Case Study - Triumph Motorcycles Ltd "Rising from the ashes in the international motorcycle business
Category : BMW Case Studies, Company Case Studies, Environmental Analysis Examples, PEST Analysis Examples, US Market
Source: Triumph Motorcycles Ltd. Logo
Triumph Motorcycles is a privately-owned British company and that their motorcycles are designed, developed and built at their factory, one of the most technologically advanced plants in the world, which is located in Hinckley, in the heart of Great Britain. Thus, Triumph has always had its own distinctive character and a history of creating bikes that become design classics and did not lost that touch - the inspiration and engineering passion that birthed the iconic Bonneville of the 60's has today created bikes like the stunning Rocket III and the unmistakable Speed Triple. (2001) The heart of the company’s philosophy is a firm commitment to developing truly unique motorcycles that are distinctive in looks, design, and performance. Triumph’s aim is to craft bikes that deliver a great riding experience through the fusion of a well-balanced, easy to handle chassis and strong, flexible engines. The result is an inspiring range of motorcycles delivering intelligent, usable performance and the company currently employs 980 personnel worldwide and has offices in many major countries like the UK, America, France, Japan and Benelux. (2001)
Furthermore, it was the obvious choice back then. Britain was the biggest motorbike maker in the world and led the motorcycling world in performance and engineering innovation with such bygone makers as BSA, Matchless and Vincent, to name just a few. Thus, it was established that the Triumph has captured approximately 75 per cent of the 'Hollywood' market, one of few US markets where Triumph is the market leader. It is true that the credit for Triumph's rebirth goes to , a builder who bought the company's remains for about $200,000. ( 2002) The product has been completely revamped. New engines were crucial. Most have a distinctive three-cylinder layout, which makes them more powerful than the two-cylinder bikes made in Europe and the United States, and more relaxing than the high-revving four-cylinder bikes made in Japan. was betting on the nostalgic power of the Triumph brand. The original Triumphs offered lighter weight and better handling than Harley's machines, and sales of the British bikes were stronger in the United States than they were in their home market. The bikes are also part of US folklore. Despite what flag waving Harley guys in bars may mistakenly claim, Steve McQueen in The Great Escape and Marlon Brando in The Wild One rode Triumphs. ( 2002)
Triumph's motorcycles are in the middleweight and heavyweight category only, competing mainly with companies such as Harley-Davidson, Ducati, BMW and of course the main Japanese motorcycle manufacturers. Motorcycles were also classified by types of use, generally separated into four groups: standard, which emphasized simplicity and cost; performance, which focused on racing and speed; touring, which emphasized comfort and amenities for long-distance travel and custom, which featured styling and individual owner customization. The standard models tended to have the smaller engines, while the performance motorcycles often had a better engine capacity as well as having a comfortable seating position and their engines ranged from middleweight to super heavyweight types.
Through Triumph’s enhanced segmentation process as there were appropriate product segments in the market as detailed below.
Product segments in the motorcycle market
Motorcycles were often classified by engine capacity in three categories follows: (2002)
Ø lightweight (50 cc-250 cc)
Ø middleweight (251 cc-650 cc)
Ø heavyweight (651 cc and up)
Aside, big-bike sales have doubled in Britain over the past five years, and the buyers are no longer youngsters needing cheap wheels but older people with the money to spend on expensive toys. Many of these born-again bikers have not touched a motorbike since their teens, and find Japanese offerings just a bit too fast and flash for their taste. Triumph's sales have risen from 2,000 in 1991 to 33,000 in 2002, tempting thoughts of the old Triumph's peak of 50,000 in the late 1960s. Most buyers now are aged between 35 and 55. US sales have soared since in 2001 Triumph introduced a retro-styled bike, called the Bonneville, and are now rising at an annual rate of 40 percent. ( 2002)
The Bonneville is about 85 per cent faithful to the 650 cc Bonneville of yore, which was the machine to ride in the 1960s if you were not a Harley man. Further introduction of a Harley-style cruiser bike is being considered by the Triumph management team. Taking marketing cues from Harley-Davidson, Triumph also offers a line of clothing and accessories. Growth should be consistent. Sales are rising by 15 percent a year, putting Triumph within sight of European rivals such as BMW and Ducati. Bruno Tagliaferri, Triumph's Marketing Manager, reckons there is plenty of scope for growth in the US, where 250,000 big bikes are sold each year. (2002) Although they did not know it, this was to be their best year. Two decades later and Japanese manufacturers are nowhere near as dominant. While they still loom large on the global motorbike market, 1981's record domestic production has declined to just 2.4 million. This serves as a stark reminder of a painful trend for all types of Japanese manufacturers as their domestic costs have risen, their markets have matured and their rivals have sharpened their game.
