Academic journal article Journal of the International Academy for Case Studies

Indian Motorcycle Company: Strategy for Market reentry.(Instructor's Note)

Academic journal article Journal of the International Academy for Case Studies

Indian Motorcycle Company: Strategy for Market reentry.(Instructor's Note)

Article excerpt

CASE DESCRIPTION

The primary subject matter of this case concerns strategic management. Secondary issues examined include entrepreneurship. The case has a difficulty level of four, appropriate for senior level courses. The case is designed to be taught in two class hours and is expected to require two hours of outside preparation by students.

CASE SYNOPSIS

This case presents a an iconic U.S. firm, Indian Motorcycle Company, with a rich history that has ceased production three times in the past century and compromised the authenticity upon which the brand is based through a variety of ownership changes and market challenges. Indian Motorcycle Company most recently disillusioned consumers and distributors in 2004 by suddenly ceasing production, leaving distributors without products to sell, and leaving customers with unenforceable warranties. But currently, the British private equity firm, Stellican Limited, is attempting to restore the brand. Two of Stellican's partners, Steve Heese and Stephen Julius, have taken active management roles in the new Indian Motorcycle Company. Both have experience in reviving struggling brands. Indian will soon begin production of a motorcycle model, the Indian Chief, which hearkens back to the 1930s. Yet with three failures in its past, it is uncertain whether Stellican can bring the Indian brand back to life. Students must decide whether the reentry of this nostalgic brand will be successful in the highly competitive heavyweight cruiser segment of the U.S. motorcycle industry.

INSTRUCTORS' NOTES

Recommendation for Teaching Approaches

The following five questions with potential answers are specifically mentioned in the case. These questions would be appropriate for student case prep prior to case discussion. Following this are theoretical perspectives professors may want to use for case discussion allowing the discussion to move from specific case issues to more generalized theoretical implications.

1. No doubt there is a consumer base that desires premium motorcycles, but will Indian be able to take market share from established incumbents such as Harley-Davidson?

The three previous failures in Indian's history argue against the ability of the Indian brand to be successful. In addition, Stellican Limited is a British private equity firm and even though they have established manufacturing in North Carolina, biker purists will certainly recall Indian's checkered history when the British private equity firm, Brockhouse Limited, purchased rights to the Indian name and simply rebranded its Royal Enfield bikes as Indian Motorcycles during the 1955-1985 era.

However, Stellican Limited is the venture capital firm that now owns Indian Motorcyele. Stellican is experienced in reviving failing brands and has carefully studied Indian's past. In addition, Stellican has a vested interest in Indian's success and is willing to back up this interest with capital injections. In addition, Indian's top-management team views this as a long-term commitment rather than an overnight story. Combined with Stellican's capital backing, this argues in favor of success.

2. Will another newcomer such as Indian be able to achieve quality levels at the outset necessary to win over consumers and distributors who were burned by Indian's sudden closure in 2004?

Indian has put together a world-class engineering team. Also, top management is well aware of negative consumer sentiment from the most recent 1999-2004 failure. Together with Stellican's long-term commitment, Indian should be able to manufacture a quality motorcycle. On the downside, however, Indian's mall size will not allow scale advantages that can quickly translate into cost savings. Thus, although Indian may be able to build a quality motorcycle, this will likely come at a cost higher than those for incumbents. It is therefore likely that pricing for introductory models will be above competitors' prices for similarly featured motorcycles. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.