Skoda Case Study Essay

Custom Student Mr. Teacher ENG 1001-04 28 March 2016

Skoda Case Study

INDUSTRIAL ENGINEERING DEPARTMENT

ELECTIVE 1: STRATEGIC MANAGEMENT

SUBMITTED BY:

ADALID, CHRISTINE JOY M.
MARTINEZ, NILO C.
JURILLA, GUDIO B.
PEŇA, JOHN JONARELL

SUBMITTED TO
ENGR. RICARDO G. CAPULE JR.

Table of Contents

SKODA AUTOMOBILE COMPANY

INTRODUCTION

a. HISTORY
In 1895 in Czechoslovakia, two keen cyclists, Vaclav Laurin and Vaclav Klement, designed and produced their own bicycle. Their business became Skoda in 1925.In 1991 Skoda became business partner of Volkswagen because of its reputation for strength.They become the largest car manufacturer in Europe providing an average of more than five million cars a year giving it a 12% share of the world car market.

Products:

b. MISSION / VISION STATEMENT

Mission
Skoda Auto mission is to anticipate consumer needs and provide safe, quality, reliable, and innovative automotive products and services to consumers around the world Vision
A world leader in high-quality, value-priced automobiles for the 21st century consumers c.

IMPORTANT EVENTS, ISSUES AND ACTIVITIES

1895 – Vaclav Laurin and Vaclav Klemnet form bicycle company in Mlada Boleslav, Czechoslovakia 1901 – They began producing motorcycles and had a total workforce of 68 people 1905 – The first car they produced, called the “Voiturette A 1925 -The Laurin & Klement automobile factory merges with the Škoda machinery manufacturing company in Plzeň 1939 to 1945-During the war years, the factory focuses on producing materials for the military. Just a few days before the war ends, the factory is bombed and sustains considerable damage. 1946 -The enterprise’s reconstruction takes place under a new name, AZNP. 1989-Czech Republic formed

1991 – April 16 marks the beginning of a new chapter in the Company’s history, when it is acquired by the strategic partner Volkswagen.

c. ORGANIZATIONAL STRUCTURE

d. INCOME STATEMENT

COMPETITORS PROFILE

PUEGEOT

STRENGTH
Strong strategy and R&D
Company supported by financing houses – Bank PSA Finance.
strong structure – 15 engineering plants and foundries, 4 research centers. Valued company values: Confidence, passion and inspiration.
Second largest car maker in Europe.

OPEL

STRENGTH
Though owned by General Motors, it has preserved its German essence Produced over a million vehicles per annum 11 manufacturing facilities in over 6 countries
Its models are rebadged & sold as Buicks, Holden, Vauxhall, Saturn in various countries

MERCEDES BENZ
STRENGTH
Strong Existing Product Brands
Mercedez Benz
$47 Billion fund for Research & Development
1st ranking

II. INDUSTRIAL ANALYSIS

A. EXTERNAL FACTORS

ECONOMIC

Fuel Prices fluctuations affect the costs and that reflect on the price of automobiles, so that may change the customer behavior toward some features of automobiles.

DEMOGRAPHIC

Increase in population in some countries make their governments tore design their traffic and make public transportation more useful will affect automobiles sales in these countries.

POLITICAL GOVERNMENTAL & LEGAL LAWS

Heavy taxes and tariffs in some countries make Skoda increase its automobiles’ price. Political sanctions, violence and terrorism make some limitation to expand globally in Asia market.
Green marketing laws and laws on environmental issues such as industrial pollution.

Currency exchange
Legal registration

B. INTERNAL FACTORS

Management
Skoda follows a model for its corporate Governance, which utilizes members of the board of directors as members of senior management of the company.

Marketing
Skoda develop a network of authorized sales and services partners, to assure that its customer receive standards compliance and improve service quality.

