Volkswagen's Acquisition of Skoda Auto: A Central European Success Story

Abstract:

This case discusses Volkswagen's acquisition of Skoda, a Czech Republic based car manufacturer. Set up in the late 1800s, Skoda was one of the oldest car companies in the world. The company and its cars had enjoyed considerable repute in the first half of the 1900s. However, its fortunes turned after the Second World War, when it first came under Nazi control and was later nationalized by the Czechoslovakian government. By the 1980s, Skoda cars had lost track of the technological advancements in the West, and were widely derided for their poor quality and unreliability. In 1991, VW acquired a stake in Skoda. Following this, VW went about systematically transforming Skoda's image and establishing it as a reliable mass market car brand.

The steps VW took to transform Skoda are discussed in this case. The case talks about the various dimensions of the transformation, including the HR aspects, the production improvements, new products launches, and image building initiatives. It concludes with a discussion of Skoda's role and position in VW's business portfolio, and the company's future prospects.

Issues:

» To examine the transformation of a company based in a former communist country into a well established brand in Western Europe

» To understand the issues in a merger between two companies that differed considerably in their culture, production practices and approach to business

» To appreciate the importance of avoiding a win-lose approach in a merger between such companies

» To study the various issues involved in enhancing a brand's image

Contents:

Keywords:

Skoda Auto, Volkswagen AG, Audi, Czech Republic, Central and Eastern Europe, Acquisition, Tandem Management, New Product Development, Image Building, Quality Management, Octavia, Fabia, Superb, Emerging markets.

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