An analysis of Triumph motorcycle in its environment is realized to discover the opportunities and threats that are evolving and that need to be addressed by the organization. A study by (1983) identified a number of positive consequences that stem from carrying out organized environmental analysis as there is an analysis of Triumph America’s environmental influences that the company faces as well as a competitive analysis should be undertaken respectively.
The environmental scanning is reliant on the monitoring activity that should be carried out by the Triumph motorcycle in order to determine its success status in the US market being one of the leading makers of great motor bikes world wide as reflected within the following points:
Awareness of environmental changes by management:
Ø Triumph’s way to enhance ability to anticipate problems arising the industry
Ø There is a need for the management awareness within range of possible futures and its market impact
Ø Greater inclination to act in advance of changes
Ø The company has greater ability to allocate resources to opportunities arising due to environmental change
Ø Ability to focus resources in business areas that may integrate attractiveness
Ø Move away from products exposed to greater social and political pressure
Ø Improved understanding and relationship with government and be proactive on government legislation
Source: A selection of benefits derived from organized environmental analysis Adapted from Diffenbach, 1983
Political issues as well as Economic factors that Triumph Motorcycles should focus upon stabilizing sales of their motorbikes targeting the US market and be a success like for instance, Adapting the US taxation policy and its monopoly controls, the US environmental protection measures, process of the governmental system and knowing good business cycles. Aside, in terms of its social and technological matters, it is a must for Triumph motorcycles to find out and be familiar of the US customers within their age profiles, social mobility as well as lifestyle values and family structures of potential motorbike buyers and providing the US market clear focus of its business principles supporting the use of innovative technology materials and its respected transfer to the US region for motorcycle usage.
Moreover, there is a range of political organizations that have to be considered when looking at influences in this area of the audit. The structure of a political system defines the centers of political influence. A state with a federal political structure will differ from a unitary political system. Therefore when considering this area of the environment a much wider view has to be taken than just the domestic national government or the legal process. Similarly, economic factors have to be viewed from a wider perspective than the organization’s domestic economy. In the global economy, domestic economic conditions are heavily influenced by events in other areas of the world. Economics is concerned with the allocation of resources. Therefore issues such as conservation of natural resources, costs of pollution, energy consumption and the whole area of the management of natural resources should be considered under this heading. However, other critical areas such as social/cultural values and beliefs that are central to changes in consumer behavior are harder to predict and can be subject to more dramatic shifts. There is a great danger in using a particular technology to define an industry. In a situation where technological developments are fast-moving it is critical to understand the fundamental consumer needs which the organization’s technology is currently serving. Identifying new technologies that can service those consumer needs more completely or economically is the critical part of this area of the analysis.
The central role of PEST analysis for Triumph motorcycle is to identify the key factors that are likely to drive change in the environment and establish as to how the key factors will affect the industry in general and the company in particular.
Triumph company has to understand the nature of the relationships within its industry in order to allow the enterprise to develop strategies to gain advantage of the current relationships and has a starting point in assessing a company’s competitive position. This is likely to be a rather broad definition of an industry and contains a number of companies that would not be direct competitors. For example, Triumph motorcycle is likely to have a number of natural direct competitors but Honda is not likely to be one of them, although both companies are in the car industry. Triumph’s scale is global and it manufactures motor bikes across the full range possibly better in US market. Companies that are direct competitors in terms of products and customer profiles are seen as being in a strategic group. The motorcycle industry would be made up of a number of strategic groups which are made up of organizations within the same industry that are pursuing equivalent strategies, targeting groups of customers in American region that have similar profiles of the other bikes.
