Documente Academic
Documente Profesional
Documente Cultură
Faculty of Business
Strategic Management
“Skoda Auto”
Case Study
Prepared By
2009
Table of Contents
Topics Page
History 3
Internal Audit 10
Internal Factor Evaluation (IFE) Matrix 11
SWOT Matrix 12
SPACE Matrix 14
Recommendations 19
References 19
History:
2
In 1895 Skoda Automobile Company was founded, when Vaclav Laurin and
Vaclav Klement began manufacturing Slavia-brand bicycles. Just four years later,
Laurin & Klement began manufacturing motorcycles.
1905
The first car, called the “Voiturette A”, leaves the factory gates and thanks to its
quality and attractive appearance soon gains a stable position in the emerging
international automobile markets.
1907
Laurin & Klement set up a joint-stock company that goes on to export cars to
markets the world over
1925
The Laurin & Klement automobile factory merges with the Skoda machinery
manufacturing company in Plzeň.
1930
ASAP (“Akciova Společnost pro Automobilov Průmysl” – the Automotive
Industry Joint-stock Company) is founded and begins using assembly-line
production methods, which are revolutionary for their time.
1939–1945
During the war years, the factory focuses on producing materials for the military.
Just a few days before the war ends, the factory is bombed and sustains
considerable damage. The enterprise is nationalized in the autumn of 1945.
1946
The enterprise’s reconstruction takes place under a new name, AZNP
(“Automobilové zavody, narodni podnik” – Automotive Plants, National
Enterprise).
1964
The enterprise, now with production area of 800,000 square meters and over
13,000 people on the payroll, begins producing the popular car Š 1000 MB.
1987
Unveiling of the long-awaited Skoda Favorite, a car with a modern design that
later helps to transform Skoda Auto
3
1991
April 16 marks the beginning of a new chapter in the Company’s history, when it
is acquired by the strategic partner Volkswagen. Skoda becomes the Volkswagen
Group’s fourth brand.
1996
Production commences of another milestone car model for the Company – the
Skoda Octavia.
Vision
Mission
Is to provide quality sales, service and transportation needs for our customers.
This is and will be accomplished through a dedicated team of employees whose
number one goal is customer satisfaction along with a management team whose
responsibility is to ensure employee satisfaction, and customer enthusiasm.
4
The Threat of Entrants:
Eastern Europe countries that were in former Soviet Union attract many
competitors who find in these countries new market, new customers, and cheap
labors to reduce costs so the threat of entrants is very high.
Threat of Substitutes
The threat of substitute will be public transportation in big, crowded, and heavy
populated countries, this substitute may be faster and cheaper than driving a car
there, because people need to find a parking for their cars and usually it will be
with fees.
Competitive Rivalry:
The automobile market is one of the most competitive markets in the world, in
addition, there are many companies try to reduce their costs by moving to low
cost countries such as Eastern Europe and Asia countries, and try to find new
market, so the competitive rivalry is high in the long run.
PESTEL Framework:
Political:
5
- Heavy taxes and tariffs in some countries make Skoda increase its
automobiles’ price.
- Political sanctions, violence and terrorism make some limitation to expand
globally in Asia market.
Economic:
- Fuel Prices fluctuations affect the costs and that reflect on the price of
automobiles, so that may change the customer behavior toward some
features of automobiles.
- Skoda could get benefits from economic unions such as Central European
Free-Trade Area (CEFTA) which includes: Poland, Hungary, Slovakia,
Czech, Slovenia, Romania, and expand heavily there.
Social:
- Negative customers' perception toward Skoda brand because of bad images
about automobiles industry in Eastern Europe countries.
- Increase in population in some countries make their governments to
redesign their traffic and make public transportation more useful will affect
automobiles sales in these countries.
Technological
- Should exploit evolution in technology to introduce new features and
options to reposition Skoda brand and to get competitive advantage.
