Norton Group PLC

To Be or Not to Be in the Motorcycle Business

GROUP MEMBERS: GEORGE AXIOTIS

GEORGE VANKOV

MAN LUO

YAQI LIANG

RICK GRIGSBY

IntroductionNorton was a prominent player in the world motorcycle market.

But in 1977, Norton withdrew from producing a large range of motorcycles, realizing that the deteriorating performance of its motorcycle business could not be readily reversed in the fact of stiff Japanese competition. By 1983, the company had developed a rotary-engine motorcycle, the Norton Interpol 2, sold mainly to the British police and armed forces.

Problem StatementThere were four market segments to choose: (1)the motorcycle market; (2)the drone;(3)the light aviation market; (4) the ultralight aviation market.

We will combine the problem and situation to analyze the choice

Situation Analysis

SWOT Analysis

Strengths● Good industry recognition and reputation for high performance and quality products.● Worldwide leader in rotary engine technology● New energetic management that can bring creative ideas to Norton

Weaknesses● Need to upgrade and expand production capacity, increase working capital, and meet front-end expenses associated with launching new products● Lacks proper distribution channels to get future Norton products to potential customers● Not sure what product/market segment (motorcycle, drone, light aviation, ultralight aviation) to focus the future of the company on

Opportunities

● Participation within a growing industry (civilian motorcycle market, aero-engine market)● Ability to grow rotary engine market by using marketing efforts of U.S. producer● Patent protections of Norton’s rotary inventions until 1995

Threats

● Future/potential stiff competition from Japanese and German manufacturers● 1986 study done by a prominent management consulting firm for Norton recommended shutting down the motorcycle business because of the company’s poor competitive position in comparison to other global suppliers● A slump in or flat future market demand for paramilitary motorcycles

Motorcycle Market Paramilitary motorcycles/ Civilian motorcycles/ Production racer motorcycles

Pros● Previous industry experience and insight● Well known brand name associated with a reliable and good quality product

Cons● Paramilitary bike cost is too high and little margin was allowed for profit or error.● Competition from Japanese and German suppliers is tough● Slump in or flat future demand for racer motorcycles

Drone Aircraft Expendable Drones/ Surveillance Drones

Pros● Norton P73 was most reliable in comparison to competitor drone engines● Surveillance drone market grew quickly (25% annually)

Cons● No previous experience in this market● Marketing for the product was not established● Target market for expendable drones grew slowly (5% annually)

Light Aviation Less than 12,500 lbs One to four peoplePros● Demand in this market would increase over time● Norton P64 engine was superior compared to competitors

Cons● Norton would require large sales force and field engineering staff in order to sell P64● Decline in sales up to this point in time

Ultralight Aviation Less than 254 lbs.

Single or twin-seat vehicles

Pros● Less competition in ultralight market● P64 would be a more reliable engine with a longer life as compared to competitors

Cons● Sales force would have to be recruited● Norton P64 was priced way higher than competitor engine● Norton would have to work with manufacturers to get its engine approved

Choice ----Motorcycle Market Has previous experience and insight

Contingencies

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