PROJECT ON SKODA AUTO INDIA PRIVATE

LTD.

SUBJECT : - Strategic Management

SUBMITTED TO : - Prof. Rahul Sir

SUBMITTED BY : - Sarabjeet

STD : - SY-BMS

ROLL NO : - 13

CONTENTSINTRODUCTION

HISTORY

BACKGROUND

PRODUCT

SERVICE

LEVELS OF STRATEGIC MANAGEMENT

KEY STEPS TOWARDS STRATEGIC PLAN

KEY STEP TOWARDS BUSINESS STRAGEGIES

STRATEGIC MANAGEMENT PROCESS

BCG MATERIX

GE MATERIX

7 MECKENSI MATRIXES

ORGANISATIONAL STRUCTURE

TYPES OF STRATEGY

CONCLUSION

RECOMMANDATION

INTRODUCTION

Skoda Auto India Pvt Ltd.Skoda Auto is a part of the International Volkswagen Group whose controlling stake is owned by Porsche SE . It is one of the premier automobile manufacturers in Europe, based in Czech Republic. The company introduced itself on November 16th, 2001. With its Greenfield plant in Aurangabad, the company has

its dealership network spread over Mumbai and Delhi region.

The brand Skoda Auto is globally known for its stylish looks, well built exterior and its constant endeavor to introduce modern technologies. The company has already introduced 16 luxury models in Indian market.

It sells cars under the brand name of Skoda. According to an official release, Skoda Auto India sold more than 16,000 units in the 2008, a 28.5% increase from 2007 sales totals

Despite a dip in global automobile sales, Skoda India managed to sell 17000 units of its vehicles in 2008, with growth registered 33.2 % from previous year.

HISTORY

At the beginning of December 1895 the mechanic Václav Laurin and the book-seller Václav Klement, both bicyckle enthusiasts, started manufacturing bicycles of thein own design, patriotically named Slavia in the nationalist atmosphere of the ond of the 19th century. A few years later, in 1899, the Laurin & Klement Co.

began producing motorcycles, wich were soon succesful and gained several racing victories. After initial experiments at the turn of century, producing of motorcycles was gradually replaced by automobiles form 1905 onward.

Based on the traditional production processes and past success, the Czechoslovak economy managed to maintain a relatively good standard in the post/socialist period for several decades, in spite of the changes brought about by planned economy and efforts at unduly rapid growth. This standard only became questionable towards the end of the 1960’s due to development of new technology in the western world. The permanent stagnation of the economy started after the 70’s, also affecting the SKODA automobile manufacturer in spite of the company’s leading position in the East Europe marker. Production grew again only when the model range Skoda Favorit went into production in 1987.

After the political changes of 1989, under the new market economy conditions the Government of the Czechoslovak Republic and the management of Skoda began to search for a strong foreign partner whose experience and investments would be capable of securing long-range international competitiveness of the company. In December 1990, the Government decided on cooperation with the German Volkswagen Group. The Skoda – Volkswagen joint venture began to operate on 16 April 1991 under the name Skoda, automobile as., becoming the fourth brand of the Volkswagen Group alongside VW, AUDI a SEAT.

BACKGROUND IN INDIA

Skoda Auto India started its operations in India on November 16, 2001. They opened their manufacturing unit in Shendra, on the outskirts of Aurangabad. Thus setting their foot on the Indian soil. The first Skoda car which had hit the Indian roads was the Skoda Octavia which was priced at 10.6 lakh INR. Skoda Octavia is a medium sized car and gained popularity for two primary reasons, first being the fact that the car had 100 percent import content and second reason that the model was available in both petrol and diesel version. The Octavia is being imported to India as semi-knocked-down kits and assembled at the company's Aurangabad plant. The plant currently assembles 10 cars a day and operates on a single shift. The indigenization level is planned to be around 10 per cent by 2002-end. In spite of being somewhat highly priced, the Skoda has received a tremendous response in the Indian market. Hence Skoda Auto has plans to launch its three luxury cars Elegance, Laurin and Klement, and Superb in India in 2002-03. With the market trend and inclination of the economy to spend generously to own a luxury car.

