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Harley Davidson case

study
Submitted by
Edwin Nash
MGT 527

Introduction:
Harley Davidson Company was set up in 1903 by William Harley and Arthur Davidson. In 1920
the company became very famous as the largest and most important motorcycle manufacturers in
the world. They spread across like wildfire in many continents by making themselves available
as franchises. It was known as a very strong and financially stable firm. They were recognized as
the heavyweight manufacturers of motorcycles. They have invested sums of money in research
and development so as to help them boost their financial performance. (Michael, Duane &
Robert,2015).
The case evaluates and explains the strategic plan that is available for the firm to use. It has
maintained operations when compared to other motorcycle firms that werent very successful.
The Harley Davidson firm has two segments that they deal with. The first is their range of
motorcycles which includes their performance bikes and accessories and parts and second is the
financing department. The financing department provides financial help to dealers, retailers and
independent distributors. They also offer motorcycle insurance and loans to their customers. The
Harley Davidson firm is a major game player in America to produce motorcycles and have setup
their businesses globally from which majority of the sales come from Asia, Latin and North
America and Europe (Michael, Duane &Robert, 2015). Due to its brand loyalty the firm has
experienced huge growth and success. Then in 2008 the firm faced trouble and had to close down
some of their factories due to recession in the US economy. So this in turn affected the firms
growth as the consumers were not ready to spend on a leisure and luxurious item. They saw a
drop in sales by 7% and income declined by 2.3%. However they came out of the recession by
maintaining productions below demand (Michael, Duane &Robert, 2015).

Current Situation/Issues/Problem:
Below are the following:
1. The current issue is that the firms products were expensive, unreliable and not of
performance when compared to their competitors like the Japanese motorcycle
companies. When it was acquired by AMF (the American machine and Foundry
Company) the focus was not on the quality but more of getting high profits. This in turn
made the customers to switch brands as the switching costs would be less and the
Japanese brands were affordable and of performance. (Batra, Ahuvia&Bagozzi,2012).
2. The other issue or problem was that a brand value wasnt created among its customers.
The needs and interest of the stakeholders werent met. Due to the mismanagement of the
firm their goals to accomplish their vision was failed.
3. There wasnt value being added in their operations especially in the after sales support
like customer service. Consumers these days expect new and updated technological
features like new ideas and innovations but Harley Davidson remained unchanged for
almost 12 years and so when customers would approach them with questions the
customers service would be of no help.
Alternatives for each issue:
An alternative for the first issue would be to make sure the products before they roll out to be
of reliable quality tried and tested for performance. The advantage is that it would ease in
identifying the issues which can potentially arise and so this guarantees effectiveness and
efficiency on the products being sold to the market. The disadvantage would be that
sometimes malfunction could happen and safety may not be guaranteed as it is all developed
by technology and labor.

An alternative for the second issue would be to empower employees so as to make them
focus on value added activities as this will help in meeting the needs of the stakeholders. The
advantage of this would be that the stakeholders have a sense of belonging and shows the
firm cares for its consumers. The disadvantage would be that the stakeholders can lose all
their investments which become losses.
The alternative for the third issue would be to improve the after sales service by improving
the customer service team. It can be done by giving adequate training, attractive benefits and
salaries. The advantage of this strategy is that it will motivate the employees to improve their
skills in attracting the customers to buy the products. The disadvantage will be that the
employees can show less interest in their work if the benefits and the environment they work
doesnt seem attractive. This in turn can affect the customer service being provided.
Justification to selected Alternatives:
To justify the alternatives, the products are tired and tested before being sold out. This can help
in knowing the quality, authenticity and uniqueness of the product. Harley Davidson was known
for their standard products. Before being acquired by the AMF, almost one third of its production
was reserved and sold to the US army. So this made their motorcycles to be a class apart
innovation during a motorized warfare.
It is also justifiable for a firm to have their vision and mission and embed their stakeholders
interest in the vision as it helps them to foresee their future. This action is supported by a
proactive decision making and thoughts. Even during the recession time the firm had a strong
platform to continue producing so as to meet the demands which was successful.

Conclusion:

Thus to conclude one can say that the Harley Davidson firm is a success story in spite of all
the downfalls it faced. The firm had a turning point after AMF opted out and when they
introduced new engines and bikes. With the precepts of logistics enhancement and just in
time inventory techniques, the firm was able to achieve competitive advantage and above
average returns. It also helped them to attain efficiency in their operations by adding value.

Appendix A:
SWOT Analysis:
Strengths:
1. strong brand loyalty globally
2. high industry growth and market share
3. proven product quality
4. Strong marketing department which sponsors and participates in major motorcycle shows.
5. Robust cash flow
6. Strong relationships built on trust and respect with suppliers and dealers.
Weakness:
1.
2.
3.
4.
5.
6.

Declining financial performance


Difficult to attract and retain talented employee
High price as the bikes being made are costly.
Mostly viewed as a luxury and leisure brand.
Prone to error due to large scale production
Ability to develop sophisticated products is limited.

Opportunities:
1. Young riders are increasing becoming interested in bikes.
2. Increase demand for bikes in the global market.
Threats:
1.
2.
3.
4.

Government polices varies globally and can affect the trade policies.
Competition in global markets can be challenging.
High rise in oil prices. The bikes are heavy so they consume a lot of oil.
The competitors have large financial and marketing resources which are more diverisified.