Furthermore, for Triumph company, analyzing every competitor in its generic industry would be a difficult task in terms of management time and company resources. Defining an organization’s strategic group allows a company to concentrate its analysis on its direct competitors and to examine them in more detail as every competitor in their strategic group an organization needs, as far as possible, to establish the information discussed in the following subsections. Financial objectives may indicate this. Investment is more likely from companies that have objectives which are long-term in nature, such as market share and sales growth, rather than organizations under pressure to produce short-term profitability. This also reveals potential trade-offs the competitor may be willing to take. If short-term profitability is the key objective then the rival is likely to be willing to lose market share in the short term in order to achieve its profitability targets. Thus, there has to be a detailed analysis of a competitor’s assets and competencies allows a judgment to be made about how well equipped they are to address the market, given the dynamics in the industry and the trends in the external environment. In order to evaluate a competitor’s potential challenge to an organization a number of areas need to be examined (1991): The competitive analysis has allowed Triumph motorcycles to establish its relative position versus its competitors on a choice of vital criteria but, Triumph has to judge itself and its competitors against the market it is operating within because is useful to establish a range of information about the US market.
In addition, Triumph motorcycle should be able to imply in terms of estimating the total sales in the US market that allows the company ways to evaluate the realism of particular market share objectives within its target market also, identifying certain sub-markets of the focused market as well as the potential areas of growth which is crucial for developing a sound market positioning of motorbike products in the US along with appropriate strategy as market analysis began to explore current trends and areas of growth for Triumph motorcycles and importantly, it began to build a picture of US consumers and buyers respectively. Although, within the US market its share has fallen by 10 percent over the past decade. (1979) The rise and rise of the Japanese motorbike manufacturers owed as much to luck as to design. Manufacturers were servicing a huge domestic market for many years which generated the profits that financed the export drive. It also gave the Japanese a finely honed design and production machine that churned out faster, more reliable and better-looking.
SWOT ANALYSIS (Triumph Motorcycle Analysis from the above environment scan key points)
There are various strength that Triumph motorcycle incorporates supporting its growth within the US market as Triumph excels in terms of their product features and also the product costs of its motorcycle bikes signaling the reality that Triumph provides a variety of great products in the US market. Moreover, Triumph motorcycle adopts specialization of high quality motor parts and gadgets pointing to excellent relations in the US market leading the way for positive societal benefits for increased motorcycle usage and safety rules – visible management process and control in the US and that the company has the upper hand move advantage ahead better rivals such as Honda and Toyota.
Triumph motorcycle on its few weakness, may lack of product valuing and independent resources as well as minimal customer supervision of products because of fast phasing purchases in the US market also, Triumph on its products might be difficult to sell without visual images of the motorcycles and bikes, the presence of better rivals in the market and the capacity of range is too vague at times having tendency to high up on prices regarding its best selling and popular motor bikes – best seller bikes
For Triumph’s opportunities, the company could be successful in terms of its product outsourcing and manufacturing and engaging more on better customer relations and successful product dealership strategies. Thus, Triumph can also have a strong drive in terms of partnerships among other manufacturers within the business, having useful diversification of products and expanding new markets that could be made easy for handling motor bike products being sold for individual buyers, developing relevant supply chain process for stable sales in the US market.
Triumph motorcycles number one threat could be the presence of fierce at the same time tight competition pointing out for close rivals within the business and possibly, a loss of management control through distinctive partnership as well as limited potential in other market and there is a possibility of short product lifecycle – motorcycles breakdown
MARKET TARGETING AND POSITIONING
The motorcycle market in the United States
The Hollywood myth of the young and wild motorcycle rider became less and less a reality in the 1990s, according to Motorcycle Industry Council statistics. The 1990s' rider was more mainstream and less likely to be a part of some counterculture motorcycle gang. 'The end of the road for today's motorcyclist is just as likely to be a boardroom as a burger joint,' said , Managing Director of Discover Today's Motorcycling, a public awareness campaign of the Motorcycle Industry Council. The average motorcyclist in the 1990s was male, 32.5 years old, married, had attended college and earned $33,000 about 12 per cent more than the average US household. The average income of the motorcyclist of the 1990s had almost doubled since 1980 ($17,500). In 1980 less than 2 per cent of riders made over $50,000 per year. In 2000 more than 30 per cent of riders had attained that income level. Riders in the 1990s were also much older. They used their bikes more for leisure and recreation than had the riders of the early 1980s. The typical rider was interested in the outdoors. In surveys about their other interests fishing and hunting topped the list. Motorcycle use for commuting purposes was down 14 per cent since1980 to only 56 per cent.