Finance & Accounting
2007 Skoda Produced over half a million cars worldwide
2009 investment plus 36% compared to 2008
2012 revenue amounted to over 10.4 billion Euros

PRODUCTION & OPERATION

2007 – Skoda Produced over half a million cars
2009 – Skoda expand and set a partnership plant in China
2011 – Skoda Produces 800,000 Major cars by the New management 2012 – Skoda announce of the new production plant for Mission L and Greenline
E-Series

Research & Development
ŠKODA AUTO, having with cutting-edge technology that expanded research and development centre.
R&D lets Skoda Company evolve its car to a more efficient automobile.

Evolution of Skoda

OCTAVIA

Competitive Analysis
Porter’s Five Models

Rivalry Among Competing Firms

The global automobile manufacturing industry is one of the most competitive in the world. In addition, new car companies are emerging in the developing countries. These companies are all trying to reduce costs by moving to low-cost countries.

Potential Entry of new Entrants

Because of the increased buying power of consumers in former Soviet Union countries and in emerging countries, many firms may see this as an opportunity to move plants to Eastern Europe to reduce their costs and compete in that market. In addition, for the first time in 50 years.

Development of Substitute Products

The threat of substitute will be public transportation in big, crowded, and heavy populated countries, this substitute may be faster and cheaper than driving a car there, because people need to find a parking for their cars and usually it will be with fees.

Bargaining Power of Supplier

With a movement toward just-in-time inventory systems worldwide in the automobile manufacturing industry, there has been greater pressure upon suppliers to move their plants to locations contiguous to the automobile plants they are supplying.

Bargaining Power of Consumers

With increased competition worldwide in the automobile manufacturing industry, consumers have many more choices from which to select when purchasing a car. In addition, the movement to a global industry from one which had been formerly a monopoly or oligopoly within a country or region, has caused intense price competition to arise.

STRATEGY FORMULATION

SWOT ANALYSIS

STRENGTH
1. Capital infusions from Volkswagen.
2. Emphasis on research and development from Volkswagen.
3. Strength of Volkswagen’s reputation.
4. Highly-skilled work force available in the Czech Republic. 5. Relatively low wages in Czech Republic.
6. Synergy with other Volkswagen products.

WEAKNESS
1. Location in a country that must deal with outdated infrastructure. 2. Perception from the past that Skoda produces a low-quality product. 3. Perception by some that their new 4-door limousine is not a limousine at all. 4. Growing unrest of Skoda’s employees in seeking higher wages which decrease profit margins. 5. Reputation of Skoda may spill over to the Bentley and frighten off buyers.

OPPURTUNITIES
1. Growing automobile market in Eastern Europe, China, Africa, India and other emerging economies. 2. Possibility of moving manufacturing and assembly plants to low-cost countries. 3. First mover advantage to those companies using alternative fuels 4. American Markets favor European-manufactured cars

THREATS
1. Movement of the global automobile manufacturing industry to a monopolistically-competitive structure with increased competition. 2. Costliness of non-renewable energy 3. Higher wage rates in some countries are making it difficult for automobile manufacturers to remain competitive. 4. Decline in sales in Eastern European countries that have become a part of the European Union because of the increased availability of used vehicles from other European countries.

IMPLIMENTATION
OBJECTIVES

Year one
Get plants up and running in China and India

Year two
Increase Production& Sales
~ 200,000 units in China, 25% export
~ 40,000 units in India, 0% export

Year three
Open new assembling plant in Mexico and make it as a base to enter American market and reposition of brand name strategy by increasing marketing efforts

Year Four
Produce 1.5 Million Automobile Vehicles in 2018

Types of strategies Used

Their plan also calls for introducing as many 10 new low price model ( related diversification). Strategic plans at Volkswagen call for wage cost, trimming the number of job and cutting back on its current over capacity by 30 % (Retrenchment). The new infusion of capital and emphasis on R & D from Volkswagen brought fourth such popular models as the smaller Felicia, the larger middle-class model Octavia (product and development).

RECOMMENDATIONS

Develop an alterative fuel car for global marketplace.
Leverage Volkswagen Auto Groups brand to create a global market for Skoda Cars. Improve the Strategy of the company.
Creating low cost recommended quality automobiles.

REFFERENCE

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