City university of science and information technology

Strategic Management
Skoda Auto
Prepared By
Syed Bakhtyar Ali shah
Table of Contents
Page Topics
3 History
!ision and Mission
"
Porter#s $ive $orces $rame%or&
' P(ST() $rame%or&
* (+ternal ,udit
-
CPM.Competitive Profile Matri+
/ (+ternal $actor (valuation 0($(1 Matri+
23 $inancial 4atio ,nalysis
23
5nternal ,udit
22 5nternal $actor (valuation 05$(1 Matri+
26 S78T Matri+
2 SP,C( Matri+
2' The Boston Consulting 9roup 0BC91 Matri+
2' The 5nternal.(+ternal 05(1 Matri+
2* The :uantitative Strategic Planning Matri+ 0:SPM1
2/ 4ecommendations
2/ 4eferences
History;
2
In 1895 Skoda Automobile Company was founded, when Vala! "aurin and
Vala! #lement be$an manufaturin$ Sla!ia%brand biyles& 'ust four years later,
"aurin ( #lement be$an manufaturin$ motoryles&
2/3"
)he first ar, alled the *Voiturette A+, lea!es the fatory $ates and thanks to its
,uality and attrati!e appearane soon $ains a stable position in the emer$in$
international automobile markets&
2/3*
"aurin ( #lement set up a -oint%stok ompany that $oes on to e.port ars to
markets the world o!er
2/6"
)he "aurin ( #lement automobile fatory mer$es with the Skoda mahinery
manufaturin$ ompany in /l0e1&
2/33
ASA/ 2*Akio!a Spole3nost pro Automobilo! /r4mysl+ 5 the Automoti!e
Industry 'oint%stok Company6 is founded and be$ins usin$ assembly%line
prodution methods, whih are re!olutionary for their time&
2/3/<2/"
7urin$ the war years, the fatory fouses on produin$ materials for the military&
'ust a few days before the war ends, the fatory is bombed and sustains
onsiderable dama$e& )he enterprise is nationali0ed in the autumn of 1985&
2/'
)he enterprise9s reonstrution takes plae under a new name, A:;/
2*Automobilo!< 0a!ody, narodni podnik+ 5 Automoti!e /lants, ;ational
=nterprise6&
2/'
)he enterprise, now with prodution area of 8>>,>>> s,uare meters and o!er
1?,>>> people on the payroll, be$ins produin$ the popular ar @ 1>>> AB&
2/-*
Bn!eilin$ of the lon$%awaited Skoda Ca!orite, a ar with a modern desi$n that
later helps to transform Skoda Auto
3
2//2
April 1D marks the be$innin$ of a new hapter in the Company9s history, when it
is a,uired by the strate$i partner Volkswa$en& Skoda beomes the Volkswa$en
Eroup9s fourth brand&
2//'
/rodution ommenes of another milestone ar model for the Company 5 the
Skoda Fta!ia&
!ision
)o ha!e the bi$$est market share in =urope by lookin$ for e.traordinary
solutions those satisfy e.traordinarily demandin$ ustomers
Mission
Is to provide quality sales, service and transportation needs for our customers.
)his is and will be aomplished throu$h a dediated team of employees whose
number one $oal is ustomer satisfation alon$ with a management team whose
responsibility is to ensure employee satisfaction, and customer enthusiasm.
