Skoda´S Change of Public Perception Analysis
Management Summative
The change of Škoda´s public perception analysis
Marking Code: Z0923727
10th of March 2011
Management Summative
ŠkodaAuto Company was founded in 1985 in Czechoslovakia by Laurin and Klement. Initially, only bicycles were made, but gradually they began the production of motorized vehicles, debuting their first automobile in 1905. Up to 1989, Škoda kept its car business monopoly, but due to the existing political climate - the communist government had just been overthrown- the new Czech government and Škoda management began to look for a suitable partner to revitalize the brand and approximate it with what western companies were achieving in terms of design, technology and naturally, in market influence. So in 1991, Volkswagen was chosen. Unlike Renault, Škoda’s other strong contender, Volkswagen didn´t want to merge Škoda into their company, but instead have it act as a subsidiary so as to take advantage of its 35% market share in Eastern Europe (Ledgard, 2005), and to be able to expand its prospective customer base. Following Škoda’s total acquisition in 2001, expectations from VW were surpassed, with Škoda contributing with 25% of profits today (Neroth, 2009). The brand has slowly, yet steadily been able to increase its market share, thus allowing VW to aim towards a more up-market clientele. * Through diverse management strategies and approaches it managed to change its image, design, technology and target consumers in order to transform itself into the profitable, renowned and award winning car manufacturing company.
Strategic Direction
It used the market penetration approach, which according to Johnson et al. (2008), is the strategic direction “by which the organization takes increased market share of its existing markets with its existing product range (…). It builds on existing strategic capabilities and does not require the organization to venture into uncharted territory.” Škoda was already a good
The change of Škoda´s public perception analysis
Marking Code: Z0923727
10th of March 2011
Management Summative
ŠkodaAuto Company was founded in 1985 in Czechoslovakia by Laurin and Klement. Initially, only bicycles were made, but gradually they began the production of motorized vehicles, debuting their first automobile in 1905. Up to 1989, Škoda kept its car business monopoly, but due to the existing political climate - the communist government had just been overthrown- the new Czech government and Škoda management began to look for a suitable partner to revitalize the brand and approximate it with what western companies were achieving in terms of design, technology and naturally, in market influence. So in 1991, Volkswagen was chosen. Unlike Renault, Škoda’s other strong contender, Volkswagen didn´t want to merge Škoda into their company, but instead have it act as a subsidiary so as to take advantage of its 35% market share in Eastern Europe (Ledgard, 2005), and to be able to expand its prospective customer base. Following Škoda’s total acquisition in 2001, expectations from VW were surpassed, with Škoda contributing with 25% of profits today (Neroth, 2009). The brand has slowly, yet steadily been able to increase its market share, thus allowing VW to aim towards a more up-market clientele. * Through diverse management strategies and approaches it managed to change its image, design, technology and target consumers in order to transform itself into the profitable, renowned and award winning car manufacturing company.
Strategic Direction
It used the market penetration approach, which according to Johnson et al. (2008), is the strategic direction “by which the organization takes increased market share of its existing markets with its existing product range (…). It builds on existing strategic capabilities and does not require the organization to venture into uncharted territory.” Škoda was already a good
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