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Harley Davidson Strategic Competitiveness That Spans Decades Case Solution
Harley Davidson has been a brand name synonymous with providing finest quality motorcycles to United States of America. The name resonates in the minds of passionate customers due to its legacy of selling the "American dream of freedom". The muscular, thriving company has come through American Depression, recessions, world wars, technological advancements and tough government regulation successfully and still enjoys a handsome market share in the motorcycle market.
However, this case highlights the challenges posed by the 21st century on Harley Davidson and how the company might not enjoy the same privileged position in the future due to changing dynamics of consumer tastes, hefty costs associated with International expansion, changing focus and venturing into new market segments and leveraging too much over the brand name. The case discusses why each of the issues addressed above forms a threat or opportunity for the company and whether the company can shine out without having to worry about cars, scooters or automobiles.
Following questions are answered in this case study solution
Case Analysis for Harley Davidson Strategic Competitiveness That Spans Decades
2. Case Analysis
Harley Davidson is being strained by a number of threats that might materialize into long term and short terms risks to the company. The first pivotal issue is the perception of its product as a “leisure item”. This means that as economic conditions of the country take a bad turn, the company will be facing slump in sales as the consumers will substitute luxurious products with priority products due to volatility in incomes (Chapman, Murray, & Mellor, 1984).
Secondly, Harley Davidson has over the years trying to be something for everyone. Historically, the company had focused its production for males between the age 29 and 55. However, the company had moved into new ventures by expanding the production segments to younger riders and women. This attempt can have far reaching consequences as tapping new segments is not a risk-free decision to make. Further to this, this will shift the focus of the company from its core competencies to other fragments. The vigor dictating the demand for heavy built motorcycles is also altering as more and more overseas competitors are pouring in with affordable and wide ranging options for the customers. This swing in competition has built pressure on Harley Davidson to protect its mighty market share in the USA and European markets.
Amidst all the challenges being faced by Harley Davison, the company has certain jewels that can help it survive the thin competition. The company has built itself competitive strength by successfully engraving its brand name to the extent that customers have become repeated buyers. The name Harley Davidson is relatable to every American who enjoys motorcycle rides on traditionally designed machines. Together with this, Harley Davidson gives its customers an impression of exclusivity in all the products that it offers which are always aligned with the specific needs of the customers. Harley-Davidson has also been able to win dedicated following from the buyers so much as to produce riding clubs specifically for Harley Davidson riders. Also, the fan following has led to the sale of complementary products like clothes and motorcycle accessories only because the brand name rings with the idea to provide the best quality. Apart from a historic brand name, Harley Davidson beats other manufacturers in the production processes that it has employed. The modern robotics combined with interchangeable parts allows the company to gain economies of scale by producing many models.
Harley-Davidson generates the biggest chunk of its revenue through its Motorcycles and related accessories area and a smaller portion from the financial services area. The company has used the same proportion of business to seep into new territories mainly by focusing energies on the two main products and ensuring the competency creates value added services for the customers. The company has also ventured into the multi-generational and multi-cultural crowd by bringing in products for females and younger drivers.
Harley-Davidson has recently expanded into countries which are experiencing rising incomes and plethora of motorcycle riders like India and China. This, however, will be faced with a number of challenges in keeping up with the expectations of a varied class of local customers and local preferences as well as high local prices due to import duties and tariffs, lesser inclination towards leisure riding, etc.
Analyzing the financial exhibit of the company suggest that efforts need to be redirected towards dragging the company out of the financial crisis it has faced since its foundation. Exhibit 2 shows a fall in the revenue generated from financial services and a very small increase in revenue from motorcycles and related products. The Exhibit 6 gives a clear picture of how much more the company has to recover from the drop in net income to retain its position. The net income has dropped down to $600 from the highest of $1000.
Harley Davidson has been in shallow waters due to its major focus on continuing the legacy of manufacturing and producing heavy motorcycles only for people who enjoy this unique ride. There is a need for repositioning of products as the industry is headed towards a new direction where more and more female riders are showing interest in buying heavy bikes. The company must diverge from the concept of associating motorcycles with masculinity only and tap more avenues for younger and female riders. Also, since women riders, culturally and biologically look for different benefits from a luxury product, the company must aim to provide right experience for the right gender. This can include sub-branding a line of bikes for women under a different name, making use of celebrity endorsement and partnering with fashion brands, etc. (Kotler, 2013).
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