)hree basi !alues of Skoda brand areG
5ntelligenceG He ontinuously seek inno!ati!e tehnial solutions and new ways
in whih to are for and approah the ustomers that are most important for us&
Fur ondut toward the ustomers is abo!eboard, and we respet their desires
and needs&
,ttractivenessG He de!elop automobiles that are aesthetially and tehnially of
hi$h standard and always ontinuous an attrati!e offer for our ustomers not
only in terms of desi$n or tehnial parameters but also the wide ran$e of offered
ser!ies&
=edicationG He are followin$ the steps of founders our ompany Aessrs& "aurin
and #lement& He are enthusiastially workin$ on the further de!elopment of our
!ehilesI we identify oursel!es with our produts&
Porter#s $ive $orces $rame%or&;
4
The Threat of (ntrants;
=astern =urope ountries that were in former So!iet Bnion attrat many
ompetitors who find in these ountries new market, new ustomers, and heap
labors to redue osts so the threat of entrants is !ery hi$h&
Bargaining Po%er of Buyers;
)he power of buyers is hi$h beause onsumers 5 espeially after $lobali0ation
ha!e many hoies from whih to selet when they purhase a ar
Bargaining po%er of suppliers;
Aany automobile ompanies mo!e toward 'ust%In%)ime in!entory system and
that pushes many suppliers to make their plants near these automobile ompanies,
and some of these automobile ompanies made their own parts, so the power of
supplier is !ery weak&
Threat of Substitutes
)he threat of substitute will be publi transportation in bi$, rowded, and hea!y
populated ountries, this substitute may be faster and heaper than dri!in$ a ar
there, beause people need to find a parkin$ for their ars and usually it will be
with fees&
Competitive 4ivalry;
)he automobile market is one of the most ompetiti!e markets in the world, in
addition, there are many ompanies try to redue their osts by mo!in$ to low
ost ountries suh as =astern =urope and Asia ountries, and try to find new
market, so the ompetiti!e ri!alry is hi$h in the lon$ run&
P(ST() $rame%or&;
/olitial:
5
- Jea!y ta.es and tariffs in some ountries make Skoda inrease its
automobiles9 prie&
- /olitial santions, !iolene and terrorism make some limitation to e.pand
$lobally in Asia market&
=onomi:
- Cuel /ries flutuations affet the osts and that reflet on the prie of
automobiles, so that may han$e the ustomer beha!ior toward some
features of automobiles&
- Skoda ould $et benefits from eonomi unions suh as Central =uropean
Cree%)rade Area 2C=C)A6 whih inludesG /oland, Jun$ary, Slo!akia,
C0eh, Slo!enia, Komania, and e.pand hea!ily there&
Soial:
- ;e$ati!e ustomersL pereption toward Skoda brand beause of bad ima$es
about automobiles industry in =astern =urope ountries&
- Inrease in population in some ountries make their $o!ernments to
redesi$n their traffi and make publi transportation more useful will affet
automobiles sales in these ountries&
)ehnolo$ial
- Should e.ploit e!olution in tehnolo$y to introdue new features and
options to reposition Skoda brand and to $et ompetiti!e ad!anta$e&
=n!ironmental:
- Beause of pollution problem and its effet on F0one, Skoda should
de!elop and onentrate on manufaturin$ $reen en!ironmental ars&
"e$al:
- Ereen marketin$ laws and laws on en!ironmental issues suh as industrial
pollution&
- Curreny e.han$e
- "e$al re$istration
(+ternal ,udit
8pportunities Threats
6
1& Erowin$ automobile
industry in Aiddle =ast by
9M, Southeast Asia by
18M, and Afria by 8M&
N& By N>1>, eletronis are
e.peted to aount for
nearly 8> perent of an
a!era$e !ehile9s !alue&
?& )he foreast for the
market for new passen$er
ars in Kussia is O11M&
8& B&S& small%ar demand
outpain$ ;orth
Amerian apaity
1& Ji$hly rowded and
ompetiti!e en!ironment&
N& Cranhised dealerships are
