How would you position Porsche’s US operations in Figure 8.1? What is the exposure-absorption capability on the input market side? What are the exchange pass-through capabilities on the output side? Case 8.2 Porsche: Fighting with currency swinging19 Porsche’s concern about operating exposure arising from changes in the exchange rate of the dollar can be traced back to heavy financial losses incurred in 1992–3. In one year, Porsche’s global sales dropped by 38 per cent to 14,000 units; in the US, its largest market, Porsche sold less than 4,000 units. The large losses were attributed not only to the global recession in the early 1990s, but also to the weak US dollar.

Founded in 1931 by Ferdinand Porsche, Porsche is a legendary German manufacturer of luxury sports cars. In 1972, Ferry Porsche and Louise Piëch, the two children of Ferdinand Porsche, changed the firm’s legal form from a limited partnership to a private limited company (German AG). An executive board and a supervisory board were set up, with executives from outside the Porsche family on the former and members mainly from the Porsche family on the latter. As of 2007, the extended Porsche and Piëch families controlled all of Porsche AG’s voting shares.