The analysis of the competitive environment of Skoda shows that, there is a very high threat of new entrants. The major competitors in the Super mini segment in the UK car industry in recent times are Corsa, Fiesta, Clio, 206 and Punto. Among the main competitors the inter-firm rivalry is very high. High competition gives rise to stiff rivalry. In this situation if we analyze the strengths of Skoda cars, we can know that the company has a very strong brand image. The brand image is created through its strong reliability and quality and good performance statistics. The strong brand image has resulted in increasing market share and profits. The following graph shows the growth in the market share of Skoda cars:
The strong market position has resulted in a very low threat of substitutes. The image of Skoda cars has taken a drastic change, from a very dull model to a sexy car. Hence, this has made the bargaining power of the consumers very low. The strong product features combined with the effective advertising strategy has made the consumers turn their focus away from the price tag. The distribution network of the company is very strong because of strategic alliances and partnerships with dealers and suppliers. The strong market position has brought down the bargaining power of the suppliers and the company has benefitted by consolidating its supply chain which is very essential in maintaining the quality of the product.
It is obvious that in any ...
If the customer likes a product/ service, then the company starts to grow and its relative strengths also tend to increase and the company strives to serve the customer better and this becomes a cycle. In case of Skoda cars, the same argument holds good. The quality of the car speaks high about the company which is obvious in its financial results and this has increased its bargaining power of the company with its suppliers. Also the preference of the consumers towards the car has increased which has further increased its bargaining power with the consumers. But the point that has to be taken into consideration is that, there is a very high level of rivalry among the existing firms and also there is a high threat of new competition. The five forces suggested by Porter has to be combined with SWOT analysis, to adopt differentiation as its main strategy to stay ahead of competitors. The differentiation now planned by the company is regarding the research and development. Skoda has about 1300 engineers dedicated to develop new trendy designs taking into consideration the nature of Asian and Eastern Europe. In future the company has to focus on its strength of design and performance to have competitive advantage. Also it has to analyze the strengths and weaknesses of its competitors and has to combine with its own strengths to develop a differentiation strategy.
The analysis of the current resources of the company to develop a sustainable competitive strategy is very essential. The following are some of the resources that the company has which can be used to develop a strategy to maintain a sustainable competitive advantage:
The company has a very long history of developing fine designs. Its