely on only the Porsche faithful? According to then CEO Wendelin Wiedeking, “For Porsche to remain independent, it can’t be dependent on the most fickle segment in the market. We don’t want to become just a marketing department of some giant. We have to make sure we’re profitable enough to pay for future development ourselves.”
So in 2002, Porsche did the unthinkable. It became one of the last car companies to jump into the insatiable sport utility vehicle (SUV) market. At roughly 5,000 pounds, the new Porsche Cayenne was heavier than anything that Porsche had ever made, with the exception of some prototype tanks it made during WWII. Once again, the new model featured an engine up front. And it was the first Porsche to ever be equipped with seatbelts for five. As news spread about the car’s development, howls could be heard from Porsche’s customer base.
But this time, Porsche did not seem too concerned that the loyalists would be put off. Could it be that the company had already forgotten what happened the last time it deviated from the mold? After driving one of the first Cayenne’s off the assembly line, one journalist stated, “A day at the wheel of the 444 horsepower Cayenne Turbo leaves two overwhelming impressions. First, the Cayenne doesn’t behave or feel like an SUV, and second, it drives like a Porsche.” This was no entry-level car. Porsche had created a two-and-a-half ton beast that could accelerate to 60 miles per hour in just over five seconds, corner like it was on rails, and hit 165 miles per hour, all while coddling five adults in sumptuous leather seats with almost no wind noise from the outside world. On top of that, it could keep up with a Land Rover when the pavement ended. Indeed, Porsche had created the Porsche of SUVs.
Last year, Porsche upped the ante one more time. It unveiled another large vehicle. But this time, it was a low-slung, five-door luxury sedan. The Porsche faithful and the automotive press again gasped in disbelief. But by the time the Panamera hit the pavement, Porsche had proven once again that Porsche customers could have their cake and eat it to. The Panamera is almost as big as the Cayenne but can move four adults down the road at speeds of up to 188 miles per hour and accelerate from a standstill to 60 miles per hour in four seconds flat.
Although some Porsche traditionalists would never be caught dead driving a front engine Porsche that has more than two doors, Porsche insists that two trends will sustain these new models. First, a category of Porsche buyers has moved into life stages that have them facing inescapable needs; they need to haul more people and stuff. This not only applies to certain regular Porsche buyers, but Porsche is again seeing buyers enter its dealerships that otherwise wouldn’t have. Only this time, the price points of the new vehicles are drawing only the well heeled, allowing Porsche to maintain its exclusivity. These buyers also seem to fit the achiever profile of regular Porsche buyers.
The second trend is the growth of emerging economies. Whereas the United States has long been the world’s biggest consumer of Porsches, the company expects China to become its biggest customer before too long. Twenty years ago, the United States accounted for about 50 percent of Porsche’s worldwide sales. Now, it accounts for only about 26 percent. In China, many people who can afford to buy a car as expensive as a Porsche also hire a chauffeur. The Cayenne and the Panamera are perfect for those who want to be driven around in style but who may also want to make a quick getaway if necessary.
The most recent economic downturn has brought down the sales of just about every maker of premium automobiles. When times are tough, buying a car like a Porsche is the ultimate deferrable purchase. But as this downturn turns back up, Porsche is better poised than it has ever been to meet the needs of its customer base. It is also in better shape than ever to maintain its brand image with the Porsche faithful and with others as well. Sure, understanding Porsche buyers is still a difficult task. But a former CEO of Porsche summed it up this way: “If you really want to understand our customers, you have to understand the phrase, ‘If I were going to be a car, I’d be a Porsche.’
4 Questions – Answer all Total Marks: 25
In: Operations Management
COMPANY Case: Porsche: Guarding the Old While Bringing in the New
Porsche (pronounced Porsh-uh) is a unique company. It has always been a niche brand that makes cars for a small and distinctive segment of automobile buyers. In 2009, Porsche sold only 27,717 cars in the five models it sells in the United States. Honda sold about 10 times that many Accords alone. But Porsche owners are as rare as their vehicles. For that reason, top managers at Porsche spend a great deal of time thinking about customers. They want to know who their customers are, what they think, and how they feel. They want to know why they buy a Porsche rather then a Jaguar, a Ferrari, or a big Mercedes coupe. These are challenging questions to answer; even Porsche owners themselves don’t know exactly what motivates their buying. But given Porsche’s low volume and the increasingly fragmented auto market, it is imperative that management understands its customers and what gets their motors running.
Since its early days, Porsche has appealed to a very narrow segment of financially successful people. These are achievers who see themselves as entrepreneurial, even if they work for a corporation. They set very high goals for themselves and then work doggedly to meet them. And they expect no less from the clothes they wear, the restaurants they go to, or the cars they drive. These individuals see themselves not as a part of the regular world but as exceptions to it. They buy Porsches because the car mirrors their self-image; it stands for the things owners like to see in themselves and their lives.
Most of us buy what Porsche executives call utility vehicles. That is, we buy cars primarily to go to work, transport children, and run errands. Because we use our cars to accomplish these daily tasks, we base buying decisions on features such as price, size, fuel economy, and other practical considerations. But Porsche is more than a utility car. Its owners see it as a car to be enjoyed, not just used. Most Porsche buyers are not moved by information but by feelings. A Porsche is like a piece of clothing—something the owner “wears” and is seen in. They develop a personal relationship with their cars, one that has more to do with the way the car sounds, vibrates, and feels, rather than the how many cup holders it has or how much cargo it can hold in the trunk. They admire their Porsche because it is a competent performance machine without being flashy or phony.
People buy Porsches because they enjoy driving. If all they needed was something to get them from point A to point B, they could find something much less expensive. And while many Porsche owners are car enthusiasts, some of them are not. One successful businesswoman and owner of a high-end Porsche said, “When I drive this car to the high school to pick up my daughter, I end up with five youngsters in the car. If I drive any other car, I can’t even find her; she doesn’t want to come home.”
