KTM – Ready to race
Group 1: Kristina Misha
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 “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. 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 “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
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.
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
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 R&D 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 **...
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