The aim of this report is to illustrate the present situation of Skoda company in China car market and the world car market. By using SWOT analysis, describing Skoda had done a successful work in China. Evaluate the suitability of China as a foreign market for Skoda and it's product cars and Skoda may stay in China for more development. This will be assessed in the PESTEL analysis.
Two young men, Vaclav Laurin and Vaclav Klement, started to designed and produced bicycle in Czechoslovakia in 1895. 30 years later, the small factory became Skoda which went on to produced farm ploughs, cars, airplanes and bicycles in Eastern Europe. Between 1925 and 1990, Skoda overcame hard times which included war, political change and economic depression.
The management of Skoda chose Volkswagen AG (VAG) as their strong foreign partner at 1990 and the reason was VAG has strong reputation, reliability and high quality. In addition, VAG is the largest car manufacturer in Europe, which taking 12% share at the world market by providing more than five million cars a year. Volkswagen AG comprises seven different car brands and each brand has its own specific character and is independent in the market. (SWOT ANALYSIS : SKODA, 2009)
❖ Skoda–Historical sales of world market |model |2002 | |Weaknesses |Threats | |Outdated infrastructure |Competitors release same level products | |Not enough series of products |Expensive non-renewable energy | |Less famous |Increasing wages of skilled workers | |Poor image | |
PESTLE Analysis PESTLE stands for: political, economic, social, technological, legal, environmental. 'PESTLE analysis is a tool that can aid organization making strategies by helping them understand the external environment is which they operate now and will operate in the future,'(PESTLE Analysis,2003) China
❖ Political – Low price of the raw materials – Low restrictions of car industry – Various of policies support the car industry(Guo peng, 2010) ❖ Economic – Economics of China is growing fast while other counties is in economic recession, which helps people can offer cars in their daily lives. ❖ Social – China has a very stable society, which is helpful to the sales and the innovation of Skoda.
❖ Technological – China government has released some encouragement policies on car manufacture and car market development. This made the technology of making cars have a large of improvement and it is suitable for Skoda to do the research and innovation. ❖ Legal – China has a complete legal system which can protect the company well. ❖ Environmental – China government has done many things to ensure the supply of petrol. This would also help the car sales.
Conclusion In Conclusion, Skoda's overall performance in China is excellent. In these four years, it has a great improvement of sales from zero to 123 thousands a year and the number is still growing. Skoda shows a high level of quality, innovation, reliability and service. However, it still has to work on the weak areas. In China, Skoda's market share is still not large enough and the government gives a great environment for the car industry. Therefore, it would be a better choice for Skoda to stay in China.
Guo peng.(2010). PESTLE Analysis of China car industry : http://wenku.baidu.com/view/b771d4335a8102d276a22f12.html. Viewed 6/8/2010
PESTLE Analysis. Renewal Associates. 2003: http://www.renewal.eu.com/resources/Renewal_Pestle_Analysis.pdf. Viewed 5/8/2010
Skoda in China sales over 83 thousands in the first half of 2010. (2010). Homepage Skoda Auto: http://www.skoda.com.cn/skoda/pages/data/new/news_20100721145609_000000000707.jsp. Viewed 5/8/2010
SWOT ANALYSIS : SKODA. Yogin Vora on August 6, 2009: http://managementfunda.com/swot-analysis-skoda/. Viewed 6/8/2010