Q2 - Case Study:

Strategy in Action at Skoda

1. Skoda Swot Analysis:

- Strengths:

Skoda UK carried out research. It asked customers directly for their opinions
about its cars. It also used reliable independent surveys that tested
customers’ feelings. For example, the annual JD Power customer satisfaction
survey asks owners what they feel about cars they have owned for at least six
months. JD Power surveys almost 20,000 car owners using detailed
questionnaires. Skoda has been in the top five manufacturers in this survey
for the past 13 years. In Top Gear’s 2007 customer satisfaction survey,
56,000 viewers gave their opinions on 152 models and voted Skoda the
number 1 car maker Skoda’s Octavia model has also won the 2008 Auto
Express Driver Power Best Car.
Skoda also attributes these results to the business concentrating on owner
experience rather than on sales. It has considered the human touch from
design through to sale.
Skoda knows that 98% of its drivers would recommend Skoda to a friend
which is a clearly identifiable strength. Skoda uses this to guide its future
strategic development and marketing of its brand image.
It adopted a strategy focused on building cars that their owners would enjoy.
As a result, Skoda’s biggest strength was the satisfaction of its customers
with a quality product and happy customers.

- Weaknesses:

. One of the greatest weakness identified, which affect the success of the
company is its small market share. Skoda only holds 1.7 percent market
share. Because of this, Skoda remains a small player in the car
manufacturing market. Skoda’s small market share is attributed to negative
perceptions of the consumers of the brand. Skoda’s heritage as an Eastern
European can manufacturer is a subject of outdated, negative consumer
perception.
 In the past, Eastern European cars had the image of poor vehicle quality,
design, assembly and materials. Therefore, the consumers didn’t purchase
Skoda manufactured cars. This poor image also affects its owners. Because
of the negative perceptions of the general public of Skoda cars, owners lose
their trust of the product.

Under Volkswagen AG, the Skoda brand was improved. The goal was to
create a new brand image and consumer perception. Skoda cars started to
be seen as not low-budget or low-quality anymore. However, it has been
found that Skoda still had a weal and neutral image in the mid-market range it
occupies, compared to other players in this area.

- Opportunities:

Opportunities happened in the external environment of a business. These include gaps

in the market for new products or services. Skoda noted that its competitors’ marketing
approaches focused on the product itself. Many brands place emphasis on the machine
and the driving experience:

 Audi emphasizes the technology through its strapline, Vorsprung Durch

Technik (advantage through technology).

 BMW promotes the ultimate driving machine.

Skoda UK discovered that its customers loved their cars more than owners of
competitor brands, such as Renault or Ford.

The SWOT analysis helped Skoda to differentiate its product range. Having a complete
understanding of the brand’s weaknesses allowed it to develop a strategy to strengthen
the brand and take advantage of the opportunities in the market.

- Threats:

The UK car market includes 50 different car makers selling 200 models.
Within these there are over 2,000 model derivatives. Skoda UK needed to
ensure that its messages were powerful enough for customers to hear within
such a crowded and competitive environment. If not, potential buyers would
 overlook Skoda. This posed the threat of a further loss of market share.
Skoda needed a strong product range to compete in the UK and globally. 

In the UK the Skoda brand is represented by seven different cars. Each one is designed
to appeal to different market segments. For example:

 the Skoda Fabia is sold as a basic but quality city car

 the Skoda Superb offers a more luxurious, up-market appeal
 the Skoda Octavia Estate provides a family with a fun drive but also a great
big boot.

Pricing reflects the competitive nature of Skoda’s market. Each model range is priced to
appeal to different groups within the mainstream car market. The combination of a clear
range with competitive pricing has overcome the threat of the crowded market.

2. What Key success factors did Skoda use to turn its brand weakness into
core competencies?

The company conducted a research involving consumers in order to find out the
strengths of its products and brand. Surveys were also used. The strength of the
company and its products lie in its focus on experience rather than on sales.
However, the company makes sure that there is human touch in the production
and manufacture of its cars and make sure that the consumers feel it. Because of
this strength, Skoda was listed as one of the top five manufacturers by JD Power.
It was also awarded by Top Gear in 2007, as the number 1 car maker. The
results of these surveys seem to testify, that the strength of Skoda is its focus on
experience and on its customers rather than on profits. It knows that 98 percent
of its drivers would recommend Skoda to a friend. This strength is being used by
Skoda to guide its future strategic development and marketing of its brand image.

 By using Skoda’s strength as a guide for its future strategies, the company has
determined its main objective which is building cars that their owners would enjoy. The
strength of the company is being used to set the company and its products from its
competitors.
 The focus of Skoda is not on maximizing sales, like most of its competitors but on
satisfying the customers. Therefore, Skoda became the biggest strength.

3. How has Skoda strategically addressed external threats?

One of the biggest threats to Skoda is intense competition in the European car
manufacturing market, particularly in the United Kingdom. There more or less 50 car
manufacturers and more or less 200 car models comprising the UK car market. This is a
big threat because in an intensely competitive environment, a company like Skoda runs
the risk of being overlooked by the consumers which will eventually result to loss of
market share. In order to address this threat, the company needed to come up with
strategies that will make it standout in the market. The company believed that in order to
not be overlooked by consumers, it needed to create a product range that will appeal to
different segments. Therefore, it introduced Skoda Fabia, Skoda Superb (luxurious),
and Skoda Octavia Estate (for the family). The prices of these products match with the
different market segments that the company wanted to attract.

Another threat is the European Union’s legal and environmental regulations because it
can affect the company’s position in the marketplace, the performance and reputation of
Skoda. So, to address this threat, the company designed products that are friendly at
every stage of their lifecycle.

B. Mission and Vision for “Spartan”:

Mission:

To develop, produce and sell value-added products and services with hygiene and
heath.

Vision:

Dedicated to improving well-being through leading hygiene and health solutions.