Ktm – Ready to Race

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would be a merger of equals, therefore KTM had no guarantee that they could operate with the same level of control.

3. Ducati’s networks in the US and CA are strong but could be same POC as KTMs.

POSSIBILITY 2: DEVELOP THEIR CAPABILITIES IN-HOUSE

Pros

1. Possibility of outsourcing production and design, thus saving time to introduce bike into marketplace more quickly.

2. Winning a race could result in sale increase of 4k to 5k units, while winning a championship title could result in sales of about 20k units.

3. Exclusive dealerships: allowed for control of sales environment and distribution.

4. Dealers already had Dealer Net EDP system and was associated with the brand.

Cons

1. Investment in research and development and tooling is expensive

2. Investment of €5 million per year.

3. Exclusive dealerships – limited price-competition for shelf space among independent dealers.

4. Difficulty in attracting new dealers due to the fact that KTM’s on-road presence was minimal.

Choice 2 – Diversifying into ATVs

Pros

1. Sold to similar markets and had similar technology to motorcycles.

2. Easy servicing.

3. Small but growing ATV niche existed

Cons

1. Need the know-how to produce utility ATVs.

2. Competitors were well established in the ATV market.

3. Safety Risk.

RECOMMENDATION

After viewing the pros and cons of the different alternatives KTM currently has, the best solution for KTM is to expand its product portfolio into the on-road segment by developing it in-house along with continuing their product development for off-road motorcycles. Based on the data provided, the on-road performance motorcycles segment is forecasted to grow in the next couple of years thus potentially increasing revenues.

KTM has the technological experience and a strong brand image. This combined with its reputation of championship wins along with their reliable high performance and its strong relationship not only with suppliers but with their dealers as well provides KTM with a favorable position among competitors.

In addition, once KTM is able to successfully establish the new product line, it can then easily transition into new geographic areas. One of the on-road circuits popular in America, which KTM could benefit from, is the Superbike circuit. By dominating the championship in this race, the company could expand its brand reputation and increase its market share in North America.

Furthermore, by opting for this decision, KTM will not be required to make a large investment in comparison to the other alternative of expanding geographically. Overall, the on-road segment will be a good complement for KTM’s already established product portfolio.