For its first few decades, Porsche AG lived by the philosophy of Ferry Porsche, Ferdinand’s son. Ferry created the Porsche 356 because no one else made a car like he wanted. But as the years rolled on, Porsche management became concerned with a significant issue: Were there enough Porsche buyers to keep the company afloat? Granted, the company never had illusions of churning out the numbers of a Chevrolet or a Toyota. But to fund innovation, even a niche manufacturer has to grow a little. And Porsche began to worry that the quirky nature of the people who buy Porsches might just run out on them.
This led Porsche to extend its brand outside the box. In the early 1970s, Porsche introduced the 914, a square-ish, mid-engine, two-seater that was much cheaper than the 911. This meant that a different class of people could afford a Porsche. It was no surprise that the 914 became Porsche’s top selling model. By the late 1970s, Porsche replaced the 914 with a hatchback coupe that had something no other regular Porsche model had ever had: an engine in the front. At less than $20,000, more than $10,000 less than the 911, the 924 and later 944 models were once again Porsche’s pitch to affordability. At one point, Porsche increased its sales goal by nearly 50 percent to 60,000 cars a year.
Although these cars were in many respects sales successes, the Porsche faithful cried foul. They considered these entry-level models to be cheap and underperforming. Most loyalists never really accepted these models as “real” Porsches. In fact, they were not at all happy that they had to share their brand with a customer who didn’t fit the Porsche owner profile. They were turned off by what they saw as a corporate strategy that had focused on mass over class marketing. This tarnished image was compounded by the fact that Nissan, Toyota, BMW, and other car manufacturers had ramped up high-end sports car offerings, creating some fierce competition. In fact, both the Datsun 280-ZX and the Toyota Supra were not only cheaper than Porsche’s 944 but also faster. A struggling economy threw more sand in Porsche’s tank. By 1990, Porsche sales had plummeted, and the company flirted with bankruptcy.
But Porsche wasn’t going down without a fight. It quickly recognized the error of its ways and halted production of the entry-level models. It rebuilt its damaged image by revamping its higher-end model lines with more race-bred technology. In an effort to regain rapport with customers, Porsche once again targeted the high end of the market in both price and performance. It set modest sales goals and decided that moderate growth with higher margins would be more profitable in the long term. Thus, the company set out to make one less Porsche than the public demanded. According to one executive, “We’re not looking for volume; we’re searching for exclusivity.”
Porsche’s efforts had the desired effect. By the late 1990s, the brand was once again favored by the same type of achiever who had so deeply loved the car for decades. The cars were once again exclusive. And the company was once again profitable. But by the early 2000s, Porsche management was again asking itself a familiar question: To have a sustainable future, could Porsche rely on only the Porsche faithful? According to then CEO Wendelin Wiedeking, “For Porsche to remain independent, it can’t be dependent on the most fickle segment in the market. We don’t want to become just a marketing department of some giant. We have to make sure we’re profitable enough to pay for future development ourselves.”
So in 2002, Porsche did the unthinkable. It became one of the last car companies to jump into the insatiable sport utility vehicle (SUV) market. At roughly 5,000 pounds, the new Porsche Cayenne was heavier than anything that Porsche had ever made, with the exception of some prototype tanks it made during WWII. Once again, the new model featured an engine up front. And it was the first Porsche to ever be equipped with seatbelts for five. As news spread about the car’s development, howls could be heard from Porsche’s customer base.
But this time, Porsche did not seem too concerned that the loyalists would be put off. Could it be that the company had already forgotten what happened the last time it deviated from the mold? After driving one of the first Cayenne’s off the assembly line, one journalist stated, “A day at the wheel of the 444 horsepower Cayenne Turbo leaves two overwhelming impressions. First, the Cayenne doesn’t behave or feel like an SUV, and second, it drives like a Porsche.” This was no entry-level car. Porsche had created a two-and-a-half ton beast that could accelerate to 60 miles per hour in just over five seconds, corner like it was on rails, and hit 165 miles per hour, all while coddling five adults in sumptuous leather seats with almost no wind noise from the outside world. On top of that, it could keep up with a Land Rover when the pavement ended. Indeed, Porsche had created the Porsche of SUVs.
Last year, Porsche upped the ante one more time. It unveiled another large vehicle. But this time, it was a low-slung, five-door luxury sedan. The Porsche faithful and the automotive press again gasped in disbelief. But by the time the Panamera hit the pavement, Porsche had proven once again that Porsche customers could have their cake and eat it to. The Panamera is almost as big as the Cayenne but can move four adults down the road at speeds of up to 188 miles per hour and accelerate from a standstill to 60 miles per hour in four seconds flat.
Although some Porsche traditionalists would never be caught dead driving a front engine Porsche that has more than two doors, Porsche insists that two trends will sustain these new models. First, a category of Porsche buyers has moved into life stages that have them facing inescapable needs; they need to haul more people and stuff. This not only applies to certain regular Porsche buyers, but Porsche is again seeing buyers enter its dealerships that otherwise wouldn’t have. Only this time, the price points of the new vehicles are drawing only the well heeled, allowing Porsche to maintain its exclusivity. These buyers also seem to fit the achiever profile of regular Porsche buyers.
The second trend is the growth of emerging economies. Whereas the United States has long been the world’s biggest consumer of Porsches, the company expects China to become its biggest customer before too long. Twenty years ago, the United States accounted for about 50 percent of Porsche’s worldwide sales. Now, it accounts for only about 26 percent. In China, many people who can afford to buy a car as expensive as a Porsche also hire a chauffeur. The Cayenne and the Panamera are perfect for those who want to be driven around in style but who may also want to make a quick getaway if necessary.
