Case Interview Question #00404: The client Kennametal (NYSE: KMT) is a large American cutting tool manufacturer and a leading producer of metals. Headquartered in the Pittsburgh suburb of Latrobe, Pennsylvania, it has revenue of approximately $1.9 billion in fiscal year 2010. The company delivers productivity to customers seeking peak performance in demanding environments by providing innovative custom and standard wear-resistant solutions.
Kennametal has the dominant market share in the US cutting tools market, but minimal presence in other parts of the world. Recently, the management is considering entering the German market. They believe that the German market could be attractive because of the large industrial base. You have been hired to help them develop a market entry strategy. How should the client Kennametal enter Germany?
Additional Information: (to be provided to you if asked)
The cutting tools that the client company manufactures are many different types of drill bits that go onto machine tools, and are used in metal working applications – from machine shops to auto manufacturers, and many other industrial applications.
Their business is divided between standard parts, and custom-designed parts for specific applications. The standard pieces are sold through distributors and direct through a sales force, and the custom designed pieces are sold through a direct salesforce. The custom-designed pieces are much more profitable than the standard pieces, and our client is interested in this market.
(At the time of this case) Germany is a growing market for cutting tools, due to a strong industrial base, especially in