Beruflich Dokumente
Kultur Dokumente
HISTORY
The small business that eventually became Skoda Automobile Company was
form in 1895 where Vaclav Lauren a mechanic and Vaclav klement, a bookseller, joined
together to manufacture the Slovia bicycle in the town of Made Boleslaw,
Czechoslovakia about the 40 miles northeast of Prague. Four years later the company
began producing Motorcycles and had a total workforce of 68 people. In1901, the
company began using its motorcycle parts in the Production of motor vehicles with four
wheels and a two Cylinder engine.
2005
187,382
162,738
23,644
10,611
3,686
4,027
2,525
10,860
482
1,269
(564)
10,073
2,180
2004
155,396
140,996
14,000
6,132
3,157
3,147
2,964
5,289
360
1,225
(865)
4,424
1,291
2,320
(140)
7,893
1,475
(184)
3,333
When the Nazis marched Czechoslovakia in 1939, hitter grabbed Skoda auto
and made it and the sarmaments factory that was a part of the Hermann Goeringwere. He also ordered Skoda to move the steering wheel of its autos to the left-side
where, it was remained ever since.
As soon as World War II was, over the company was nationalized by the Soviets,
who had taken over the country, and renamed it AZNP Skoda. Under the Soviets Skoda
gained a monopoly status as the Czech passenger car manufacturer and this is when
the jokes really began as the quality of the cars for the mass market that had little style
and often looked like a metal box. As poor as their quality was, the still ahead of its
Eastern European Counterparts such as trabant, Warburg, and Lada.
Interestingly, the name Skoda in the Czech language means a shame and the
company in the 40 years of soviets regime certainly lived up to its name. It was
unfortunate that the oldest car company in central European fell greatly in the both
quality and prestige. Because of a lack of innovation, its models became outdated its
factories became inefficient, and its worker were not well trained.
When consumers were forced to purchase automobiles from soviets companies
and were prevented from, purchasing goods outside the region, there was no real
incentive to produce a competitive automobile. Likewise, workers who were guaranteed,
lifetime employment by the government were not motivated to produce quality products
in order to keep their jobs.
On November 17, 1989, a student rally for the freedom began at Wenceslas
Square in Prague, and within two weeks the communist government had relinquished
power to the government in what would later be referred to as, Velvet Revolution. In
1993, Czechoslovakia split into two parts the Czech Republic and Slovakia. The Czech
Republic began to put into place laws to encourage privatization of national assets and
the development of new entrepreneurial enterprises. The privatization of national
companies took place by the three means. A sale of the assets to outside owners (often
companies from other countries); a management employee buyout and voucher
privatization in which citizens were given vouchers for a minimal price that they could
use to purchase the stock of national companies that were being privatized.
EXHIBIT 2 Skoda Balance Sheet for the Year Ended December 31, 2006 (in Millions of
Czech Crowns)
ASSETS
2006
2005
2004
Intangible assets
13,351
13,210
12,602
39,809
41,466
42,236
Investments in associates
187
608
387
374
346
Non-current assets
54,070
55,023
55,792
Inventories
12,248
12,270
9,232
6,624
7,048
Trade receivables
Current tax receivables
5,497
449
231
14,430
11,600
Cash
1,176
4,512
4,534
Current assets
51,342
34,331
32,414
TOTAL ASSETS
105,212
89,755
88,206
EQUITY
Share capital
16,709
16,709
16,709
1,578
1,578
1,578
Reserves
39,961
28,395
25,860
TOTAL EQUITY
58,321
46,757
44,147
1,995
4,990
4,986
834
631
2,528
2,837
2,982
398
268
4,597
4,111
3,368
12,277
12,837
11,336
5,331
2,475
7,734
19,168
18,855
19,904
3,153
2,328
1,138
1,945
1,056
849
Current provisions
4,997
5,447
3,098
Share premium
LIABILITIES
Non-current financial liabilities
Other non-current liabilities
Deferred tax liabilities
Non-current tax payables
Non-current provisions
TOTAL NON-CURRENT LIABILITIES
Current financial liabilities
Trade payables
34,594
105,212
30,161
89,755
32,723
88,206
After the Velvet Revolution in Czechoslovakia in 1989, a Republic was formed, and
Vaclav Havel was elected president. The government immediately began to seek a
buyer for Skoda as a part of its privatization of national assets. That buyer was found,
and on April 16, 1991, Skoda became the fourth brand of the Volkswagen Group after
VW, Audi, and Seat (the Spanish subsidiary). Volkswagen bought a 70 percent interest
in the company, and the Czech government retained a 30 percent interest. In 2000,
Volkswagen bought out the remaining 30 percent interest from the Czech government.
