SKODA strategy to expand in Indonesia
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  • 1. Lukas Dziadek Lina Mao Sakinah B Mohd Shukri Tenghan Xie SKODA AUTO EXPANDS TO INDONESIA
  • 2. SKODA AUTO INTRODUCTION COMPANY SITUATION ANALYSIS GLOBAL MARKET SEARCH IN-DEPTH MARKET ANALYSIS ENTRY STRATEGY AND MARKET PLAN CONCLUSIONS  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
  • 3. OWNERSHIP STRUCTURE INTRODUCTION COMPANY SITUATION ANALYSIS GLOBAL MARKET SEARCH IN-DEPTH ANMARKET ALYSIS ENTRY STRATEGY AND MARKET PLAN CONCLUSIONS
  • 4. SWOT ANALYSIS INTRODUCTION COMPANY SITUATION ANALYSIS GLOBAL MARKET SEARCH IN-DEPTH MARKET ANALYSIS ENTRY STRATEGY AND MARKET PLAN CONCLUSIONS • Part of VW - good image • Missing models of large MPVs and SUVs • Positioning is not limited by VW • In some markets perception of brand image • The symbol of European quality • Adapting production with customers is poor • Financial performance Strenghts Weaknesses Opportunities Threats • Extension of existing capacity • Crisis • Growing market dynamics in ER • Decline in demand - too much competitors • Extending the sales network • Changing trends - production of EV • Extending the product portfolio • Strong competition in the market • Addressing other target groups
  • 5. GROWTH STRATEGY INTRODUCTION COMPANY SITUATION ANALYSIS GLOBAL MARKET SEARCH IN-DEPTH MARKET ANALYSIS ENTRY STRATEGY AND MARKET PLAN CONCLUSIONS
  • 6. PRODUCT PROFILE INTRODUCTION COMPANY SITUATION ANALYSIS GLOBAL MARKET SEARCH IN-DEPTH MARKET ANALYSIS ENTRY STRATEGY AND MARKET PLAN CONCLUSIONS  Skoda Superb  Skoda Octavia  Skoda Yeti  Skoda Roomster  Skoda Rapid  Skoda Fabia  Skoda Citigo
  • 7. FINANCIAL ANALYSIS INTRODUCTION COMPANY SITUATION ANALYSIS GLOBAL MARKET SEARCH IN-DEPTH MARKET ANALYSIS ENTRY STRATEGY AND MARKET PLAN CONCLUSIONS Unit Year 2011 2010 Change (%) Production ths. cars 902 780 +15.5 Sales ths. cars 690 585 +18.1 26,565 24,714 +7.5 Employees 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
  • 8. INTERNATIONAL INVOLVEMENT INTRODUCTION COMPANY SITUATION ANALYSIS  GLOBAL MARKET SEARCH  IN-DEPTH MARKET ANALYSIS ENTRY STRATEGY AND MARKET PLAN CONCLUSIONS    Africa – 10 countries America – 14 countries Asia – 29 countries Europa – 39 countries Oceania – 4 countries
  • 9. MAJOR COMPETITORS INTRODUCTION COMPANY SITUATION ANALYSIS GLOBAL MARKET SEARCH IN-DEPTH MARKET ANALYSIS ENTRY STRATEGY AND MARKET PLAN CONCLUSIONS  Volkswagen  Peugeot  Renault
  • 10. INDUSTRY ANALYSIS INTRODUCTION COMPANY SITUATION ANALYSIS GLOBAL MARKET SEARCH IN-DEPTH MARKET ANALYSIS ENTRY STRATEGY AND MARKET PLAN CONCLUSIONS  World economic situation dominated by debt crisis  Highly volatile financial markets  Strong exchange rate fluctuation  High raw material prices
  • 11. PORTER´S 5 FORCES ANALYSIS INTRODUCTION COMPANY SITUATION ANALYSIS GLOBAL MARKET SEARCH IN-DEPTH MARKET ANALYSIS ENTRY STRATEGY AND MARKET PLAN CONCLUSIONS
  • 12. RECOMMENDATION AND CONCLUSION INTRODUCTION COMPANY SITUATION ANALYSIS GLOBAL MARKET SEARCH IN-DEPTH MARKET ANALYSIS ENTRY STRATEGY AND MARKET PLAN CONCLUSIONS  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
  • 13. SELECTING INTRODUCTION COMPANY SITUATION ANALYSIS GLOBAL MARKET SEARCH IN-DEPTH MARKET ANALYSIS ENTRY STRATEGY AND MARKET PLAN CONCLUSIONS 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
  • 14. THE TEN POTENTIAL COUNTRIES INTRODUCTION Huge population Increasing economy Easy access to manufacturing factories GLOBAL MARKET SEARCH IN-DEPTH MARKET ANALYSIS ENTRY STRATEGY AND MARKET PLAN CONCLUSIONS  Angola  Argentina  Bolivia  population--248.20 million  Egypt  its growth rate -- 4%  Indonesia  GDP’s rapid growth  Iran  infrastructure  Mexico  over 764,000 cars are sold in 2010  COMPANY SITUATION ANALYSIS Philippines  South Korea  Vietnam  competition especially Japanese carmakers  rapid economic development  large population  many auto manufacturers  great potential market
  • 15. KEY CRITERIA INTRODUCTION COMPANY SITUATION ANALYSIS Demographics  GLOBAL MARKET SEARCH    Population( Growth Rate) IN-DEPTH MARKET ANALYSIS Local Consumption/Use  ENTRY STRATEGY AND MARKET PLAN CONCLUSIONS Household income Consumption of the product Imports of your product Economic Criteria GDP Disposable Income Political/Legal Environment      Competition intensity Tariffs/duties
  • 16. RECOMMENDATION AND CONCLUSION INTRODUCTION COMPANY SITUATION ANALYSIS GLOBAL MARKET SEARCH IN-DEPTH MARKET ANALYSIS ENTRY STRATEGY AND MARKET PLAN CONCLUSIONS  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.
