Skoda Case Study
Executive summary:2 Company Analysis:2 Introduction:2 Vision3 Mission:3 Market Situational Analysis:3 Strengths:3 Weakness:4 Opportunities:5 Threats and the COMPETITION :5 Competitors:6 Peugeot:6 Renault:6 Implementation and control:6 Market mix strategies:6 Evaluation and Control7 Financial Reviews:8 Consolidated Balance sheet (CZK million)8 Sales /Financial Projection Based on the facts of Past years8 Reccomendations9 References10 Executive summary: To develop the market strength and improve its performance in the competitive car market, Skoda’s UK management decided to assess its brand positioning.
Brand positioning was in terms of establishing a dynamic image for the brand compared to strong competitors in the world car market - Skoda Case Study introduction. Skoda achieved sharp market research and obtained the data from internal and external strategic audits. This was the leading factor for Skoda to take new opportunities and quick and effective respond to threats. Volkswagen simultaneously acquired co-ownership rights of the distinctive Skoda winged arrow logo, which had been the property of Skoda Plzen engineering company since the end of world war 2.
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After getting such a strenghful combination with Volkswagen, Skoda restarted its market brandin by having a strong market Campaign, and dispite of being a joke among the customers skoda manages to win customers hearts by entering into the market with Fabia. And a slogan “Full of Love stuff”. Thrughout the case, Skoda managed to overcome the hard years of the business life, And continuously, handled new marketing approaches with extra ordinary advertisements and people awareness. Company Analysis: Introduction:
Skoda is one of the oldest car manufacturers in the world. Looking depth into the glimpses of Skoda’s history we can elaborate that Skoda was basically the product of the hardwork and the inventions done by two keen cyclists, Vaclav Laurin and Vaclav Klement, in 1895. (Skoda History). They designed and produced their own bicycles. Their business was based on their own imagination and invention. But, it came under “Skoda” name in 1925. During that time the situation was worst in terms of Ecconomy, World war, and the political challenge.
Due to that hard time Skoda was in black period almost about 65 years. To overcome the hard situation of economic crisis, Czech government was in immediate need of having a strong foreign partner. By 1990, Volkswagen AG(VAG) was a strong option to have a foreign partner for Skoda, because of its strength, strong financial reputation, quality , and ability to achieve success ,as Volkswagen was having almost control over the whole automobile industry during 90’s. On basis of market analysis it is given that Volkswagen was sharing almost 12% share of World Automobile Industry.
To develop the market strength and improve its performance in the competitive car market, Skoda’s UK management decided to assess its brand positioning. Brand positioning was in terms of establishing a dynamic image for the brand compared to strong competitors in the world car market. Skoda achieved sharp market research and obtained the data from internal and external strategic audits. This was the leading factor for Skoda to take new opportunities and quick and effective respond to threats.
Volkswagen simultaneously acquired co-ownership rights of the distinctive Skoda winged arrow logo, which had been the property of Skoda Plzen engineering company since the end of world war 2. The Czech government paid Skoda Plazen more than CZK 250million for the right to have Volkswagen use the trademark on cars. Logo was updated with new color in 1993. The name” Skoda Auto” was printed in white around a black circle, said to symbolize company’s long heritage. The green winged arrow within symbolize contemporary concern for issues.
Vision: To have the biggest market share in Europe by looking for extraordinary solutions and hard efforts which can effectively satisfy extraordinary customer demands, and can built an emotional and the strong relation of trust among the car owners which is far worth than just selling the cars. Mission: The strong mission is to provide quality service,sales and transportation needs of customers. Basically, Skoda wants to have a stronger product range to compute Uk and Globally.
And to maintain the equal level of faith and honesty during the relationship with customer, which is easily visible thrugh the quotation that,” Fabia, is a car so good that you wont believe that it is a Skoda. ” Market Situational Analysis: Strengths: To identify and develop the strengths of Skoda UK, carried out a market research. According to financial times Skoda approached directly to the main customers. Skoda asked company’s customers and rated their reviews. Skoda used customer’s opinion about the usage of its cars.
