SKODA strategy to expand in Indonesia

SKODA AUTO SKODA AUTO EXPANDS EXPANDS

TO INDONESIATO INDONESIA

Lukas Dziadek

Lina Mao

Sakinah B Mohd Shukri

Tenghan Xie

SKODA AUTOSKODA AUTO

Skoda auto is automotive manufacturer Origin in Czech Republic Founded more than 100 years ago On of the biggest national employer Produce around 10% of country export Owned by Volkswagen AG Presenting on more than 80 markets

COMPANY COMPANY SITUATION SITUATION ANALYSISANALYSIS

GLOBAL GLOBAL MARKET MARKET SEARCHSEARCH

IN-DEPTH IN-DEPTH MARKET MARKET

ANALYSISANALYSIS

ENTRY ENTRY STRATEGY STRATEGY

AND MARKET AND MARKET PLANPLAN

INTRODUCTIINTRODUCTIONON

CONCLUSIONCONCLUSIONSS

OWNERSHIP STRUCTUREOWNERSHIP STRUCTURE



IN-DEPTH IN-DEPTH ANMARKET ANMARKET

ALYSISALYSIS



INTRODUCTIOINTRODUCTIONN


SWOT ANALYSISSWOT ANALYSIS




ANALYSISANALYSIS





Part of VW - good image

Positioning is not limited by VW

The symbol of European quality

Adapting production with customers

Financial performance

Missing models of large MPVs and SUVs

In some markets perception of brand image is poor

Extension of existing capacity

Growing market dynamics in ER

Extending the sales network

Extending the product portfolio

Addressing other target groups

Crisis

Decline in demand - too much competitors

Changing trends - production of EV

Strong competition in the market

Strenghts Weaknesses

ThreatsOpportunities

GROWTH STRATEGYGROWTH STRATEGY


GLOBALGLOBAL MARKETMARKET SEARCHSEARCH

IN-DEPTHIN-DEPTH MARKETMARKET

ANALYSISANALYSIS

ENTRYENTRY STRATEGYSTRATEGY

ANDAND MARKETMARKET PLANPLAN



PRODUCT PROFILEPRODUCT PROFILE

Skoda Superb Skoda Octavia Skoda Yeti Skoda Roomster Skoda Rapid Skoda Fabia Skoda Citigo


GLOBALGLOBAL MARKETMARKET SEARCHSEARCH

IN-DEPTHIN-DEPTH MARKETMARKET

ANALYSISANALYSIS

ENTRYENTRY STRATEGYSTRATEGY

ANDAND MARKETMARKET PLANPLAN



FINANCIAL ANALYSISFINANCIAL ANALYSIS




ANALYSISANALYSIS





UnitYear Change

(%)2011 2010

Production ths. cars 902 780 +15.5

Sales ths. cars 690 585 +18.1

Employees 26,565 24,714 +7.5

Sales revenues mil. EUR 10,266 8,692 +18.1

Operating profit mil. EUR 743 447 +66.1

Operating profit as % of revenues % +7.2 +5.1

Profit for the year mil. EUR 652 349 +86.9

Investment (in fix assets) mil. EUR 568 403 +40.8

Net liquidity mil. EUR 1,838 1,605 +14.5

INTERNATIONAL INTERNATIONAL INVOLVEMENTINVOLVEMENT

Africa – 10 countries America – 14 countries Asia – 29 countries Europa – 39 countries Oceania – 4 countries




ANALYSISANALYSIS





MAJOR COMPETITORSMAJOR COMPETITORS

Volkswagen

Peugeot

Renault




ANALYSISANALYSIS





INDUSTRY ANALYSISINDUSTRY ANALYSIS

World economic situation dominated by debt crisis Highly volatile financial markets Strong exchange rate fluctuation High raw material prices




ANALYSISANALYSIS








ANALYSISANALYSIS





PORTER´S 5 FORCES PORTER´S 5 FORCES ANALYSISANALYSIS

RECOMMENDATION AND RECOMMENDATION AND CONCLUSIONCONCLUSION

Automotive industry is in good growing up phase so it’s time to expansion

Skoda is part of Volkswagen group, which has strong basement

Negative influence of EU financial crisis in contrast of growth of emerging economies

