SWOT analysis in action
A Skoda case study

Page 4: Opportunities and threats

Opportunities

Opportunities occur in the external environment of a business. These include for example, gaps in the market for new products or services. In analysing the external market, Skoda noted that its competitors' marketing approaches focused on the product itself. Many brands place emphasis on the machine and the driving experience:

  • Audi emphasises the technology through its strapline, 'Vorsprung Durch Technik' ('advantage through technology').
  • BMW promotes 'the ultimate driving machine'.

Skoda UK discovered that its customers loved their cars more than owners of competitor brands, such as Renault or Ford.

Differentiation

Information from the SWOT analysis helped Skoda to differentiate its product range. Having a complete understanding of the brand's weaknesses allowed it to develop a strategy to strengthen the brand and take advantage of the opportunities in the market.

It focused on its existing strengths and provided cars focused on the customer experience. The focus on 'happy Skoda customers' is an opportunity. It enables Skoda to differentiate the Skoda brand to make it stand out from the competition. This is Skoda's unique selling proposition (USP) in the motor industry.

Threats

Threats come from outside of a business. These involve for example, a competitor launching cheaper products. A careful analysis of the nature, source and likelihood of these threats is a key part of the SWOT process.

The UK car market includes 50 different car makers selling 200 models. Within these there are over 2,000 model derivatives. Skoda UK needed to ensure that its messages were powerful enough for customers to hear within such a crowded and competitive environment. If not, potential buyers would overlook Skoda. This posed the threat of a further loss of market share. Skoda needed a strong product range to compete in the UK and globally. 

In the UK the Skoda brand is represented by seven different cars. Each one is designed to appeal to different market segments. For example:

  • the Skoda Fabia is sold as a basic but quality 'city car'
  • the Skoda Superb offers a more luxurious, 'up-market' appeal
  • the Skoda Octavia Estate provides a family with a fun drive but also a great big boot.

Pricing reflects the competitive nature of Skoda's market. Each model range is priced to appeal to different groups within the mainstream car market. The combination of a clear range with competitive pricing has overcome the threat of the crowded market.

Environmental constraints

The following example illustrates how Skoda responded to another of its threats, namely, the need to respond to EU legal and environmental regulations. Skoda responded by designing products that are environmentally friendly at every stage of their life cycle. For example:-

  • recycling as much as possible. Skoda parts are marked for quick and easy identification when the car is taken apart.
  • using the latest, most environmentally-friendly manufacturing technologies and facilities available. For instance, painting areas to protect against corrosion use lead-free, water based colours.
  • designing processes to cut fuel consumption and emissions in petrol and diesel engines. These use lighter parts making vehicles as aerodynamic as possible to use less energy.
  • using technology to design cars with lower noise levels and improved sound quality.

Skoda | SWOT analysis in action

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