Skoda also used reliable independent surveys that tasted customer’s feelings and the perception about the Skoda. Skoda has been in the top five manufacturers in the survey taken by JD group for more than 13 years. In the Top Gear’s survey of 2007, almost 56,000 viewers gave their opinion on 152 models and voted Skoda the ‘number one car maker’. Skoda’s Octivia model has also won the 2008 Auto Express Driver Power’ Best Car’. From the surveys and the customer’s opinions about the Skoda, one can easily grab the basic strength of Skoda is the customer Satisfaction, rather than just selling the car.
Additionally, Skoda found that almost all of Skoda’s customer would give the strong recommendation about Skoda to a relative or a friend, at shows the clear view of having a clearly identifiable strength. As a result and the outcome, Skoda started to show more interest and efficiency to manufactured cars that their customers could enjoy and give their first priority to be a customer of Skoda, rather than simply manufactured a car, which is simply different from just having a goal of increase sales. Customer satisfaction occurs when the perception of the reward from the purchase of goods or services by the customer meets or exceeds his/her perceived sacrifice. The perception is a consequence of matching past purchase and consumption experience with the current purchase. ” By Phillip Kotler . the customer satisfaction as strength, gives an opportunity to firm by maintaining equality in quality and satisfaction. If company is capable to provide both at equal rate, company can rise its customer satisfaction level.
And alternatively, increase in customer satisfaction will lead company to boost its profit level, Because a satisfied customer will develop loyalty towards the company and will buy product of the same company again and again and the same customer will recommend the product to his/her friend or relative. As a result, Skoda’s main strength was its customer’s satisfaction. This clearly indicates that the brand was directly associated with a quality and higher satisfaction level. The second biggest strength was that Skoda turned its brand weakness into an opportunity.
On the basis of certain market research Skoda found that cars are being loved more than their owners of competitor’s brands. Skoda found that the company should differentiate its product range. The marketing team of Skoda went through the maket weaknesses and brand unawareness and they could make the brand more powerful and could take an advantage of availability to be in the competitive car market. They could make an eye on their existing power and produce cars on customer experiences. The focus on ‘happy skoda’s customers is an opportunity .
In addition, Skoda won number of awards and prices for producing a quality automobile. And skoda achieved the highest growth in sales in 2008 in sales in Eastern Europe, western Europe as well. Weakness: According to the sharp financial analysis of Skoda the biggest weakness was the smallest market share in the highly competitive market. Although, Skoda was having a powerful customer satisfaction or somewhere strong customer relationship, but the market analysis clearly displays the area of weakness was inside the business as they have only 1. % shares in the market which forces them to be in a very small position in the overall car market which declares that Skoda will have to face the biggest challenge to face its competitors in the market. Basically, this weakness was due to brand positioning. In the past, during the world was the Skoda’s products were in consideration was with the poor quality,assembly, design and materials. That somewhere affected Skoda owners. And car ownership is something which is more important or valuable for many people around the whole world.
Opportunities: According to Phillip Kotler, “Opportunity in business arises from some of the most important things like change, chaos, confusion, inconsistence, ambiguity, uncertainty, ignorance and emotions. ” When the management team of Skoda Uk, realized the weakness of brand positioning, they took this weakness as an opportunity to deal with. They found Volkswagen AG, was the most successful brand during the time. And Volkswagen was having the control over the 17% of the world car market, according to the Financial Times.
By 1999, Volkswagen AG ownership changed customer’s negative attitude about Skoda. That was the biggest opportunity for Skoda to use with. Due to having an effective business plateform with Volkswagen AG, Skoda reestablished its strong base, Skoda managed to turn profit ( $42. 8 billion)At the time, more than half of the Skoda cars sold in the European community were going to Germany, particularly eastern proviences. Although, opportunity ouccured In the external envoirnment of a business. This particularly includes gaps in the market for new products or services.
