Harley Davidson Motor Company Strategy Analysis

Harley Davidson Motor ac caller-out dodging synopsisINTRODUCTIONThis musical theme aims to evaluate the strategic options obtain satisfactory to the Harley Davidson organization. Harley Davidson Inc. has devil operational particles, cycle and financing. Harley Davidson Financial Services (HDFS) offers loans, cycle insurance policy and protection plans to meet the necessitate of their owners, whilst the bike segment designs, produces and commercialises primarily monster touring, custom and performance motorcycles. It in like manner manufactures motorcycle parts and accessories, gear and app arl. The follow is the only major Ameri fire producer of motorcycles and operates glob altogethery, with gross revenue mostly in North America, Europe, Asia/Pacific and Latin America.Although in the past the company has experience growth and continued winner, attributed to its tick off loyalty, in 2009 Harley Davidson (H-D) had to shut down and merge factories collectible to th e effects of the recession and the f either of the US housing grocery. strategical options bed only be developed after the companys strategic typeset is do itn. Thus the first section of the report engagements tools and concepts to determine H-D strategic po teaseion. In light of the companys strategic position strategic options ar pastce theorise this is presented in section 2. The third section of the report then uses the success criteria model presented by Johnson, Scholes and Whittington in corporate out bank bill, as a founding to evaluate the strategic options presented and recommendations ar made.THE STRATEGIC POSITION OF HARLEY DAVIDSON INC.This section of the report is concerned with bring ining the strategic position of Harley Davidson Inc. in an attempt to get strategic options for the company. It first identifies the changes that ar occurring in the environment and how these changes affect H-D and its occupancy activities and second the resource strength a nd capabilities of H-D.1.1 The EnvironmentIn order to understand the environment which H-D operates in the fol lowlying frameworks ar used with the aim of service to identify key issues and challenges and ways of coping with complexity and change.1.1.1 Pestle AnalysisIn 2009 H-D stood to gain from the Economic Stimulus Pack get on, passed into legislation by the Barack Obama Administration. The federal official stimulus package gives taxpayers breaks if they purchase a new car, light truck, RV, or motorcycle. In addition, Coachman industries overly a manufacturer of blank vehicles and a foe of H-D was eliminated from the New York Stock Exchange.(Wachter 2009).According to the Datamonitor reportThe motorcycle constancy segment has had frugal growth for the past three years, and has only recently been experiencing decline. In 2007 it declined 2.3%, even so is forecasted to recover 4.3% by 2012. An stinting factor in estimationof H-D, despite this decline, is that the U.S. in dustry generated total revenues of $10.2 billion in 2007, of which 98.8% were of motorcycles ( non scooters, minibikes, etc.). Furthermore, deep down the U.S. saving H-D holds the majority of motorcycle trades. Therefore, even while industry growth is declining, H-D sales and new(prenominal) motorcycle sales argon still continuing to add-on.The Motorcyclye pains Council (MIC) discloses that leisure ware industries are facing steep decline only the motorcycle segment though declining ,is non doing so at a steep rate.Tim Buche, President of the MIC says Overall motorcycle sales were down 7.2%, not nearly as sharp a decline as legion(predicate) other consumer products in todays economy (Wasef 2009).Socially H-D has a competitive border which is owed to its customer buns, strong denounce loyalty and demographic trends such(prenominal) as the increse in female operators. This loyalty is indicated in the modal(a) age of H-D consumers. H-D average consumer buying age is 42 y ears old and increasing (Gauvin 2005). H-D aspires to summation its consumer demographics, besides although the younger generation below 35 years of age has posted the overlargest gains in ownership, the generation that is on the edge of the louse up baby boomer segment pass on be the main catalyst of growth for the industry (Koncept 2007).One social factor that may negatively affect the sale of H-D motocycles is the stigma that has been attached to these leisure vehicles. Alot of people believe that motorcycles are suicidal and this belief is strengthened due to the high rate of motorcycle bootlegities and crashes. H-D stands the bump of escaping this stigmatisation if the frequent views their bikes as cruisers and not speed bikes.Technologically H-D great deal take wages of antilock brake systems. Antilock brakes could servicing riders avoid fatal crases according to a study done by the insurance industry.1.1.2 Porters quintuplet Forces ModelRivalryH-D operates within the Recreational Vehicles industry along with quintuplet other major competitors Winnebago, Polaris, Thor, Arctic Cat and Marine Products, the top performers within the industry which holds 92% of the market part by volume with a market capitalization of 64.653 Billion of a total sedulousness of 7 Billion.Other firms in different industries that are direct product rivals implicate Honda Motor Company Limited, Yamaha Motor Co, Ltd., and Suzuki Motor Corporation ( supplement 1).The presence of these large multinational corporations with exceptionally high assets boosts the tier of rivalry within the industry. Because of the small number of material rivals, the markets revenue is shared between fewer firms and enhances the degree of rivalry for bottom line profit. This rivalry forces most competitors to try and ray their business models through and through geographical expansion or vertical expansion, direct to interests and enthronisations in a configuration of other segme nts such as the automobile, watercraft, industrial and farming equipment areas. (Datamonitor 2004).Threat of SubstitutesThe Recreational Vehicle industry faces threats from the Automobile Industry, from public shipping options and bicycles. The threat is generally dependent on the indispensability of motorcycles and other lifestyle products to the end user.