The new infusion of capital and emphasis on research and development from
Volkswagen brought forth such popular models as the smaller Felicia, the larger middleclass Model Octavia and the latest products the Superd Czech and the roomy
Roomster. This model began to take the market share from other car manufactures in
the Western European small car market. Exhibit 3 provides a picture of Skoda Superd.
Skoda progressed so well improving the affiance and attractiveness of its cars
that in 2006. Skoda brand vehicles received the following honor`s 1st place " car of the
year" for the Skoda Roomster in Estonia, Finland and Bulgaria; 1st place " Auto Trophy"
in the Minivan category for Skoda Roomster; 1st place in Sweden and Belgium; and "
Red Dot" design award for Skoda Octavia Combined.
Mission Statement
Skoda developed the following Mission Statement
Three basics value of the Skoda brand are:
Intelligence- We continuously seeks innovation solutions and new ways in which to care
for and approach the customers that are most important for us. Our conduct towards the
customers is above abroad, and we respect their desires and needs.
Attractiveness- We develop automobiles that are aesthetically and technically of high
standard and always constitute an attractive offer for our customers not only in terms of
design or technical parameters but also the wide range of offered services.
Dedication- We are following the steps of founders our company Messrs, Laurin and
klement. We are enthusiastically working on the further development of our vehicles; we
identify ourselves with our products.
Top Management
Skoda follows German models for its corporate governance which utilizes
members of the board of directors as member of senior management of the company. In
accordance with its articles of association the general meeting (the sole shareholders
Volkswagen) elects and recall members of the board of directors and decides how they
will be compensated for their work. The board of directors, in turn, elects and recalls its
chairman. As Skodas statutory body, the board of directors runs all companys
operations and acts in its name. The board has six members, each with a term of office
of three years, and multiple terms are possible. Each of the six members of the board of
directors runs one of Skodas six departments. Skodas board members are listed in
Exhibit 3.
Central Europe Operations
Despite flat markets in Central Europe in 2006, Skoda maintained its position as
the member one carmaker in this region. In Poland, the brands second market in this
region, 28,783 vehicles were sold (up 4.1 percent from 2005). This corresponds to a
market share of 12.0 percent, making Skoda the market leader in Poland. In Slovakia,
the sales of Skoda vehicles grew by 3.0 percent and remained the market leader by a
wide margin
In the Czech Republic, the overall passenger car market contracted in
comparison with 2005confirming an ongoing declining trend. This decline was offset by
rapid expansion of the overall market for light commercial vehicles. Skoda did maintain
its vehicles sales volume in 2006 and retained its position of domestic market leader in
both the passenger car and light commercial vehicle segments.
Compared to 2006, demand for new passenger cars in markets in Central
Europe is expected to remain flat. Positive movement can be anticipated in the Polish
(year-on-year growth of 2.0 percent) market, while the Hungarian market is forecasted
to decline substantially (-9.0 percent).
Eastern Europe Operations
The highest growth in 2006 sales was achieved by Skoda in Eastern Europe. A
total of 70,986 vehicles were delivered in this region, an increase of Skoda in Ukraine
were up to 64.2 percent over the previous year.
The forecast for the overall markets for new passenger cars in Eastern Europe
was one of growth in 2007, the most dynamic market being Russia (+11.0 percent).