  • 17. POTENTIAL CONTACT INTRODUCTION COMPANY SITUATION ANALYSIS GLOBAL MARKET SEARCH IN-DEPTH MARKET ANALYSIS ENTRY STRATEGY AND MARKET PLAN CONCLUSIONS Mexico: Indonesia:  Volkswagen De Mexico  Volkswagen Indonesia  Czech Republic Embassy  Czech Republic Embassy  Automotriz Naucalpan  Yassa Mobil
  • 18. MARKET AND COMPANY SALES POTENTIAL INTRODUCTION COMPANY SITUATION ANALYSIS GLOBAL MARKET SEARCH IN-DEPTH MARKET ANALYSIS ENTRY STRATEGY AND MARKET PLAN CONCLUSIONS  Based Total Skoda Market Potential Indonesia TMP (billions)  Mexico 186.1 242.2 Skoda Company sales potential Indonesia CSP (billions) Mexico 14.8 19.2
  • 19. POTENTIAL BUYER (1) INTRODUCTION COMPANY SITUATION ANALYSIS  SKODA is an automotive industry business focusing on cars. GLOBAL MARKET SEARCH  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. IN-DEPTH MARKET ANALYSIS ENTRY STRATEGY AND MARKET PLAN CONCLUSIONS Country Indonesia Mexico Percentage Percentage of people Population of each who employed in country aged between each country 15-64 55.4% 72.6% 75.6% 71.8% Household income percentage 29.9% 41.4%
  • 20. POTENTIAL BUYER (2) INTRODUCTION COMPANY SITUATION ANALYSIS GLOBAL MARKET SEARCH IN-DEPTH MARKET ANALYSIS  Skoda potential buyer within cities City Population INDONESIA Jakarta 9.121 million Surabaya 2.509 million Bandung 2.412million MEXICO ENTRY STRATEGY AND MARKET PLAN Mexico City 19.319 million Guadalajara 4.338 million CONCLUSIONS Monterey 3.838million
  • 21. COMPETITIVE ANALYSIS INTRODUCTION COMPANY SITUATION ANALYSIS GLOBAL MARKET SEARCH IN-DEPTH MARKET ANALYSIS ENTRY STRATEGY AND MARKET PLAN CONCLUSIONS Competitor 1 Competitor 2 INDONESIA Competitor name Product name Number of employees Years in Business Competitor name Product name Number of Employees Years in business Toyota Innova Fortuner Avanza 5792 43 Nissan Leaf Tiida Sentra Tsuru 169298 79 Daihatsu Xenia Sirion Luxio 7967 9 MEXICO General Motor Chevrolet Aveo Chevrolet Spark Chevrolet Chevy Chevrolet Cruze 202000 104
  • 22. COUNTRY ENTRY REGULATION INTRODUCTION COMPANY SITUATION ANALYSIS GLOBAL MARKET SEARCH IN-DEPTH MARKET ANALYSIS ENTRY STRATEGY AND MARKET PLAN CONCLUSIONS Import Regulation:  Indonesia administrative barrier is lower than Mexico  Import Licensing requirement is more strict than Mexico  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 Quotas & Tariff is lower in Indonesia
  • 23. MARKET ENTRY REGULATION INTRODUCTION COMPANY SITUATION ANALYSIS GLOBAL MARKET SEARCH IN-DEPTH MARKET ANALYSIS ENTRY STRATEGY AND MARKET PLAN CONCLUSIONS 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 Indonesia  Corporate Tax is 15%-30%  Rupiah  Labour union (Public Service International)  Government help to increase their transport infrastructure  WTO (1995)  Corruption high
  • 24. THE BEST TARGET MARKET FOR SKODA INTRODUCTION COMPANY SITUATION ANALYSIS GLOBAL MARKET SEARCH IN-DEPTH MARKET ANALYSIS ENTRY STRATEGY AND MARKET PLAN CONCLUSIONS  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
  • 25. RECOMMENDATION AND CONCLUSION INTRODUCTION COMPANY SITUATION ANALYSIS GLOBAL MARKET SEARCH IN-DEPTH MARKET ANALYSIS ENTRY STRATEGY AND MARKET PLAN CONCLUSIONS  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
  • 26. EVALUTE BY THIS ELEMENTS INTRODUCTION COMPANY SITUATION ANALYSIS GLOBAL MARKET SEARCH IN-DEPTH MARKET ANALYSIS ENTRY STRATEGY AND MARKETING PLAN CONCLUSIONS 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.
