The Current State of Skoda’s Business in the Uk

Introduction

Skoda, as a car manufacturer with a long history, has become one of the companies of Volkswagen who is the largest vehicle manufacturer in Europe since 1991 (Volkswagen, 2012). There is a fast development of Skoda in recent years. Its deliveries to customers in 2011 increased by 15.3% compared to 2010 (Skoda, 2012). This report aims to:· evaluate the current situation of Skoda in the UK using the SWOT analysis. · analyze the business environment of Skoda in the UK by using the PESTLE analysis in detail. · create the possible strategies for Skoda’s future development based on the analysis.

Company Overview

With twenty years development supported by Volkswagen, Skoda achieved a new high record of sales for 45282 vehicles in the UK, which occupied over 5% of the whole sales volume of the brand. In the market of the UK, Skoda has launched seven models, namely Citigo, Fabia, Roomster, Rapid, Octavia, Superb and Yeti (Skoda, 2012).

SWOT analysis

Both strong and weak points of the business situation about Skoda in the UK can be seen in the SWOT analysis (see appendix I). The most obvious strength is the satisfaction provided to customers. Skoda has been doing good job on improving their products and services to meet customers’ demands.

The company surveys their feelings and opinions directly to get the correct needs of customers. At the same time, some chances might be taken by Skoda to boost sales. Focusing on the vehicle itself as the marketing strategy, Skoda’s competitors leave the space to Skoda to focus on ‘happy Skoda customers’. It avoided the direct competition focusing on the product itself with other rivals and became the ‘unique selling proposition’ of Skoda in the vehicle market (Times, 2008).

In contrast, there are still some persistent weaknesses and threats of Skoda. One weak point, for example, is the negative effects from the ‘image of poor quality, design, assembly, and materials’ in the past. Although Skoda had tried to make many efforts to make the brand image better, it was proved to fail in the mid-market range by a brand named Health Check. Meanwhile, the threats for Skoda are ‘50 different car makers selling 200 models’ in the UK. That means there is a highly competitive market in the UK, ‘potential buyers would overlook Skoda’. Informing the customers effectively and developing potential customers are the challenges for Skoda (Times, 2008).

PESTEL analysis

There are six parts of PESTLE analysis about business environment in the UK which focus on the external elements, namely, political, economic, social, technological, legal and environmental factors. Some changes of political element, such as raising the VAT, are made by the UK government to increase the cost of buying cars. Plus, the UK customers are encouraged by British government to buy cars which are environmentally friendly because the road tax will be reduced if people have small engines cars.

That means the vehicle with smaller engine will attract more customers due to the financial reason. At the same time, the British car industry is affected by the economic recession. There is less demand which leads to fewer new vehicles being sold. People prefer to buy second hand cars instead of new cars because of the low price. The economic factors are more essential than the quality and design of cars because low consumption of new car means less profits the companies can gain (Gough, 2012).

For the social element, the lifestyle changes of consumers may influence the design of a vehicle. Many bigger seats and larger space are provided in the cars for meeting the requirements of ‘the growing number of obese people in the UK’. In addition, the development of technology is a chance for companies to reduce production cost. Advertising their products widely on the Internet will attract more potential buyers. There might be some new legal limitations of driving cars in the future. The speed limits may be considered more to ensure the citizen’s safety. Finally, the environmental

issues, for instance the global warming, will be the pressure of vehicle manufacturers. They have to think about how to reduce the pollutant emission to be responsible for their society (Gough, 2012).

Future strategy

Two main suggested approaches aiming to solve the challenges of Skoda according to SWOT and PESTLE analyses are as follows: · Invest a lot on promotion. Such as advertise their product on Internet and TV for informing UK customers the high quality and low price of the cars to change the bad brand image. · Expand the model range for meeting different demands of British customers to increase the market share in heavy competition.

Conclusion and Recommendations

It can be found that the high satisfaction and high quality with low price are the strong points of Skoda. Although some weak points exist, they can be solved by advertising of telling the high quality and expanding the range of model to gain more British customers. In summary, Skoda should overcome the negative effects by using its advantages to boost sales and increase market share in the UK.