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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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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Background - Volkswagen
VW's history can be traced back to the early 1930s, when
Adolf Hitler (Hitler), the then Chancellor of Germany, approached Ferdinand
Porsche (Porsche)13, an automobile
engineer, to design a car for the common man...
Skoda under VW
In the early 1990s, VW's sales in the US were less than 100,000 cars a year.
This made it imperative for the company to start looking for new markets to
safeguard its long term interests17.
Around the same time, VW embarked on its multi-brand strategy in an effort to
rationalize its brands. At that time, VW had four distinct vehicle brands -
Audi, VW, SEAT and Skoda. Each brand had its own distinct brand identity, which
VW made an effort to maintain. The company's strategy was to target different
market segments with each of its brands. The Audi brand was synonymous with
exclusivity, technological superiority and 'coolness'...
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The Transformation of Skoda
When VW took over Skoda, the two companies had little in
common. VW was known the world over for the quality of its engineering. Skoda on
the other hand, was a peripheral player in the global auto industry, often
mocked for its cars' unreliability and poor quality...
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Integration and
HR Issues
VW's approach towards transforming Skoda was gradual
and incremental. The company used a collaborative and nurturing strategy
in bringing about improvements at Skoda, and reportedly tried to avoid
'winner-loser' comparisons. From the beginning, VW made an effort to
keep Skoda's brand identity independent. As one of the first steps
towards improving Skoda's image in the market, VW decided to focus on
the company's heritage as one of the oldest car makers in the world. It
also talked about Skoda's history and past achievements, and encouraged
employees to take pride in being a part of the company... |
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