ktm_group a
TRANSCRIPT
GROUP A
five forces: KTM
competitive rivalry
bargainingpower ofsuppliers
bargainingpower ofbuyers
threat ofsubstituteproducts
threat ofnew
entrants
five forces analysis
industry attractivenessstrength
low medium high
rivalry amongst competitors
threat of new entrants
threat of new substitutes
bargaining power of buyers
bargaining power of suppliers
industry competitors
factor strength
low medium high
industry growth
concentration and balance
fixed costs / value added
intermittent overcapacity
brand identity
switching cost
informational complexity
diversity of competitors
corporate stakes
exit barriers
substitutes
factor strength
low medium high
relative price performance of substitutes
switching cost
buyer propensity to substitute
buyers
factor strength
low medium high
buyer concentration
buyer volume
switching cost
buyer information
buyer profits
substitute products
pull-through
price-sensitivity
price/total purchases
product differences
brand identity
ability to backward integrate
impact on quality/performance
decision maker’ incentives
c
porter’s four principal diagnosis components
what drives the competitor what the competitor is doing and can do
future objectives at all levels of management and in multiple dimensions
current strategyhow the business
is currently competing
assumptionsheld about itself and the industry
capabilitiesorganisation’s strengths
and weaknesses
competitor’s response profile• is the current competitor satisfied with its current position?• what likely moves or strategy shifts will the competitor make?• where is the competitor vulnerable? • what will provoke the greatest and most effective retaliation by the competitor?
competitor A:Kawaski (future objectives)
• Focus on the production of high performance super bike, which should be known for its design.
• To pursue cost efficiencies and drive Research and Development
competitor A: assumptions
• Revenue from the motor cycle business in future would remain at a minimum of 25% of the total.
competitor A: current strategy
• Developed the ‘Good Times Owners Club’ for the motorcycle owners
• Entered into an alliance with Kawasaki to leverage each others strengths, cost effectiveness and share R & D.
competitor A: capabilities
• Known to produce high performance super bikes.
competitor B:Suzuki( future objectives)
• Target the youthful Japanese market by adapting to “Street Type’ motorcycles.
• Expected to push towards internationalisation.
competitor B: assumptions
• Revenue from the motor cycle business in future would remain at a minimum of 25% of the total.
competitor B: current strategy
• A monthly e-newsletter to remain in touch with the pulse of the consumers
• Focus on Street-Types bikes along with touring models
competitor B: capabilities
• Development of Suzuki Advanced Cooling Systems, which increased the racing performance of the touring models
competitor C:Yamaha( future objectives)
• To surpass the customer expectations
competitor C: assumptions
• Revenue from the motor cycle business in future would remain at the present figure of 50%.
competitor C: capabilities
• High quality of design and racing technology
competitor C: current strategy
• Focus on the Yamaha Racing Team, to gain insight into the latest racing trends.
• Outsourcing of the non-value added activities to take advantage of the cost efficiencies.
competitor D:Honda( future objectives)
• To be a lifestyle product, by connecting with its consumers
• High focus on safety of its riders.
competitor D: capabilities
• Customisation of bikes according to the tastes of its customers
competitor D: current strategy
• Focus on marketing and after-sales methodologies.
• Development of motorcycle community called ‘Honda’s Riders Club’, offering rider education reimbursement and arranging of Honda Hoot.
competitor threat gridfactors Kawasaki Suzuki Yamaha Honda
• future objectives
Focus on the production of high performance super bike
To pursue cost efficiencies and drive Research and Development
Target the youthful Japanese market by adapting to “Street Type’ motorcycles.
To surpass the customer expectations
To be a lifestyle product, by connecting with its consumersHigh focus on safety of its riders.
• assumptions
Revenue from the motor cycle business would remain at a minimum of 25% of the total.
Revenue from the motor cycle business would remain at a minimum of 25% of the total.
Revenue from the motor cycle business would remain at the present figure of 50%.
-
• current strategy
- Developed the ‘Good Times Owners Club’ for the motorcycle owners- Alliance with Kawasaki
- Monthly e-newsletter to remain in touch with the consumers- Focus on Street-Types bikes
- Focus on the Yamaha Racing Team- Outsourcing of the non-value added activities
- Focus on marketing and after-sales - Development of motorcycle community called ‘Honda’s Riders Club’
Competitor threat grid
factors Kawasaki Suzuki Yamaha Honda
• CapabilitiesKnown to manufacture high performance super bikes.
Development of Suzuki Advanced Cooling System to increase the racing performance of the touring models
High quality design and racing technology
Customisation of the bikes as per the needs of the customers
•Impact Reaction
• Likely Response
Internationalism – diversification into Asian and Latin
American countries
Vendor development, R&D, setting up of local
infrastructure.
Internationalism – diversification into Asian and Latin
American countries
Vendor development, R&D, setting up of local infrastructure.
Internationalism – diversification into Asian and Latin
American countries
Vendor development, R&D, setting up of local infrastructure.
Internationalism – diversification into Asian and Latin
American countries
Vendor development, R&D, setting up of local
infrastructure.
Environmental Analysis: Economic
• Growth of the automobile industry in North America for 10 consecutive years.
• Growing income strength of the middle class in Latin America.
• Development markets in Asia and Latin America, which are highly price competitive.
Environmental Analysis: Political
• Countries like Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta etc. are expected to join the European Union followed by Bulgaria, Turkey. Croatia and Romania.
• Creation of a common regulatory framework across the European Union which made it possible for KTM to follow just one standard.
