Class
Professor
Institution Affiliation
City, State
Date
Contents
Cloesen, U., 2013.Japanese Custom Motorcycles. Poundoury Veloce Publishing Ltd. 11
Cloesen, U., 2014. British Custom Motorcycles: The Brit Chop - choppers, cruisers, bobbers & trikes. Poundoury: Veloce Publishing Ltd. 12
Cycle World Magazine - Jan 2009 12
Hancox, H., 2000. Tales of Triumph Motorcycles and the Meriden Factory. Poundoury Veloce Publishing Ltd 12
Rosamond, J., 2009. Save the Triumph Bonneville: The Inside Story of the Meriden Workers' Co-op. 12
Weckerle, A., 2013. Civility in the Digital Age: How Companies and People Can overcome trolls. New York, NY: Pearson Education. 13
Woolridge, H., 2004. The Triumph Trophy Bible. Poundoury Veloce Publishing Ltd. 13
Abstract
This term paper is a study of Triumph Motorcycles Ltd with a focus on the major risks that face the company in the foreseeable future. The opportunities and the threats that are presented by the risks have also been analyzed critically. The strategies that will be used to take advantage of the opportunities presented and also those strategies to curb the threats identified have been formulated in this paper. The strategies considered are specific to Triumph Motorcycles Ltd. Triumph Motorcycles is the biggest United Kingdom motorcycle manufacturer. The various threats facing Triumph in the motorcycle industry are studied in this paper include but not limited to: competition, changes in technology and innovation, costs of production and marketing, changes in customer preferences, finances, global recession, unpredictable risks such as fire and others. This paper also analyses the strategies Triumph can take to curb the risks it is facing in the future. Taking advantage of the opportunities available for Triumph is also evaluated.
Introduction Triumph Motorcycles Ltd is so far the biggest motorcycle manufacturer in Britain. It began production of motorcycles in 1902 and was bought by John Bloor in 1984.Currently it has about 1600 employees. Its network of dealers consists of about 700 dealers in the globe. The source of company’s revenue is as follows: about 25 % of the revenue is obtained from North America, UK offers 15%, and continental Europe provides 22% and 22% is from Asia. There is lot of space for expansion especially in the United States where their market share is at 1% only ( unbelievably in 1969 it was the highest selling motorcycle brand in the US, making appearances in film with celebrities such as Clint Eastwood, James Dean, Marlon Brando and Steve McQueen until competition brought it down).
Triumph is a private limited company and therefore has its share of tribulations associated with such companies. Triumph faces several risks in its bid to be a leading motorcycle manufacturer and seller in the in the world with a big market share. The various risks facing the company which are foreseeable in the future include but not limited to the following:
1. Tight and Fierce Competition
Triumph Motorcycles Ltd has previously faced tough competition in this dynamic industry. In the 1970s period Triumph faced fierce competition from Japan which it was ill-prepared for. Generally, it suffered from many problems which included: high costs of borrowing, inability to come up with new and better goods fast enough which resulted to bad performance and outdated styling, non-replacement of old factory machinery contributing to low quality level in comparison with the competitors. It is evident that the competition has not come to an end with presence of Japanese giants such as Yamaha, Suzuki, Honda and Kawasaki which are large and efficient dominating the market.
In the US the likes of Harley Davidson has taken almost all the market leaving almost no space for Triumph. Triumph is very much aware of the challenges that the future present as shown by its former CEO, Mantoni, who once said that they were success then but Japanese makers were present always and the Chinese were coming. He also said that China had 25 to 50 brands then (year 2009) and in 10 years time, 2 or 3 brands will be as prosperous and competitive as the Japanese so they have to watch that always (Andrews R.N.L., et el. 2001). Japanese have been very competitive especially when it comes to the lower selling prices of their motorcycles. This means that Triumph has to be very vigilant of the upcoming competitors but not to forget the already existing ones.
2. Innovation and Changes in Technology
Triumph recognizes that it lacks the power to challenge the big Japanese manufacturers when it comes to innovation but it is determined to improve its current technology. Innovation has cost Triumph billions of money in its pursuit of competing with the Japanese who have made very innovative and great motorcycles in the past century. John Bloor and his team of engineers had to go to Japan to study the technology applied there. Triumph replaced it old machinery with robots to gain a competitive edge and also applied Japanese designs (Jones 2012). Triumph has to look out for the technologies that its competitors are implementing and the ones they are abandoning. Technology is changing everyday which calls for Triumph to be very alert as this may risk its business if it lags behind technologically in the future.