Expansion is strategic decision, which can help to company to reach sustainable growth




ANALYSISANALYSIS





SELECTINGSELECTING

The Process of Selecting Potential Countries

1. Depending on the economic and demographic location

2. Selecting the criteria that is relevant in the automobile industry

3. Evaluation of different countries

4. Verification on the best market to penetrate




ANALYSISANALYSIS





THE TEN POTENTIAL THE TEN POTENTIAL COUNTRIESCOUNTRIES




ANALYSISANALYSIS





Huge populationIncreasing economyEasy access to manufacturing factories

population--248.20 million its growth rate -- 4% GDP’s rapid growth infrastructure over 764,000 cars are sold in 2010 competition especially Japanese carmakers

rapid economic development large population many auto manufacturers great potential market

Angola Argentina Bolivia Egypt Indonesia Iran Mexico Philippines South Korea Vietnam

KEY CRITERIAKEY CRITERIA




ANALYSISANALYSIS





Demographics

Population( Growth Rate)

Household income

Economic Criteria

GDP

Disposable Income

Local Consumption/Use

Consumption of the product

Imports of your product

Political/Legal Environment

Competition intensity

Tariffs/duties

RECOMMENDATION AND RECOMMENDATION AND CONCLUSION CONCLUSION




ANALYSISANALYSIS





Indonesia and Mexico is the most potential market for Skoda Auto to choose from. Further analysis is now needed to select which country we should entry into.

POTENTIAL CONTACTPOTENTIAL CONTACT

Indonesia:

Volkswagen Indonesia Czech Republic Embassy Yassa Mobil




ANALYSISANALYSIS





Mexico:

Volkswagen De Mexico Czech Republic Embassy Automotriz Naucalpan

MARKET AND COMPANY MARKET AND COMPANY SALES POTENTIALSALES POTENTIAL

Based Total Skoda Market Potential

Skoda Company sales potential




ANALYSISANALYSIS





Indonesia Mexico

TMP (billions) 186.1 242.2

Indonesia Mexico

CSP (billions) 14.8 19.2

POTENTIAL BUYERPOTENTIAL BUYER (1) (1)

SKODA is an automotive industry business focusing on cars.

Based on this, there potential customer are more towards that are qualified to buy a car, teenager ranging 18-25 and are employed that can afford to buy a car.




ANALYSISANALYSIS





CountryPercentage of people

who employed in each country

Percentage Population of each

country aged between 15-64

Household income

percentage

Indonesia 55.4% 72.6% 29.9%Mexico 75.6% 71.8% 41.4%

POTENTIAL BUYERPOTENTIAL BUYER (2) (2)

Skoda potential buyer within citiesCOMPANY COMPANY SITUATION SITUATION ANALYSISANALYSIS



ANALYSISANALYSIS





City Population

INDONESIA

Jakarta 9.121 million

Surabaya 2.509 million

Bandung 2.412million

MEXICO

Mexico City 19.319 million

Guadalajara 4.338 million

Monterey 3.838million

COMPETITIVE ANALYSISCOMPETITIVE ANALYSIS




ANALYSISANALYSIS





Competitor 1 Competitor 2

INDONESIA Competitor name Toyota Daihatsu Product name Innova

Fortuner Avanza

Xenia Sirion Luxio

Number of employees 5792 7967 Years in Business 43 9

MEXICO Competitor name Nissan General Motor Product name Leaf

Tiida Sentra Tsuru

Chevrolet Aveo Chevrolet Spark Chevrolet Chevy Chevrolet Cruze

Number of Employees 169298 202000 Years in business 79 104

COUNTRY ENTRY COUNTRY ENTRY REGULATIONREGULATION

Import Regulation: Indonesia administrative

barrier is lower than Mexico

Import Licensing requirement is more strict than Mexico

Quotas & Tariff is lower in Indonesia




ANALYSISANALYSIS





Foreign Direct Investment: FDI 100% Equity

ownership is more encourage by the gov in Indonesia

The gov are more encourage to foreign company to establish their business in Indonesia