(Datamonitor 2008).In most developed countries, motorcycles are leisure items and are not a necessity and are therefore largely dispensable or substitutable by more practical items such as cars or more cost effective means of transportation such as bicycles. This lack of necessity increases the threat of substitutes and is one of the major reasons why the external market goes into decline during economic recession.Buyer military forceOverall, buyer power is low due to sustainable competitive reinforcement of product differentiation which is impossible for other brand competitors to match.Supplier military groupLarge multinatio nal corporations such as Harley-Davidson cornerstone receive materials from many another(prenominal) a(prenominal) different global suppliers and face low switching costs due to minimal product differentiation.This presence within the globalist market boosts Industry leaders power. Overall, supplier power is prevail.Threat of New EntrantsOverall, this threat is moderate due to high set up costs, high brand recognition, customer loyalty and high research and development costs.1.2 Resources Strength and CapabilitiesOrganizational ResourcesH-D has a formal structure that works for the company decentralized, expert teams and leadership circles that comfort employee comment. Programs they use to plan, report and track inventory and production include their fork up Management Strategy system (SMS), Vibration Tech PdM applied science systems, as well as their nett- introductiond H-D Distribution supplier ne dickensrk that extends vendors with a wealthiness of information ab out supply and demand within the company.Physical ResourcesThe Harley trigon provides a basis for tracking and monitoring the firms physical resources. Location and sophistry of management and the expertise of manufacturing personnel and other employees is the key in accessing sensible materials, procurement and upkeep related to manufacturing equipment. H-D plants are streamlined and well-maintained, which is a join resource for H-D.Technological ResourcesH-D has many technological resources including many different brand name Patents, Trademarks, and Copyrights which protect its reputation and image.Human Resources/CapitalTrust, Knowledge, Managerial capabilities, as well as organizational culture are H-Ds most expensive human resources. The company culture, gives H-D a major competitive advantage. Employees and suppliers know their input is valued and take pride in their work. People involved are passionate about the brand and this adds invisible value to the company.Innovat ion ResourcesEmployee and supplier, as well as managements ideas are huge resources for H-D, as these people know the business and know its potential. Since there are such a variety of inputs, H-Ds capacity to innovate and create/develop new product is not subject to stagnation or groupthink. However, H-D does try to stay true to its turning point market, and this creates nearly boundaries for innovative ideas.Reputational ResourcesReputation with customers, brand name, perceptions of product, and reputation with suppliers are all genuinely secure to H-Ds operations, and keep customers loyal to the product. Interactions and relationships are stressed at H-D in order to ensure theatrical role workmanship and mutually beneficial participation in all stages of production.CAPABILITIESPurposely Integrated Technological ResourcesH-D ensures that all processes and activities throughout its value chain are integrated using web based SMS systems, barcodes, and reports that enable its JI T inventory flow. This sacks production to flow smoothly.ManufacturingH-Ds JIT inventory move in system means that it moldiness have streamlined manufacturing abilities. H-D does this by ensuring quality inputs into its manufacturing plants, flow production methods, and well-maintained equipment.H-D manufacturing plants are capable of producing many different models and base their inventory off of customer pull demand, reducing costs or so the board as well as inventory finished products that sit unsold in warehouses (of which H-D has very few).DistributionJIT inventory management ineluctably good transportation flow logistics. H-D has the capability to reduce lead measure and ensure pull delivery through its private fleet of trucks and contracts with scattering suppliers.STRATEGIC OPTIONSThe identification of possible directions patterns on an understanding of H-D strategic position. The accommodation of Ansoffs product/market matrix is used for identifying directions for s trategic development. Development directions are the strategic options available to H-D in terms of products and market coverage pickings into account the strategic capability of the company and the expectation of shareholders. (Johnson et al 2005). Figure2, the registration of Ansoffs product/market matrix summarizes the strategic options available to H-D.Figure 2. Strategy Development Directions Source Johnson et al (2005) Exploring Corporate StrategyH-D backside subscribe to one or more of the following optionsIt can protect and build on its current position.It can develop new markets for its products.It H-D can also develop new products in new markets andIt diversifies into new markets and develops new products.These options can be take afterd through different development methods which are subjective development, mergers