Strategic Recommendations:
Existing Strategy
•Generic Strategy: Focused differentiation. Their mission
statement makes this clear enough, which is to be the leader of
the high performance off-road sport motorcycle market.
•Grand Strategies: Product innovation, product development, and
a strategic alliance with Polaris Industries. KTM’s brand image
is dependent on these grand strategies, most customers buying a
KTM for the sake of owning a quality product with the latest
racing technology incorporated into their production motorcycles.
Current Strategy: Pros and Cons
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KTM’s existing business structure
and strategies ensure product
quality, while reducing costs for raw
materials, and producing up to 450
motorcycles per day at each of their
four assembly plants (KTM, 2005).
KTM’s research and development
functional unit has often set the
trend of the latest technology
incorporated into off-road
motorcycles (for example, the first
rear disc brake equipped supercross
motorcycle in 1986).
However, the firm’s debt has
increased significantly in order to
build the new engine production
plant in Munderfing, and their new
development center in Mattighofen.
Also, brand image is quite limited
in North America and other regions
besides Western Europe. This is the
result of the larger Japanese firms
(Honda, Yamaha, Kawasaki, and
Suzuki) producing larger quantities
of motorcycles at lower prices.
Options for KTM
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Become a supplier of high
performance motorcycle components
to the larger Japanese firms. This was
done before, when KTM supplied
radiators for the liquid-cooled twostroke supercross motorcycles
produced by Suzuki in the 1980s.
Expand the company further by
establishing assembly plans in the
three other regions of the world in
which their products are sold: South
Africa, New Zealand or Japan, and the
United States. Produce the
undifferentiated components at these
plants, while the Austrian assembly
plants ships the completed engines
and latest innovated products to the
final assembly plants.
Open corporately-owned dealerships
in North America, rather than giving
the rights to sell KTM products to
smaller, generic motorcycle shops.
Finally, expand sponsorship of enduro
and longer duration motorcycle
competitions in North America, since
motocross and supercross events are
already sponsored usually by the
larger Japanese firms.
Reasons for Strategic Changes:
Separate Assembly Plants
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At present, completed motorcycles are shipped directly from Austria to
their respective sales divisions in Europe, North America, Japan, New
Zealand, and South Africa. This involves large shipping costs, and a
reduced capacity of products which can be shipped.
KTM can ship a greater quantity of completed engines and sub-frame
assemblies to each regional assembly plant, and therefore reduce
production costs in Austria, while also increasing the number of
completed motorcycles available for sale internationally.
Each assembly plant can respond more quickly to technical service
bulletins and design flaws with undifferentiated components, such as
wheels, fork tubes, and rear suspension systems, than having the sales
divisions have to work through the Austrian assembly plants for the
solution.
This also leaves the option available to KTM for customers to purchase
unique, customized motorcycles, selecting from a variety of
engine/transmission assemblies, frames, and product features, rather
than buying a standard issue model. This is something no off-road
motorcycle manufacturer has done yet.
Reasons for Strategic Changes:
Supplying Japanese Firms
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While the objective is to sell more KTM products, KTM itself is already
the supplier of performance radiators for other recreational motorized
vehicles. KTM has always been a manufacturing company first, with a
focus in motorcycle production finally becoming realzied in the mid
1950s.
Selling differentiated, KTM-specific components to the Japanese firms
saves Honda, Yamaha, Kawasaki, and Suzuki their own research and
development costs. The Japanese firms already copy the innovations that
KTM produces. This would simply save the costs incurred by the
Japanese firms, while also giving KTM income when its competitors
succeed in selling more products than they do.
KTM’s customers can already purchase PowerParts for their motorcycles
directly from Austria. The next logical step would simply be to begin
producing KTM brand performance parts for the Japanese motorcycles,
especially since many of the new features are based on KTM’s
innovations.
Reasons for Strategic Changes:
Race Sponsorship and Dealerships
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The Japanese firms already have a hold on
the majority of motorcycle advertising in
North America, the region of the world
which often defines the latest trends in
motorcycle racing. For example, Honda
already markets towards whole families, far
more effectively than any of the other
Japanese firms in the last few years. This
can be seen in their latest marketing
campaign.
KTM is better known for the Dakar Rally,
and other similar long-distance endurance
races, while the Japanese firms have a
greater hold on AMA Supercross, Motocross,
and Supermoto events. Expanding the brand
image into North American enduro races
through the AMA offers less competition
than trying to establish a place in events
already taken.
Having corporately-run dealerships in North
America is something the larger motorcycle
firms, including Harley Davidson, do for
both brand image and quality control. KTM
motorcycles, on the other hand, are
currently purchased through independent
motorcycle dealerships and shops that offer
a mixed bag of products, including Triumph,
BSA, and other brands.
Works Cited
Information
“Honda Off-Road Motorcycles”. OffRoad.Honda.Com.Date Accessed: 26 Nov.
2006. http://offroad.honda.com/
“KTM”. Wikipedia.Org. Date Accessed: 26 Nov. 2006.
http://en.wikipedia.org/wiki/KTM
“KTM.Com-Country Selector”. KTM.Co.At. Date Accessed: 26 Nov. 2006.
http://www.ktm.co.at/
Visuals
“KTM.Com-Country Selector”. KTM.Co.At. Date Accessed: 26 Nov. 2006.
http://www.ktm.co.at/
“I Wanna Ride”. YouTube.Com. Date Accessed: 26 Nov. 2006.
http://www.youtube.com/watch?v=x1rG-a8lPmU
“Euromilhoes Lisboa Dakar 2007: Homepage”. Dakar.Com. Date Accessed:
26 Nov. 2006. http://www.dakar.com/indexus.html