The Triumph Group continued its strong positioning in the 2005 financial year that ended on June 30th 2005. The group turnover rose by 42 percent from GBP 125 million (USD 225m) to GBP 177 million (USD 318m). The operating profit, before interest and tax, rose from GBP 1.5 million (USD 2.7m) to GBP 10.7 million (USD 19.2m) and representing a growth of 29 percent compared to the past sales of 24,500 units. (Hackman and Wageman 1995) The growth of Triumph Motorcycles is the result of an increase in sales across various Triumph’s markets since, their growth does not stem from an entry into the US market. Triumph’s popularity with customers is growing across the board and it is satisfactory to see that the company’s markets have performed well above the levels of the previous year. ( 1995) Moreover, US sales growth shows that Triumph focuses on distinctively designed motorcycles with a lot of character has been very successful and this is where our focus will continue in the future. In many ways the Daytona Triple epitomizes the strategy change that has taken place in their sport range and focus on distinctively designed three-cylinder bikes (1995).
In addition, the classic derivative shares the same engine and chassis as the standard model but has a more comfortable riding position and a look which is more in tune with the US market. (1995) Triumph has registered unit sales growth during the first four months of the current financial year of approximately 23 percent and the majority of the production volume for this financial year is already pre-sold as this implies a good position to be in, we remain focused on sustainable growth and the primary objectives are to grow value for their customers and our dealers and further strengthen the brand. (1995) Aside, Triumph’s success in the Northern part of America mirrors that of Triumph’s other key markets globally. During 2005 Triumph announced a 42 percent increase in turnover in the 2005 financial year. Group turnover rose by 42 percent from GBP 125 million (USD 225m) to GBP 177 million (USD 318m). The operating profit, before interest and tax, rose from GBP 1.5 million (USD 2.7m) to GBP 10.7 million (USD 19.2m). (1986) Triumph crushed its competition in the customer satisfaction stakes for used bikes, with 61 percent stating their satisfaction with the brand. The management were delighted that Triumph has been so successful in its business. (1986)
In industrialized wealthy economies such as the United States and Europe, Triumph motorcycles were often purchased for recreation in addition to basic transport. In developing economies and others with low income per capita, motorcycles or smaller two-wheelers were purchased primarily for basic transport, and the market was distinctly different while motorcycles with small engine displacement and mopeds made up the vast majority of sales in the US. (1990) Although, Triumph sells about 15 percent of the Harley-Davidson sales volume as being so small makes it hard to develop new bikes or to buy good components at a decent price. (1990) There was a range of machines using famous model names from the past arrived in 1988. Brand new 750 cc and 900 cc triples and 1000 cc and 1200 cc fours all using a modular design (to keep production costs low) were built and proved successful. As sales built, big fours were phased out of the lineup - Triumph's heritage is tied to parallel twins and triples, and these are the marketing and development focus of Triumph's marketing strategy today. Triumph is now carving out a niche in the motorcycle market based on nostalgic looking engine technologies and design - its core customers are the "40 something" males returning to their youth. ( 1990)
Basically, a concrete change is that all new bikes going forward will have either the parallel twin or the iconic triple engine, something that's unique for Triumph in the motorcycle market. ( 1988) Since, Triumph is about individuality and riding something that not everyone else has in working hard to define Triumph's identity and the success of our latest models is evidence that the consumers like what we have done. In the US markets, the demand has outstripped the supply of the new models and there are long waiting lists if people want to get their hands on models like the Speed Triple and that Triumph has worked hard to create a unique retail experience that reflects the Triumph brand, including the launch of a new corporate store design. ( 1988) Motorcycles are more convenient means of transport in large cities laden with traffic jams as around 85 percent of motorcycle purchases are made with credits offered by multi finance companies. (1988) Triumph Motorcycles (America) Ltd., steeped in a rich history spanning 100 years of motorcycling, today announced its plans to celebrate this milestone along with other triumphs a 40 percent increase in sales, as well as the expansion into a new manufacturing facility with a celebration motorcycle ride Triumph Across America with its rich legacy and current robust sales, Triumph is one of the most famous names in motorcycling on the streets today.
