PESTEL Analysis of Skoda Company

The two cyclists, who were known as Vaclav Laurin and Vaclav Klement, are considered as the founders of Skoda Company. The two cyclists were used to design and produce their own bicycles and eventually it was established as Skoda. In 1925, Skoda was established in Czechoslovakia and gradually, it was expanded towards Eastern Europe by producing cars, farm ploughs, and aero planes other than bicycles. Skoda has to cope with hard times in company history such as war, economic problems and also the changes in the political environment. While the Skoda is grown up internationally, there was a requirement of a strong foreign partner. By, 1990 Volkswagen AG had dominated by joining Skoda. Volkswagen AG is known as the leading car manufacturer in Europe by manufacturing variety of branded products such as Volkswagen, Skoda, and Audi.

PESTEL Analysis of Skoda Company

PESTEL Analysis of Skoda Company

The macro environment consist of factors which are lying outside of the direct control of the business. It includes economy, policies of the government and also the social changes. Since these macro factors can primarily change the environment of a business one individual business can rarely do much on its own to shape them. Theoretically, the macro environment can be analyzed by using PESTEL analysis. PESTEL is stand for Political, Economical, Social, Technological, Environmental and Legal analysis. It describes the outline of macro environment in relation to the business environment.

Referring to the political factors, it consists of policies implemented by the government such as the involvement in the economy. It also includes what kind of goods and services to be produced and the priorities in relation to the business support. The political decisions may play a vital role for some businesses which are related to education health and also in the infra structure facilities. Considering the Skoda Company, the changes in laws and regulations such as accounting standards, taxation requirements and environmental laws and legal power of the foreign states may affect on their business especially in the international trade. Therefore, it is critical to monitor the governments’ policies and regulations in a continuous manner.

Economic factors may include economic growth, interest rates, exchange rates as well as the inflation rate. Those are the factors that may have the potential to make effects on operations and decisions. Referring to Skoda, interest rate may affect its’  cost of capital. Therefore, it determines the extent of the growth of the business and expansion. Exchange rates may affect the costs of exporting goods and the supply and price of imported goods.

Social  factors include cultural aspects, health perception, population growth rate, age distribution, career attitudes and emphasis on safety. Changes in social factors influence in the product demand and operation. For example, aging process may generate smaller and less-willing workforce. This may lead to increasing the labour cost. Therefore, referring Skoda to cope with these trends there should be various management strategies to be adopted. For an example, it should be more concerned on age limit of the workers when recruiting new workers.

The factors such as rate of technological changes, automation and the technical inducements altogether considered as technological factors. Those factors may influence with the outsourcing decisions, market entry barriers and efficient production level of a company. When considering the Skoda, it is producing branded motor cars. Therefore, technology should be their main focus. Because, it creates opportunities for new products and product improvement in relation to the marketing. As the technology advances, new products may launch.

Ecological and environmental aspects such as weather, climate, and climate changes can be considered as environmental factors. Those factors may especially influences industries such as tourism, farming, and insurance. Furthermore, growing awareness of the potential impacts of climate change is affecting how companies operate and the products they offer, both creating new markets and diminishing or demolishing existing ones.

Discrimination law,  consumer law,  antitrust law,  employment law, and  health and safety law can be considered as the component of the legal factor. These factors can influence with the operation process, cost of production and the demand for the products. Legal aspect mainly focuses on the effect of the national and world legislation. The Skoda Company receives all the rights applicable in the nature of their business and every inventions and product developments are always going into the patented process. I.e. Audi, Skoda.

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