The most recent economic downturn has brought down the sales of just about every maker of premium automobiles. When times are tough, buying a car like a Porsche is the ultimate deferrable purchase. But as this downturn turns back up, Porsche is better poised than it has ever been to meet the needs of its customer base. It is also in better shape than ever to maintain its brand image with the Porsche faithful and with others as well. Sure, understanding Porsche buyers is still a difficult task. But a former CEO of Porsche summed it up this way: “If you really want to understand our customers, you have to understand the phrase, ‘If I were going to be a car, I’d be a Porsche.’
.
Required Questions
Question 01: You are asked to develop a Mission statement and four Marketing objectives for Porsche for the next ten years (2021- 2025) . Draft an ideal mission statement and outline your four marketing objectives (5 marks
.
Question 02: Identify , explain and justify the main consumer behaviour characteristics that influences the Porche buyers.
In: Operations Management
COMPANY Case: Porsche: Guarding the Old While Bringing in the New
Porsche (pronounced Porsh-uh) is a unique company. It has always been a niche brand that makes cars for a small and distinctive segment of automobile buyers. In 2009, Porsche sold only 27,717 cars in the five models it sells in the United States. Honda sold about 10 times that many Accords alone. But Porsche owners are as rare as their vehicles. For that reason, top managers at Porsche spend a great deal of time thinking about customers. They want to know who their customers are, what they think, and how they feel. They want to know why they buy a Porsche rather then a Jaguar, a Ferrari, or a big Mercedes coupe. These are challenging questions to answer; even Porsche owners themselves don’t know exactly what motivates their buying. But given Porsche’s low volume and the increasingly fragmented auto market, it is imperative that management understands its customers and what gets their motors running.
Since its early days, Porsche has appealed to a very narrow segment of financially successful people. These are achievers who see themselves as entrepreneurial, even if they work for a corporation. They set very high goals for themselves and then work doggedly to meet them. And they expect no less from the clothes they wear, the restaurants they go to, or the cars they drive. These individuals see themselves not as a part of the regular world but as exceptions to it. They buy Porsches because the car mirrors their self-image; it stands for the things owners like to see in themselves and their lives.
Most of us buy what Porsche executives call utility vehicles. That is, we buy cars primarily to go to work, transport children, and run errands. Because we use our cars to accomplish these daily tasks, we base buying decisions on features such as price, size, fuel economy, and other practical considerations. But Porsche is more than a utility car. Its owners see it as a car to be enjoyed, not just used. Most Porsche buyers are not moved by information but by feelings. A Porsche is like a piece of clothing—something the owner “wears” and is seen in. They develop a personal relationship with their cars, one that has more to do with the way the car sounds, vibrates, and feels, rather than the how many cup holders it has or how much cargo it can hold in the trunk. They admire their Porsche because it is a competent performance machine without being flashy or phony.
People buy Porsches because they enjoy driving. If all they needed was something to get them from point A to point B, they could find something much less expensive. And while many Porsche owners are car enthusiasts, some of them are not. One successful businesswoman and owner of a high-end Porsche said, “When I drive this car to the high school to pick up my daughter, I end up with five youngsters in the car. If I drive any other car, I can’t even find her; she doesn’t want to come home.”
For its first few decades, Porsche AG lived by the philosophy of Ferry Porsche, Ferdinand’s son. Ferry created the Porsche 356 because no one else made a car like he wanted. But as the years rolled on, Porsche management became concerned with a significant issue: Were there enough Porsche buyers to keep the company afloat? Granted, the company never had illusions of churning out the numbers of a Chevrolet or a Toyota. But to fund innovation, even a niche manufacturer has to grow a little. And Porsche began to worry that the quirky nature of the people who buy Porsches might just run out on them.
This led Porsche to extend its brand outside the box. In the early 1970s, Porsche introduced the 914, a square-ish, mid-engine, two-seater that was much cheaper than the 911. This meant that a different class of people could afford a Porsche. It was no surprise that the 914 became Porsche’s top selling model. By the late 1970s, Porsche replaced the 914 with a hatchback coupe that had something no other regular Porsche model had ever had: an engine in the front. At less than $20,000, more than $10,000 less than the 911, the 924 and later 944 models were once again Porsche’s pitch to affordability. At one point, Porsche increased its sales goal by nearly 50 percent to 60,000 cars a year.
Although these cars were in many respects sales successes, the Porsche faithful cried foul. They considered these entry-level models to be cheap and underperforming. Most loyalists never really accepted these models as “real” Porsches. In fact, they were not at all happy that they had to share their brand with a customer who didn’t fit the Porsche owner profile. They were turned off by what they saw as a corporate strategy that had focused on mass over class marketing. This tarnished image was compounded by the fact that Nissan, Toyota, BMW, and other car manufacturers had ramped up high-end sports car offerings, creating some fierce competition. In fact, both the Datsun 280-ZX and the Toyota Supra were not only cheaper than Porsche’s 944 but also faster. A struggling economy threw more sand in Porsche’s tank. By 1990, Porsche sales had plummeted, and the company flirted with bankruptcy.
But Porsche wasn’t going down without a fight. It quickly recognized the error of its ways and halted production of the entry-level models. It rebuilt its damaged image by revamping its higher-end model lines with more race-bred technology. In an effort to regain rapport with customers, Porsche once again targeted the high end of the market in both price and performance. It set modest sales goals and decided that moderate growth with higher margins would be more profitable in the long term. Thus, the company set out to make one less Porsche than the public demanded. According to one executive, “We’re not looking for volume; we’re searching for exclusivity.”
Porsche’s efforts had the desired effect. By the late 1990s, the brand was once again favored by the same type of achiever who had so deeply loved the car for decades. The cars were once again exclusive. And the company was once again profitable. But by the early 2000s, Porsche management was again asking itself a familiar question: To have a sustainable future, could Porsche rely on only the Porsche faithful? According to then CEO Wendelin Wiedeking, “For Porsche to remain independent, it can’t be dependent on the most fickle segment in the market. We don’t want to become just a marketing department of some giant. We have to make sure we’re profitable enough to pay for future development ourselves.”
