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1 A PROJECT ON To Have an Overview on Strategies Implementation on SKODAIn the subject strategic management SUBMITTED TO UNIVERSITY OF MUMBAI FOR SEMESTER-II OF MASTER OF COMMERCE BY SUNITA KUMARI YADAV MCOM PART-I AND ROLL NO- 1890 UNDER THE GUIDANCE OF Mrs. SEEMA SOMANI YEAR- 2012-2013

Stratergic management mcom

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1

A PROJECT

ON

“To Have an Overview on Strategies Implementation on SKODA”

In the subject strategic management

SUBMITTED TO

UNIVERSITY OF MUMBAI

FOR SEMESTER-II OF

MASTER OF COMMERCE

BY

SUNITA KUMARI YADAV

MCOM PART-I AND ROLL NO- 1890

UNDER THE GUIDANCE OF

Mrs. SEEMA SOMANI

YEAR- 2012-2013

2

DECLARATION BY THE STUDENT

I, SUNITA KUMARI YADAV student of M COM PART-I Roll

Number 1890 hereby declare that the project for the Paper strategic

management titled,

“To have an overview on strategies implementation on SKODA”

Submitted by me for semester-II during the academic year 2012-2013, is

based on actual work carried out by me under the guidance and

supervision of Mrs. SEEMA SOMANI.

I further state that this work is original and not submitted anywhere else

for any examination.

Signature of Student

EVALUATION CERTIFICATE

This is to certify that the undersigned have assessed and evaluated the

project on

“To have an overview on strategies implementation on SKODA”

Submitted by SUNITA KUMARI YADAV Student of M COM Part-I.

This project is original to the best of our knowledge and has been

accepted for internal assessment.

Internal Examiner External Examiner vice principle

3

PILLAI’S COLLEGE OF ARTS, COMMERCE & SCIENCE

Internal Assessment: Project 40 Marks

Name of Student Class Division Roll

Number.

First Name: SUNITA KUMARI

M COM

Father’s Name: BBS PART I 1890

Surname: YADAV

Subject: Strategic Management

Topic for the Project:

“To have an overview on strategies implementation on SKODA”

Mark Awarded Signature

DOCUMENTATION

Internal Examiner

(Out of 10 Marks)

External Examiner

(Out of 10 Marks)

Presentation

(Out of 10 Marks)

Viva and Interaction

(Out of 10 Marks)

TOTAL MARKS (Out of 40)

4

CHAPTER

NO.

TOPICS PAGE

NO.

1. Introduction 1

2. History 2

3. Background In India 3

4. Product

Feature 4

SKODA Model In Production 6

Discontinued SKODA Model 10

5. Level Of Strategic Management 11

6. Type Of Strategies 16

7. Key Step Toward Strategic Planning 17

8. Strategic Management Process 19

9. Conclusion 20

10. Recommendation 21

5

January 25TH, 2013

The Project coordinator,

Panvel,

Navi Mumbai

Dear Sir,

As a part of Mumbai University curriculum our bonafide

student Ms. SUNITA KUMARI YADAV, Roll No. 1890

studying in MCOM would like to undergo a project works in

the topic of “To have an overview on strategies

implementation on SKODA”.

Kindly advice and allow her to do the same.

Thank you.

Yours faithfully,

6

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.

7

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.

8

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%.

9

PRODUCT

All ŠKODA vehicles are designed to be supremely efficient and achieve low greenhouse-gas

emissions, thanks to utilizing state of the art technologies. But real world fuel consumption is

still in the hands of you, the driver. Improper driving style may increase both fuel

consumption and greenhouse gas emissions by tenths per cent.

That’s why we’d like to offer you with ten tips to help you fully use your car’s potential.

1. Be smooth

Smoothness is mother of efficiency. Aggressive driving with lot of braking and acceleration

leads to high fuel consumption. Clean, smooth inputs will not only save you money, they also

make your journey more pleasant and comfortable.

2. Look ahead!

Is the traffic coming to a stop in front of you? Is that green light down the road going to turn

red? Lift your foot! Coasting car uses no fuel and by slowing down early enough, you may

even find in position to accelerate again before you come to a full stop, saving yet more fuel!

3. Engine brake

Brakes turn energy into heat. If your car is equipped with energy recovery system, you can

recoup at least part of this energy. And in any case, you’ll save the fuel that would otherwise

be used to keep engine running at takeover.

4. Rev low

High engine speeds mean more resistance and more friction losses. Especially with modern

turbocharged engines, which can achieve maximum torque in low rpms, it’s unnecessary to

rev the engine too much. Or you can just listen to the Shift recommendation system.

10

5. Travel light

Weight not only slows you down, it also costs you fuel. Take the unnecessary items out of the

car, every kilogram counts. And watch for the aerodynamics, too. Try not to levy your

windows open and take off the bike racks or roof boxes when not in use.

6. Navigate

Traffic jams do not only cost you time (and time is money). They increase fuel consumption,

so they cost you money. Again using your ŠKODA Navigation systems with traffic

information, you can avoid them and use your time and money on finer things in life.

7. Slow down

fast driving usually won’t save you more than a few minutes, but it may severely increase

your fuel consumption. Even 10 or 20km/h may make a huge difference and keeping under

the speed limits will not only save you money, but also make your journey safer and less

stressful.

8. Take care

Only if it’s in perfect shape, can your car give its best. Make sure that your tyres are properly

inflated, your oil and filters changed regularly and that your car is properly maintained by

professionals at the authorized ŠKODA Service Partner.

9. Switch off

Running your engine on idle is unnecessary waste of fuel, so switch it off every time you stay

stationary for a prolonged period of time. Or you can just order one of our Start-stop

equipped cars and leave it to computer!

10. Use slipstream

hiding in the slipstream behind cars or, preferably, trucks, can vastly reduce the aerodynamic

drag and significantly reduce fuel consumption. Just watch out and don’t get too close!

11

12

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.

SKODA OCTAVIA

13

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.

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

14

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.

15

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

16

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.

17

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

18

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.

19

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.

20

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.

21

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.

22

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 environment

Modern 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.

23

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 cars

Market penetration with dropping prices

To increase Local production percentage of components from 50% to 75%

24

Strategic Management Process

Strategic Management Process

Strategic Strategic Strategic 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.

25

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

26

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.