Introduction: SKODA is a car manufacturer originated from Czech Republic and it was established since 1895. Regrettably, to say, they were not doing well at all when they were under the Soviet Union and it was at 1991 when they have their turnover opportunity, which soon became reality when Volkswagen bought 31% of the stakes, soon increases to 70% in 1995 and fully owned in 2000 after they bought the remaining shares from the Czech government. SKODA became the fourth branch company of the Volkswagen group after VW, Audi and Seat.
1. Good reputation according to 98% of their customers and under Volkswagen group 2. Emphasize on customer’s satisfaction such as having customer’s survey 3. Won various awards for car model such as from AUTO Express, Top Gear, JD Power and Caravan Club since 2000 to present
4. Awarded for ISO certificates on Quality Management Standard and Environmental Management Standard| 1. Low market share in UK with only 1.7% compared with Honda 4.29%, 2. Out-dated perception of the brand compared to Ford, Peugeot and Renault 3. Weak brand awareness/identity in other countries such as Malaysia 4. Lack of innovation such as the SUV was a trend in 90s but SKODA comes up with its own SUV Yeti in 2009|
1. Going-Green trend in drivers(Focus on environmental friendly car), SKODA is implementing SKODA Greenline 2. More market opportunities such as in China(Increase public awareness) 3. SKODA is in growing stage due to accomplishments such as their sales volume is increasing from 2000 to 2010| 1. Competitors such as Ford, Honda, Toyota, and Nissan has more variety of product range 2. Recession causes purchasing power to decrease 3. Accessibility to SKODA spare parts is expensive 4. Environmental Constraint(Security issues)|
Financial Conditions: The financial conditions of SKODA from 2000 to 2003 profit of the year are decreasing. This is because when Volkswagen has just successfully acquired SKODA, they have a strong competitor, which is the Renault, and during that time, SKODA has just started to renew their management but was unable to compete with Renault due to fail in implementing plan such as innovate their products.
However, from 2004 to 2007 because new car models are coming in such as Fabia, Octavia, Superb and Roomster which all of it have won awards before, profit of the year is increasing until 2008 to 2009, it started to decrease again. The reason that the profit of the year is decreasing is due to the increase in cost such as the steel prices. Although the profit of the year is decreasing and increasing, the sales volume of SKODA from 2000 to 2009 is still increasing. SKODA’s Strategies and Objectives:
SKODA’s objectives focused primarily on satisfying customers with special demand and doing it with ideas that exceed normal expectation or in another word, extraordinary. They aim to provide quality sales, service and transportation needs for their customers. Up until now, SKODA has implement strategies such as growth strategy and focus strategy. In growth strategy, SKODA expands their business to India and they done it successfully with their SKODA Fabia. Their second strategy is the focus strategy or differentiation strategy where they focus only on a small segment such as work conditions, basic construction and price.
Firm’s Competitor and Their Strategy The SKODA’s competitors are mainly on Honda, Toyota and Nissan. Honda’s strategy is to focus on superior fuel economy, optimum safety, driving pleasure and product known worldwide. Toyota’s strategies are base on the innovation and differentiation of their products and these strategies can be further distinguished into market penetration, product development, market development, and diversification.
Recommendations of Strategy * Investing on Research and Development-SKODA thrive to look for extraordinary solutions for extraordinary demands by customers. They should invest more on the R&D for researcher to explore more alternatives to make products more differentiated such as the Go-Green concept on the Hybrid technology by looking for ways to make it more cost-effective or cost optimization * Setting up more SKODA center to provide more convenience follow-up services will be ideal as well. By doing so, SKODA will be able to provide a better follow-up services such as doing service on customer’s car and at the same time able to attract more potential customers by showing SKODA value added-services.
The strategy that implemented by SKODA focused more on their sales profit and only on a small segment. It may be a good strategy but at the same time, they are missing out many other potential customers. What they should do first is to find more range of products as well as create public awareness because not many people know about SKODA.
On the R&D side, SKODA should provide scholarships to International students to study on engineering and technology field. Doing so will give the company the opportunities to look for more talented student to work on their side and to innovate their products. Secondly, setting up SKODA center can be done by setting up the center on strategic locations where there are a lot of population and easily accessible. If SKODA were to implement both these strategies, the only problem that SKODA will be facing is cash flow.