free to set !ehile pries,
and they may or may not
offer ustomers the
disounts that automakers
pro!ide&
?& Continuous inreasin$ in
oil pries may affet
automobiles sales around
the world&
CPM.Competitive Profile Matri+
7

Skoda Peugeot Renault Opel
Critical
Success
Factors
Weigh
t
Ratin
g
Weighte
d Score
Ratin
g
Weighte
d Score
Ratin
g
Weighte
d Score
Ratin
g
Weighte
d Score
Price 0.12 4 .48 2 .24 3 .36 2 .24
Financial
Position
0.15 3 .45 4 .60 3 .45 4 .60
Advertising 0.09 2 .18 3 .27 2 .18 4 .36
Innovation 0.22 2 .44 3 .66 2 .44 4 .88
Market
Share
0. 22 2 .44 4 .88 2 .44 4 .88
Manageme
nt
0.10 3 .30 3 .30 3 .30 3 .30
Global
Epansion
0.10 3 .30 4 .40 3 .30 4 .40
!otal "#$$ %#&' (#(& %#)* (#++
(+ternal $actor (valuation 0($(1 Matri+
>ey (+ternal $actors 7eight 4ating 7eighted
Score
8pportunities
8
1& Erowin$ automobile industry in
Aiddle =ast by 9M, Southeast
Asia by 18M, and Afria by 8M&
0.15 3 0..45
N& By N>1>, eletronis are
e.peted to aount for nearly 8>
perent of an a!era$e !ehile9s
!alue
0.15 2 0.30
?& )he foreast for the market for
new passen$er ars in Kussia is
O11M
0.20 3 0.60
8& B&S& small%ar demand outpain$
;orth Amerian apaity
0.15 2 0.30
Threats
1& Ji$hly rowded and ompetiti!e
en!ironment
0.15 3 0.45
N& Cranhised dealerships are free to
set !ehile pries, and they may
or may not offer ustomers the
disounts that automakers
pro!ide&
0.10 2 0.20
?& Continuous inreasin$ in oil
pries may affet automobiles
sales around the world&
0.10 2 0.20
!otal "#$$ %#&$
$inancial 4atio ,nalysis 26?633'
9ro%th 4ates @ S&oda 5ndustry
Sales 2Ptr !s year a$o ,tr6 1&1N 9&8>
;et Inome 2Q)7 !s Q)76 1&88 11&8>
)iAuidity 4atios
Current Katio 1&88 N&1>
Puik Katio 1&1? >&9>
(fficiency 4atio
9
Assets to sales >&5N 11&>
Profitability 4atios
Keturns to sales >&>55 ?&N
Keturns to Assets >&11 D&8
=ebt 4atio
)otal liabilities to 1&8> NRR&N
5nternal ,udit
Strength Weakness
1& S&oda %on numerous
a%ards for producing a
Auality automobileB
2. S&oda implements lo%.cost
country sourcing strategyB
?& S&oda is the largest
employer in the CCech
4epublicB
8& Total assets are gradually
increasingB
5& S&oda achieves highest
gro%th in 633' sales in
(astern (uropeD number one
carma&er in Central (uropeD
and gre% its 7estern
(urope mar&et share to 6B2
2B Poor brand name due to
S&oda relates to (astern
(urope origins that in the
past the cars had an image of
poor vehicle AualityD and
designB
6B Total S&oda mar&et share is
2B*@B
3B S&oda has problems %ith
their assembly plants outside
of the CCech 4epublicB
5nternal $actor (valuation 05$(1 Matri+
Key Internal Factors Weight Rating Weighted Score
Strengths
1& Skoda won numerous awards for
produin$ a ,uality automobile&
0.15 3 0.45
2. Skoda implements low%ost
0.15 3 0.45
10
ountry sourin$ strate$y&
?& Skoda is the lar$est employer in
the C0eh Kepubli&
0.08 3 0.24
8& )otal assets are $radually
inreasin$&
0.10 3 0.30
5& Skoda ahie!es hi$hest $rowth in
N>>D sales in =astern =urope,
number one armaker in Central
=urope, and $rew its Hestern
=urope market share to N&1
0.18 4 0.72
Weaknesses
1& Heak brand name due to Skoda
relates to =astern =urope ori$ins
that in the past the ars had an
ima$e of poor !ehile ,uality,
and desi$n&
0.18 1 0.18
N& )otal Skoda market share is
1&RM&
0.08 2 0.16
?& Skoda has problems with their
assembly plants outside of the
C0eh Kepubli
0.08 1 0.08
)otal 1&>> N&58
S78T Matri+
11
12
Strengths ,eaknesses
1& Skoda won numerous awards
for produin$ a ,uality
automobile&
N& Skoda implements low%ost
ountry sourin$ strate$y&
?& Skoda is the lar$est employer
in the C0eh Kepubli&
8& )otal assets are $radually
inreasin$&
5& Skoda ahie!es hi$hest
$rowth in N>>D sales in
=astern =urope, number one
armaker in Central =urope,
and $rew its Hestern =urope
market share to N&1.