So in 2002, Porsche did the unthinkable. It became one of the last car companies to jump into the insatiable sport utility vehicle (SUV) market. At roughly 5,000 pounds, the new Porsche Cayenne was heavier than anything that Porsche had ever made, with the exception of some prototype tanks it made during WWII. Once again, the new model featured an engine up front. And it was the first Porsche to ever be equipped with seatbelts for five. As news spread about the car’s development, howls could be heard from Porsche’s customer base.
But this time, Porsche did not seem too concerned that the loyalists would be put off. Could it be that the company had already forgotten what happened the last time it deviated from the mold? After driving one of the first Cayenne’s off the assembly line, one journalist stated, “A day at the wheel of the 444 horsepower Cayenne Turbo leaves two overwhelming impressions. First, the Cayenne doesn’t behave or feel like an SUV, and second, it drives like a Porsche.” This was no entry-level car. Porsche had created a two-and-a-half ton beast that could accelerate to 60 miles per hour in just over five seconds, corner like it was on rails, and hit 165 miles per hour, all while coddling five adults in sumptuous leather seats with almost no wind noise from the outside world. On top of that, it could keep up with a Land Rover when the pavement ended. Indeed, Porsche had created the Porsche of SUVs.
Last year, Porsche upped the ante one more time. It unveiled another large vehicle. But this time, it was a low-slung, five-door luxury sedan. The Porsche faithful and the automotive press again gasped in disbelief. But by the time the Panamera hit the pavement, Porsche had proven once again that Porsche customers could have their cake and eat it to. The Panamera is almost as big as the Cayenne but can move four adults down the road at speeds of up to 188 miles per hour and accelerate from a standstill to 60 miles per hour in four seconds flat.
Although some Porsche traditionalists would never be caught dead driving a front engine Porsche that has more than two doors, Porsche insists that two trends will sustain these new models. First, a category of Porsche buyers has moved into life stages that have them facing inescapable needs; they need to haul more people and stuff. This not only applies to certain regular Porsche buyers, but Porsche is again seeing buyers enter its dealerships that otherwise wouldn’t have. Only this time, the price points of the new vehicles are drawing only the well heeled, allowing Porsche to maintain its exclusivity. These buyers also seem to fit the achiever profile of regular Porsche buyers.
The second trend is the growth of emerging economies. Whereas the United States has long been the world’s biggest consumer of Porsches, the company expects China to become its biggest customer before too long. Twenty years ago, the United States accounted for about 50 percent of Porsche’s worldwide sales. Now, it accounts for only about 26 percent. In China, many people who can afford to buy a car as expensive as a Porsche also hire a chauffeur. The Cayenne and the Panamera are perfect for those who want to be driven around in style but who may also want to make a quick getaway if necessary.
The most recent economic downturn has brought down the sales of just about every maker of premium automobiles. When times are tough, buying a car like a Porsche is the ultimate deferrable purchase. But as this downturn turns back up, Porsche is better poised than it has ever been to meet the needs of its customer base. It is also in better shape than ever to maintain its brand image with the Porsche faithful and with others as well. Sure, understanding Porsche buyers is still a difficult task. But a former CEO of Porsche summed it up this way: “If you really want to understand our customers, you have to understand the phrase, ‘If I were going to be a car, I’d be a Porsche.’
Required Questions –
Question 01: Critically analyze the relevant Porters generic strategies and the growth strategies Porsche is pursuing , justify your answer by referring to the case study (5 marks)
Question 02: Marketing had evolved through five stages, out of this five which concept or concepts is Porsche following , justify your answer. Do you agree with this why or why not (5 marks)
In: Operations Management
COMPANY Case: Porsche: Guarding the Old While Bringing in the New
Porsche (pronounced Porsh-uh) is a unique company. It has always been a niche brand that makes cars for a small and distinctive segment of automobile buyers. In 2009, Porsche sold only 27,717 cars in the five models it sells in the United States. Honda sold about 10 times that many Accords alone. But Porsche owners are as rare as their vehicles. For that reason, top managers at Porsche spend a great deal of time thinking about customers. They want to know who their customers are, what they think, and how they feel. They want to know why they buy a Porsche rather then a Jaguar, a Ferrari, or a big Mercedes coupe. These are challenging questions to answer; even Porsche owners themselves don’t know exactly what motivates their buying. But given Porsche’s low volume and the increasingly fragmented auto market, it is imperative that management understands its customers and what gets their motors running.
Since its early days, Porsche has appealed to a very narrow segment of financially successful people. These are achievers who see themselves as entrepreneurial, even if they work for a corporation. They set very high goals for themselves and then work doggedly to meet them. And they expect no less from the clothes they wear, the restaurants they go to, or the cars they drive. These individuals see themselves not as a part of the regular world but as exceptions to it. They buy Porsches because the car mirrors their self-image; it stands for the things owners like to see in themselves and their lives.
Most of us buy what Porsche executives call utility vehicles. That is, we buy cars primarily to go to work, transport children, and run errands. Because we use our cars to accomplish these daily tasks, we base buying decisions on features such as price, size, fuel economy, and other practical considerations. But Porsche is more than a utility car. Its owners see it as a car to be enjoyed, not just used. Most Porsche buyers are not moved by information but by feelings. A Porsche is like a piece of clothing—something the owner “wears” and is seen in. They develop a personal relationship with their cars, one that has more to do with the way the car sounds, vibrates, and feels, rather than the how many cup holders it has or how much cargo it can hold in the trunk. They admire their Porsche because it is a competent performance machine without being flashy or phony.
People buy Porsches because they enjoy driving. If all they needed was something to get them from point A to point B, they could find something much less expensive. And while many Porsche owners are car enthusiasts, some of them are not. One successful businesswoman and owner of a high-end Porsche said, “When I drive this car to the high school to pick up my daughter, I end up with five youngsters in the car. If I drive any other car, I can’t even find her; she doesn’t want to come home.”