Environmental:
- Because of pollution problem and its effect on Ozone, Skoda should
develop and concentrate on manufacturing green environmental cars.
Legal:
- Green marketing laws and laws on environmental issues such as industrial
pollution.
- Currency exchange
- Legal registration
External Audit
Opportunities Threats
6
1. Growing automobile 1. Highly crowded and
industry in Middle East by competitive environment.
9%, Southeast Asia by 2. Franchised dealerships are
14%, and Africa by 8%. free to set vehicle prices,
2. By 2010, electronics are and they may or may not
expected to account for offer customers the
nearly 40 percent of an discounts that automakers
average vehicle’s value. provide.
3. The forecast for the 3. Continuous increasing in
market for new passenger
oil prices may affect
cars in Russia is +11%.
4. U.S. small-car demand automobiles sales around
outpacing North American
the world.
capacity
7
Skoda Peugeot Renault Opel
Critical Weig Ratin Weight Ratin Weight Ratin Weight Ratin Weight
Success ht g ed g ed g ed g ed
Factors Score Score Score Score
Threats
9
Net Income (YTD vs YTD) 1.48 11.80
Liquidity Ratios
Current Ratio 1.48 2.10
Quick Ratio 1.13 0.90
Efficiency Ratio
Assets to sales 0.52 11.0
Profitability Ratios
Returns to sales 0.055 3.2
Returns to Assets 0.11 6.4
Debt Ratio
Total liabilities to 1.80 277.2
Internal Audit
Strength Weakness
1. Skoda won numerous awards 1. Poor brand name due to Skoda
for producing a quality relates to Eastern Europe
automobile. origins that in the past the cars
had an image of poor vehicle
2. Skoda implements low-cost quality, and design.
country sourcing strategy.
2. Total Skoda market share is
3. Skoda is the largest employer 1.7%.
in the Czech Republic.
3. Skoda has problems with their
4. Total assets are gradually assembly plants outside of the
increasing. Czech Republic.
5. Skoda achieves highest growth
in 2006 sales in Eastern
Europe, number one carmaker
in Central Europe, and grew
its Western Europe market
share to 2.1
increasing.
SWOT Matrix
11
Strengths Weaknesses
nearly 40 percent of an
average vehicle’s value.
3. The forecast for the market
for new passenger cars in
Russia is +11%.
4. U.S. small-car demand
outpacing North American
capacity
Threats S-T Strategies W-T Strategies
Y-axis -3.25
X-axis 1.20
FS
Conservativ Aggressive
e
C IS
A
Defensive Competitiv
e
ES
Quadrant II Quadrant I
Weak Strong
Competitiv
Competitiv
e
e
Position
Position
Quadrant IV
Quadrant III
Slow Market Growth
High
I II III
3.0 to 3.99
Medium IV V VI
The EFE
2.0 to Skoda
Total
Weighted
2.99
Score
VII VIII IX
Low
1.0 to 1.99
Strategy 1 Strategy 2
Strengths
Skoda won numerous awards for 0.15 2 0.20 2 0.20
producing a quality automobile
16
sourcing strategy
Strategy 1 Strategy 2
Opportunities
Growing automobile industry in Middle 0.15 1 0.15 3 0.60
East by 9%, Southeast Asia by 14%,
and Africa by 8%.
By 2010, electronics are expected to 0.15 - - - -
account for nearly 40 percent of an
average vehicle’s value
The forecast for the market for new 0.20 - - - -
passenger cars in Russia is +11%
17
U.S. small-car demand outpacing North 0.15 4 0.60 2 0.30
American capacity
Threats
Highly crowded and competitive 0.15 4 0.60 3 0.45
environment
Franchised dealerships are free to set 0.10 - - - -
vehicle prices, and they may or may not
offer customers the discounts that
automakers provide
Recommendation
18
References
1. www.skoda-auto.com
2. www.skoda.co.uk
3. www.euromonitor.com
4. www.marketresearch.com
19