3. Costs of Production
The majority of Triumph’s competitors such as the Japanese manufacturers are having cost of production advantage which poses a risk. By consideration of production Triumph lacks access to economies of scale as compared to the Japanese Competitors. The Japanese Companies are continuing to spread their overheads in production quantities as much as ten times more. Advancement in computer aided design, engineering practice and manufacturing will curb the risk of high costs of production in the near future as noted by Bloor (Hancox 2000).
4. Finances
The fact that Triumph is Private Limited Company and its recent success poses the question whether that is long lasting. Getting enough finances for future projects is risky. Triumph may need to turn to the stock exchange so that it can raise enough long term finances to enable it to compete with the larger rivals. Furthermore, its prosperity has resulted to interests from its competitors such as BMW which wanted to take it over in 2006. This means that the company should be financially secure in the future to have the capacity to reject such financially lucrative takeover bids (Chatburn 2010).
5. Global Recession
Global recession and economic crisis are risks to Triumph and other manufacturers and they are not immune to the same. In the year 2008 Bloor lost £52 million and 17% turnover fall forcing triumph to write-off building land worth £63 million because of the credit crunch. The UK market suffered a 15% decline in motorcycles sales for nine months in 2009 (Cloesen 2013). This was a warning and such a thing can repeat itself in the future.
6. Government Policies
The changing government policies in the countries that Triumph is selling its motorcycles are a major risk to its business. For example, currently it has to export motorcycles to India in completely knock down (CKD) form and do assembling in the country. This helps in dealing with the 60% high duties levied on bikes imported directly and 10% on CKD units. Triumph should be aware of the government policies in the countries it intends to sell its products. Talks with such government will also be of assistance in the future (Andrews R.N.L., et al. 2001).
7. Unpredictable Risks
Triumph faces many unpredictable risks in the future such as fire, floods, hurricanes etc. Like it happened in March 2002 when fire destroyed their factory which resulted to be biggest (£25 million) industrial insurance claim at the time. The closure and building period meant no business for the company. Such occurrences should be looked out for in the future.
8. Changes in Customer Preferences
The motorcycle customers preferences are changing everyday which means that Triumph should be very observant to continue being in business in the future. Previously the bikes produced by Triumph reflected its heritage. However, the future calls for modern bikes and history cannot be traded forever because of the changing customer tastes and preferences. Steve Kenward (CEO of MCIA) said that there has been the growing up of specialist bike enthusiast leaning towards models that are comfortable to the old people. Actually, sports superbikes sales have reduced by half while adventure and tourer bikes demand has doubled (Brown 2002). This means that Triumph should cater for the needs of their customers in the future.
9. Possibility of short product lifecycle
The products of Triumph especially the middle weight bikes are faced with risk of short lifecycles. This is because newer and more improved brands from competitors are coming up daily. Triumph does not want to accept that any of its products will come to the inevitable death because no company wants to see its company die.
Strategies Taken By Triumph
Triumph Motorcycles Limited has undertaken and ought to undertake various other strategies to take advantage of the opportunities in the motorcycle industry. It has also taken other strategies to control the threats and risks that surround its business.
Strategies to control the tight and fierce competition
To control the tight and fierce competition in the motorcycle industry Triumph had to evaluate what its competitors especially the Japanese manufactures were using to come up with very competitive designs. John Bloor and his team of engineers visited the Japanese makers and fortunately they did not restrict them (Church and Austin 1979). That visit was very strategic as the team borrowed designs and technologies from the Japanese which they used in their factory. The new designs which shared very many internal components made them very competitive in the Motorcycle industry.
However, the growth in sales recently indicates that Triumph has taken the opportunities available in the market for motorcycles that have been designed distinctively and this focus seems to continue in the foreseeable future. For example, the Daytona Triple model shows the change in strategy that has occurred in their sport range and now their focus is on three-cylinder distinctive designs. The three-cylinder Daytona Triple sets itself on a strategic edge to compete with the likes of Harley Davidson with its detail attention and good quality finish (Wageman and Hackman 1995).
