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Executive summary

Triumph Motorcycles Ltd is a firm that has been in operation in the motorcycle manufacture industry for more than 110 years and consequently has a lot to offer in terms of business strategy outlook. Despite its current leadership position in the UK market, it has faced major challenges along the way – having shut down and reopened. The aim of this paper is to analyse the current strategies that Triumph Motorcycle Ltd has employed to help it curb competition and maintain its leadership position in a growing motorcycle manufacture industry in the UK. To achieve this, the paper employed strategic tools such as Porter’s five forces of the market and Porter’s three generic strategies. Additionally, the paper looks at the intended, deliberate and emergent strategies in light of the firm’s current operations. Evidently, the motorcycle manufacture industry in the UK is growing and this has created need for sound business strategies as firm both local and foreign endeavor to increase their market share. Triumph Motorcycles Ltd  has employed the focus differentiation strategy all along which has continued to be challenged by the competitive forces of the industry especially rivalry among existing players. To stay relevant in the industry, the firm has employed new core competencies such as innovation and passion and for it to continue to survive as it needs to respond to industry forces promptly. The suggestion that this paper offers is that the company takes advantage of its leadership position to influence the current market forces to its advantage.

1. Introduction

Triumph Motorcycles Ltd is a British motorcycle manufacturer that was established in 1902 and has been operational for more than 110 years. The company had shut down in the 1980s but later reopened with new facilities based in Hickley, Leicestershire and focuses on producing bikes with a blend of design, character, charisma and performance. Currently the company is the largest British motorcycle manufacturer producing over 50,000 bikes per year (Triumph Motor Cycles, 2014).

UK’s motorcycle manufacture industry has grown over the years and the major driver of the industry is Triumph Motorcycles Limited (Motor Cycle Industry Association 2012). Additionally, the UK has the smallest motor cycle ownership per head in Europe; 22 people in every 1,000 and this means that the sector has potential for growth. Manufacturers are endeavouring to increase their market share and with the industry featuring over 353 manufacturers, competition is bound to increase (Motor Cycle Industry Association, 2012). This essay presents an analysis of resources and competency and the business strategy employed by Triumph. To achieve this, the essay employs strategic tools such as Porter’s five forces of the market and Porter’s three generic strategies. It also looks at the intended, deliberate and emergent strategies based on the firm’s historical and current performance.

1. Industry Analysis; Porter’s five forces

According to Porter (2008), the drivers of industry competition and profitability in any sector are the same but in order to understand them one requires a comprehensive analysis of the industry’s underlying structures. Porter identifies the five forces as threat of new entrants, rivalry among existing competitors, threat of substitute products, bargaining power of buyers and the bargaining power of suppliers (Porter, 2008).

Figure 1: Porter’s five forces model (Porter, 2008)

The threat of new entrants in the manufacture of motorcycles is low. The major attribution to this is the scale of operation of Triumph Motorcycle Ltd. The firm, due to its large scale production – over 50, 000 motorcycles per year –, enjoys economies of scale. This means that per unit costs are low and it will be very expensive for any new entrant to match up to those costs. Additionally, the capital requirements required to set up equipment at the initial investment stage for a manufacturing company are enormous. Besides this, a Triumph Motorcycles Ltd has integrated forward by owning subsidiaries who act as distributors (Triumph Motor Cycles, 2014). The result is that new entrants find it hard to access the distribution chain.

Unlike the threat of new entrants, rivalry among existing firms is very high. As much as the firm does face little competition from smaller British firms such as Norton and CCM, there are also large-scale manufacturers from Japan and America that are based in the UK. Majorly the firm competes against David-Harley, Kawasaki, Suzuki, Honda, and Yamaha and according to Goodley (2011), has managed to outdo the rivals by increasing its market share for two consecutive years. Competitive rivalry is also propagated by the similar nature of the products offered by these firms and that basically lowers switching costs between different manufacturers. Despite the products not being entirely similar, they have substitutes within the same region especially from external manufacturers. For example in 2010, the firm registered booming sales attributed to the strengthening of the Japanese currency that made Japan-manufactured bikes more expensive (Allen, 2010). 

Similarly, the threat of substitutes is high because of many local and foreign automotive manufacturers in the market. The Motor Cycle Industry Association (2012) points out the existence of more than 350 motorcycle manufacturers and over 1,700 retail and distribution businesses. This means that substitutes are numerous from both local and foreign manufacturers. Again, though customers are considering motorcycles for day to day use due to low running costs, small automobiles with low capacities are taking over the future of this segment (Business Monitor International, 2012).

The bargaining power of buyers is low. One major reason in this case is that the market for the motorcycles is not concentrated in the UK alone. As Allen (2010), noted, out of the 46,000 bikes manufactured by Triumph on 9,000 were sold domestically. Additionally, the bargaining power is low because Triumph has done forward integration. It owns subsidiaries in the distribution channels and in other case reaches the ultimate costumers directly through its website. This way, other intermediaries in the distribution chain who act as buyers have low leverage in driving prices.

