KTM-Ready to Race Harvard Case Solution & Analysis

KTM-Ready to Race  Case Solution

KTM-Ready to Race

Introduction

KTM was founded in the year 1934 by engineer Hans Trunkenpolz who opened a motorcycle repair shop in Mattighofen, Austria. After several years of experimenting with motorcycle production, Trunkenpolz teamed with up Ernst Kronreif to start KTM. Over the years the company gained popularity with many off road motorcycle enthusiasts because of its sponsorship of cross-country racing events and rides. Furthermore, the company gained a reputation of reliable and high quality products in the market.

ktm case study solution

ktm case study solution

In the year 1991, KTM declared bankruptcy and was purchased by Knunz and his partner, Stefan Pierer along with some European importers and venture fund. Subsequently KTM wentpublic in 1996 in order to generate enough capital to grow the company and pay out the venture fund. The management of the company decided to go private in the year 1999 to ensure the stability and leadership of KTM which was aided by equity financing from BC European Capital.

By the end of 2002 about 70% of KTM’s revenues came from off-road motorcycle sales including mainly motocross and Enduro bikes, all of which came ready to race off the factory line. Motocross bikes were made for shorter races, while Enduro bikes were made for longer races. Both rally and supermoto bikes were classified as dual sport bikes with elements similar to those of on-bikes, since they couldbe used for adventure racing and everyday riding in the city. There were sportminicycles which were designed for children between the ages of 4 and 13.

The dealing network of the company works with the local and the general importers of motorcycles. The company makes 80% of its sales from the contracted dealers of the company and the other 20% of the sales are made by the general importers of the company’s products.

Analysis

The company has invested in the motorcycle industry fora long period and has experienced gains and losses to great extent. The company is now in a much of a stable state but the concern of the company’s management is that it has lost some of its share in the market as its sales in the market of off-road bikes have decreased and the most important thing is that the majority of sales comes from the off-road bikes and if the company losesits major products’ charm in the eyes of its customers, then it will go into severe losses.
The company has managed to grow in the last 3 years but in the current year the company has experienced a drop in the revenues of the off-road bikes and now the company is of the view that it should make some changes in the operations of the company so that it would beadle to increase the sales of its products or if it can make some marketing strategies, which can increase the sales.....................

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