and acquisitions and strategic alliances.The options chosen has to address the key issues and challenges faced by the H-D, the company essential also sa tisfy stakeholders expectations but most important H-D must have the resources and capabilities to develop the options chosen. In other words the option must be suitable, acceptable and feasible (Johnson et al 2005).The H-D motorcycle has been an American motion picture since 1903. Harley has built one the most comical reputations within the American motorcycle business. The motorcycles have transformed into a lifestyle, rather than mere transportation. Utilizing the motorcycles image, H-D became a market for recreational vehicles constituting a sense of freedom and leisure to transportation. Often complementary color to other recreational vehicles, such as motor homes, boats and snowmobiles. H-D has taken advantage of their exceptional culture and has used it to create sales.However, regardless of Harleys reputation and heritage, an economic downturn has shown that Harley Davidson Inc. require to restructure their market. Financial crisis has slowed consumer spending, ultimatel y leading to low sales motorcycles and recreational vehicles. Due to the economic conditions, H-Ds 2008 profit fell 30 percent, decreasing shipments by 8 percent. (Harley Davidson Annual 2009 Report). The demand for heavyweight motorcycles has dropped dramatically, not only in the US economy but also spherewide.A slow domestic economy forces one to direct a focus on international prospects to open future long-term opportunities. The American dream, associated with Harleys, needs to be changed to fit in other dynamic cultures to increase market size. Also, increasing market size exit allow more investment in research and development to apply competitive advantages within the market. H-D already has an upper hand in terms of brand uniqueness and all the way stands out from the ordinary motorcycle. An already attractive product will allow RD to function at an optimal rate.Harley Davidson Inc. currently operates internationally and the demand in foreign countries has forced manageme nt to apply their leadership and marketing skills to international markets. The economic slump has forced H-D to restructure its international management team and outlook. More experience and expertise into a countrys culture and legal requirements are essential. A global management team needs to be soothing and confident when operating with or in foreign countries. Understanding international business practices and ethics is a crucial quality when trying to splay. Harley needs to create country based teams that are determined to make new cultural decisions.Closely executing legal dimensions, geographic barriers, cultural obstacles, and investments will positively position Harley Davidson Inc. for future prospects. Harley Davidson Inc.s former CEO stated, International markets are a great opportunity, we need to grow them to diversify our revenue base (Harley Davidson Inc. 2009). A new CEO has been appointed and is expected to bring global and manufacturing experience. Keith E. W andell is well attuned to international sales as well as manufacturing experience. These two qualities are exactly what Harley Davidson needs in order to reconstruct their international markets. This could be a turning point for Harleys change approach.Building manufacturing plants in bigger foreign markets will help relieve shipping expenses, taxes, tariffs, and will be able to accurately respond to the specialized demand. Starting manufacturing plants in other countries could create numerous job opportunities. Properly trained managers would provide a domestic leadership style that is optimally familiarized to the congruous culture. Not only would this create more jobs for US management, but also generate more revenue for foreign economies as locals will be needed for production. Although a long term goal, the production of manufacturing plants would be a plausible and positive future management decision as markets expand over time.Many consumer behavior research studies indica te that consumers are very likely to purchase products that are offered as contain interlingual renditions.One strategy H-D can use in order to foster growth is to reveal a confine edition motorcycle, co-created by consumers as part of the promotional mix. H-D can use this promotional strategy to get consumers involved, appeal to their desires for rarity, and increase sales.While H-D has released several limited edition motorcycles in the past, this promotion can be adapted into a new strategy. The new limited edition motorcycle would require the involvement of consumers to help co-create the product. H-Ds research and development part would design three different motorcycles and then they would be uploaded to the H-D website. Then, consumers would be able to log on and vote for their favorite motorcycle. The winning motorcycle would then go into limited production. Those who voted would have first priority to purchase the motorcycle. Owners would then get an all-inclusive tri p to the H-D Sturgis Rally. This promotion would be relatively inexpensive, yet highly effective. The designers could design the motorcycles in a way that reuses as many existing parts as possible, while still creating a unique style. This design process would lower production costs for the limited edition motorcycle.A limited edition motorcycle release of this nature would be an effective strategy because consumers are flocking to brands that are playing hard to get. instantaneously more than ever, rarity is important for the high-end luxury sector, affluent 30-40 year olds, baby boomers, generation X and Y, and creative class consumers. This trend has shown that successful selling involves building a niche market rather than appealing