1. Outline the threats in Harley-Davidsons external environmental. Which threats


pose the greatest short-term and long-term risks for the company?
The threats mentioned in the case was that first the consumers viewed the product as leisure then
was the struggle in managing target market and finally the demand for cost drivers for
motorcycle markets are ever changing. The threat which poses the greatest short tern and long
term risks was the struggle to manage the target market and the price of bikes that keeps
fluctuating. They also faced threats of global markets as countries lowered their prices of
motorcycles and made it more affordable and convenient as they knew that the Harley Davidson
firm would be a strong competitor. (Hyungil,Do Young, &Kyong, 2014).

2. Identify the companys core competencies. Given the existing situation, does HarleyDavidson have a competitive advantage that is sustainable?
The core competencies of the firm were price differentiation and brand loyalty. The firms
perceived value was of creating a brand loyalty through the title of American dream of
freedom. Their focus and target was on customers who valued style, heritage, reputation and
durability. This was all made possible with the resources and capabilities put together which gave
them competitive edge over their competitors (Zheng Zhou, Yim&Tse, 2005). The price
differentiation was another core competency. The consumers saw the brand as a strong quality
with high cost for the elite people. Their premium products have been established for a long term
and the success of that has helped them attain competitive advantage among its consumers. Yes
Harley Davidson does have a competitive advantage that is sustainable in the long run. It is
because of the strategy it has formulated and implemented. They were good in doing things
better than their rivals. That is they created a brand name and reputation in the market locally and

globally. They also were able to produce different types of bikes by keeping production costs low
which in turn made it hard to imitate or substitute for the competitors as their bikes were unique.
(Agarwal, Malhotra, & Bolton, 2010).
3. Define Harley-Davidsons business strategy. Based on your analysis, do you
recommend any changes in strategy to address the threats facing the company?
The firms business strategy was the differentiation strategy. They focused and targeted a specific
group of people. Harley Davidson did it so as to attain a competitive advantage. They also used it
to build a brand image and market their products as high value and of quality to customers who
regarded and valued it for the heritage, style, reputation and durability.
(Jae,Jungwoo&Jongsu,2013). The firms asset has been its brand loyalty, it signifies the
American pride. Harley Davidson also takes part and sponsors many events and even give free
riding courses to the younger and female riders. More so, the firm provides an open customer
forum to focus group, customer surveys to hear the customers view. And they use the data and
input to improve on their products.
I would recommend some changes to the firm like they can change their production process by
adding value in each stage. Switch to low cost production techniques and use more of just in time
inventory to save resources. They can also target all types of people make changes in the
demographics and even the political environment situations. They also need to improve and work
on the betterment of tapping global markets. They need to retain their brand name across the
globe by targeting low income groups especially the young generation. If they do all of these
they can achieve sustainable growth locally and globally.
4. Evaluate international conditions and the companys performance outside of the
U.S. What options are available to support Harley-Davidsons overseas expansion?

Harley Davidson has set up franchises in different countries across the world. They were
able to penetrate and setup their brand name. In India it became successful as they built
production plants so as to save them import duties by almost 80% when compared to high
tariff charges being imposed when exporting overseas. It was able to meet the needs of its
target market in India by providing quality products, parts and accessories to suit the
needs of the market. It was also able to lower its price which increased its competitive
advantage position. But in china it faced problems and became unsuccessful because of
the stringent government laws. Additionally, the cost of importing was very high as when
exporting 30% more was added to the cost of the each product. More so, the HarleyDavidson competitors in China gained competitive advantage by providing varieties and
cheaper products to suits the customers needs. The firm also needs to change its target
market of 29-55 year olds. It is a threat to the internal and external environment. Their
focus should be more on the younger generation. The younger crowds prefer bikes that
are fast and lightweight. So the firm can adjust its research and development department
and make the changes. By targeting both the older and younger crowds will help in
generating revenues domestically and internationally. Another suggestion would be for
Harley Davidson to build a manufacturing plant in china as it will help lower import
duties and achieve their profits.

References
Filip, A. (2012). Market segmentation - fundamental process in business to business
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Michael A. Hitt, R. Duane Ireland, Robert E. Hoskisson, (2015). Strategic Management:
Competitiveness and Globalization Concepts. Cengage Learning Eleventh Edition
Zheng Zhou, K., Yim, C., &Tse, D. K. (2005).The Effects of Strategic Orientations on
Technology- and Market-Based Breakthrough Innovations.Journal Of Marketing, 69(2),
42-60
Agarwal, J., Malhotra, N., & Bolton, R. (2010). A Cross-National and Cross-Cultural Approach
to Global Market Segmentation: An Application Using Consumers' Perceived Service
Quality. Journal Of International Marketing, 18(3), 18-40. doi:10.1509/jimk.18.3.18

Bailey, C., Baines, P. R., Wilson, H., & Clark, M. (2009). Segmentation and customer insight in
contemporary services marketing practice: why grouping customers is no longer enough.
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Batra, R., Ahuvia, A., &Bagozzi, R. (2012). Brand Love. Journal Of Marketing, 76(2), 1-16.
doi:10.1509/jm.09.0339
Hyungil Harry, K., Do Young, P., &KyongKeun, C. (2014). The mediating role of perceived
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Jae Young, C., Jungwoo, S., &Jongsu, L. (2013). Strategic management of new products: Exante simulation and market segmentation. International Journal Of Market Research,
55(2), 289-314. doi:10.2501/IJMR-2013-024
Michael A. Hitt, R. Duane Ireland, Robert E. Hoskisson, (2015). Strategic Management:
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