1& /oor brand name due
to Skoda relates to
=astern =urope ori$ins
that in the past the ars
had an ima$e of poor
!ehile ,uality, and
desi$n&
N& )otal Skoda market
share is 1&RM&
?& Skoda has problems
with their assembly
plants outside of the
C0eh Kepubli&
Opportunities S-O Strategies ,-O Strategies
1. Erowin$ automobile
industry in Aiddle =ast by
9M, Southeast Asia by
18M, and Afria by 8M&
N& By N>1>, eletronis are
e.peted to aount for
nearly 8> perent of an
a!era$e !ehile9s !alue&
?& )he foreast for the
market for new passen$er
ars in Kussia is O11M&
8& B&S& small%ar demand
outpain$ ;orth Amerian
apaity
1& Bsin$ prie as a ompetiti!e
ad!anta$e to onentrate on
Kussia Aarket 2SN,F?6
N& Fpen assembly plant in
Ae.io to feedin$ ;orth
Ameria market
2S1,SN,S5,F1,F86
1& Inrease market share by
enterin$ new $rowth
market in Aiddle east,
Southeast Asia, and
Afria2HN,F16
2. Impro!in$ automobiles
,uality by introduin$
inno!ati!e, eletroni
features, and desi$n
2H1,FN)
!hreats S-! Strategies ,-! Strategies
1& Ji$hly rowded and
ompetiti!e
en!ironment&
N& Cranhised dealerships
are free to set !ehile
pries, and they may
1& Inrease marketin$ efforts
to make new
repositionin$2S8, S5, )1,
)?6
N& Cous on produin$ middle
and small en$ine
ars2S1,SN,)?6
1& Fffer 5 yearsSN>>>>>
#ilometer warranty on
all !ehiles 2H1, )16
SP,C( Matri+
Financial Strength Rating Environmental
Stabilit.
Rating
Return on assets 2 Rate of infation !3
"e#erage 1 $echnoogica changes !4
%et &nco'e 2 (rice )asticit* of
de'and
!6
R+) 2 ,o'-etiti#e -ressure !6
.arriers to entr* ne/
'ar0ets
!6
1#erage 1.75 1#erage !5
2!a3is -(#%&
Competitive
Advantage
Rating Industr. Strength Rating
4ar0et share !1 5ro/th -otentia 2
(roduct 6uait* !2 7inancia sta8iit* 2
,usto'er "o*at* !1 )ase of entr* ne/ 3
13
'ar0ets
,ontro o#er other
-arties
!1 Resources utii9ation 2
$echnoogica 0no/!
ho/
!1 (rofit -otentia 3
1#erage 1.20 1#erage 2.40
:!a3is "#%$
=irectional vector point is ;0 2B63D .3B6"1
The Boston Consulting 9roup 0BC91 Matri+
14
,onser#ati#e 1ggressi#e
,o'-etiti#e ;efensi#e
7S
&S ,
1
)S
:uestion Mar&s
Mar&et share position
Stars
15
=ogs
Cash Ca%
S&oda
5ndustry
Sales 9ro%th
4ate
The 5nternal.(+ternal 05(1 Matri+
Stron$ ?&> to ?&99 Aedium N&> to N&99 "ow 1&> to 1&99

<igh
3.0 to 3.99
4ediu'
2.0 to 2.99
"o/
1.0 to 1.99
16
&= = =&
=&& =&&& &:
Skoda
!he EFE
!otal
,eighted
Score
!he IFE !otal ,eighted Score
& && &&&