SWOT analysis in action at koda

Introduction In 1895 in Czechoslovakia, two keen cyclists, Vaclav Laurin and Vaclav Kle ent, desi!ned and "roduced their own #icycle$ %heir #usiness #eca e &koda in 1925$ &koda went on to anu'acture cycles, cars, 'ar "lou!hs and air"lanes in (astern (uro"e$ &koda overca e hard ti es over the ne)t *5 years$ %hese included war, econo ic de"ression and "olitical chan!e$ +y 199, the Czech ana!e ent o' &koda was lookin! 'or a stron! 'orei!n "artner$ Volkswa!en -. /V-.0 was chosen #ecause o' its re"utation 'or stren!th, 1uality and relia#ility$ It is the lar!est car anu'acturer in (uro"e "rovidin! an avera!e o' ore than 5 illion cars a year 2 !ivin! it a 123 share o' the world car arket$ Volkswa!en -. co "rises the Volkswa!en, -udi, &koda, 4(-%, Volkswa!en Co ercial Vehicles, La #or!hini, +entley and +u!atti #rands$ (ach #rand has its own s"eci'ic character and is inde"endent in the arket$ &koda 5K sells &koda cars throu!h its network o' inde"endent franchised dealers$ %o i "rove its "er'or ance in the co "etitive car arket, &koda 5K6s ana!e ent needed to assess its brand "ositionin!$ +rand "ositionin! eans esta#lishin! a distinctive i a!e 'or the #rand co "ared to co "etin! #rands$ 7nly then could it !row 'ro #ein! a s all "layer$ %o aid its decision8 akin!, &koda 5K o#tained market research data 'ro internal and e)ternal strate!ic audits$ %his ena#led it to take advanta!e o' new o""ortunities and res"ond to threats$ %he audit "rovided a su ary o' the #usiness6s overall strate!ic "osition #y usin! a 497% analysis$ 497% is an acrony which stands 'or: ; Stren!ths 2 the internal ele ents o' the #usiness that contri#ute to i "rove ent and !rowth ; Weaknesses 2 the attri#utes that will hinder a #usiness or ake it vulnera#le to 'ailure ; O""ortunities 2 the e)ternal conditions that could ena#le 'uture !rowth ; Threats 2 the e)ternal 'actors which could ne!atively a''ect the #usiness$ %his case study 'ocuses on how &koda 5K6s ana!e ent #uilt on all the areas o' the strate!ic audit$ %he outco e o' the 497% analysis was a strate!y 'or e''ective co "etition in the car industry$ Strengths %o identi'y its stren!ths, &koda 5K carried out research$ It asked custo ers directly 'or their o"inions a#out its cars$ It also used relia#le inde"endent surveys that tested custo ers6 'eelin!s$ <or e)a "le, the annual => ?ower custo er satis'action survey asks owners what they 'eel a#out cars they have owned 'or at least si) onths$ => ?ower surveys al ost 2,,,,, car owners usin! detailed 1uestionnaires$ &koda has #een in the to" 'ive anu'acturers in this survey 'or the "ast 1@ years$ In Top Gears 2,,A custo er satis'action survey, 5*,,,, viewers !ave their o"inions on 152
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odels and voted &koda the Bnu #er 1 car aker6$ &koda6s 7ctavia odel has also won the 2,,8 Auto Express >river ?ower B+est Car6$