Importanly Skoda UK, discovered that its customers loved their cars more than the owners of competitior brands, such as Renault and Ford. Threats and the COMPETITION : “A business can have many basic threats which comprises external threats and internal threats. Including political threat, Legislative effect, Environmental effects, Market demand, Financial and credit pressures, Seasonal and weather effects. Basically, assessment of a risk is a crucial to any firm. Where the risk is low, the firm must ignore this issues and not to be distracted by them.
But if the risk is high the company should analyze the sources and assess the capability gaps and plan to defend them in very specific controlled ways,” By Paul Bains. The biggest threat for Skoda was an external threat of its competitors. On the basis of UK car market analysis, the market is having 50 different car makers selling more than 200 Products. For Skoda, this is one of the biggest challenges that to make and maintain its place within such a crowded and competitive environment. And if it is not, the potential buyers will overlook Skoda.
This may posted the loss in the share market, which is the biggest financial loss and the loss in the reputation as well. The second major issue was the constrain in environmental factors. One cannot undermine the economic factors, the world economy was showing the increasing rates in oil market which may affect an automobile industries around the world. The basic and the simple threat was the Franchised dealerships, which are free to set vehicle prices, and they may or may not offer customers some basic discounts, which may lead the dangerous threats of loosing the customer satisfaction. Competitors: Peugeot:
Peugeot company was found in 1810, so it can be said the more eshtablished company than Skoda. Additionally, Major French car brands are based on Peugeot Citroen, the second largest car brand in Europe, and the number one manufacturer of light commercial vehicles. They have started their first automobile production in 1891. Peugeot was on the top level in producing motorsports competition in early 1894. International rallying in the world championship, touring car racing,sports car racing in the world sports car championship. The basic goal of Peugeot is somewhere more threatful than any other strategies.
Because, to enhance global marketing experience, to give excellent customer satisfaction and having super production quality are their basic goals rather than just simply production and marketing Renault: The French automaker which is producing all kind of heavy and family vehicles. Like cars, vans, tractors, trucks and the auto trail vehicles. The Renault was ranked the fourth largest car manufacturers by Financial Times. Going towards the history, Renault was producing car since 1897, but founded in 1899 by Louis Renault and his brothers Marcel and Fernando.
Implementation and control: Going towards the basic strategies implementation by Renault, one can see that the basic successive strategy is the Innovation and change in terms of development. Renault has something new in its all the newly launch vehicles including trucks, vans or cars. They are the top ones having highly impressive innovation strategies. And second one can see was increase its target market. In 2011 they got the excellent target market worth 20,000-40,000 target sell. Renault’s high target market is the biggest threat for Skoda. Market mix strategies:
Skoda is having strong Marketing Strategies. “CAKE” is the prime example of that. It was the creative message stood out from the rest of the catergory by presenting the concept of the lovely stuff into a language which is easily understandable by everyone. The one minute and half minute adverts were showed on the television, how Skoda’s engineers creating the Fabia, full of lovely stuffs. During the adverts white chocolate chunks, raspberry chunks, raspberry jam, raising,almonds, eggs and chocolate fudge was being displayed. That clearly showed that Skoda is having strong marketing techniques.
The one minute advertisement was firstly released on the 17th may, 2007 with the shorter execution being used from Monday 21st. During the time of launching Skoda Fabia, it was the challenge for Skoda Auto. Into a highly competitive super mini sector. Advertiseing to its fairly generic, usually any car advertisement would show the winding or mountain road but the Skoda Fabia, needed to stand out from these common categories. The motive of advertisement was not only to send message to Skoda’s target audiences, which were 35 plus aged people, but the grass root of the automotive industries. When the creatives at Fallon considered the Use of the new Fabia, they noticed that as well as being a supremely well engineered car it also had a slew of smaller, helpful features. ” Financial Times Evaluation and Control Due to having a strong concentration on advertisement part of the marketing, skoda was on the top range in terms of having the highest share of voice of any auto motive message from May17,2007 to June 30, 2007 with 850 rating achieved across a worldwide range of chennels.