For its first few decades, Porsche AG lived by the philosophy of Ferry Porsche, Ferdinand’s son. Ferry created the Porsche 356 because no one else made a car like he wanted. But as the years rolled on, Porsche management became concerned with a significant issue: Were there enough Porsche buyers to keep the company afloat? Granted, the company never had illusions of churning out the numbers of a Chevrolet or a Toyota. But to fund innovation, even a niche manufacturer has to grow a little. And Porsche began to worry that the quirky nature of the people who buy Porsches might just run out on them.
This led Porsche to extend its brand outside the box. In the early 1970s, Porsche introduced the 914, a square-ish, mid-engine, two-seater that was much cheaper than the 911. This meant that a different class of people could afford a Porsche. It was no surprise that the 914 became Porsche’s top selling model. By the late 1970s, Porsche replaced the 914 with a hatchback coupe that had something no other regular Porsche model had ever had: an engine in the front. At less than $20,000, more than $10,000 less than the 911, the 924 and later 944 models were once again Porsche’s pitch to affordability. At one point, Porsche increased its sales goal by nearly 50 percent to 60,000 cars a year.
Although these cars were in many respects sales successes, the Porsche faithful cried foul. They considered these entry-level models to be cheap and underperforming. Most loyalists never really accepted these models as “real” Porsches. In fact, they were not at all happy that they had to share their brand with a customer who didn’t fit the Porsche owner profile. They were turned off by what they saw as a corporate strategy that had focused on mass over class marketing. This tarnished image was compounded by the fact that Nissan, Toyota, BMW, and other car manufacturers had ramped up high-end sports car offerings, creating some fierce competition. In fact, both the Datsun 280-ZX and the Toyota Supra were not only cheaper than Porsche’s 944 but also faster. A struggling economy threw more sand in Porsche’s tank. By 1990, Porsche sales had plummeted, and the company flirted with bankruptcy.
But Porsche wasn’t going down without a fight. It quickly recognized the error of its ways and halted production of the entry-level models. It rebuilt its damaged image by revamping its higher-end model lines with more race-bred technology. In an effort to regain rapport with customers, Porsche once again targeted the high end of the market in both price and performance. It set modest sales goals and decided that moderate growth with higher margins would be more profitable in the long term. Thus, the company set out to make one less Porsche than the public demanded. According to one executive, “We’re not looking for volume; we’re searching for exclusivity.”
Porsche’s efforts had the desired effect. By the late 1990s, the brand was once again favored by the same type of achiever who had so deeply loved the car for decades. The cars were once again exclusive. And the company was once again profitable. But by the early 2000s, Porsche management was again asking itself a familiar question: To have a sustainable future, could Porsche rely on only the Porsche faithful? According to then CEO Wendelin Wiedeking, “For Porsche to remain independent, it can’t be dependent on the most fickle segment in the market. We don’t want to become just a marketing department of some giant. We have to make sure we’re profitable enough to pay for future development ourselves.”
So in 2002, Porsche did the unthinkable. It became one of the last car companies to jump into the insatiable sport utility vehicle (SUV) market. At roughly 5,000 pounds, the new Porsche Cayenne was heavier than anything that Porsche had ever made, with the exception of some prototype tanks it made during WWII. Once again, the new model featured an engine up front. And it was the first Porsche to ever be equipped with seatbelts for five. As news spread about the car’s development, howls could be heard from Porsche’s customer base.
But this time, Porsche did not seem too concerned that the loyalists would be put off. Could it be that the company had already forgotten what happened the last time it deviated from the mold? After driving one of the first Cayenne’s off the assembly line, one journalist stated, “A day at the wheel of the 444 horsepower Cayenne Turbo leaves two overwhelming impressions. First, the Cayenne doesn’t behave or feel like an SUV, and second, it drives like a Porsche.” This was no entry-level car. Porsche had created a two-and-a-half ton beast that could accelerate to 60 miles per hour in just over five seconds, corner like it was on rails, and hit 165 miles per hour, all while coddling five adults in sumptuous leather seats with almost no wind noise from the outside world. On top of that, it could keep up with a Land Rover when the pavement ended. Indeed, Porsche had created the Porsche of SUVs.
Last year, Porsche upped the ante one more time. It unveiled another large vehicle. But this time, it was a low-slung, five-door luxury sedan. The Porsche faithful and the automotive press again gasped in disbelief. But by the time the Panamera hit the pavement, Porsche had proven once again that Porsche customers could have their cake and eat it to. The Panamera is almost as big as the Cayenne but can move four adults down the road at speeds of up to 188 miles per hour and accelerate from a standstill to 60 miles per hour in four seconds flat.
Although some Porsche traditionalists would never be caught dead driving a front engine Porsche that has more than two doors, Porsche insists that two trends will sustain these new models. First, a category of Porsche buyers has moved into life stages that have them facing inescapable needs; they need to haul more people and stuff. This not only applies to certain regular Porsche buyers, but Porsche is again seeing buyers enter its dealerships that otherwise wouldn’t have. Only this time, the price points of the new vehicles are drawing only the well heeled, allowing Porsche to maintain its exclusivity. These buyers also seem to fit the achiever profile of regular Porsche buyers.
The second trend is the growth of emerging economies. Whereas the United States has long been the world’s biggest consumer of Porsches, the company expects China to become its biggest customer before too long. Twenty years ago, the United States accounted for about 50 percent of Porsche’s worldwide sales. Now, it accounts for only about 26 percent. In China, many people who can afford to buy a car as expensive as a Porsche also hire a chauffeur. The Cayenne and the Panamera are perfect for those who want to be driven around in style but who may also want to make a quick getaway if necessary.
The most recent economic downturn has brought down the sales of just about every maker of premium automobiles. When times are tough, buying a car like a Porsche is the ultimate deferrable purchase. But as this downturn turns back up, Porsche is better poised than it has ever been to meet the needs of its customer base. It is also in better shape than ever to maintain its brand image with the Porsche faithful and with others as well. Sure, understanding Porsche buyers is still a difficult task. But a former CEO of Porsche summed it up this way: “If you really want to understand our customers, you have to understand the phrase, ‘If I were going to be a car, I’d be a Porsche.’
