Volkswagen's Acquisition of Skoda Auto: A Central European Success Story
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Case Details:
Case Code : BSTR262
Case Length : 24 Pages
Period : 1991-2007
Pub Date : 2007
Teaching Note :Not Available
Organization : Volkswagen AG, Skoda Auto Industry : Automobile
Countries : Czech Republic
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Please note:
This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
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Production and Quality Improvement
After several decades as a state-owned company, Skoda's
production methods had become outdated, and the company had no well-defined
quality management systems...
New Product Development
The rationalization of production processes at Skoda was
taking place even as new and improved models under the Skoda brand were being
launched...
Image-Building
The launch of new and better quality cars was supported by an extensive
image-building exercise across Europe, and especially in the UK, where Skoda had
been the subject of many jokes over the years (Some samples: "What do you call a Skoda
convertible? A dumpster."32; "How
do you double the value of a Skoda? Fill it with gas."33).
Long-time Skoda employees found the jokes annoying.
"What you have to remember
is that we made the best cars we could under real socialism...
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Skoda in the New Millennium
In late 1999, the government of the Czech Republic announced
that it was ready to divest its remaining 30 percent stake in Skoda...
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The Road Ahead
As of 2006, Skoda was a well established mass market
car brand. Analysts said that the main reason behind Skoda's success was
the fact that in most markets, Skoda had the support of the VW brand.
Customers reasoned that that they were buying a VW car for a lot less
(especially as the Skoda cars shared many components with VW).
It also
helped that Skoda had been able to overcome its quality issues and had
built a reputation for good value cars. Skoda's future plans included
developing a leisure vehicle featuring advanced technology... |
Exhibits
Exhibit I: Skoda - Vehicle Production by Model
Exhibit II: Skoda - Consolidated Profit and Loss Account (CZK Millions)
Exhibit III: Indicative Prices of Skoda Cars as of Mid 2007
Exhibit IV: The Three Basic Values of the Skoda Brand
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