  • 27. ENTRY MODEL INTRODUCTION COMPANY SITUATION ANALYSIS GLOBAL MARKET SEARCH IN-DEPTH MARKET ANALYSIS ENTRY STRATEGY AND MARKETING PLAN CONCLUSIONS  Our final recommend Entry Model is Foreign Based Sales instead of Wholly Owned Manufacturing Subsidiary
  • 28. MARKETING STRATEGIES (7PS) INTRODUCTION COMPANY SITUATION ANALYSIS GLOBAL MARKET SEARCH IN-DEPTH MARKET ANALYSIS ENTRY STRATEGY AND MARKETING PLAN CONCLUSIONS Focus on the first 4Ps  Products  Pricing  Promotion  Place  People  Physical evidence  Process
  • 29. PRICING AND PROMOTION INTRODUCTION COMPANY SITUATION ANALYSIS GLOBAL MARKET SEARCH IN-DEPTH MARKET ANALYSIS ENTRY STRATEGY AND MARKETING PLAN CONCLUSIONS  Pricing method Buying Price [€] Total shipping costs [€] Insurance costs [€] Goods customs [€] Import duties (Tariffs) [€] Value-added tax (VAT) [€] Selling Price [€]  20,000 2,000 200 22,200 2,220 2,442 26,862 It is 10% of buying price It is 1% of buying price It is 10% of goods customs It is 10% of (goods customs + tariffs) Budget for promotional mix Type of promotional mix Advertising (Magazine) Internet Total budget Cost per unit Units Total cost 2 350 1,000 3 2,000 1,050 3,050
  • 30. INTERNATIONAL MARKETING BUDGET AND PROFIT INTRODUCTION COMPANY SITUATION ANALYSIS GLOBAL MARKET SEARCH IN-DEPTH MARKET ANALYSIS ENTRY STRATEGY AND MARKETING PLAN CONCLUSIONS Cost of entry strategy  ̶ Mainly in Shipping cost and Import duties Forecast of future sales  ̶ NO. of sales will increase in the next 3 years Projected income statement  ̶ Estimated Best/Worst case happened in next 3 years Breakeven analysis  ̶ The stress will be first 2 years in order to cover our investment
  • 31. P/L SCENARIO INTRODUCTION COMPANY SITUATION ANALYSIS GLOBAL MARKET SEARCH IN-DEPTH MARKET ANALYSIS ENTRY STRATEGY AND MARKETING PLAN CONCLUSIONS
  • 32. RECOMMENDATION AND CONCLUSION INTRODUCTION COMPANY SITUATION ANALYSIS GLOBAL MARKET SEARCH IN-DEPTH MARKET ANALYSIS ENTRY STRATEGY AND MARKETING PLAN CONCLUSIONS  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
  • 33. OVERALL CONCLUSION INTRODUCTION COMPANY SITUATION ANALYSIS GLOBAL MARKET SEARCH IN-DEPTH MARKET ANALYSIS ENTRY STRATEGY AND MARKET PLAN CONCLUSIONS  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
  • 34. REFERENCES INTRODUCTION COMPANY SITUATION ANALYSIS GLOBAL MARKET SEARCH IN-DEPTH MARKET ANALYSIS ENTRY STRATEGY AND MARKET PLAN CONCLUSIONS  More than 60 references are available in full report
  • 35. QUESTIONS AND ANSWERS INTRODUCTION COMPANY SITUATION ANALYSIS GLOBAL MARKET SEARCH IN-DEPTH MARKET ANALYSIS ENTRY STRATEGY AND MARKET PLAN CONCLUSIONS