SWOT Analysis in action at SKODA

1. What was the key weakness that Skoda was able to identify?

            The SWOT analysis was used by Skoda to identify its weaknesses. One of the greatest weakness

identified, which affect the success of the company is its small market share. Skoda only holds 1.7 percent

market share. Because of this, Skoda remains a small player in the car manufacturing market. Through

the SWOT analysis, management was able to identify this weakness and also the causes of this weakness.

Skoda’s small market share, is attributed to negative perceptions of the consumers of the brand. Skoda’s

heritage as an Eastern European can manufacturer is a subject of outdated, negative consumer perception.

In the past, Eastern European cars had the image of poor vehicle quality, design, assembly and materials.

Because of this consumers do not purchase Skoda manufactured cars. This poor image also affects SKoda

owners. Because of the negative perceptions of the general public of Skoda cars, owners lose their trust of

the product. In addition, car ownership is look upon as something that creates an image of the owner. Car

ownership is all about image.

Under Volkswagen AG, the Skoda brand was improved. The goal was to create a new brand image

and consumer perception. Skoda cars started to be seen as not low-budget or low-quality anymore.

However, it has been found that Skoda still had a weal and neutral image in the mid-market range it

occupies, compared to other players in this area.

The persisting weakness of Skoda is unfavorable brand image and poor perceptions of the cars. Consumers

still does not regard Skoda as quality cars. The company needs to formulate marketing strategies that will

focus on the good qualities of the cars and create a good brand image.

2. What strength did Skoda use to turn its brand weakness into an opportunity?

            The strengths of Skoda were identified and assessed by conducting a SWOT analysis. The company

conducted a research involving consumers in order to find out the strengths of its products and brand.

Surveys were also used. The strength of the company and its products lie in its focus on experience rather

than on sales. Meaning, the company makes sure that there is “human touch” in the production and

manufacture of its cars and make sure that the consumers feel it. Because of this strength, Skoda was listed

as one of the top five manufacturers by JD Power. Skoda was also awarded by Top Gear in 2007, as the

number 1 car maker. The results of these surveys seem to testify, that the strength of Skoda is its focus on
experience. Skoda focuses on its customers rather than on profits. Skoda knows that 98 percent of

its drivers would recommend Skoda to a friend. This strength is being used by Skoda to guide its

future strategic development and marketing of its brand image.

            By using Skoda’s strength as a guide for its future strategies, the company has determined its main

objective which is building cars that their owners would enjoy. The strength of the company is being used to

set the company and its products from its competitors. The focus of Skoda is not on maximizing sales, like

most of its competitors but on satisfying the customers. Customer satisfaction, therefore became Skoda’s

biggest strength.

            From the SWOT analysis, Skoda identified its strength, which also paved the way for an opportunity

to differentiate the company and its products from the competitors. Skoda focused on its existing strengths

and provided cars focused on customer experience. The focus on ‘happy Skoda customers’ is an

opportunity. It enables Skoda to differentiate the Skoda brand. And this sprang up from the company’s

strength.

3. How has Skoda strategically addressed external threats?

            Through the SWOT analysis, the company was able to identify the external threats that may affect

the company’s standing in the market and success. One of the biggest threats to Skoda is intense

competition in the European car manufacturing market, particularly in the United Kingdom. There more or

less 50 car manufacturers and more or less 200 car models comprising the UK car market. This is a big

threat because in an intensely competitive environment, a company like Skoda runs the risk of being

overlooked by the consumers which will eventually result to loss of market share. In order to address this

threat, the company needed to come up with strategies that will make it standout in the market. The

company believed that in order to not be overlooked by consumers, it needed to create a product range that

will appeal to different segments. So the company introduced Skoda Fabia (basic but quality car); Skoda

Superb (for the up-market consumers, luxurious); and Skoda Octavia Estate (for the family, fun drive).

The prices of these products coincide with the different market segments that the company wanted to

attract.

            Another threat is the European Union’s legal and environmental regulations. This poses as a threat

because it can affect the company’s position in the market place and sanctions imposed by the EU can

affect the performance and reputation of Skoda. In order to address this threat, the company designed

products that are environmentally friendly at every stage of their lifecycle. This was accomplished by (1)

recycling as much as possible, (2) using the latest, most environmentally friendly manufacturing

technologies and facilities available, (3) designing processes to cut fuel consumption and emissions in petrol
and diesel engines, and (4) using technology to design cars with lower noise levels and improved sound

quality.  

4. What in your view are the important benefits of using a SWOT analysis?

            It is clear from the case study, the SWOT analysis have been helpful in creating and formulating

strategies for the company. The company relied on SWOT analysis in getting a clear picture of where the

company is now and where the company wants to go. The SWOT analysis, provided information about the

strengths of the company, which they can use to build a strategic advantage over and a point of difference

from its competitors. The SWOT analysis was also used to determine the weaknesses of the company. By

having a complete understanding of its weaknesses, Skoda was able to focus on its strengths and to grasp

the opportunities that its strengths bring. By using different tools and strategies (e.g. consumer surveys,

market research) in conducting a SWOT analysis, the company was able to understand its consumers better

and to identify their perceptions of the company and its products. SWOT analysis aided in the clear

understanding of the company’s external environment, particularly the opportunities and threats that the

company are facing. Analyzing the external opportunities and threats allows Skoda UK to pinpoint how it

should target its marketing messages.