Skoda is targeted a 17-18-per cent share of the combined C- and D-segment volume in India in 2003. Skoda, which made an initial investment of $15 million in the Aurangabad facility, invested $56 million more in due course of time for higher level of localization which in turn would bring down the cost of the cars manufactured.

In April 2007 Skoda (VW group) invested $912m to expand its plant at Aurangabad & Chakan plant at Pune

to accommodate the production on Volkswagen, Audi and Porsche. In 31st march 2009 chakan plant was ready and Skoda announced localization level increased to 50% from 15%.

PRODUCT

SKODA INDIA OFFERS THE FOLLOWING CARS,

SKODA FABIA

The sleek looking Fabia is the first Super Hatch in India with a huge passenger and cargo space designed with premium looks. It has all the comforts and roominess of a big luxury car and at the same time it is so compact that you can drive it and park it with utmost ease in the most congested areas.

This super hatch that combines looks with performance and economy is available in petrol and diesel variants. It packs quite a punch every time it hits the road.

Features

Available in both petrol (1.2 ltrs) and 1.4 TDi engine

Dual airbags for safety ABS (anti lock breaking system) Integrated music system Parking sensors Climate control Multi-function display Sunroof

SKODA OCTAVIA

Octavia is an orderly design with no unwanted mass. It’s more about straight lines than about curves. It looks very European with the subtle nose section and high waistline. The build quality is as good as it can get and is faintly reflected in the way the Octavia looks. While seated in the rear, you will have limited legroom but the story is completely different at the front as the seats at front are enormously accommodating. The quality of the interior is quite good and it exudes a tough feel.

The 1.9l turbo-diesel engine is the one which has sold the most, and rightly so. It is frugal and manages to keep the performance-oriented driver happy at the same time. The 1.8l, 150bhp turbocharged petrol engine is an entirely different beast and is one of the most powerful in the under-Rs 20 lakh price bracket. It is supremely responsive and makes the Octavia one of the fastest four-door offerings in the nation. Running on low-profile tyres, the Octavia RS (1.8l) suffers from harsh ride quality but the handling is razor sharp. The regular Octavia offers better ride comfort and even when going over big potholes, it results in an expected bump.

The Octavia offers the build quality of a battle tank and storage capacity of a water tank. Good ride and modest handling are other positives which make it click so well but what swings the balance in her favor by a fair margin is the fuel efficiency which is one of the best in the country. Makes perfect sense to take this car on long journeys.

FEATURES

Leather seats Climate control Integrated music system with steering mounted

control Dual airbag Xenon head lamps Alloy wheels Sun-roof Multi-functional display DSG transmission Parking sensors Tilt steering

SKODA LAURA

Skoda Laura, a stable mate of Skoda Octavia, Laura is popular for its contemporary, dynamic designer looks. Specially customized, the model has stood the test of times in Indian conditions with its extraordinary performance giving results beyond imagination. Skoda (Sedan) The Skoda Laura with its diesel variants targets the middle class consumer with Skoda car prices between rupees sixteen and nineteen lakhs, it is available in 3 engine options

The 1.8TSi borrowed from Audi 1.9 turbo diesel 2.0 turbo diesel

Features

12 way adjustable electrical seat 6 airbags Abs + EBD + traction control Heated front seat 6.5 inch TFT music player with steering mounted control Dual zone climatronic Leather upholster Cruise control Xenon projector headlamps Rear and Front parking sensor Central information system Rain sensor

SKODA SUPERB

Skoda has gone all out with the new superb to make you feel that you are buying a 40 lakh car for half the price. It has technology, features and safety equipment that befit other luxury cars. But the surprise is the 1.8 TSI motor, which has performance and efficiency to threaten the Accord. The car comes with 3 engine options 1.8 tsi motor , 1.9 TDI and 2.7V6 petrol engine , it also the first of its kind 7 speed triptronic DSG transmission first introduced by an local manufacturer.