Required Questions –
Question 01: Critically analyze the relevant Porters generic strategies and the growth strategies Porsche is pursuing , justify your answer by referring to the case study
In: Operations Management
Questions:
5) What are the advantages and disadvantages to countries that promote frontier tourism?
6) Discuss how nations can create a competitive advantage in attracting tourists.
Roughing It: Tourists Are Boldly Going Into African Trouble Spots
A conservationist in oil-rich Gabon leads the way in promoting tiny nation’s sur ing hippopotamuses and other natural attractions, as part of a regional push for tourism amid instability
By Alexandra Wexler
Oct. 19, 2018 5 30 a.m. ET
WONGA WONGUE, Gabon—For the past decade, an energetic conservationist has been building the foundations for a tourism industry in Gabon, where rare forest elephants stroll down the beach, hippopotamuses surf in the ocean waves and blue-faced mandrills march by the thousands through the jungle.
The challenges for Gabon’s national parks authority and its head, Lee White, include transporting clients to remote camps in a country with little infrastructure, recruiting pygmy trackers from deep within the jungle and training antipoaching units who have to battle armed hunters and illegal gold miners in one of the world’s most pristine stretches of wilderness.
Over the past decade, with the support of government and overseas philanthropists, Mr. White has transformed Gabon’s parks authority from a group with just 100 staff with a budget of $500,000 to a $30 million operation with 800 employees, 175 cars, 35 boats and a number of aircraft, including a helicopter. Tourists have begun to arrive, with visitors up by a third this year through July compared with the average over the same period in 2017 at the country’s most-popular national park for international tourists.
Mr. White’s Gabonese gambit is at the leading edge of a trend attracting a growing list of African economies: frontier-tourism products in places that visitors often more-closely associate with conflict or instability.
In recent years, a small but swelling segment of the tourism market has been drawn to places like Chad, the Democratic Republic of Congo’s Virunga National Park, which was recently closed after two British tourists were kidnapped and their ranger killed, and war-torn Central African Republic. Tour operator Thomas Cook Group PLC recently sent a delegation to Sierra Leone, which has struggled with civil war and more recently an Ebola epidemic, to discuss offering package tours.
“There is a trend recently of interest in ‘unexplored’ places,” said André Rodrigues Aquino, a senior natural-resources management specialist at the World Bank, who advises African
governments on their tourism sector. “It’s very linked to nature, places that have pristine unspoiled nature.”
The numbers are small compared with sub-Saharan Africa’s broader tourism market of $43.7 billion in 2017, according to the World Travel & Tourism Council. But countries with the strongest growth in international arrivals in 2016 compared with a year earlier were Sierra Leone, Nigeria, Eritrea and Togo, according to the African Development Bank.
“A lot of people who have traveled previously, particularly in Africa, are looking for different experiences in different places,” said Peter Fearnhead, chief executive of African Parks, a nongovernmental organization that manages 15 national parks in partnership with governments across Africa. “The fact that [these places are] so edgy, we’re finding that there’s an increasing interest.”
The niche but expanding market for frontier tourism in fractious security environments has governments and companies seeking to balance revenue potential against the investments and know-how needed to ensure safety.
Oil-rich Gabon, a sparsely-populated country the size of Colorado on Africa’s Atlantic seaboard, has one of the highest per-capita incomes in sub-Saharan Africa and is one of the more stable countries in the continent’s central region. But when Mr. White took the reins of the country’s newly created national-parks agency in 2009, the vast nature reserves that cover about 20% of the country existed essentially only on paper.
= “The first priority when I was appointed was to manage the parks and when necessary, defend them,” Mr. White said. He created antipoaching units and armed rapid-response teams to push, with much success, ivory poachers out of the parks.
There are exceptions. Parks officers have had two gunbattles with illegal gold miners in a park called Birougou in the past six months, Mr. White said.
At Zakouma, a national park in the desert nation of Chad, poachers had massacred about 90% of the park’s elephants by the time African Parks took over its management in 2010. Since then, the group has transformed the region into a haven for one of Africa’s largest single herds, now about 560 elephants strong. By establishing flights to link the park with Chad’s capital city— and joining with a group of private guides as part of the marketing strategy—the park’s revenue is expected to be just under a $1 million this year, up from about $50,000 in 2015.
The mobile-tented safari experience that African Parks offers is booked about 18 months in advance, but it takes a maximum of just eight guests at a time and is limited to the dry season.
“It’s not a sustainable solution for the park,” said Stuart Slabbert, head of conservation-led economic development for African Parks.
Experts say national parks across the continent will struggle to expand their tourism revenue without a cooperative and supportive government.
In Gabon, Mr. White’s plans have been aided by his close relationship with current President Ali Bongo Ondimba, established while his father, Omar Bongo Ondimba, was still in power. Though Gabon is
theoretically a democracy, the elder Mr. Bongo ruled for 42 years and the current president, who took over when he died in 2009, won close, tense elections in 2016 marred by accusations of fraud that ignited countrywide rioting.
This year, Mr. White began actively marketing safari-type trips to the parks for the first time. Possible sightings include sea turtles hatching on the country’s beaches, humpback whales breaching in the surf and Western lowland gorillas lazing while their babies climb and swing around trees: a literal jungle gym.
“It’s not savanna tourism. You have to work to see this stuff,“ said Michael Nichols, a photographer who took a picture of Gabon’s surfing hippos that Time magazine calls one of the 100 most influential images of all time. “That doesn’t preclude that it’s frigging unbelievable. It could be like the Amazon.”
In: Operations Management
Database
You have just started a new position on the database design staff at Gizmonic Consultants, Inc.
Your first project is to translate the database requirements for Continental Hotels into an ER representation. In the next project, you will derive a relational schema from an ER diagram and implement the schema, populate it, and query over it.