• Imposition of tariff’s by USA, in retaliation for the European Union’s ban on American beef, which resulted in 100% duty surcharge on bikes imported from Europe
Environmental Analysis: Social
• Popularity of the on-road bikes for transportation and recreation and usage of off-road bikes for cross-country racing.
• Desire for a certain lifestyle and community experience from the old on-road bikers, while the need for the young, urban males for urban transportation.
• Decrease or graying of the baby boomer generation which were moving towards other means of transportation (Japan)
Environmental Analysis: Technological
• Recent trend in the automobile industry to move towards 4 stroke engines and away from 2 stroke engines.
SWOT ANALYSIS: KTMStrength
• Reputation for production of reliable, high-quality core parts.• Financing from Venture Capitalists and Private equity firms.• Products off the factory line were ‘ready to race’.• Short average life span of the motor cycles and quick introduction of new
models and upgrades.• Highly diversified product portfolio which comprised off sport mini cycles, rally
bikes, super motor bikes etc.• Sponsoring of major off-road racing circuits in Europe which helped cultivate
its brand image.• Gaining control over the suppliers, dealers, market investment and market
information after the formation of EU.• KTM bikes being sold for a premium compared to Japanese brands.• Allocation and placing orders for nearly 90% of next years production.• Using Dealer Net to coordinate, track shipments and inventory among the
dealers.• Flat hierarchy, shared vision, strategy and democratic work environment.
SWOT Analysis: KTMStrength (contd.)
• Customer segment was young and edgy, who were drawn by the legacy of KTM’S championship titles.
• Alliance with companies like Red dull, to appeal to the segment of extreme sports fans.
• Availability of high end technological know-how to produce sporty All Terrain Vehicles.
SWOT Analysis: KTMWeakness
• Lack of control over the dealers chosen thereby having no control over market information, level of investment or the introduction of newer models.
• Bikes manufactured were challenging to ride and were meant for experienced riders.
• Ability to produce only sport ATV’s but not utility ones.
SWOT Analysis: KTMOpportunities
• Develop in-house on-road motorcycles.• Develop utility All Terrain Vehicles.• Go on a geographical expansion into Europe and
Latin America.• Integrate with the smaller suppliers, who were based
out of Europe and develop specialized tools and technology.
SWOT Analysis: KTMThreats
• Lack of professionalism from the bigger suppliers who supply to Gm and Ford.
• Less efficient, small time automotive suppliers on whom KTM was overlay dependent.
• Drop in the sales in the European Region
SWOT ANALYSIS: KawasakiSTRENGTH
Known for design and high performance super bikes.Only manufacturer to develop hardcore sports bikeDevelopment of the “Good Times Owners Club”.Offering financial services for the purchase of Kawasaki products
WEAKNESS
THREATS
Markets in Developed countries were moving to saturation.
OPPORTUNITIES
To leverage the company’s strengths, pursue cost effectiveness and share R and D with Suzuki.Expansion into Latin America, Asia and India by development of local sourcing, R&D and production infrastructure.
SWOT ANALYSIS: SuzukiSTRENGTH
Targeted the Japanese youth.Strong in adapting the trends associated with street-type motorcycles.Known for its advanced technological systems. Eg: Suzuki Advanced Cooling SystemPublishing of a monthly e-newspaper
WEAKNESS
Didn’t have an established community for its riders.
THREATS
Shrinking population of Japan.Aging baby boomer segmentShift in consumer preferences.Markets in Developed countries were moving to saturation.
OPPORTUNITIES
Expansion into Latin America, Asia and India by development of local sourcing, R&D and production infrastructure.
STRENGTH
Successfully adapted Harley’s marketing and after-sales methodologies.Ability to customize the bikes as per the requirements of the customers.Developed a community called Honda Riders Club of America, which gives rider education reimbursements etc.
WEAKNESS
THREATS
Markets in Developed countries were moving to saturation.
OPPORTUNITIES
Expansion into Latin America, Asia and India by development of local sourcing, R&D and production infrastructure.
SWOT ANALYSIS: Honda
SWOT ANALYSIS: Yamaha
STRENGTH
Followed the philosophy of Kando – surpassing customer requirements.Focus on the Yamaha racing team.Focused on core competencies in design.Outsourcing of non-value added activities to take advantage of cost efficiency.
WEAKNESS
THREATS
Markets in Developed countries were moving to saturation.
OPPORTUNITIES
Expansion into Latin America, Asia and India by development of local sourcing, R&D and production infrastructure.
MARKET COMPARISON: Europe vs. United StatesFACTORS EUROPE UNITED STATES
SALES Drop in Sales. Expected to drop by 10% in 2003 and over 4 % each year over the next 3 years.
Increase in sales. Positive growth in 10 consecutive years. Expected to grow by 17-18% over the next 3 years.
CURRENCY FLUCTUTATIONS
None. Euro was expected to be the common currency.
Dollar was losing out because Euro was strengthening.
TRADE PROTECTIONISM
None. Common regulations among all countries .
Had imposed a ban on the import of European bikes, resulting in 100% increase in prices
SUPPLIERS Small, unprofessional but on training were integrated and were vital for operations
Accustomed only to high-volume, low-technology products and hence hadn’t the technical skill nor inclination to respond to KTM’s needs
Recommendation
• Expand dealer network with new models in High Growth in North America
• Expand operations in to new potential markets like Latin America, Asia and Africa
• Even though off road segment is growing, on road market is too large to ignore, hence should enter into off road.
• Should launch utility ATV’s as the technical knowhow is already present.