FEATURES

Ac-vents on b-pillar for rear passengerstouch screen stereo which has multi-information radio station display-can display up to 9 different FM stations and just on the touch of a screen, you can choose your desired station.blue tooth connectivity with controls on steering wheeltrip computer with full information including service level indicatordriver's 8-way power adjustable seat with 3 memory settings (not sure of the front passengers as I forgot to pay notice)digital display of temperature for rear passengers also behind the gear console.dual zone automatic climate control with individual

temperature controlselectric roller blind on the rear windowmanual roller blind on the side rear windowswhen the car is locked, the mirrors (OSRVM) automatically retractautomatic boot lid opening from the key fobboot locks automatically when closed down softly due to electromagnetic buttonstwin-door system-either open just the deck lid or the rear hatch-an electromagnetic bottom on the left opens the deck lid and one on the right opens the hatch..Front and rear parking sensorstyre pressure monitoring systemrain sensing auto-on wipers60:40 rear split seatfront, side and curtain airbags with knee airbag etc

SERVICE

In India, Skoda parts are not sold in the open market and are only available from Škoda Auto India authorized dealers; Skoda currently has 61 dealerships across India, but plans to expand to 65 dealerships by the end of 2009.

Service for Skoda car

Warranty for Skoda products  

In accordance with the warranty conditions Skoda offers following warranty • 2 - Year warranty on New Skoda vehicles for unlimited kms• 2 - Years warranty on Skoda Genuine Parts and Skoda Genuine Accessories for unlimited kms.• The warranty will be honored by authorized Skoda dealership

LEVELS OF STRATEGIC MANAGEMENT

Skoda India is an Business Unit (BU) of the VW international group of companies, VW decided to setup an BU in India because of the large automobile market in India, the luxurious car market in India in about 3500 units per month, which maybe a small share compared to other segment, but the growth in this segment is at

34% annually, which is among the highest in the world. Hence just imports of manufactured won’t have been viable because they would have attracted 100% duty, but also the company also have missed the opportunity to tap the export friendly market set up in India.

From the levels of strategy, BUSINESS STRATEGY fits SKODA AUTO INDIA LTD, as Skoda is a multinational corporation it has production facilities and presence in large number Business units in world markets belonging to a particular country i.e. Skoda India, Skoda china etc which are connected to the parent company. Here the head of the BU decides the strategies and step need to be taken for the company growth and smooth operation.

In business strategy Skoda India is Competitive Strategy system as it is competing with other premier car manufacturers like Honda and Toyota.Skoda India is trying to bring down the cost of vehicles manufactured by locally manufacturing components of the vehicle hence evading from paying heavy taxes on direct imports.

Competitive pricing has also been a hand behind Skoda’s huge success, their price has been below the price of their competitors and with solid built and quality, Skoda has been triumphing in Indian premier segment market.

KEY STEP TOWARDS BUSINESS STRATEGY (SWOT ANALYSIS)

Strength Weakness

Opportunity Threats

Brand image Established

distribution Fuel efficient

engines Built quality High resale

value Advanced

technology

Pricy spare parts

Petrol versions car not success

Complaints of en-ethical practice during A.S.S

High import duty leveled on importing components

Increase PP of people

Premium segment growth by 34%

Lower level of threats from Indian companies

Tax incentives

Threats from new companies entering market

Threat from Constantly evolving Indian companies

Threats from competitors

B.C.G matrix

Stars

Skoda Laura 1.9TDi Skoda Fabia 1.4 TDi Skoda Fabia 1.2 petrol

Question mark

Skoda Laura 1.8 TSi Skoda Laura 2.0 Tdi Skoda Superb 1.8 TSi

Cash Cows

Skoda Octavia 1.9 tdi Skoda superb 1.9 tdi

Dogs

Skoda Octavia 1.8 petrol

Skoda combi Skoda vRS Skoda superb 2.7 V6

Question marks: they are new products with potential for success but their cash needs are high and cash generation is low. In Skoda’s stable Laura 1.8tsi, 2.0 tdi and superb 1.8tsi have been introduced into Indian market. The initial sales are high but there still remains a question mark about future sales after the hype dies down.

