THE BOSTON CONSULTING GROUP (BCG) MATRIX

Refer to table above SKODA AUTO in quadrant 1 we called question mark.

• Division in quadrant 1 have a low relative market share position and they compete in a high
growth industry.

• Generally, firm’s need highly cash for growing industry but their cash generation is low.

The global automobile industry has become intensely competitive with Toyota, Nissan, and
Honda attacking worldwide and at the same time Skoda’s parent company Volkswagen having
financial problem. Beside that, Skoda management should decide whether continue their
assembly plants outside of Chezh Republic and whether Skoda automobiles should exported to
the united state. We can see their lack of cash but market growth very high.

Skoda auto must decide whether to strengthen them by pursuing an intensive strategy. In this
quadrant they require intensive strategy efforts to improve existing product and market.
Product development

• The new infusion of capital and emphasis on research and development to create new
model like small car and middle class car.

• Improving the efficiency and attractiveness of new car.

Market Penetration

• Marketing communication was developed for the Skoda Roomster aimed at a new target
audience.

• Introducing low price model.

• The customer receives service standard compliance and improves service quality.

• The comprehensive campaign is develop to launch of new model

Market Development

• Skoda automobiles should be export to the United States. Volkswagen merge with
Skoda Auto in April 16 1991, VW hold 70% shares in Skoda Auto and the rest retained
by Czech government. They sure can be sold there because reputation and quality of
product by Volkswagen

• Construct new Skoda dealership globally.

• Building assembly plants outside of Czech Republic.

Divestiture

• Trimming the number of jobs.

• Cutting back on its current overcapacity of 30 percent.

• Sale of some operations, VW has already sold their car rental business, Europcar, to
European investment firm Eurazeo
 THE INTERNAL – EXTERNAL(IE) MATRIX

Skoda Auto fall in division 2, the best way their need to hold and maintain this company because
this firm have a good future refer to the financial report there shows profit increasing year by year.
In Central Europe flat market in 2006 but, Skoda maintained its position as the number one
carmaker in this region. In the Poland, the brand’s second largest market, In Slovakia remained
market leader by a wide margin and the most dynamic market being Russia (+11.00 percent).
To hold and maintain this company, we need to implement the strategy which is market penetration
and product development.

3
Product development

• The new infusion of capital and emphasis on research and development to create new
model like small car and middle class car.

• Improving the efficiency and attractiveness of new car.

Market Penetration
• Marketing communication was developed for the Skoda Roomster aimed at a new target
audience.

• Introducing low price model.

• The customer receives service standard compliance and improves service quality.

• The comprehensive campaign is develop to launch of new model

• Improving the efficiency and attractiveness of new car.

THE GRAND STRATEGY MATRIX

Skoda Auto located in quadrant I of the Grand Strategy Matrix is in an excellent strategic position.
For this firm, continued concentration on current markets and products is an appropriate strategy.

Product development

• The new infusion of capital and emphasis on research and development to create new
model like small car and middle class car.

• Improving the efficiency and attractiveness of new car.

Market Penetration

• Marketing communication was developed for the Skoda Roomster aimed at a new target
audience.

• Introducing low price model.

• The customer receives service standard compliance and improves service quality.

• The comprehensive campaign is develop to launch of new model

Market Development
 • Skoda automobiles should be export to the United States. Volkswagen merge with
Skoda Auto in April 16 1991, VW hold 70% shares in Skoda Auto and the rest retained
by Czech government. They sure can be sold there because reputation and quality of
product by Volkswagen.

• Construct new Skoda dealership globally.

• Building assembly plants outside of Czech Republic.

When the organization has excessive resources, integration strategies maybe effective strategy for
Skoda Auto.

Forward Integration

• The construction of 100 new Skoda dealerships also illustrates strong growth of the
brand’s distribution network.

• Building assembly plants outside of Czech Republic.

Backward Integration

• Suppliers are selected in a systematic and controlled process which involves technical
development and production functions.

• The selection of suppliers is powered by modern information and communication

technology.

Horizontal Integration

• April 16 1991 Volkswagen buys 70 percent Interest Company and 30 percent retained by
Czech government. (Merge)

Related Diversification

• 1895 manufacture the Slavia bicycle in the town of Malda Boleslav.

• 1901 the company using motorcycle parts in the production of motor vehicle with four
wheels and two cylinder engine.