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&koda attri#utes these results to the #usiness concentratin! on owner e)"erience rather than on sales$ It has considered Bthe hu an touch6 'ro desi!n throu!h to sale$ &koda knows that 983 o' its drivers would reco end &koda to a 'riend$ %his is a clearly identi'ia#le and 1uanti'ia#le stren!th$ &koda uses this to !uide its 'uture strate!ic develo" ent and arketin! o' its brand image$ 4trate!ic ana!e ent !uides a #usiness so that it can co "ete and !row in its arket$ &koda ado"ted a strate!y 'ocused on #uildin! cars that their owners would enCoy$ %his is di''erent 'ro si "ly a)i isin! sales o' a "roduct$ -s a result, &koda6s #i!!est stren!th was the satis'action o' its custo ers$ %his eans the #rand is associated with a 1uality "roduct and ha""y custo ers$ Weaknesses - 497% analysis identi'ies areas o' weakness inside the #usiness$ &koda 5K6s analysis showed that in order to !row it needed to address key 1uestions a#out the #rand "osition$ &koda has only 1$A3 arket share$ %his ade it a very s all "layer in the arket 'or cars$ %he ain issue it needed to address was: how did &koda 'it into this hi!hly co "etitive, fragmented marketD %his weakness was "artly due to out8dated "erce"tions o' the #rand$ %hese related to &koda6s eastern (uro"ean ori!ins$ In the "ast the cars had an i a!e o' "oor vehicle 1uality, desi!n,asse #ly, and aterials$ Crucially, this "oor "erce"tion also a''ected &koda owners$ <or any "eo"le, car ownershi" is all a#out i a!e$ I' you are a &koda driver, what do other "eo"le thinkD <ro 1999 onwards, under Volkswa!en -. ownershi", &koda chan!ed this ne!ative i a!e$ &koda cars were no lon!er seen as low8#ud!et or low 1uality$ Eowever, a #rand Bhealth check6 in 2,,* showed that &koda still had a weak and neutral i a!e in the id8 arket ran!e it occu"ies, co "ared to other "layers in this area, 'or e)a "le, <ord, ?eu!eot and Fenault$ %his eant that whilst the #rand no lon!er had a "oor i a!e, it did not have a stron! a""eal either$ %his understandin! showed &koda in which direction it needed to !o$ It needed to sto" #ein! de'ensive in "ro otional ca "ai!ns$ %he co "any had sou!ht to correct old "erce"tions and de onstrate what &koda cars were not$ It realised it was now ti e to say what the #rand does stand 'or$ %he arketin! essa!e 'or the chan!e was si "le$ &koda owners were known to #e ha""y and contented with their cars$ %he car8#uyin! "u#lic and the car industry as a whole needed convincin! that &koda cars were !reat to own and drive$

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Opportunities 7""ortunities occur in the e)ternal environ ent o' a #usiness$ %hese include 'or e)a "le, !a"s in the arket 'or new "roducts or services$ In analysin! the e)ternal arket, &koda noted that its co "etitors6 arketin! a""roaches 'ocused on the "roduct itsel'$ -udi e "hasises the technolo!y throu!h its stra"line, BVors"run! >urch %echnik6 /Badvanta!e throu!h technolo!y60$ +G9 "ro otes Bthe ulti ate drivin! achine6$ Gany #rands "lace e "hasis on the achine and the drivin! e)"erience$ &koda 5K discovered that its custo ers loved their cars ore than owners o' co "etitor #rands, such as Fenault or <ord$ In'or ation 'ro the 497% analysis hel"ed &koda to differentiate its "roduct ran!e$ Eavin! a co "lete understandin! o' the #rand6s weaknesses allowed it to develo" a strate!y to stren!then the #rand and take advanta!e o' the o""ortunities in the arket$ It 'ocused on its e)istin! stren!ths and "rovided cars 'ocused on the custo er e)"erience$ %he 'ocus on Bha""y &koda custo ers6 is an o""ortunity$ It ena#les &koda to di''erentiate the &koda #rand to ake it stand out 'ro the co "etition$ %his is &koda6s unique selling proposition /54?0 in the otor industry$ Threats %hreats co e 'ro outside o' a #usiness$ %hese involve, 'or e)a "le, a co "etitor launchin! chea"er "roducts$ - care'ul analysis o' the nature, source and likelihood o' these threats is a key "art o' the 497% "rocess$ %he 5K car arket includes 5, di''erent car akers sellin! 2,, odels$ 9ithin these there are over 2,,,, odel derivatives$ &koda 5K needed to ensure that its essa!es were "ower'ul enou!h 'or custo ers to hear within such a crowded and co "etitive environ ent$ I' not, "otential #uyers would overlook &koda$ %his "osed the threat o' a 'urther loss o' market share$ &koda needed a stron! "roduct ran!e to co "ete in the 5K and !lo#ally$ In the 5K the &koda #rand is re"resented #y seven di''erent cars$ (ach one is desi!ned to a""eal to di''erent market segments$ <or e)a "le: ; the &koda <a#ia is sold as a #asic #ut 1uality Bcity car6 ; the &koda 4u"er# o''ers a ore lu)urious, Bu"8 arket6 a""eal ; the &koda 7ctavia (state "rovides a 'a ily with a 'un drive #ut also a !reat #i! #oot$ ?ricin! re'lects the co "etitive nature o' &koda6s arket$ (ach odel ran!e is "riced to a""eal to di''erent !rou"s within the ainstrea car arket$ %he co #ination o' a clear ran!e with co "etitive "ricin! has overco e the threat o' the crowded arket$ %he 'ollowin! e)a "le illustrates how &koda res"onded to another o' its threats, na ely, the need to res"ond to (5 le!al and environ ental re!ulations$ &koda res"onded #y desi!nin! "roducts that are environ entally 'riendly at every sta!e o' their li'e cycle$ %his was done #y 'or e)a "le: ; Fecyclin! as uch as "ossi#le$ &koda "arts are arked 'or 1uick and easy identi'ication when the car is taken a"art$ ; 5sin! the latest, ost environ entally8'riendly anu'acturin! technolo!ies and 'acilities availa#le$ <or instance, areas "ainted to "rotect a!ainst corrosion use lead8'ree, water #ased colours$
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; >esi!nin! "rocesses to cut 'uel consu "tion and e issions in "etrol and diesel en!ines$ %hese use li!hter "arts akin! vehicles as aerodyna ic as "ossi#le to use less ener!y ; 5sin! technolo!y to desi!n cars with lower noise levels and i "roved sound 1uality$

