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.

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

Open new assembling plant for Skoda cars

in Mexico and make it as a base to enter American market

Strategy 2

Reposition of brand name strategy by

increasing marketing effort

Key Internal Factors Weight AS TAS AS TAS

Strengths1. Skoda achieved the highest sales in 2006 compared to its competitors especially in Western and Eastern Europe

0.14 4 0.56 - -

2. Market share in Western Europe recorded higher sales

0.14 4 0.56 - -

3. Establish an auto school named Skoda Auto School of Economics in 2000 as the first company operated university in the Czech Republic. To produce graduate people in sales department and engineering department indirectly can make Skoda Auto more effective.

0.10 - - 4 0.40

4. Quality is the key components of Skoda strategy-won numerous award for producing quality automobile

0.14

- - 4 0.56

5. Having a program called Healthy Company which focuses on improving their employee health and fighting diseases

0.10 - - 3 0.30

Weaknesses1. Skoda’s parent, Volkswagen, having financial problem

0.12 - - - -

2. Skoda has problem with their assembly plant in some countries

0.14 2 0.28

3. Demand for Skoda’s cars in Central Europe showed declining trend 0.14

2 0.28 2 0.28

Subtotal 1.00 1.68 1.54

Strategy 1

Open new assembling plant for Skoda cars

in Mexico and make it as a base to enter American market

Strategy 2

Reposition of brand name strategy by

increasing marketing effort

Key External Factors Weight AS TAS AS TAS

Opportunities 1. In Slovakia, sales of Skoda vehicles grew by 3% and remained 0.05 3 0.15 4 0.20the market leader by a wide margin 2. Forecast growth in 2007 for overall market of new passengers

0.05

3 0.15 cars in Eastern Europe-Russia was expected as the most dynamic market with future growth of 11%3. The construction of 100 new Skoda dealerships which 0.10Illustrate the strong growth of brand's distribution network.

- - 3 0.30

4. A new type of marketing communication was developed- 0.10Skoda Roomster target new audience.

- - 4 0.40

Threats1 Automobile industry become more competitive with Asian 0.20carmakers like Nissan, Honda and Toyota extending their

2 0.40 2 0.40

market share worldwide, Chinese auto firm expanding globally 2. Regrouping of General Motors and Ford Motors 0.15

- - - -

3. Skoda's parent, Volkswagen, having financial problem 0.10

2 0.20 2 0.30

4. Escalating price of non-renewable energy sources and higher 0.20

2 0.40 - -

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 ATTRACTIVENESS SCORE 2.98 3.14

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.