Requirements:
Develop an ERD to capture the entities and relationships specified in the requirements documentation below. Use only the conventions covered in class.
Phase 2
////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////
Continental Hotels Requirements
Continental Hotels is a chain of hotels that operates in several cities. There are currently 10 locations, and each hotel has about 100 guest rooms. The rooms are normally 80% occupied, with an average length of stay of three days. The hotels are frequented by both business travelers and vacationers. The chain is expanding to additional locations. The current guestroom reservation system is slow and unreliable and a new system is needed to handle reservations and associated guest billing.
Guests normally use the chain’s website to make a room reservation, supplying the dates requested, the number of guests, the number of rooms needed, and the area desired. The site shows the locations that have availability for the dates requested that are in the desired area. The user then chooses a location and a summary of the available rooms for that site is displayed, showing a brief description of the room type and the standard rate for each available room. Locations have unique names like “Columbus Downtown” and “Cincinnati North.”
The user can see a more detailed description of each room by clicking on a button. The user has the option to request a special rate due to membership in a group, military status, or age. The list of available rooms and their cost is updated to reflect the discounted price, if any. The chain also offers a rewards program for frequent guests. The website allows the user to enter or retrieve his or her membership number and password, and the site displays the number of rewards points the user has accumulated.
Whether the user belongs to the rewards program or not, he or she can reserve up to three rooms, and must choose a room type and accept the cost for each one from the list displayed, as well as entering the number of the proposed occupants and any special requests for each room, from a menu of special requests. The customer provides a credit card number to guarantee the reservation, and may choose to use some or all of his or her rewards points, if any, towards the cost of the rooms.
At the conclusion of the process, a confirmation number is assigned for the reservation. If a customer prefers, this same process can be done by telephone or even by mail.
A customer can cancel a reservation up to the day before he or she is due to check in with no penalty. If the customer does not cancel and is a no-show, the room cost(s) for one day will be charged to the credit card account provided in the reservation. A fictitious room number (-1) is used for this purpose. In addition to reservations, the hotel can accommodate walk-in guests, provided there are rooms available. In that case the customer information is taken, and a reservation is made for the same day for the period desired. Guests can also extend their stays past the reserved date, provided there are rooms available. The ending date of the current reservation is updated accordingly.
When a guest checks in with or without a reservation, guest IDs are checked, rooms are assigned, and an imprint of the credit card that will be used for billing is taken. If separate bills are requested for rooms at check-in, additional credit card imprints are taken, and basic information about the credit card holder, who is now considered the customer holding a reservation for that room, is taken. Miscellaneous charges for such items as room service, meals in the hotel restaurants or coffee shop, movie rentals, and telephone calls, as well as the basic room charges, will be billed to the credit card account for each associated room. Guests can access their room account information to see a summary of the charges for each room each day. At the end of the stay, guests are requested to fill out an evaluation form for each room, either on paper or online.
Some of the reports that the system should be able to produce include the following, for each of the hotels in the chain:
Guest Bill – This should include, for each room:
Invoice number, room number, guest name, guest address, guest telephone, credit card number, number of persons. For each day of the stay, it should show the date, room charge, room tax, and a list of additional charges - room service charges (date, time, amount), hotel restaurant charges (restaurant name, date, time, amount), telephone charges (date, number called, length, cost) and any other items. At the end of the bill, the total charges, any discount for rewards points, and the total paid or charged to the credit card are given. If additional charges are found once the guest has checked out, a revised bill is prepared and sent to the guest.
Weekly Room Utilization Report – This report is normally produced at the end of each week, showing the utilization of rooms during the week. Note that some of the hotel’s guest rooms may not be available for rental because of damages, renovations, or other reasons. For each day, the report shows date, number of rooms available to be rented, number occupied, number unoccupied, number of rooms reserved, number of no-shows, number of walk-ins.
At the bottom of the report, the totals of each of these numbers for the week is shown.
Housekeeping Daily Room Requests Report – A report is created daily showing any special requests for guests who are checking in that day or who are already registered that must be filled by the housekeeping staff, such as extra pillows, rollaway beds, and so forth.
Daily Checkout Report - The report lists the rooms that will be vacated that day so that the housekeeping staff can prepare them for new guests after current guests depart.
□ List all the hotels (names) in the Cincinnati area.
□ List all the areas that do not have a hotel with a room with the type “queen size, handicapped accessible.”
□ List names of guests who watched the movie “Buckaroo Banzai” at any hotel.
□ List names of guests who were charged for a no-show reservation and who have a rewards membership.
□ List the sum of all miscellaneous charges by guest name and room number at the “Downtown Columbus” hotel in June 2019.
In: Computer Science
1. In this problem, assume that the distribution of differences
is approximately normal. Note: For degrees of freedom
d.f. not in the Student's t table, use
the closest d.f. that is smaller. In
some situations, this choice of d.f. may increase
the P-value by a small amount and therefore produce a
slightly more "conservative" answer.
Suppose that at five weather stations on Trail Ridge Road in Rocky
Mountain National Park, the peak wind gusts (in miles per hour) for
January and April are recorded below.
| Wilderness District | 1 | 2 | 3 | 4 | 5 |
| January | 139 | 120 | 126 | 64 | 78 |
| April | 101 | 110 | 108 | 88 | 61 |
Does this information indicate that the peak wind gusts are higher in January than in April? Use α = 0.01. Solve the problem using the critical region method of testing. (Let d = January − April. Round your answers to three decimal places.)
| test statistic | = | |
| critical value | = |
Interpret your conclusion in the context of the application.
Reject the null hypothesis, there is sufficient evidence to claim average peak wind gusts are higher in January.
Fail to reject the null hypothesis, there is sufficient evidence to claim average peak wind gusts are higher in January.
Fail to reject the null hypothesis, there is insufficient evidence to claim average peak wind gusts are higher in January.
