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Harley-Davidson Inc Case Solution
The change from baby boomer to millennials has had a significant impact on companies such as Harley Davidson. Harley Davidson is a company manufacturing heavy motorbikes. The company has developed a repute brand image and a significant loyal customer base. However, this change from one generation to the other as well as a rapid change in technology has presented problems for the company. The company has been performing as a profit yielding company 25 years of its existence. However, the year 2009 saw a change in this legacy and the company’s financial performance showed a net loss. This loss was also due to the fact that the world was in a financial crisis, reducing the sales of the company significantly. The company also had product extensions to categories such as credit extension to customers. There was another factor that contributed to this loss. This was the change in leadership to a person having no knowledge of the company operations and the company culture. This was due to external hiring that the company did for the first time in its history for a top management position. Even though leadership and the financial crisis can be blamed for these problems, these were just symptoms of some major issues that the company had. One of the major issues was regarding the lagged response of the company to changes in technology. Other companies in the industry were competing on the basis of technological improvements. Harley Davidson did include technological changes to improve the quality of the product, the change was slow. Furthermore, the change in the customer demographics and preferences was not being considered. As a result, other competitors in the industry gained a competitive edge by offering the customers what they required and demanded. The third issue was related to the corrosion of the brand image as a resultant of these activities. These issues were tacked by offering a diverse range of products to satisfy the needs of every customer which diluted and tarnished the brand image, resulting in a decline in the loyal customer base that the company was proud of.
Following questions are answered in this case study solution
Key Industry Success Factors
Case Analysis for Harley-Davidson Inc
The recommendations made were to revamp the existing business by redefining the target audience and setting a strategy structure based on these significant changes in the organization. Furthermore, the three issues highlighted in the case were found to be the key success factors for obtaining a leadership position in the industry. Another recommendation was to develop a strategy that facilitates innovations based on customer demands. This would result in the development and improvement of the brand image once again. The post-case scenario showed that the company has changed the core target audience to young people rather than the prior core customer, 40 years of age.
The core issue of the case is the inability of Harley-Davidson to adapt to the changing technological innovations in bikes. This changing technology had led to a change in the mindset of the bike-riding individuals. This change had been brought about with the new generation and the core target audience of the company reducing significantly. The preferences of these individuals belonging to the new generation had shifted from the core offering that the company had for its customers. As a result, the company aimed to adjust by offering price as well as style variants for these customers. However, this had a dilution effect on the brand and the loyalty of the loyalist customers decreased significantly.
2. External Assessment
The external environment was shifting as a result of a change in technology. This shift had caused the customers, a part of the external environment, being impacted, resulting in a change in the mindset of the people. Also, the natural environment includes a shift in the demographics of the target audience that prefers bike rides. This shift is characterized by the shift of bike riders from old to younger rides which are appealed by some factors other than what Harley-Davidson offers.
The assessment of the external factors shows that the competitiveness in the industry has increased significantly. The competitor brands are offering products to buyers that include the components of a Harley-Davidson bike that are attractive, and additional features that are a resultant of technological change. Furthermore, in this competitive industry, maintaining a competitive advantage is difficult because companies can replicate the product offering.
The third factor is the task environment. With the Harley-Davidson brand image encapsulated as an American cowboy, the same customer image cannot be projected to other markets such as Europe and Asia; promising markets for the company. The differences in the tastes and preferences of people are the global environment is difficult to adjust to.
3. Internal Assessment
The performance of the company has reduced to a certain extent because of some steps that increased the company receivables. This included credit extension to customers and also defaulters, resulting in an unstable condition for the company, resulting in an adverse effect on the financial performance. The only competitive advantage that the company has been its brand image that also has been diluted with the product and line extensions offered to a diverse audience. Furthermore, leadership, as a component of the internal organization is not strong because of the lack of experience in working in the company. The capabilities of the company include the production of high-quality vehicles. This capability of the company has been inculcated in the brand. Activities such as distribution and inventory management have been improved significantly over time that show that the operations aspect of the company has improved. Another value chain component is that of technology that is a weakness for the company since Harley-Davidson lags behind in technology adoption. The major strength of the company is its brand image. However, the weakness of the company is that in an effort to maintain the sales and profitability of the company, the brand image has been diluted.
4. Key Industry Success Factors
According to the analysis above, the key industry success factors that have been found are; technology adaptability, brand image development, and customer demands. Technology adaptability was found to be a key industry success factor given the failure that Harley-Davidson is facing in this case. The importance of this factor is highlighted by the fact that companies such as Yamaha that were not as old as Harley-Davidson was improving to increase its market share in the industry. The second key factor is the development of a concentrated and focused brand image.
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