When Skoda researched about its weaknesses, Skoda’s managers found the weakness in branding as well as public aweareness and they jumped into the high-level advertising which can attract almost all the class of customers, due to that the innovative creative message also attracted a lot of buzz in social networking sites including face book and twitter with more than 2,000 members, and more than 7,00,000 viewers of the ad via you-tube and almost 1,50,000 returned searches for “Skoda CAKE car” Financial Reviews: Consolidated Balance sheet (CZK million) 31. 12. 011 31. 12. 2010 31. 12. 2009 Non-current assets 64,68658,8649. 9% Current assets88,87176,872 15.. 6% Of which- deposits49,08835,67837. 6% Total assets1,53,5571,35,736,73. 1% Equity81,21174,7728. 6% non-current liabilities 21,34815,48037. 9% Current liabilities50,99945,48412. 1% Total liabilities1,53,5571,35,73613. 1% By Annual report (2011) Sales /Financial Projection Based on the facts of Past years Skoda Brand production| 2011| 2010| 2010/11 in %| Fabia| 1,42,115| 1,25,596| 13. 2| Fabia Combi| 73,023| 68,079| 7. 3|
Total| 2,15,138| 1,93,675| 11. 1| Roomster| 33,414| 27,728| 20. 5| Roomster Paktik| 3,013| 2745| 9. 8| Roomster Total| 36,427| 30433| 19. 5| Octavia| 1,42,289| 1,19,884| 18. 7| Octavia combi| 1,31,953| 1,13,221| 16. 5| Octavia total| 2,74,242| 2,33,105| 17. 6| Yeti| 77,312| 52,550| 47. 1| Superb 2| 26,009| 24,970| 4. 2| Superb combi| 44,882| 40,969| 9. 6| Superb total| 70,891| 65,939| 7. 5| Total skoda Brand| 6,74,010| 5,75,742| 17. 1| Reccomendations According to the present scenario there are few recommendations for the more successful car market of Skoda 1.
Skoda needs to establish new and the perfect car Market in Mexico and should make it as a base to enter into the American car market and reposition of brand name strateg by increasing making hard efforts. Because Us has a very powerful car industry in terms of demands. 2. Skoda need to enhance its market share and for that entering new growth market in Middle East and Southest Asia 3. Skoda can bring new lights of innovation management which is the basic need to get successful References http://www. ukessays. co. uk/essays/business/skoda-automobile-company. hp www. thetimes100. co. uk Hichael J. Stahl ,David W. Grigsby, Strategy Management , Chapter 2 Environment and strategy plan, page 30 Gareth R. Jones, Jennifer M. George (2003), Essential of contemporary management, chapter 6 planning strategy and change, page 187 Henry Mintzberg, Sunantra Ghoshal(2002) The strategy process: contexts, cases,chapter no (3) Formulating Strategy, page 77, By Petr Pavlinek (2008)successful transformation? Restructuring of the Czech automobile industry, chapter transformation of Skoda auto, page 92 According to Marios, I.
Katsioloudes, and Global Strategic Planning: Cultural Perspectives for profit and non profit Page 75, Chapter-3 External Strategic Audit. According to Nigel Hill, John Brierley, Rob MacDougall(2003) Business & Economics, Chapter ‘‘How to measure customer Satisfaction” Page 2 According to Michael J. Mard, Robert R. Dunne,Edi Osborne (2004) Business and Economics, Chapter Driving your company’s value: Strategic Benchmarking for Value, page 39 www. Skoda-auto. com www. skoda. co. uk www. euromonitor. com Annual report of Skoda 2010 and 2011