Reject the null hypothesis, there is insufficient evidence to claim average peak wind gusts are higher in January.
Compare your conclusion with the conclusion obtained by using the
P-value method. Are they the same?
We reject the null hypothesis using the critical region method, but fail to reject using the P-value method.
We reject the null hypothesis using the P-value method, but fail to reject using the critical region method.
The conclusions obtained by using both methods are the same.
2.
Gentle Ben is a Morgan horse at a Colorado dude ranch. Over the past 8 weeks, a veterinarian took the following glucose readings from this horse (in mg/100 ml).
| 91 | 86 | 81 | 107 | 99 | 108 | 86 | 88 |
The sample mean is x ≈ 93.3. Let x be a random variable representing glucose readings taken from Gentle Ben. We may assume that x has a normal distribution, and we know from past experience that σ = 12.5. The mean glucose level for horses should be μ = 85 mg/100 ml.† Do these data indicate that Gentle Ben has an overall average glucose level higher than 85? Use α = 0.05.
(a) What is the level of significance?
State the null and alternate hypotheses. Will you use a
left-tailed, right-tailed, or two-tailed test?
H0: μ > 85; H1: μ = 85; right-tailed
H0: μ = 85; H1: μ > 85; right-tailed
H0: μ = 85; H1: μ ≠ 85; two-tailed
H0: μ = 85; H1: μ < 85; left-tailed
(b) What sampling distribution will you use? Explain the rationale
for your choice of sampling distribution.
The standard normal, since we assume that x has a normal distribution with unknown σ.
The Student's t, since we assume that x has a normal distribution with known σ.
The standard normal, since we assume that x has a normal distribution with known σ.
The Student's t, since n is large with unknown σ.
What is the value of the sample test statistic? (Round your answer
to two decimal places.)
(c) Find (or estimate) the P-value. (Round your answer to
four decimal places.)
Sketch the sampling distribution and show the area corresponding to
the P-value.
(d) Based on your answers in parts (a) to (c), will you reject or
fail to reject the null hypothesis? Are the data statistically
significant at level α?
At the α = 0.05 level, we reject the null hypothesis and conclude the data are statistically significant.
At the α = 0.05 level, we reject the null hypothesis and conclude the data are not statistically significant.
At the α = 0.05 level, we fail to reject the null hypothesis and conclude the data are statistically significant.
At the α = 0.05 level, we fail to reject the null hypothesis and conclude the data are not statistically significant.
(e) State your conclusion in the context of the application.
There is sufficient evidence at the 0.05 level to conclude that Gentle Ben's glucose is higher than 85 mg/100 ml.
There is insufficient evidence at the 0.05 level to conclude that Gentle Ben's glucose is higher than 85 mg/100 ml.
In: Statistics and Probability
Dan and Cheryl's last name is Taxpayer.
If the Taxpayers have a refund, have the entire amount refunded.
Helpful Hints and Checks
For Schedule D:
Assume the charitable donation of GE stock was to the United Way. It was donated on 3/5/19 and was originally purchased on 4/10/12.
Schedule C:
Use the 2019 tax forms (locate tax forms on www.irs.gov).
General Requirements
For this assignment you will need to submit the following tax forms as a single document:
Refer to the resource, "Tax Rate Schedules 2019 and Other Items," located in the course materials.
Tax Return Check Figures for 2019 Tax Forms - Data Set A
Problem I:7-64
Check Figures for the Various Forms (check figures are not provided for every form):
Form 1040 –
Schedule 1 –
Schedule A –
Schedule C –
Schedule D –
Form 8829 (not required) –
Remember to use the tax forms for the year indicated by your instructor. Points will be deducted for incorrect forms and incorrect sequence. In addition, be sure to submit the tax forms in order as required by the IRS. You will notice a Sequence No. on the top right of each tax return form except for the Form 1040. Form 1040 is the first form in the sequence.
In: Accounting
University Car Wash built a deluxe car wash across the street from campus. The new machines cost $225,000 including installation. The company estimates that the equipment will have a residual value of $22,500. University Car Wash also estimates it will use the machine for six years or about 12,500 total hours. Actual use per year was as follows:
| Year | Hours Used |
| 1 | 3,100 |
| 2 | 1,600 |
| 3 | 1,700 |
| 4 | 2,300 |
| 5 | 2,100 |
| 6 | 1,700 |
Required:
1. Prepare a depreciation schedule for six years using the straight-line method. (Do not round your intermediate calculations.)
|
|||||||||||||||||||||||||||||||||||||||||||
2. Prepare a depreciation schedule for six years using the double-declining-balance method. (Do not round your intermediate calculations.)
|
|||||||||||||||||||||||||||||||||||||||||||
3. Prepare a depreciation schedule for six years using the activity-based method. (Round your "Depreciation Rate" to 2 decimal places and use this amount in all subsequent calculations.)
|
|||||||||||||||||||||||||||||||||||||||||||
In: Accounting
For each of these five separate cases, identify the principle(s) of internal control that is violated. Recommend what the business should do to ensure adherence to principles of internal control.
1.Latisha Tally is the company’s computer specialist and oversees its computerized payroll system. Her boss recently asked her to put password protection on all office computers. Latisha has put a password in place that allows only the boss access to the file where pay rates are changed and personnel are added or deleted from the payroll.
2.Marker Theater has a computerized order-taking system for its tickets. The system is active all week and backed up every Friday night.
3.Sutton Company has two employees handling acquisitions of inventory. One employee places purchase orders and pays vendors. The second employee receives the merchandise.
4.The owner of Super Pharmacy uses a check software/printer to prepare checks, making it difficult for anyone to alter the amount of a check. The check software/printer, which is not password protected, is on the owner’s desk in an office that contains company checks and is normally unlocked.
5.Lavina Company is a small business that has separated the duties of cash receipts and cash disbursements. The employee responsible for cash disbursements reconciles the bank account monthly.
In: Accounting