Q3. In light of your answers to the above two questions, what should KTM do to follow the directions you have advocated? Should it acquire another company (like Moto Guzzi), merge with another one (like Ducati), form an alliance, or build internally?
KTM acquisition of racing engaged and racing heritage companies like Moto Guzzi and Ducati are strictly unrelated to the international trends that the markets are exhibited in the data here in this consideration.
ktm case study solution
Since the entire global markets of off-road motorcycles will grow at a minute and mediocre 5% and might continue to decline over the next few years. While concentrating only on the racing aspect of motorcycling Ducati or Moto Guzzi might prove beneficial only restricting to the American racing. Track based Motorsport culture which is found in the Europe as well, but in order to cope up and draw benefit from the ever more attractive masses, the KTM has to seek alliance or even acquire a cost competitive player that is offered on the road, daily commuting bikes. That will not only aid KTM in capturing the growing customers in the masses, but also to develop relatively big engine motorcycles for the part-time and occasional enthusiast as well as specialize in the long distance cruiser utilizing its on racing experiences and tradition.
KTM has a reputation in producing 150cc and 250cc engines that can not only be mated with the body of tourists and cruisers, but the local city commuters can also get powered by the KTMs 150cc engines. Similar strategy in the Asian countries is perused by the Japanese manufacturers like Honda, Yamaha and Suzuki and they offer a wide range of commuters, cruiser and big engine cruisers as well. But some countries of the Asian sub-continent more specifically Pakistan and its neighboring countries including Afghanistan and Iran are starving for any significant competition. In particular the Pakistan’s market is ruled by obsolete offerings from the Japanese players like Honda and Suzuki, followed by the Chinese supplier based local replicas of the original Japanese OEM models. This phenomenon strictly suggests that there is a vast gap that needs to be fully filled in the region, especially west of the subcontinent where the Japanese players have dominated by only offering their outdated models and offering them throughout the years.
The natural alliance that can be viable for KTM with a local Asian player will undoubtedly be a Chinese vendor that has expanded its roots to the local markets, particularly the western subcontinent because of the fact that KTM can be overshadowed by the brand of a giant and further the benefits can be lesser as compared to the cost.
KTM has all the basics covered as it already has specialized in producing relatively smaller engines than the full-fledged racing motors in the form of 150cc to 250cc engines. So, in my opinion KTM only needs assistance to put those engines on the road in appropriate vehicle, according to the needs of the customers with the help of a local player that knows the market and the need of the customers residing in that particular market.
Q4. Assuming that KTM wants to enter the ATV market, compare and contrast alternative vehicles available to KTM. (Hint: In discussing alternative vehicles also incorporate “who should KTM choose if it wants to buy or borrow and why?” discussion as well into your decision criteria. That is, if no alliance target is available, suggesting that it should borrow is not the best of the arguments, similarly for buying and building. In addition, suggesting that KTM should buy without telling whom to buy is also not the best approach.
Is the ATV market viable for KTM or not?
Solution
Bearing in mind the dynamics of KTM’s off-road motorcycles, there is a significant degree of common practices that involve the manufacturing or production of an off-road motorcycle and ATV. For example, ATV is a four wheeled off-road bike; strengthened and reinforced to accumulate four wheels, changes might range from minor to large, depending upon the variety of the ATV product range and the customer’s preferences, but the core idea similar. For instance, the technical competency that KTM secures in making the off-road two-wheeled vehicles, will also be relevant in making its four-wheeled versions, to some extent. Not only that, some value chain activities might also be common and deliver substantial benefits in this whole process. Lastly, KTM’s off-road will also be coupled with their new ATVs as well. Henceforth, the phenomenon of strategic fits can produce synergies, combined positive effect of working
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