From its beginning, the popularity of Triumph grew -- becoming the number one selling big-bore motorcycle in the 60s. In the late 70s and early 80s, like many other motorcycle companies, Triumph struggled and ultimately in 1983 closed its doors during the decline of the worldwide motorcycle market. That year, acquired the Triumph brand name and began to assemble a team of designers and engineers to rebuild one of the world's most prominent names in motorcycling. Triumph Motorcycles (America) Ltd., the reception from American and world-market consumers, has been overwhelming and continues to grow, sales of Triumph have increased dramatically in the United States in 1995 and in 2001 -- new unit sales were up 40 percent over the same time period in 2000. The United States, definitely established itself as Triumph's number one marketplace worldwide. Demand has risen to a level that Triumph has outgrown its original factory and an all new state-of-the-art factory will be online in 2003, with the capacity to produce approximately 50,000 units per year. Henceforth, Triumph explored the US market and there were one hundred American motorcyclists were paid $100 dollars each to participate in the early design process. They persuaded Triumph to combine a relatively conservative appearance with an emphatic commitment to the principle that bigger is absolutely better.
The result is the manufacturer's proud boast that the Rocket's pistons are "the same size as those of a Dodge Viper" – typically American cars in which subtle aesthetics are cast aside in favour of brute force. The Rocket is designed to appeal to the same demographic. That is why it has the 2300cc power plant instead of the original 1600cc. It has a rear wheel wide enough to grace a truck. Triumph have built something unique, but it remains to be seen whether it will prove desirable. On both sides of the Atlantic there is a market for luxury, long-range cruising machines. Ducati and BMW aim to fill it with their Multistrada and R1200 models. Aside, the Rocket III is a power cruiser that redefines how much oomph is required to cover long distances on two wheels. It may prove capable of winning a very profitable niche in the American market that adheres for something bigger, more powerful and more conspicuous than anything else on the road because the Triumph's handling and refinement will have to match its capacity for speed and endurance within the country as Rocket will be available to American purchasers before it is obtainable in Britain. It is an American dream, but one that may give Harley, BMW and Ducati pause for thought if Triumph can produce it in sufficient numbers. (2004)
Triumph Motorcycles significant contribution to their growth in sales stems from the successful launch of new products and the work done with their dealers as these are considered important areas to the consumer and it's through these two crucial touch-points that Triumph communicate the brand and make the change in their business visible in the US. Triumph spent its year, creating a unique retail experience that reflects the Triumph brand being rolled out to dealers across the globe and is maximizing resources to build up components ready for the new assembly line, and to ensure a continuous supply of spare parts to Triumph dealers worldwide. (2002) There are good engines, with cruiser sales representing over half of all motorcycle sales, Triumph knew they needed a product to siphon some of that business to their brand. The result is the all-new Triumph Bonneville America. After spending some quality seat time with the America, Triumph will have no trouble finding homes for the 5,000 motor bikes that will make their way across the pond this year. The bike leans into a corner with almost no effort, aided by the shape of the pulled back handlebars that provide good leverage for counter steering. It tracks well and feels firmly planted as spirited riding is encouraged.
Triumph enters the US market again for the first time since the close of the Meriden Cooperative, although the engine was hardly touched in that time, Utting went through 30 pair of tires, 120 oil changes, 24 sets of brake pads, two speedometer cables and 14 chain and sprocket sets. The workforce is up to 300 this year and production was around 12,000 units a year. The Thunderbird is manufactured and Triumph dedicated 25 per cent of its production capacity to the bike this year. It has spoked wheels laced by the same firm that spoked Triumph's original wheels (36 spokes in front, 40 in back). The compression is dropped from 10.6:1 to 10.1:1, lowering the horse power from the stock 83 to 69. It reaches it maximum torque at 4,800 rpm (about 110 kmh). The braking system uses the largest diameter disks on Hinckley Triumphs to date: 320mm front and 285mm rear. As a new millennium begins, Triumph continues to enhance and hone its lineup. The new 955 engine got placed in the Tiger and Sprint, while the Daytona received upgrades.
