KTM Sportmotorcycle free essay sample

KTM Sportmotorcycle AG is an Austrian motorcycle, bicycle and moped manufacturer. The company was founded in 1934 by engineer Hans Trunkenpolz in Mattighofen. It started out as a metal working shop named â€Å"Kraftfahrzeuge Trunkenpolz Mattighofen† and in 1954 the company began producing motorcycles. KTM, primarily a producer of premium off-road sports motorcycles, has been the fastest growing major motorcycle manufacturer for the past three years with a cumulative average growth rate from 1998-2001 of 31% in revenues and 50% in profits. Its improved financial performance enabled the company to pay down long-term debt and fund the capital expenditures associated with the company’s aggressive expansion goals. However, the prospect of slowing growth in traditional motorcycle markets, coupled with the desire of the venture fund BC European Capital, which is holding 49% of KTM, to exit soon means that KTM will have to consider how to manage its resources to be able to facilitate this exit. Problem KTM’s top management has to decide on the most profitable direction for the company’s future growth. We will write a custom essay sample on KTM Sportmotorcycle or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page There is a possibility for a geographic and/or product line expansion. Company characteristics As mentioned above, KTM is the fastest growing motorcycle company over the past three years. Their main focus is still on the Off-road bikes, as it represented 70% percent of their revenues. Their motto is to be the technological and performance leader, producing premium bikes in low volumes and with the best technology. They are committed to performance and their slogan is â€Å"ready to race†. Tools for Analysis We have used value chain analysis and the VRIO model to assess the overall company situation and the SWOT analysis to get a better overview of the decision that the company is facing. VALUE CHAIN ANALYSIS KTW – READY TO RACE SWOT Strengths: Has a high reputation for being an adventure- oriented brand Was well prepared to produce state of the as distinctive engine***** and unique design High stylish with a distinction color that was well known Superbly efficient dealen **** simiplifies its inventory o**** also helped in advertising Weakness: Initially exploited by impostors No direct control on the selection of dealers, market investment, product***** etc. ********were more busy supplying to **** guys like ford, GM etc. Opportunities: Gain a resounding presence in Moto Gran Prix through the development of V4 engine-design A possible merger with Ducati the latter being a leader in facing success worldwide Can expand into Alt-Terrain vehicles Threats: Merger with Ducati, Italy might spell trouble because of the difficult business conditions in Italy Losing out on the on-road segment to brands such as Harley Porter’s 5 forces for the industry The only substitutes to racing bikes were racing cars which were much costlier. Hence the presence of substitutes was weak. Not many suppliers were present which could provide the resources to KTM**reliably. Thus suppliers beginning power was strong. The industry involves high investment in technology and RD which is difficult for a new entrant. Hence threat of new entrant is weak. *** were ready to pay *miums for the motorcycles since they *che buyers. Hence ** bargaining power was weak. Rivalry, overall effect was weak. Current strategy Building its brand image based on technological leadership and legacy of championship titles Partnership with companies like Red Bull. To appeal to the growing†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. Growth Alternative: 1. Product line expansion On-road motorcycles: Joining with another firm In-house developments All-Terrain vehicles 2. Geographic expansion: Europe USA Geographic expansion – Europe Pros: With the introduction of Euro, KTM has been freed up of valuable time spent on research and development and reducing dealer con** Expansion of the EU brings the new markets for KTM Cons: strict regulation and difficult business situations in some ****e Italy Geographic expansion – US Pros: strong off-road market Cons: strengthening Euro made the exporting to US US suppliers were incapable of catering to KTM’s low volume, high techonology needs. Recommendations: KTM should go for product-line expansion for on-road motorcycles considering all alternatives. If it outsources the design and production of its major component, it co** **** **oduce thebike into marketplace*** SWOT Analysis of Bajaj KTM S. W. O. T Analysis Strength – ? Bajaj is one of the most trusted names in two wheeler industries and has a strong goodwill from its legacy of â€Å"Humara Bajaj† and Pulsar bikes ? KTM is a well known brand known for its Style and Performance ? KTM Duke 125 is a complete package in terms of style and fuel economy ? Has a Strong distribution and service channel with its 1,100 service centre and 600 dealers all across India ? Experienced management having years of experience in bike launch ? Increase in purchasing power of youth and young professional ? 125 cc bike market showing a consistent growth as compared to other segment bikes in India ? One of the kind Duke 125 cc bike having 6 speed gear system for optimal performance and speed. ? Only performance bike in 125 cc segment that gives high fuel economy ? Bajaj has won several awards for its reliability, innovation, consumer`s preference and performance segment in past years. Opportunity ? To become a leader in 125 cc bike market by launch of Duke ? To increase market share through increased sales ? To make a trust of KTM in Indian market ,so other KTM bikes can be launched under Bajaj brand ? Opportunity for Bajaj to become a global brand in world through tie up with KTM Motorcycles. ? Create a shift in consumer preferences from higher end bike to small cc bikes which offers more style and fuel economy as compared to traditional bikes available. Weakness – ? Highly competitive market ? Increase in fuel price which restrict middle income group from buying modern bikes. ? Price tag is $ 2,100 and many heavy cc bikes are available in that price Threat – ? Pilot launch of KTM Duke 125 cc under Bajaj brand, it may tamper Bajaj image if the product does not meets consumer expectation. ? New modern design bike may not appeal to Indian consumer, irrespective of high sales at Global platform. ? Rumors that other competitors are also coming up in new and stylish 125 cc bikes in near future.