Strategies to cope up with Innovation and Changes in Technology
Triumph has made up very good strategies when it comes to Innovation and Technology. It has invested millions of money to build research and development units which are very much protected and visitors are not allowed to go near the facility. At the beginning of the renovation of the company by John Bloor he and a team of professionals went to Japan to analyze the level of technology applied there which influenced them to replace the old machinery and build new facilities. Triumph has embraced robotics as a strategy to build high quality motorcycles at minimum production costs (Weckerle 2013).
Strategies to reduce the cost of production and opportunities available
Triumph should strategise in reducing the costs of production to the minimum in order to compete with the Japanese. Currently, it has been noted that Triumph doesn’t possess the economies of scale as compared to the Japanese companies which distribute their overheads across production quantities in excess of ten times. This translates to a big opportunity if Triumph is to implement strategic measures to have good economies of scale.
Strategies to manage financial prospects needs risk Hamel (1991) suggested that Triumph being a private limited company should strategise in registering itself in the stock exchange market so that it will be able to gather long term finance for its development projects. This will enable it to be able to compete with the bigger rivals and also keep off lucrative like those from BMW to take it over.
Strategies to manage global recession and opportunities presented Triumph ought to strategise in studying the global markets keenly by the use of talented watch dogs to be well prepared in case of any recession. Worldwide recessions are shown by such things like the fall and shrinkage of markets, reduced demand and this should be followed by such measures like slashing production and reducing wages like Ducati did in 2009 (financial times). Other measures include closing some factories and making redundancies especially in the worst hit countries. Yamaha is a good example of how to cope with recession: in 2008 it had expectations of falling sales by 22% and thus it did cut production in the UK, US and Europe (Cloesen 2014).
Strategies to cope with government policies and the opportunities presented The most ideal way to deal with government policies is to take strategic measures to go around the policies in order to remain in business. Triumph previous measure to export CKDs to India instead of complete motorcycles is a good example. Triumph ought to take steps to reduce the cost of doing business without violating government policies. It should also consider engaging itself with governments and forward their suggestions in the making of policies which might luckily be considered (Rosamond 2009). The government policies also provide opportunities. For example, the high taxes (about 60%) levied by the Indian government on imported bikes opened the opportunity of Triumph setting up an assembling plant in the country. Triumph is in negotiation with the Southern State of India (Karnataka) in regard to building an assembly plant where it will develop the highly demanded 250cc motorcycle in India. Triumph has also signed a joint marketing and promotion contract with Castrol Oil and also collaborated with HDFC Bank in India which will provide loans of up to 80% of the buying price on Triumph motorcycles. India is the second growing market being targeted by Triumph, launching in Russia was also done courtesy of favourable government policies. Brazil is on the list for building a manufacturing facility. Thus, it is evident that Triumph can get a lot out of government policies by strategising its moves.
Strategies to curb unpredictable risks
Triumph should make strategies to curb the unpredictable risks such as fire, employee accidents among others. The most ideal strategies should include but not limited to insurance and the decentralization of its manufacturing plants. In case one succumbs from a risk such as fire, as it happened on 15th March 2002, the company can continue production in other plants by adjusting the output slightly. This will ensure that they will continue supplying to their customers without having to stop production to build from ashes like the six months in 2002.
However, occurrence of such risks sometimes comes with good things like full insurance compensation which is used to build new and modern manufacturing facilities. After the 2002 incident the new plant had the capacity to produce 100,000 motorcycles yearly and completion of a bike in a record 2.5 hours.
Strategies to manage changing customer preferences
Triumph ought to do deep market researches on the current and previous customer preferences. This will assist in coming up with models to predict the future customers tastes and preferences and be prepared for the same. Preparedness can be done through research and development to come up with motorcycles that best suits the customers. This will present market opportunities and competitiveness. To curb the short product life cycles Triumph should undertake thorough research and development to come up with motorcycles that will be customers’ choice over long durations. Moving from heritage bikes to modern bikes will do great. Conclusively, it is evident that Triumph Motorcycles Ltd is big motorcycle privately –owned company with a good potential to hold a top position in the global market. However, evaluation of risks and opportunities in the foreseeable future is crucial.
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