QUANTITATIVE STRATEGIC PLANNING MATRIX (QPSM)

 Strategy 1 Strategy 2

Open new assembling Reposition of brand

plant for Skoda cars name strategy by
in Mexico and make it increasing marketing
as a base to enter effort
American market
Weig AS TAS AS TAS
Key Internal Factors ht
Strengths
1. Skoda achieved the
highest sales in 2006
compared to its competitors 0.14 4 0.56 - -
especially in Western and
Eastern Europe

0.14 4 0.56 - -
2. Market share in Western
Europe recorded higher sales

3. Establish an auto school

named Skoda Auto School of
Economics in 2000 as the first 0.10 - - 4 0.40
company operated university
in the Czech Republic. To
produce graduate people in
sales department and
engineering department
indirectly can make Skoda
Auto more effective.

4. Quality is the key

components of Skoda
strategy-won numerous - - 4 0.56
award for producing quality 0.14
automobile

5. Having a program called

Healthy Company which
focuses on improving their - - 3 0.30
employee health and fighting 0.10
diseases

Weaknesses
1. Skoda’s parent, 0.12 - - - -
Volkswagen, having financial
problem

2. Skoda has problem with 2 0.28

their assembly plant in some 0.14
countries
3. Demand for Skoda’s cars in 2 0.28 2 0.28
Central Europe showed
declining trend 0.14
Subtotal 1.00 1.68 1.54

Strategy 1 Strategy 2

Open new assembling Reposition of brand

plant for Skoda cars name strategy by
in Mexico and make it increasing marketing
as a base to enter effort
American market
Weig AS TAS AS TAS
Key External Factors ht
Opportunities
1. In Slovakia, sales of Skoda
vehicles grew by 3% and 3 0.15 4 0.20
remained 0.05
the market leader by a wide
margin
2. Forecast growth in 2007
for overall market of new
passengers 3 0.15
cars in Eastern Europe-Russia 0.05
was expected as the most
dynamic market with future
growth of 11%
3. The construction of 100
new Skoda dealerships which 0.10
Illustrate the strong growth of - - 3 0.30
brand's distribution network.
4. A new type of marketing
communication was
developed- 0.10
Skoda Roomster target new - - 4 0.40
audience.
Threats
1 Automobile industry
become more competitive
with Asian 0.20
carmakers like Nissan, Honda and 2 0.40 2 0.40
Toyota extending their
market share worldwide, Chinese
auto firm expanding globally
2. Regrouping of General - - - -
Motors and Ford Motors 0.15
3. Skoda's parent, 2 0.20 2 0.30
Volkswagen, having financial
problem 0.10
4. Escalating price of non- 2 0.40 - -
renewable energy sources
and higher 0.20
 petroleum prices
5. Effect of world Trade - - - -
Organization-imported models
began to 0.05
flood the market, thus the
domestic producers were forced
to cut the price
Subtotal 1.00 1.30 1.60
SUM TOTAL 2.98 3.14
ATTRACTIVENESS SCORE

This technique is QPSM, which comprises two strategies Skoda Auto to indicate which alternative
strategies are the best. In Table QPSM, two alternative strategies, Strategy 1 open new assembling
plant for Skoda cars in Mexico and make it as a base to enter American market and Strategy 2
Reposition of brand name strategy by increasing marketing effort. Sum total attractiveness score in
strategy 1 is 2.98 versus 3.14 that indicate the business should reposition of brand name strategy by
increasing marketing effort.

Strategy 2 Reposition of brand name strategy by increasing marketing effort

• Low cost – Skoda Auto only think cost in creates effective marketing rather than built new
assembly plant in other country and plus marketing plan.
• Save time – Skoda Auto take short-term to make attractive marketing rather than built new
plant in other country

Recommendation

• The best solution is using the grand strategy matrix (GSM) which company can apply all the
strategies within GSM. For this firm, continued concentration on current markets and
products. GSM make Skoda Auto more flexible to apply their strategies to suit with the
problems occurs.
• Increase production and sales export more in Asian – Asian have big market in China,
Indonesia, Malaysia and others in Asian. Besides that, they need to produce low price model
for middle class.
• Improving the efficiency and attractiveness of marketing new car – creativity is important to
make marketing more quality and different from others to attract and introduce people about
our new car and indirectly stimulate buying that car.