Bank of Indonesia

MARKET MARKET ENTRY ENTRY REGULATIONREGULATION

Indonesia

Corporate Tax is 15%-30% Rupiah Labour union (Public

Service International) Government help to

increase their transport infrastructure

WTO (1995) Corruption high




ANALYSISANALYSIS





Mexico

Flat rate Peso Currency value is rising Labour issue is in the

Mexican Law Many type of distribution

channel WTO (1995) Labour wage according to

skill

THE BEST TARGET MARKET THE BEST TARGET MARKET FOR SKODAFOR SKODA

The above analysis shows the country with the highest market potential to penetrate in for SKODA is Indonesia. There is more market potential in Indonesia compared to Mexico




ANALYSISANALYSIS





Plan a successful promotional strategy Using a Local distributor to gain knowledge Gain understanding of the competitor Aware on the political situation and legal regulation Respect host country policy




ANALYSISANALYSIS






1. Goals and objectives

2. Control

3. Resources

4. Experience

5. Competition

6. Regulations

7. Market size

8. Risk

9. Flexibility

10. Feedback

And we have two highly recommend strategies.




ANALYSISANALYSIS


AND AND MARKETING MARKETING

PLANPLAN



EVALUTE BY THIS ELEMENTSEVALUTE BY THIS ELEMENTS

Our final recommend Entry Model is Foreign Based Sales instead of Wholly Owned Manufacturing Subsidiary




ANALYSISANALYSIS



PLANPLAN



ENTRY MODELENTRY MODEL

MARKETING STRATEGIES MARKETING STRATEGIES (7PS)(7PS)

Focus on the first 4Ps

Products Pricing Promotion Place People Physical evidence Process




ANALYSISANALYSIS



PLANPLAN



PRICING AND PROMOTION PRICING AND PROMOTION

Pricing method

Budget for promotional mix




ANALYSISANALYSIS



PLANPLAN



Buying Price [€] 20,000Total shipping costs [€] 2,000 It is 10% of buying priceInsurance costs [€] 200 It is 1% of buying priceGoods customs [€] 22,200Import duties (Tariffs) [€] 2,220 It is 10% of goods customsValue-added tax (VAT) [€] 2,442 It is 10% of (goods customs + tariffs)Selling Price [€] 26,862

Type of promotional mix Cost per unit Units Total cost

Advertising (Magazine) 2 1,000 2,000Internet 350 3 1,050Total budget 3,050

INTERNATIONAL INTERNATIONAL MARKETING BUDGET AND MARKETING BUDGET AND

PROFITPROFIT

Cost of entry strategy̶Q Mainly in Shipping cost and Import duties

Forecast of future sales̶Q NO. of sales will increase in the next 3 years

Projected income statement̶Q Estimated Best/Worst case happened in next 3 years

Breakeven analysis̶Q The stress will be first 2 years in order to cover our investment




ANALYSISANALYSIS



PLANPLAN






ANALYSISANALYSIS



PLANPLAN



P/L SCENARIOP/L SCENARIO

Export strategy, foreign base sales branch Understanding of competitor (Toyota & Daihatsu) Focus on pricing and promotion strategy Financial plan -> lost in first 2 years, 3rd year breakeven




ANALYSISANALYSIS



PLANPLAN




Advantage from our parent company Indonesia or Mexico -> Indonesia is the best Indonesia is in WTO (1995) Letter of credit International Trade Law Document for Export




ANALYSISANALYSIS




CONCLUSIOCONCLUSIONSNS

OVERALL CONCLUSION OVERALL CONCLUSION

More than 60 references are available in full report




ANALYSISANALYSIS





REFERENCESREFERENCES




ANALYSISANALYSIS





QUESTIONS AND ANSWERSQUESTIONS AND ANSWERS

SKODA strategy to expand in Indonesia

Business

growth rate

skoda

country

indonesia

2 years

lower

buy

mexico