According to Porter (2008), a fast growing industry may seem lucrative but it ends up putting suppliers in a powerful position as companies become more dependent on them. This is the expected case for the UK motorcycle industry which the UK autos report in 2012 projected that by 2016 the sales of motorcycles will be more than 100,000 units (Business Monitor International, 2012). However, the Motor Cycle Industry Association (2012) notes that the bargaining power of suppliers in the UK is low due to the backward integration of manufacturers. Most of the components are produced by the manufacturers or obtained from foreign suppliers because they are unavailable locally at the required time, price and quality.

2. Resource and Competency analysis

At the heart of Triumph Motorcycle Ltd is a strong brand image that has been built for over 110 years. The firm therefore has years of experience in manufacture of motorcycles and it does boast of iconic motorbikes that offer a unique combination of design and performance (Triumph Motorcycles Ltd, 2014). Also, despite the latest shift by the firm towards the production of heavyweight motorcycles – above capacities of 500cc – the main strength of the company, as put by New Media Age (2004), remains grounded on a good reputation for motorcycle engineering and a the unrivalled heritage appeal. Moreover, the firm observes a strict discipline of passion and innovation; it has managed to stay relevant by studying the dynamics of the environment and adapting accordingly using the current technologies. Evidence to this is the fact that the firm invests in research and developments to rhyme with market demands and invests in a group of passionate engineers that focus on design and functionality (Davies, 2013). Each of these employees, Davies (2013) notes, come aboard the company with their own history of passion with motorcycles; Triumph does not rely on employees learning the company culture after joining but rather on an individual’s past encounters.

 Additionally, the company has a unique advantage over competitors attributed to integrating forward and backwards in the supply chain. Partly, it acts as its own supplier by manufacturing motorcycle parts and accessories and being a parent company to subsidiaries that distribute its products in the UK (Triumph Motorcycles Ltd, 2014). Still on distribution, Triumph has a digital platform – the firm’s website – that it uses to reach the ultimate customer thereby reducing the costs associated with advertisement. The platform also serves to ensure that customers can trace credible dealers within their region thus enjoying reliability in the process.

3. Porter’s three generic strategies

Michael Porter identified three generic strategies that are useful in building a competitive advantage. The three include cost leadership, differentiation and focus (Sehgal, 2011; Shakhshir, 2014). In light of the three strategies, Triumph Motorcycles Ltd has adapted the differentiation focus strategy whereby it manufacturers motorcycles with a perceived unique value by the customers. The first tool that the firm has used to make it unique is the brand image; Triumph has been a strong British brand since its inception in 1902. Additionally, the firm goes with the dynamics of the market by carrying out market research on the customer needs and coming up with designs and functionalities that are particular to its brand (Davies, 2013). However, the firm has not managed to entirely differentiate itself from the competitors because there are models of Kawasaki, Yamaha, and Honda, among others, that can act as substitutes.

The differentiation focus strategy is essential for the company’s survival especially because the industry faces foreign competitors that are capable of winning prices wars in case the firm opts for a strategy such as cost leadership. The Japanese firms, for example, have an advantage of cheap supply of labour compared to the UK. Moreover, given the manufacturing industry is labour intensive – every 1 dollar spent on capital requires 2.18 dollars to be spent on labour, – foreign firms can lower prices more than their UK counterpart (IBISWorld, 2014). Differentiation also influences the competitive forces due to the fact that product differentiation affects rivalry restraint and competitive advantage. A firm with differentiated products creates more economic value to its advantage at the expense of rivals. This is majorly because customers shall prefer differentiated products without being sensitive of prices thereby raising the firm’s profits (Makadok and Ross, 2013). Moreover, cost cutting shall not be effective in competing and thus rivalry is eliminated. Triumphs market leadership position may be attributed to this.

3.1. Intended, deliberate and emergent strategies

Henry Mintzberg came up with a way of classifying strategies for a more comprehensive understanding. He categorised strategies into intended (those that are being planned for), deliberate (those that have been put into action), emergent (unplanned for) and realised strategies (Hills, Jones and Schilling, 2014). According to Triumph Motorcycles Ltd (2014), their intended strategic focus is a commitment to deliver unique – differentiated – motorcycles on the basis of design, intuitive handling and performance. In this sense, the firm has managed to create numerous models of motorcycles under the categories of touring, supersports, cruisers, classics, roadsters and adventures.

Ruddick (2011) notes the success of the current strategic focus that the company takes has enabled it to curb the rivalry in the industry and attain a leadership position in the UK market. In view of the external environment, the main challenging industry force is rivalry from foreign manufacturers especially Japan. The only strategy that is essential in eliminating the rivalry amidst industry players is differentiation focus and the firm has managed to partly achieve differentiation of its products by implementing issues learnt by the management team that did a bench-making exercise with their Chinese counterparts over two decades ago. Consequently, the firm invested in a new production plant that has been capable of producing motorcycles that can compete with those from Japan and other nations.

