Porsche 2006 Annual Report Download - page 26

24 Management Report
made under warranty or product Iiability Iaw, and
product recalls may even be necessary. Identifying
and analyzing product defects in the various sales
markets allows Porsche to detect any deterioration
in product quality, and its causes, at an early stage.
An interdisciplinary task force has been set up and
meets weekly to discuss product quality, analyze the
causes of product defects, and initiate appropriate
remedial action. This evaluation covers our entire
production, including the quality of parts and the
suppliers’ manufacturing processes.
To be able to respond quickly to urgent parts requests
or technical queries from subsidiaries, Porsche has
a system in which problems are recorded locally and
processed and remedied centrally. This ensures that
spare parts problems are solved within a defined
period of time to the satisfaction of the dealer orga-
nization. All product liability claims are dealt with
centrally by our legal department and are covered,
as far as possible, by our international insurance
program. Financial provision is also made for warranty
claims. As far as the development of new products
is concerned, there is a fundamental risk that cus-
tomers will have no demand for the new product.
Porsche counters this risk with market surveys and
studies concerning trends.
Furthermore there is always the danger that devel-
opment targets will not be met, or at least not by
the deadlines specified. To reduce this risk, Porsche
monitors project progress on a constant basis,
comparing progress with the requirements originally
defined. The development status is measured in
defined phases against targets, the end of which is
marked by a quality gate. This process ensures that
the prerequisites for passing the next quality gate
are analyzed prospectively, thus sensitizing those
responsible for reaching the quality gate on time and
allowing countermeasures to be taken in good time
in the event of target variances.
Last but not least, the infringement of third parties’
rights can disrupt design and development work or
production. Porsche takes preventive measures here
too. To protect itself from possible infringements of
rights, it conducts research that systematically
determines and evaluates the industrial property
rights of third parties.
Dependent Company Report Drawn Up
As mentioned in the annual report for last two fiscal
years, the structure of the holders of Porsche AG
ordinary shares has changed in recent years as a
result of restructuring of their holdings. As in the
previous years, in accordance with §312 German
Stock Corporation Act (AktG) Porsche has been
advised by its legal counsel to draw up a report on
relations with companies associated with holders
of ordinary shares (a dependent company report).
The conclusions of this report are as follows: “In
accordance with the circumstances known to it when
the legal transactions stated in the report were
conducted, Dr. Ing. h.c. F. Porsche AG has rendered
or, as the case may be, received reasonable pay-
ment. There were no measures calling for submis-
sion of a report in accordance with § 312 Paragraph 1
Sentence 2 AktG”.
Outlook
The risks which may impede further growth of the
world economy are substantial. Besides rising prices
of energy and raw materials in the wake of the high
demand from the developing countries in Asia, the
effects of the crisis in the US property market pose
the greatest risk. In August and September 2007,
the international central banks succeeded in stabi-
lizing the worldwide finance system by supplying
huge amounts of cash and reducing interest rates.
The drop in property prices in the USA and the credit
risks could nevertheless adversely affect the eco-
nomy in North America and, as a result, other eco-
nomies around the globe. The high current account
deficit of the USA is another risk which could lead
to a further devaluation of the US dollar and con-
siderable shifts in the world economic structure.
At the same time, there are good reasons to believe
that the risks will remain just that and that the over-
all world economy will remain buoyant. For example,
the weak US dollar also boosts exports from the
USA to the rest of the world and supports industry
in North America. The continuing growth in develop-
ing countries in Asia continues to create growing
demand for capital goods and high quality consumer
products from the USA, Europe and Japan. The clear
economic recovery looks set to continue both in
Japan and in the euro zone. In both regions, there
is every indication that the higher employment rate
will bring with it growing consumption by private
households.