EXHIBIT 3
Chairman of the
Board
Detlef Wittig
Commercial affairs
Department
HolgerKintscher
Production and Logistic
Department
Horst Muhi
Sales and Marketing
Department
Fred Kappler
Human Resources
Department
Martin John
Department Technical
Development
Herald Ludanek
(+ 9.1% year on year). Over 10% sales growth was recorded in the following Western
European countries. Germany, Spain, Belgium, Greece, Switzerland, Finland and
Luxembourg. The most vehicles were sold in Germany- 103,931 vehicles total which
was up 25.3% over 2005.
In 2007, overall demand for new passenger cars in Western Europe was forecast
as likely to fall slightly (-1.0%) compared to 2006, primarily as a result of anticipated
declines in the German (-2.6%) and British (-1.5%) markers the French market was
expected to improve (+4.5%)
Asia
Skoda's deliveries in Asia in 2006 totaled 36,541 vehicles, up 21.1% over the
previous year. India again the largest market saw 12,105 vehicles delivered to
customers for year on year increase of 35.2%. Other important market were Turkey
(5,725 vehicles compared to 7,261 in 2005), Egypt (3,683 vehicles compared to 2,328
in 2005) and Israel (3,518 vehicles compared to 2,906 in 2005)
By 2006, Skoda had developed its production facilities even further in other
countries. In May of 2006, an agreement was signed for a joint manufacturing plant for
the Volkswagen and Skoda Auto brands in Kaluga, Russia. The first vehicles bound for
the Russia market to leaves the gates of the joint plant will be the Skoda Octavia, and
this event was to take place as early as autumn in 2007.
In June of 2006, a licensing agreement was signed to allow production of Skoda
fabia and Skoda Superd model lines in China. In the run-up to its Chinese market
launch in 2005 Skoda presented the new Skoda Octavia model at the Beijing motor
show in November 2006.
Skoda produces finished vehicles as well as vehicles kits in various stages of
assembly. The vehicles kits are shipped from the production plants and assembled in
their assembly plant the company also manufactures engines, gearboxes, engine and
gearbox components and genuine parts and accessories.
Skoda's 2006 revenues broken down by the product category are provided in
exhibit 4.
Skoda assembly plants were recently opened in Kazakhstan, Ukraine, Bosnia
and Herzegovina, and India. Exhibit 5 identifies the countries to which Skoda
Automobiles were shipped from 2000 to 2006. Note the decreasing trend in the Czech
Republic and Central Europe while Eastern and Western Europe and Asia are growing.
In total, Skoda operated in nearly 90 countries all over the globe. Exhibit 6 illustrates the
Skoda auto Group Structure around the world.
Marketing
In addition to a growing number of vehicle deliveries worldwide. Skoda has
developed a network of authorized sales and service partners (up 5.5% from 2005). To
assure that its customers receive standards compliance and improved service quality,
Skoda has trained over 4,400 service employees in the Czech Republic and abroad.
The construction of 100 new Skoda dealerships also illustrates strong growth of the
brands distribution network.
EXHIBIT 4
Skoda Sales Revenues by product lines in 2006
PRODUCT
Vehicles
Part and accessories
Supplies to other VW Companies
Other goods and services
Total
PERCENT OF REVENUES
88.7%
7.3%
2.9%
1.1%
100%
2000
2001
Czech Republic
Western Europe
Overseas & Asia
13,116
2003
2004
2005
2006
71,522 64,676
65,166 65,171
83,549
93,747 87,139
73,855 75,626
24,167 27,224
26,652 31,564
2002
A new type of marketing communication was developed for the Skoda Roomster aimed
a new target audience. The company envisions that the Roomster is not just a means of
transportation for this customer segment, but it is also a way to express their personal
style. The comprehensive campaign developed for the launch of this new model is
based on the claim, Find your own room, which emphasizes the principal features of
the car which are styling, roominess, and perspective.
Skoda Auto
Slovensko
s.r.o.
Based in
Bratislava,
Slovak Republic
Skoda Auto Stake:
Skoda Auto a.s.
Based in Mlada
Boleslaw,
Czech Republic
SkodaAutoPolska
S.A.
