Executive summary The purpose of this report is evaluating the recent situation of Skoda in the UK. This essay will consider Skoda’s internal and external components by using SWOT and PESTEL analysis. At the end of essay, a suggestive strategy will be given to make Skoda remain invincible in the British auto market.
Introduction Skoda, a car company, was founded by Czech firm in 1925 (Times, 2010). At the beginning of the Czech management period, Skoda was regarded as an ugly joke because of its poor reputation and low quality. In order to get rid of the dilemma, Czech chose a potential foreign company, Volkswagen AG, as an associate in 1990. After that, Skoda became the most popular name in the world auto market through the joint efforts of Czech and VAG (Lyndon, 2010). It was also regarded as the second largest import brand by British people.
In 2011, its sales refresh a new record which is exceeded 80 thousand and in the UK, it increased by 12.2% (People, 2011). Although it has made some achievements, but there are still many challenges and threats which need it to overcome. This report aims to:
• Use the SWOT method to analysis the internal states of Skoda in the UK. • Evaluate about the business environment of the United Kingdom whether conducive to the development of the Skoda by adopting the PESTLE analyses. • Combined with the above situations and make a constructive for Skoda’s development.
SWOT and PESTLE analysis According to Boddy (2012), In order to make a strategy to reap profits, companies should use SWOT analysis, which should not only be considered the advantage and disadvantage in their own companies but also need to be thought about the outside environment such as changes and competitors. These four elements will be seen in SWOT and PESTLE analysis (see appendixⅠ)
The advantage for Skoda is the high satisfaction of its consumers. Because the higher satisfaction the customers give, the more products they buy. First, comprehensive and independent surveys were used by managers to obtain the information of customer feelings and suggestions. Up to now, in order to meet the needs of different groups, Skoda developed numerous new sub-brands such as Fabia, Octavia and Yeti.
What is more, the exclusive service ideas, ‘Only the best is good enough for our customers(Skoda, 2012)’ and ‘the human touch’, has been accepted by European people, especially in British costumers’ mind, Which made Skoda sales satisfaction be ranked in the top three. Another factor is its low price which also meets client satisfaction, according to Admin (2012), Octavia is the Skoda best-selling car in UK, whose price is £18,000. In short, the strengths of Skoda are integrated surveys, unique service ideas and the low price.
However, every product has it weaknesses. Skoda is no exception and the poor quality image which was influenced by its low reputation of the earliest product. The reason is that its origins have bad quality and design and every one regard it as a loser. It has deeply bad effect on the emerging brand of Skoda. Because of its old image, few customers want to buy it, which made the sales in relatively small amounts of level and also led a low market share.
Timepassguru (2011) showed that the market share of Skoda only occupied 2.3%, although it achieved the UK sales peak (41,313 units). According to these data, consumers in the UK might have not enough confidence in Skoda’s products. So the bad image is the issue which can not be ignored by manager to Skoda.
Opportunities and threats are the external factors of SWOT. To evaluating these two elements, PESTLE which is an effective tool can be used. Kokemuller (2012) defines that it focuses on external environment and covers Political, Economic, Social, Technological, Legal and Environmental factors. Therefore it has strong relevance to threats and opportunities assessments of SWOT.
In the UK, there is a favorable social welfare system such as healthcare and pensions (Datamonitor, 2011). In this case, the residents do not need to save money for their health and future lives. So they could pay more expenses on material enjoyment, for example they can purchase luxury clothes or cars. Therefore it a beneficial condition for Skoda to sale its products. Further, According to Smmt (2012), £56 million of public funding has already invested in the British car manufacturing industry, whose purpose of government is developing low carbon vehicle technology skills.
This technological policy offers the capital base for Skoda to the manufacture low-carbon vehicles. Besides, the legal system is the safeguard which can ensure the automotive market operate smoothly and provide a proper environment. According to George Osborne, “a chancellor of the exchequer, corporate taxes would be reduced from 28% to 26% from March 2011 to April 2012 and until 2015 it will be decreased by 23%, which will save companies around £425m during 2011–12, increasing to reach around £1bn a year in four years' time (Datamonitor, 2011).” In this case, it gives a chance which allows Skoda put more money into their management or products.
Nevertheless, the threats still exist. In the UK’s political landscape, terrorism might be a profound impact for marketing operations. On 7th July 2005, a bombing tragedy was made by terrorists in London (Datamonitor, 2011), which made market stagnated and the level of consumption reduced rapidly, it also include the car market.
So it is an unpredictable danger for Skoda. On the other hand, the serious economic crisis in 2008 lead British consumption and investment demand fell down. The employment rate also could be influenced negatively. Until 2010 it only has a little sluggish growth. These factors can also decrease the sales of Skoda. Moreover, there are many popular car manufacturers such as Ford, Honda and Toyota and their cars are all competitive. So they are the threats to Skoda.
In addition to this, as a car manufacture company, the environment aspect should be considered. Because protecting environment and reducing carbon emissions are the responsibilities for every enterprises and countries. What is more, The UK is a member of the Group of Eight (G8) (Datamonitor, 2011), whose aim is protect the global environment. Therefore, it might be both a new challenge and threat for Skoda since it offers the opportunity to manufacture fuel-efficient cars which not only can attract to customers but also might reduce the sales of its ordinary car.
Conclusion and recommendations According to the above analysis, the Skoda’s business situations are affected by both internal factor which includes satisfactory services, low price and poor image and external environment such as the favorable social, legal, technological systems, terrorism and so on. Therefore, if the manager of Skoda wants it have a bright future, they should enhance its advantages and avoid its shortcomings.
First, the good points which are low price and good services should keep developing. Second, they should improve the qualities of its products and manufacture the eco-friendly cars. Third, the design should be more creative which can make it have more competitiveness than rival cars. It is likely to be successful if the manager achieve these three points and operate it comprehensively.
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Appendices Appendix I: SWOT and PESTLE analysis. (Own source)
|Strength |Opportunity(include PESTLE analysis) | |Satisfaction of customers: |Social: | |Integrated surveys |The favorable social welfare system | |Satisfactory services |Technological: | |Low price |Public funding for low carbon vehicle technology skills | | |Legal: | | |Reduce the corporate taxes | | |Environment: | | |A member of the Group of Eight | |Weakness |Threat(include PESTLE analysis) | |Small market share: |Political: | |Poor quality image |Terrorism | | |Economic: | | |Sluggish growth of economy | | |Environment: | | |A member of the Group of Eight | | |Many competitors |