Stars: Stars are defined by having high market share in a growing market. Stars are using large amounts of

cash. Stars are leaders in the business. For Skoda the highest seller are Laura 1.9TDi and Fabia, these product are the one’s giving higher profits to the company.

Cash Cows: Cash cows are in a position of high market share in a mature market; they are the main horse pulling the company forward in the sales chart. For Skoda Octavia remain Cash Cow and the largest seller of the company. They have reached the maturity stage but still manage to sell in the market because of its value for money and ease of maintenance.

Dogs: Dogs have no market share or very little market share and does not bring in much profit to the company, it is even considered as loss making asset to the company. For Skoda Octavia combi, vRS has become DOG because it is only demanded by car enthusiasts as it is performance based car and Skoda superb 2.7 V6 is also a dog is it is expensive and has low fuel economy.

GE matrix

GE is an

alternative technique used in product management to find out whether the product is a profit making or loss making, hence to make a decision to continue to invest in the development of the product.

Business Strength

Strong MediumWeakness

High

Medium

Fabia 1.2 , 1.4Tdi

Laura 1.9TDi

Laura 1.8 tsi, 2.0 TDi

Skoda superb 1.8 tsi

Octavia 1.9TDi

Superb 1.9Tdi

Octavia Combi

Octavia vRS Octavia 1.8

Skoda 2.7 V6

Low

IndustryAttractiveness

The line A and upper cell indicate strong business strength and industry attractiveness i.e. Fabia, Laura 1.8Tsi & 2.0TDi and superb 1.8 tsi and Skoda Laura 1.9 TDi.

Line B shows medium strength in industry attractiveness and business strength, products are Octavia 1.9TDi and Superb 1.9TDi.

Line C show low industry attractiveness and business strength, products are Octavia vRS, Octavia 1.8 and Skoda 2.7 V6 and Octavia Combi.

7 Mackenzie Matrixes

Soft skills Hard Skills

SHAREVALUE

SKILLS STRATEGY

STRUCTURE

STAFF

Hard Skills

Strategy: The basic strategy of Skoda was to bring an premium diesel cars to the Indian market along with petrol, as there was an absence of any diesel premium car, the only other two where Honda civic and Toyota corolla. Even though Skoda launched petrol cars but they knew that a more affordable and cheap diesel car is behind their success.

There was a new strategy in 2004, when Skoda decided to launch its super hatchback The Skoda Fabia and it was an immediate success.Skoda currently plans to expand their presence in India and making India an export hub for their cars because of cheap labor and raw material availability.

Structure: The head of the Business unit head of Skoda India is Mr. Jorg Mueller president VW India. VW India is divided up into 4 Business units those are

Skoda India VW India Porsche India Audi India

The organizational structure followed is of Strategic business unit.

System: Skoda Auto's philosophy of employing the latest technology to ensure that our cars are built to the highest standard and are available at attractive prices has a long tradition.  This commitment also extends to the best quality, the best services & the concern for environment. As part of this commitment, Skoda Auto offers the roomiest cars in their class, providing luxury, value for money & people oriented technology.

Soft Skills

Staff: Skoda Auto is making an effort to create such a working environment, which supports motivation, high performance and creativity of the employees while respecting their individuality and varying needs. This approach also has support at all-concern level.Practical consequences are subsequently applied in the individual areas, regardless of whether this concerns HR policy, working environment, working safety, protection of the health of employees, education and personal development of employees or provided social services

Shared value: A value of the company that guides the employee towards value behavior. Skoda Auto's value of making the environment friendly cars, best built quality, value for money, providing luxury, & people oriented technology.

Skills: To produce various car models, Skoda have built new manufacturing facilities and equipped them with the most advanced technology available to automobile manufacturers worldwide. Skoda’s employees are also leading specialists in their fields.

