Ktm Case Study

Topics: Motorcycle, KTM, Suzuki Pages: 11 (3661 words) Published: May 9, 2013
KTM – Ready to race

Case study

Group 1: Kristina Misha
Vladislava Adamenková
Alina Schön
Miro Verdel
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

Firm infrastructures
Private firm enables stability and leaderships. System of mostly wholly-owned subsidiaries makes full control over operations possible. R&D and Technology Development
As the firm bases its success on the racing success, R&D and Technology Development make this image sustainable. The dealer net software is another technological competitive advantage of KTM. Procurement

More than 50% of the costs come from the procurement of parts. They sacrify the cost for a long term relationship, which is necessary the R&D in a trend driven market. They chose rather smaller suppliers, who are specialized niche players with whom KTM worked very closely to develop the tools and technology. They were less efficient and less professional then the automotive suppliers and consequently KTM invested heavily in training them to move them up the learning curve. Once developed, these suppliers are vital to KTM´s operations. Dealer infrastructure

When KTM was large enough it has built very strong relationships with its dealers. KTM allocated and placed close to 90% of its production in the upcoming year before the bikes were produced. That meant that KTM did very little discounting, its (and dealers´) margins steady throughout the year. In contrast, Japanese manufacturers lacked the intimate contact with its dealers and do frequently need to put products on “fire sales”. Human resources

The average age of the worldwide workforce is under 32 and most of them are motorcycle enthusiasts. The work environment is characterized by democratic decision making, a relatively flat hierarchy, a shared vision and strategy and open door policy. In other words lean structure and labour consisting of the motorcycle fans living the lifestyle of the customers. Marketing

Through sponsoring all major races and championships are building a strong brand name of “ready to race”. The distinctive appearance and characteristics of all the products are all fitting to the company’s strategy. Inbound...
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • Essay about Marketing and Case Study
  • Essay about Zara case study
  • Starbucks Case Study Essay
  • Case Study: Nike's Competitiveness Essay
  • McDonald case study Research Paper
  • Case Study and Web-based Delivery Model Essay
  • Case Study Analysis Essay

Become a StudyMode Member

Sign Up - It's Free