Staff perspective on the global market is paramount in executing strategies that put a firm in a competitive position against global players (Welch and Steen, 2013). This is why the firm takes in employees – engineers – that are driven by passion for motorcycles; the firm does depend on employees learning the company culture as they progress (Davies, 2013). This means that internally the firm’s strategies are sound too and they firm’s reaction to external forces because with the right employees and a modern production facility, the firm can achieve differentiation focus.

Lastly, it is fundamental to note that the firm has adopted the exercise of importing motorcycle parts from foreign nations and producing some (Ruddick, 2011). These can be considered as part of the emergent strategies that the firm undertook after the deliberate strategies went unrealized since as Moore (2011) describes them; they emerge over time to accommodate a changing reality. Currently the firm boasts of being the largest British motorcycle manufacturer (Motor Cycle Industry Association, 2012). The best way of achieving strategic success is prompt adjustment to environmental changes (Rose and Cray, 2013).

4. Conclusion

According to Porter (2008), the industrial changes present new opportunities for a firm to alter its strategic position by understanding the shifts in competitive forces. Currently, the motorcycle manufacture industry is growing and Triumph has emerged as the major driver in it. At such a position, according to Porter (2008), a firm can now alter the forces that are operating in the industry to its favour. To this extent, given the major force that is in play in the industry is rivalry amongst the existing competitors, Triumph Motorcycle Ltd has managed to counter this by employing some of the strategies suggested by porter (2008b) which extrapolate to creating a strong dealership network that can serve to raise buyer switching costs in future and investing in unique motorcycle designs. The current differentiation focus strategy, driven by passion and innovation (Davies, 2013), has placed the firm in a leadership position. However, to stay at the top the firm has to keep altering the strategic focus in response to the growing and changing industry.

5. References

Allen, K. (2010) Triumph rides high as UK bestseller takes on Harley-Davidson. [online] the Guardian. Available at: http://www.theguardian.com/business/2010/may/23/triumph-overtakes-honda-britain [Accessed 21 Nov. 2014].

Business Monitor International, (2012) UK Autos Report. Q2 2012. UK Autos Report. London: BMI, pp.53-56.

Davies, S. (2013) Back from the Brink [Triumph motorcycle]. Engineering & Technology, 8(9), pp.50-53.

Goodley, S. (2011) Triumph for UK manufacturing as motorbike firm overtakes rivals. [online] the Guardian. Available at: http://www.theguardian.com/business/2011/jan/13/triumph-sales-boost-uk-manufacturing [Accessed 21 Nov. 2014].

Hill, C., Jones, G. and Schilling, M. (2014) Strategic Management: Theory: An Integrated Approach. 11th ed. Boston: Cengage Learning.

IBISWorld, (2014) Motorcycle Manufacturing in the UK: Market Research Report. IBISWorld Industry Report. London: IBISWorld.

Makadok, R. and Ross, D. (2013) Taking industry structuring seriously: A strategic perspective on product differentiation. Strategic Management Journal, 34(5), pp.509-532.

Moore, K. (2011) Porter or Mintzberg: Whose View of Strategy Is the Most Relevant Today?. [online] Forbes. Available at: http://www.forbes.com/sites/karlmoore/2011/03/28/porter-or-mintzberg-whose-view-of-strategy-is-the-most-relevant-today/ [Accessed 22 Nov. 2014].

Motor Cycle Industry Association Limited, (2012) T h e UK Motorcycle Industry Manufacturing, Public Policy, The Economy and Growth. Coventry: Motor Cycle Industry Association Limited.

Porter, M. (2008) The Five Competitive Forces that Shape Strategy. Havard Business Review, 86(1), pp.78-93.

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Rose, W. and Cray, D. (2013) The Role of Context in the Transformation of Planned Strategy into Implemented Strategy. International Journal of Business Management & Economic Research, 4(3), pp.721-737.

Ruddick, G. (2011) Triumph Motorcycles: A history – Telegraph. [online] Telegraph.co.uk. Available at: http://www.telegraph.co.uk/finance/newsbysector/industry/8931253/Triumph-Motorcycles-A-history.html [Accessed 22 Nov. 2014].

Sean, H. (2004) Revving Up. New Media Age, pp.24-25.

Sehgal, V. (2011) Supply chain as strategic asset. Hoboken, N.J.: Wiley.

Shakhshir, G. (2014) Positioning strategies development. Economic Science Series, 23(1), pp.979-988.

Triumph Motor Cycles, (2014) Press Centre. [online] Available at: http://www.triumphmotorcycles.co.uk/media-library/D89C404FFE644E2C9812810F641B6BF6.pdf [Accessed 21 Nov. 2014].

Welch, D. and Steen, A. (2013) Repositioning global staff transfers: a learning perspective. Human Resource Management, 52(5), pp.793-807.