Case Study: Volkswagen & Skoda

Executive Summary

Skoda Auto is an Eastern European Company that is growing at a rapid pace as compared to the other automobile companies across the globe. Skoda has its presence in several regions of the world. It has succeeded in making enormous sales in majority of the regions of the world. However, it has gone through several crisis situations to arrive at this stage. Since its inception in 1895 till the year 2004, it survived several challenges and managed to maintain the stability of the firm. Before 1991, Skoda was in real crisis and required foreign help in order to survive. Volkswagen was the firm that helped Skoda in coming out of the crisis. It made investments in the Czech company and made several commitments to the Czech government in order to have the share of company instead of purchasing it upfront. As the merger took place, Skoda did not only prove its worth as an assembly plant of Volkswagen but continued to have the presence of its brand image. It continued manufacturing and production of Skoda branded cars. It opened up several manufacturing plants across Russia, Ukraine, India, Kazakhstan and several other parts of the world. As Skoda tried to approach China in the similar manner as it tried to approach the other countries, China did not give a positive response. China resisted the entrance of Skoda in the country and ruled out direct investment in favor of a local Chinese automobile company. However, in 2007, as China became a part of World Trade Organizations (WTO), it signed deal with Skoda in accordance with the requirements of the terms of WTO. Since then, Skoda has opened up several number of manufacturing plants in the country.

Executive Summaryii

Introduction1

Discussion2

Market Entry strategy employed by Volkswagen through their investment in Skoda2

Extent of success of Skoda to be attributed to the geographical location of the new sites4

Ruling out of direct investment in China6

Conclusion7

References8

Case Study: Volkswagen & Skoda

Introduction

Skoda Auto is an Eastern European organization is one of the fastest growing global automobile brands, specifically in emerging economies of the Middle East and Asia. Additionally, it is the third oldest car manufacturing company in the world. Presently, the organization is negotiating with Chinese carmakers to sell them Skoda designs, while preparing for entrance into Arab and Iranian markets and pushing deeper into the Indian car market. Skoda has been able to successfully carve out substantial share of market in Scandinavia, Germany, and Britain. It is growing in France and Italy.

The strategy of Skoda is to turn out to be 'The Ikea of car making'. This strategy of the firm builds on its present post-Cold War reputation as a manufacturer of strikingly functional cars of small size that are inexpensive in nature. Like all other companies, Skoda also has a few challenges to face. It faces a bribery and fraud scandal. This scandal proves to be a threat to engulf the car firm and its corporate parent, Volkswagen AG in months of controversy and investigation ...