SKODA SUMMATIVE ESSAY PLAN

* Introduction
-for the business to grow and be successful, it was crucial that customer perception and the images consumers had of skoda and their values were changed
-Skoda’s major turnaround was initiated by the acquisition that took place by VW in April 1991
-Big cultural differences between the two companies so was a challenge to improve it

* Training – direct impact on performance of employees
-Skoda workers were sent to VW wolfsburg plant for training
-However, their productivity did not immediately improve suggesting how great the changes were that needed to be made and how stuck in their own methods Skoda were.
- Mullins benefits of training (pg 466 of Naylor)

* How employees were managed to achieve greater performance
- Motivation theories (see lecture 3 notes)
- extrinsic and intrinsic motivation (expectancy valence theory, cognitive and managerial implications)
- Reward and punishment
- AL DERFER what motivates? – existence, relatedness, growth
- maslow, mcclelland
- LINK IN TO SKODA

* Changed production techniques
-Skoda had to change from using ‘flexible, improvisatory’ styles of working to Japanese methods employed by VW, ‘where precise just-in-time processes were required’
-‘foreman was the absolute boss’ – introduced hierarchical system of working
- Things started to pick up a year after the takeover and productivity began to increase
-QUALITY CONTROL - Red Button of Responsibility technique was adopted – stopped errors only being checked at end of production. Allowed workers to take responsibility for their own work and encouraged them to pay attention to detail. Made process more efficient. Instead of having to identify what was wrong with the car at the end, could identify what was wrong and who was to blame more quickly. Also leads to the problem being fixed more quickly. ‘number of defects fell from fiver per car to less than one’ and skoda began to make profit showing this technique was working.

* Product
-not so much focus on quantity but focus on improving quality and quality control measures
-Czechs were using spare parts from what was available but VW made it adopt the idea of using the best parts even if this meant waiting. This would ensure a better quality product, helping reduce the reputation Skoda had for bad quality cars – emphasis on research and development here and how important it is to do research and get the best parts. Also helped skoda to better understand the environment
-Skoda’s focus became the design of cars and acquired designers from around Europe. Better looking and design of cars would help improve the image of skoda - cars no longer seen as low budget or low quality
-Common platform approach by VW on skoda – lowered development costs, increased profits, allowed engines and chassis to be trialed in a niche market before being trialled over the whole group, different cars would then be tried out under diff names to see what worked best – improved methods of research and development.

* Branding and image transformation due to previous failure
-brand decontamination
-Advertising in western markets, focusing on skoda’s improvement and admitting to problems it had before. (Marketing textbook, pg 475)
-Planning! – had a game plan – make a serious car to improve skoda’s reputation before making exciting ones.
-Environmentally friendly – also had to do this to keep up with EU legal and environmental regulations but also would have improved reputation
-Marketing strategy – USP = focus on ‘happy skoda customers’ and customer experience – allowed them to alleviate negative image before. put them in good public light as they were seen to care about what customers’ wants
-new website that was user friendly and fun to use, appealing to a younger audience.
-branding (management textbook pg 374) – helps consumers to gauge the level of product quality, becoming more recognisable, made it easier to distinguish the old skoda from the new skoda
-marketing orientation(lecture 8) focus, means and goal
-promotion – helped skoda during recession

* Communication and organisation
-Human Resource Management (important to have communication and feel listened to, giving workers some autonomy as with red button of responsibility in skoda) - Mary Parker Follet
-Hierarchy system (pg 310 and 399 of Naylor)
-communication networks (lecture 4) finding what network best suited skoda. Had to change from an all channel network to a chain network
-organisation structure (lecture 6) division of labour makes specialisation and expertness possible.
-operations management – slack et al 2007, reduces costs of producing products and services, increase rev by increasing customer satisfaction through quality and service, provides basis for future innovation (lecture 7)

* Market
-Market orientation (naylor, 525) Kotler
-Adapting to change by expanding range – skoda doing this helped protect it from suffering less than many others in the car industry during the recession. Spread risk
-Moving into different market segments. VW is now allowing skoda to move upmarket and downmarket – increasing its market size and profit potential. If skoda can be seen to be making higher quality cars, reputation would be improved.

* Critical Reflection
-‘I don’t think anyone in the uk has doubts about the Skoda brand any more’ prof bailey
-Although it may no longer have a particularly negative image, it does not have a strong positive one either – ‘a brand health check in 2006 showed that skoda still had a weak and neutral image in the mid-market range.. compared to other players in this area’
- Advertising really that useful? Sunk cost! So can be risky to spend so much money on this. (pg 465 of marketing textbook)
-VW promised not to lay off workers. Perhaps it should have done this to get rid of those who were inefficient and perhaps this would have sped up skoda’s recovery
-were VWs methods always effective/suitable for Skoda?
-has it been useful for the Czech republic?
- Are the resources useful? (bias as many are written by skoda)