Organizational structure

President VW group India

MD Skoda MD Porsche MD VW MD Audi

HR FN PR MKT

Types of Strategies

Integration strategy

Backward Integration strategy fits Skoda India best because, initially Skoda use to import the cars in Complete knocked down Kits (CKD) and would assemble it in India, now Skoda has started manufacturing components locally to build their cars.

Intensive Strategy

Market Penetration fits Skoda the best because as we have seen since their launch they place their products price very low from their competitors, hence catching the attention of buyers.

Diversification strategy

Concentric Diversification: Skoda India also has started to produce Audi, Porsche and VW cars in their manufacturing plant apart from manufacturing Skoda’s.

Defensive Strategy

Potter Generic Strategy

Focus: The Company’s main focus since their launch to retain its spot is to concentrate on highly fuel efficient diesel cars which have created an impact in the premium segment cars.

Key Step towards Strategic Planning

Vision: Skoda Auto is a brand known for its lifestyle value, offering reliability and European build quality with a constant Endeavour to introduce modern technologies. The vision of the company is slated by the slogan below: -

Man needs an automobile as well as the nature

Technology focused on safety and environmentModern engineering

Mission: to develop a brand name and brand following, to set up standards in production and to be an example of automobile manufacturing in India.

Objectives: the company’s objective is to make India their global production factory from where they can export their products to the world. Within the country they want to be the leading premium automobile manufacturer in India.

Value: Skoda Auto philosophy of employing the latest technology to ensure that our cars are built to the highest standard and are available at attractive prices has a long tradition.

Goals: Skoda vision is to be the leading premium automobile MFG in India, customer satisfaction, VFM products.

Customers have responded to their products in the following way 1st in Sales satisfaction index 2007 'Most Technologically Advanced Car' 'Executive Car of the Year' 'NFO Voice of customer' 'Best entry luxury car' Strategy: The current strategies implemented are

Create new market for small carsMarket penetration with dropping pricesTo increase Local production percentage of components from 50% to 75%

Strategic Management Process

Strategic Management Process

Strategic StrategicStrategic Evaluation

Formulation Implementation & Control

Strategy formulation: after Framing missions and objectives and SWOT analysis, Skoda India has worked on a plan to tap the Lower hatchback segment of the market.

News: Skoda India, a part of the Volkswagen Group, is changing tack and one could soon see new cheaper small cars on Indian roads. Next week, the Skoda India management would be in the company's headquarters in Europe to discuss the nitty gritty of the new small car, as well as a way forward in India, where Skoda is number nine among car manufacturers.

Strategy implementation: it will be down in mid 2009 when the current manufacturing plant will be expanded to facilitate the new production line.

Conclusion: following is the conclusion about Skoda India

They make rock solid cars and fuel efficient cars which the customer desire for and for this the sales speak for them selves

In 2006 and 2007, Skoda India has received a spate of awards which has been remarkable in terms of achievements like J D POWER ASIA PACIFIC AWARDS FOR 2007 for being ranked 1st in Sales satisfaction index 2007

Skoda India also achieved the 'TCS award' in mid size premium segment against Honda Civic in 2006 along with 'Most Technologically Advanced Car' for Skoda Laura; 'Best Variant' for Skoda Superb Turbo Diesel from CNBC-TV18 AUTOCAR AUTO AWARDS 2006

'Executive Car of the Year' from NDTV PROFIT CAR INDIA AWARDS 2006, and 'Auto tech of the Year' from OVERDRIVE 2006, both awards for Skoda Laura

Recommendation

Their current strategies in Place takes care of most of the recommendation I had in mind but few which haven’t been addressed are

High labor cost during A.S.S is heavy on customers needs to be brought down

Reliability problem of Skoda Superb as the advanced engine cannot deal with our fuel quality

Unethical activities going with dealer and Service centre’s like changing original parts with duplicate once, hence dealers and service centre have to be inspected by the company

High price on spare parts need to be brought down

These are a few recommendation given by me, these are the few problems I feel needs to be addressed by the company for better customer service.