The story of Skoda is one of struggle and success. Skoda enjoys a century-long history of motor vehicle manufacturing in a small town in the Czech Republic, about sixty kilometers outside the cultural and tourist center of Prague. Despite early achievements, times became much harder during the former socialist era. The physical plant fell into disrepair and quality declined. However, this tale in one of transformation, and Skoda has once again become very successful in a joint venture partnership with the large German manufacturer Volkswagen (Mendenhall and Oddou, 379).
At the beginning of 1895 mechanic Vaclav Laurin and bookseller Vaclav Klement began producing bicycles “Slavia” in Mlada Boleslav. In the next few years, 1899, the firm Laurin & Klement decided to manufacture also motorcycles, which leaded to success in many international competitions. After first attempt at the turn of the century the firm started to manufacture cars. In 1905, Laurin & Klement introduced their first car, Voiturette A, which became very successful between Czech classical veteran cars.
Its production grew so fast that soon L & K overstepped the scope of the family business. Skoda 420 Popular In 1907 the founders implemented the business transaction to joint-stock company. In 1920s, the need for merge with stronger industrial partners was expressed that, in 1925, Laurin and Klement merged with Skoda Plzen (Pilsner). In the following years the modernize manufacturing did not only include cars, but also trucks, buses, air engines, and agriculture machinery. In 1930 the car production in the scope of concern was earned many credits.
Creation of Joint Company for Automobile Industry (JCAI) after the world industrial crisis leaded for the success on the international arket with new models of Skoda, Skoda 422 and 420 Popular. The World War II had broken this development, which damage the civil program and oriented the production of the war equipment. The JCIA Skoda became the part of German concern Hermann-Goring-Werke and fully did have to orient to the war equipment. Besides the preparation of the various parts of guns, Skoda manufactured also different kinds of terrain vehicles, such as heavy tractors and towing vehicles, tanks, etc.
Skoda 1101 After World War II the JCIA was changed to Automobile Factory/National Company (AFNC) Skoda. Skoda started to manufacture ew models, Skoda 1101/1102 Tudor, which had got along with the technical success of the prewar years. During the 1950s and 1960s, Skoda again introduced new models, Skoda 1200, Spartak, Octavia, Felicia, as well as Skoda 1000MB. New increase of production, more than million of vehicles, was made by introducing Skoda 782 Favorit to the market in 1987 together with Forman 785 and Pickup 787.
After the political changes of 1989 in the Czech Republic, Skoda in Mlada Boleslav began seeking in the new condition of market economy strong international partner that could guarantee with ts experience and investments long-term international competitiveness of the company. In December of 1990 Czech government decided for the cooperation with German concern Volkswagen. On April 16, 1991, Skoda, joint-venture, began its forth brand concern with among such well-known companies as VW, AUDI and Seat. Web Skoda) The goal of the venture was to transfer knowledge and expertise to locals from German expatriates on temporary assignment. “Czech and German managers were paired as part of a “tandem system” for the purpose of exchanging “know-how” (Mendenhall and Oddou, 380). According to a Czech manager, the phase of the know-how transfer is finished sot he number of expatriates is decreasing, and before 1999 should be small group of foreign managers here who are focused on strategic issues.
Both Czechs and Germans agree that the effectiveness of the tandem system is related to the personalities of individual managers, and to the level of knowledge possessed by the German expatriate. Thanks to the modernized measures in management marketing, as well as in the manufacturing process, Skoda Favorit was replaced by Skoda Felicia that with its quality and design was appropriate for the nternational market. Also other preparations were made for second model rows, low middle-class Octavia that was introduced on the Czech market by the end of 1996 and two year after Skoda Octavia-Combi.
Favorit Vehicles manufactured by Skoda Auto are currently sold in 64 markets worldwide. “Impressive sales figures underscore the continued success of the Czech subsidiary of the Volkswagen Group. ” (Web Skoda) Vehicles deliveries set again a new half-year record: the sale of approximately 200,000 vehicles during the first six months of 1999 represents an increase of 10. percent over the previous record of 180,342 automobile. Skoda Auto achieved its greatest growth in Western Europe where a total of 101,534 vehicles were sold, 20. percent up from the previous year. The Western European market accounted fro more than fifty percent of worldwide sales volume. Germany remains the most important export market for Skoda vehicles. There the deliveries rose to 28,581 automobiles in 1999, a 40. 4 percent increase over the first half of the year 1998. Skoda Auto also recorded significant sales increases in Great Britain (13,823 vehicles, p 67. 5%), Spain (6,096 vehicles, up 98%) and France (5,742 vehicles, 35. 5%).
Skoda Auto enjoys a more than 5 percent share of the Austrian automobile market, the companys largest share of any single Western European market. “The mixed economic picture in Central and Eastern Europe set the tone for the development of business for Skoda in this region. The economies of former CIS countries are currently in a downward spiral that is expected to continue for the rest of the year. ” (Web Skoda) In Russia only 83 of every 1,000 people own their own can, ess than half the ownership rate in Eastern Europe.
Soon Volkswagen will start assembling Skodas in Russia and Belarus in an attempt to avoid import tariffs that account for 30 percent of the sticker price (Czinkota, Ronkainen, and Moffett, 296). The sales volume of Czech carmaker Skoda Auto decreased in Russia by 82. 5% to 896 cars in the first half of 1999. (Prime-Tass) Sales in the Baltic countries, Romania and the former Yugoslavia were also low. Despite the continuing downward economic trend in the Czech republic, a total of 38,777 vehicles were sold in the ome market during the first six months of 1999.
The market leader Skoda Auto managed to retain an outstanding more than fifty percent share of the highly competitive domestic car market. On the other hand business developed positively in Central Europe. In Poland Skoda Auto improved its market position to fourth place with sales of 22,461 vehicles, a 52. 8 percent increase over the same period last year. Thus Poland is the second largest export market for the Czech cars, followed very closely by Slovak Republic, which enjoyed a 40. 7 percent growth in deliveries to 19,236 vehicles.