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'...

Business Strategy | Case Study in Management, Operations, Strategies, Business Strategy, Case Studies

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...

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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13]  Porsche was the founder of Porsche AG, a German sports car company that was set up in 1931. As of 2006, Porsche held a 20 percent stake in VW.

17]  The company made an effort to revive its fortunes in the US market by introducing what it called the New Beetle in 1998. The car was a success in the US, although the sales in Europe were limited.

 

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