Poland
Skoda Auto Stake:
51%
000 Volkswagen
Russ
Based in Kaluga,
Russia
Skoda Auto Stake:
37.5%
Education
Skoda established the Skoda Auto School of Economics in 2000 as the first
company-operated university in the Czech Republic. Skoda decide to hire highly
proficient university professors to reach in the school, and the university was
subsequently fully accredited for awarding degrees. In the several years since its
inception, the number of applicants for the school has grown to the point that demand
has outstripped supply. The three-and-a-half year bachelor program allows students to
work in the plant to earn credit for their studies in management, and the first students
enrolled in the school graduated in 2004.
Beginning in 2006, the university bean offering a master's degree in
management. A total of 585 students were enrolled in the school in 2006, and 157
graduates were awarded bachelor's degrees. Approximately, one-half of the graduates
found jobs working for the company or its suppliers. Another one-third elected to
continue their studies in the master's degree program.
Suppliers
One of the key components of Skoda's strategy is quality. Suppliers are selected
in a systematic and controlled process which involves the technical development and
production functions. The most important activity of the purchasing department in 2006
was to secure everything needed for the series of production of the new model line, the
Skoda Roomster.
In 2006, production-related purchasing was CZK 208.8 billion in comparison to
CZK 105.2 billion in 2005. The share by domestic suppliers was 62.6 percent, and in
2005 it was 63.9 percent. Suppliers from Central and Eastern Europe who satisfy the
strict eligibility conditions are winning contracts within the Volkswagen Group.
The selection of suppliers is powered by modern information and
communications technology. One of the most important applications in Skoda's Internet
B28 platform is online negotiations. A total of 403 online negotiations took place in 2006
as compared to 220 such negotiations in 2005.
Quality
A key part of the integrated management system at Skoda is the quality
management system. The company is subjected to audit for compliance with the
International ISO 9001-2000 standard. In the autumn of 2006, TUV NORD carried out
the second audit of this system. The result was a renewal of the certificate which was
granted in 2004. This certificate documents that Skoda has introduced and uses a
quality management system in the areas of development, production, sales, and service
and that the system used complies with the ISO standard.
Health Management
developing countries of Asia, South America, Eastern Europe, and Africa rather than the
mature economies of Western Europe, North America and Japan.
Mergers of automobile companies are being considered in China, and there was
a strong movement worldwide to an amalgamation of automobile companies located in
different countries. In February of 2007, DaimlerChrysler AG acknowledged that it might
have to find a partner or spin off its ailing U.S. arm (Chrysler) due to the depth of the
crisis facing Detroit's automakers. The list of potential partners included Renault SA and
Nissan Motor Company. Nissan had hinted earlier that it was interested in a North
American partner.
Ford Motor Company CEO Alan Mulally also expressed interest in assessing
whether Ford could rely on other companies for some manufacturing or other tasks.
Toyota had suggested in 2006 that it was interested in further conversations with Ford.
Ford also was searching for a buyer for its Range Rover and Jaguar divisions, which
were showing a lack of profitability.
In 2006, General Motors considered an alliance with Renault and Nissan before
deciding to remain as they are. However, GM executives have made it clear that they
anticipate their company's future growth will come largely from outside the United States
partly by making use of existing low-cost partners such as South Korea's GM Daewoo
Auto and Technology Company and China's Shanghai Automotive Industries
Corporation.
Unfortunately, many of the cross-border mergers and joint ventures in the
industry in the past had a difficult time surviving. For instance, the joint venture between
General Motors and Saab cost General Motors S2 billion, which would be difficult to
recoup. In addition, Ford bought Jaguar in the early 1990s and invested approximately
S5 billion in that model; but by 2007 Ford was considering finding a buyer for it. Other
global ventures that did not have positive outcomes were Ford-ACE, ChryslerLamborghini, Chrysler-Rootes, Renault-Volvo, BMW-Rover and Volkswagen-Rolls. For
the high cost of acquisition, that automobile companies might have more easily created
their own new models.