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Outcomes and benefits of SWOT analysis &koda 5K6s 497% analysis answered so e key 1uestions$ It discovered that: ; &koda car owners were ha""y a#out ownin! a &koda ; the #rand was no lon!er seen as a "oorer version o' co "etitors6 cars$ Eowever, ; the #rand was still very uch within a niche arket ; a chan!e in "u#lic "erce"tion was vital 'or &koda to co "ete and increase its arket share o' the ainstrea car arket$ %he challen!e was how to #uild on this and develo" the #rand so that it was viewed "ositively$ It re1uired a whole new arketin! strate!y$ &koda 5K has res"onded with a new arketin! strate!y #ased on the con'ident slo!an, the manufacturer of happy drivers. %he ca "ai!n6s "ro otional activities su""ort the new #rand "osition$ %he key essa!es 'or the ca "ai!n 'ocus on the Bha""y6 custo er e)"erience and a""eal at an e otional rather than a "ractical level$ %he ca "ai!n includes: ; he B<a#ia Cake6 %V advert$ %his showed that the car was B'ull o' lovely stu''6 with the ha""y usic /B<avourite thin!s60 in the #ack!round$ ; -n i "roved and redesi!ned we#site which is easy and 'un to use$ %his is to a""eal to a youn! audience$ It e #odies the essa!e Be)"erience the ha""iness o' &koda online6$ Custo ers are a#le to #ook test drives and order #rochures online$ %he result is that "otential custo ers will 'eel a &koda is not only a relia#le and sensi#le car to own, it is also Blovely6 to own$ -nalysin! the e)ternal o""ortunities and threats allows &koda 5K to "in"oint "recisely how it should tar!et its arketin! essa!es$ Ho other arket "layer has Bdriver ha""iness6 as its 54?$ +y #uildin! on the understandin! derived 'ro the 497%, &koda 5K has !iven new i "etus to its ca "ai!n$ -t the sa e ti e, the ca "ai!n has addressed the threat o' e)ternal co "etition #y settin! &koda a"art 'ro its rivals$ Conclusion &koda is a !lo#al #rand o''erin! a ran!e o' "roducts in a hi!hly co "etitive and 'ra! ented arket$ %he co "any ust res"ond "ositively to internal and e)ternal issues to avoid losin! sales and arket share$ - 497% analysis #rin!s order and structure to otherwise rando in'or ation$ %he 497% odel hel"s ana!ers to look internally as well as e)ternally$ %he in'or ation derived 'ro the analysis !ives direction to the strate!y$ It hi!hli!hts the key internal weaknesses in a #usiness, it 'ocuses on stren!ths and it alerts ana!ers to o""ortunities and threats$ &koda was a#le to identi'y where it had stren!ths to co "ete$ %he structured review o' internal and e)ternal 'actors hel"ed trans'or &koda 5K6s strate!ic direction$ %he case study shows how &koda 5K trans'or ed its #rand i a!e in the eyes o' "otential custo ers and #uild its co "etitive ed!e over rivals$ +y develo"in! a arketin! strate!y "layin! on clearly identi'ied
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stren!ths o' custo er ha""iness, &koda was a#le to overco e weaknesses$ It turned its "reviously de'ensive "osition o' the #rand to a "ositive custo er8'ocused e)"erience$ %he various awards &koda has won de onstrate how its co unications are reachin! custo ers$ I "roved sales show that &koda 5K6s new strate!y has delivered #ene'its$

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Questions 1$ 9hat was the key weakness that &koda was a#le to identi'yD 2$ 9hat stren!th did &koda use to turn its #rand weakness into an o""ortunityD @$ Eow has &koda strate!ically addressed e)ternal threatsD 4$ 9hat in your view are the i "ortant #ene'its o' usin! a 497% analysisD

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