More significantly, the 2002 Bonneville sees two new models, the T100 and the Bonneville America. The former is the same as the 2000 Bonnie, but with tachometer, knee pads and other cosmetic additions. It is designed to celebrate Triumph's 100th anniversary of motorcycle manufacturing. The America is designed to appeal to the cruiser market, in 2003, Triumph announced its Speedmaster, a sportier version of the Bonneville America and one that appears to be getting excellent reviews in the motorcycle press. The Thunderbird Sport was revived as a model in the lineup, despite lukewarm reviews in the past. In 1905 Triumph introduced the Model 3HP, with a 363cc single cylinder side-valve engine designed and manufactured in-house. The T100 impressed the American flat track racing community during the late 1930s, the Works Manager, Edward Turner began to look at the US market.
Triumph solves its free form surfacing problems; implements latest design and production techniques Triumph found that it was difficult and time-consuming to create free form surfaces in a solid modeling application. So it started searching for a more automated method to develop efficient, aesthetically pleasing, production quality surfaces.
Delivering high-quality products
Triumph has to make sure it has the latest design and production techniques to consistently deliver high-quality products in a limited time frame. Triumph had been developing entire motorcycles in its solid modeling CAD system. However, the company soon found that it was difficult and time-consuming to create free form surfaces in a solid modeling application. So Triumph turned to UGS' authorized United Kingdom distributor in order to develop Class A surfaces and prior to surface development, a reflectance plot is applied to the electronic data to quickly determine the desired features and lay out the surface patch network. Using this network, the exterior skin is created.
Utilizing best-in-class inspection tools
To develop the solid model for final production, the completed surfaces are seamlessly brought into Triumph's resident CAD system. Subsequently, Triumph used the industrial design and styling capabilities of image ware to confirm first-article and routine inspections of prototype and production parts. Triumph is able to efficiently model the desired shapes and features. Then it checks the manufactured product to ensure it meets the stringent design specifications in its CAD database. As the NX's inspection capabilities allow Triumph to compare styled parts that are either manufactured within a Triumph facility or by authorized suppliers throughout the world. Design engineers can rapidly capture 3D representations of parts and tooling using a Faro arm equipped with a 3D laser scanner. The scanned, physical data is then compared to the master model. The colored contour plot capabilities within NX help Triumph to completely evaluate tolerance deviations in surfaces and critical details and once the inspection analysis is captured, the electronic report can be shared with design and manufacturing engineers, management, mold makers and suppliers. Also, Triumph's design engineers develop production quality surfaces in significantly less time than with traditional modelers.
Realizing a significant cycle time advantage
Along with improved communications and faster delivery of production quality surfaces, there was the advanced surfacing and inspection analysis capabilities reduced the overall design process by 50 percent. After several successful projects, Triumph elected to bring the technology in-house. Today, the Triumph design team develops its own Class A surfaces for motorcycle parts such as gas tanks, seats, body side panels, engine ports and grab rails.
A dynamic environment
Therefore, the NX's dynamic editing tools provide a real-time environment in which curvature continuous, production quality surfaces can be perfected so, and Triumph motorcycle was able to go through more design iterations in a much lesser time duration. The situation had allowed Triumph to capture the desired aesthetic style of their completed as well as final product surfaces while meeting the product's functional and manufacturing specifications respectively.
Triumph Motorcycles Ltd. involved their business in US for the following key points that keeps the company in tough shape within:
Ø Consistently deliver high-quality products
Ø Verify that parts meet stringent design criteria
Ø Improve overall product development time frame
Ø Utilize high-quality free form surface modeling
Ø Implement a completely automated digital design environment
Ø Leverage integrated product and tooling inspection processes
Ø Production quality surfaces developed in significantly less time
Ø Communications streamlined with automated inspection processes and reports
Ø Overall time for design process reduced 50 percent