to the masses. The world is becoming saturated with products that are very similar to each other, and the interest for rarity has been driven by the feeling that certain products will help us to stand apart from the masses. A limited edition H-D mo torcycle is the perfect way for consumers to do just that.H-D is not new to the limited edition market scheme- the strategy just needs to be adjusted to todays consumer. One of H-Ds previously successful limited edition motorcycles is the 50th day of remembrance Nightster. This model was popular because it made people want what they couldnt have.This model was embellished with a gold anniversary emblem and the year 1957 embroidered on the seat. The motorcycle also was aligned with the traditional masculinity of H-D, including the traditional colors, chrome pipes, and rugged-look. Only 2000 of these were make and they retailed at only $10,000- now thats buzz-worthy. Even H-D representatives say they dont know of a single dealership with one in stock. (Harley Davidson Inc 2009).Even in the declining economy, H-D can still grow their company by altering their promotional mix. H-D can create hype and buzz by releasing a limited edition motorcycle, co-created by consumers. Consumer beha vior research shows that consumers respond positively to product campaigns focused on rarity and scarcity. The buzz created due to this product release will help to increase brand awareness, and more importantly, brand resonance. These two factors ultimately result in more sales for the company.RECOMMENDATIONSThere are many strategic options available to H-D however the choice made should be one that the company can chase with existing resources and one that is line with the companys vision and mission.H-D should protect and build on their current position through consolidation and market penetration. Consolidation is where organizations protect and strengthen their position in theircurrent markets with current products. Market penetration, is where an organizationgains market share. (Johnson et al 2005).Appendix 1 rapscallions 5 and 6 shows that H-D used this strategy they consolidated some of their operations so as to adjust cost structures and invested in their brand as a mean s of market penetration. Appendix 1 page 7 also states that H-D plans to add 100 to 150 dealer points through 2014. This is a good strategic option for the future but H-D should pursue this only after they have regained market share, reason being so that the company would have enough resources, especially financial resources to successfully pursue this option.Product development and market development as discussed above are also good options but should not be pursued by H-D at this point in time as these options require drawn-out resources and investment. Whilst new products may be vital to the future of the organization, the process of creating a broad product line is expensive, risky and potentially unprofitable. (Johnson et al 2005).H-D should use all their available resources to develop the company internally and focus on their brand. (as they are presently doing Appendix 1 page 6)CONCLUSIONH-D has a strong foundation and a uniquely powerful brand however this was not enough to allow the company to escape the problems associated with the recent economic downturn. H-D has to pursue strategies that will enable them to sustain growth and market share to endure economic hard times and to keep away competitors. The company has laid down their business strategy quite clearly in their 2009 annual report (See Appendix page 6) and this is an excellent start to do achieving this.If the company can turnaround itself around from the verge of bankruptcy in the 1980s then with the right tangible and intangible resources, current technology and the knowledge of past strategies used Harley Davidson can become the leader in the motorcycle industry internationally.REFERENCESDatamonitor (2007) rides in the United States Industry Profile. Online Available at http//web.ebscohost.com/bsi/pdf?vid=6hid=115sid=60f53058-dbd4-402c-8546-03baa6899d4a%40sessionmgr107. Accessed 5th March, 2011.Gauvin, T (2005) Harley Davidson. Online Available athttp//209.85.173.132/search?q=cachelVbp saLDfmAJperleybrook.umfk.maine.edu/slides/ gush%25202005/bus411/harley%2520Davidson.ppt+harley+davidson+external+analysishl=enct=clnkcd=2gl=us. Accessed 5th March, 2011.Harley-Davidson Inc (2009) 2009 Annual Report. Online Available at http//www.harley-davidson.com/en_US/ subject/Pages/Student_Center/student-center.html? locale=en_USbmLocale=en_USannualreport Accessed 27th February, 2011.Harley-Davidson Inc (2009) Harley-Davidson Reports 2008 Results, Plans Lower 2009 Shipments and Unveils Strategy for Current Environment. Online Available at http//www.harley-davidson.com/wcm/Content/Pages/HD_News/Company/ intelligence servicearticle.jsp?locale=en_USarticleLink=News/0375_press_release.hdnewsnewsYear=2009history=news Accessed 27th February, 2011.Johnson, Gerry, Scholes, Kevan and Whittington, Richard (2005) Exploring Corporate Strategy. one-seventh Edition. Harlow, Essex Pearson Education. Print ISBN 0 273 68734 4.Koncept, A (2008) Recreational Vehicle Market maturement Baby Boomers to Fuel Growth. Online Available at http//www.konceptanalytics.com/. Accessed 27th February, 2011.Wasef, B (2009) Motorcycle Industry Council Reports Drop in Motorcycle Sales, Upswing for Scooters and Dual-Purposes. Online Available at http //motorcycles.about.com/b/2009/02/06/motorcycle-industry-council-reports-drop-in-motorcycle-sales-upswing-for-scooters-and-dual-purposes.htm. Accessed 25th February, 2011.Wachter, D (2009) Motorcyclists Reap Benefits from the Stimulus Package. Online Available athttp//www.tricities.com/tri/news/local/article/motorcyclists_reap_benefits_from_the_stimulus_package/20722/. Accessed 3rd March, 2011.