In making plant location decisions, companies normally consider the following
factors: labor costs, energy costs, access to a workforce that has the right skills, access
to the necessary infrastructure (roads, railroads, favorable political climate) and
closeness to important global markets. The Skoda plant in the Czech Republic had
been a good selection for Volkswagen for those reasons. There was also a tendency to
move to just-in-time inventory systems at automobile manufacturers around the world,
which caused suppliers to move their operations closer to auto plants. This movement
was occurring around the Skoda plant at Milada Boleslav.
The Future
The automobile industry has gone from primarily a national to a regional a finally
a global marketplace. Skoda has to decide whether to continue the movement of
assembly plants abroad when the Czech Republic had such inexpensive labor. Prepare
a three-year strategic plan for the Skoda board of directors who manage the company.
References:
Hoovers, a D&B Company.http://premium.hoovers.com/subscribe/co/profile.xhtml? ID=ffffcrxhyyrhfrjtsh
Flint,Jerry(january1999).Global math. Wards Auto World, Volume35, issue 1,p.15.
*2009 financial statements for this case are available at www.pearsonglobaleditions.com/david
perleybrook.umfk.maine.edu/slides/Spring2009/BUS411/SKODA.ppt
www.skoda-auto.com
www.skoda.co.uk
www.euromonitor.com
www.marketresearch.com
To identify new opportunities for growth and bringing innovation to the market
To renew the negative perception of its brand name
V. AREAS OF CONSIDERATION
Strength
1. Won numerous awards for
producing quality automobile
2. Implementation of low wage cost
country sourcing strategy
3. Gradual increase of total assets
4. Largest employer in Czech
Republic
5. Long-term existence as automobile
manufacturer in Europe
6. Graduates of Skoda Auto School of
Economics serves as their
competent employee
7. Parent company is Volkswagen
8. High growth sales in Europe
9. Capital is from VW
Opportunities
1. Failed cross border merger and
joint venture
2. Moving
manufacturing
and
assembly plants to low wage cost
countries
3. Growing automobile market in Asia
and Africa
4. American market is open for
European companies
5. Manufacture automobile operating
in new form of energy
SWOT Matrix
Weakness
1. Poor brand name
2. Low total market share
3. Assembly plants outside the Czech
Republic
4. Stay in the shadow of VW
5. Negative perception on car models
6. Employees are claiming for high
wage
1.
2.
3.
4.
5.
Threats
High and intense automobile
competition in the market
Increasing price of nonrenewable
energy sources and petroleum
Monopolistic competition worldwide
Decline in sales at Eastern Europe
High wage rate of other countries
that make it difficult to be
competitive
Strength-Opportunities
1.
2.
3.
Strength-Threats
1.
2.
Weakness-Opportunities
1.
Weakness-Threats
2.
Renewed mindset of
Disadvantages
the customers to
ACA 2
Expensive due to
marketing campaign
Skoda
Limited flexibilty
Impersonal
Timescale
Awareness
Consistency in
market place
Relocation
Time consuming
possibilities
Expensive
Loss of control
new opportunity
Compromised quality
Employee turnover
Financial challenge
Lesser cost of
dealership
ACA 3
ACA 4
New employee
Considerations
Uniqueness
Eco-friendly
Expensive
Possible to be not
market
known because of
Volkswagen
their identity.
ACA2
2
1
ACA3
3
4
ACA4
1
2
1
1
2
7
2
3
4
16
3
2
1
9
3-Better
4-Best
Definition of Criteria:
Cost benefit- the result where they can benefit higher cost among all the
alternatives
Broad applicability- the extent where the alternative can apply
Timeliness- the length of time top consume
Completeness- if the ACA plan has all the major elements
Risk- which ACA will result to greater damage
Based on the analysis, ACA 1 proved to be the best among the 4 alternatives.
PERSON/S
RESPONSIBLE
Marketing Department
ESTIMATED TIME
Top management,
Marketing Department,
Accounting Department
Sales, Marketing and
Accounting Department
6 months
2-3 months
2-3 months