Harley-davidson Case Solution

8/12/2019 Harley-davidson Case Solution

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I. Time context:

2009

II. Viewpoint:

Marketing Department

III. Statement of the problem

A. Major problem:

Harley Davidsons product line is relatively out of the

consumers preference in their domestic market.

B. Minor problem:

.!Decrease in annual domestic sales.

2.!"#istence of foreign competitors in their local operation.

$.! %imited market segment.

IV. Objectives

A. MustShort !an"e Objectives

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. (o identify the customers preference for a particular product.

2. (o satisfy the target market demands and provide product line

)ased on their preference.

*. #ant$on" !an"e Objectives

. Dominate the industry despite of the high competition.

2. (o have a clear strategic direction of continuing its product

improvement for the )enefit of the company and

meeting customers demand. $. (o )e a)le to capture ma+ority of domestic market share.

V. Areas of %onsi&eration

A. S#OT Anal'sis

Stren"ths

. ,o-erful )rand image

*ecause the firm esta)lished in the mind of customer that

riding a Harley Davidson motorcycle is the fulfillment of

their dreams.

2. /trong relationship -ith employees

*ecause it is one of their resources -hich made them

successful

$. (he sole American motorcycle manufacturer

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(his is their key factor to dominate the industry for

decades

. "sta)lished Academy of Motorcycling

1hich provide )oth ne- and e#pert riders -ith a deeper

engagement in motorcycling and to e#perience Harley

Davidson style.

. ,roduct customi3ation

1hich ena)le the customers to )e more creative in the

styles they -ant.

4. 5ustomer loyalty

*ecause they esta)lished on the mind of the consumer

that they )elong to the family of Harley -hen they o-n a unit.

#ea(nesses

. ,roducts are more e#pensive

(hats -hy only those rich people can purchase the Harley

motors.

2. People also feared of being called as hooligans in the

society -hen they ride a Harley Davison )ike.

$. American pride is the main )asis of their product

development.

. 6ffers only a single product line in the industry.

. /lo- gro-th in the international market share.

4. 5ultural diversity product designs are for )ig people like

American and "uropeans.

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Opportunities

. /trong gro-th in the motorcycle industry in Asia and Me#ico.

2. Increasing num)ers of -omen riders.

$. Increasing num)er of aging population -hich is considered

as their largest market segment.

. (echnological advancement is useful in the product

development and innovation.

. "#pansion in the glo)al market due to increase in economic

gro-th.

Threats

. HDs competitors offer a more diversified product line thats

-hy they are vulnera)le in the industry changes.

2. /u)stitute ,roductspotential development )ecomes a factor

in purchase decision making.

$. "uropean motorcycle industry is suffering from declining of

gro-th.

. "#tinguishment of their largest market segment -hich is the

aging population )ecause they are una)le to operate a

motorcycle.

. Developing car industry.

4. 5hanging preference of the customers.

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7. ,otential entries of more players -ith lo-er prices.

S#OT MAT!I)

/trength 1eaknesses6pportunities Having an academy of

motorcycles e#pand

the motorcycles

industry in Asia and

Me#ico

8/6!

(echnological

advancement that

puts HarleyDavison

product more

e#pensive compare to

its competitors861!

(he costumers loyalty

helps in the e#pansion

in the glo)al market

8/46!

HarleyDavidson

pursuing the American

pride due to

increasing no. of aging

population -hich their

target market

86$1$!Increasing no. of

-omen riders cause of

po-erful )rand image

of HarleyDavidson

8/62!(hreats HarleyDavidson is the

only one motorcycle

manufacturer in

America )ut its

competitors offer

more diversified

product line

HarleyDavidson must

provide su)stitute

products )ecause its

only offer single

product line

8(217!

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8/$(!,roduct customi3ation

that HarleyDavidson

offer gro- in the

"uropean motorcycle

industry

8/($!:

Due to changing

preferences of the

costumer makes slo-

gro-th in the

international market

shares

8(41!

*+ST+$ A,A$-SIS

,6%I(I5A%

. (he ;nited /tates military and police used the product of

Harley Davidson.

2. HarleyDavidson faced is the import


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. 5onfidence in economy is directly proportional to the

purchasing of consumer items

2. 6pportunities in emerging economies &India and china' )ut

uncertain operating situations.

$. In >ork ,A the employees strike happened due to failed to

agree on -ages and health )enefits.

. ?ising fuel prices -ill affect )oth HarleyDavidson their

suppliers and HarleyDavidson@s competitors.

. 5onsumers are less inclined to spend their money.

/65IA%

. (he firm support *5=/ 8*reast 5ancer =et-ork of

/trength! and 8Muscular Dystrophy Association!

2. (he unforgetta)le e#perience.

$. overnment reports state that motorcyclists are more

likely to )e in+ured. Beeping this social issue in mind

)uyers may choose a company that focuses on the safety

of its products.

("5H=6%6I5A%

. HarleyDavidson have a -ide variety of products according

to standard performing touring and custom

2. (he advancement of HarleyDavidson in the parts of

motorcycles.

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$. Antilock )reaking systems and Cclutchless@@ transmissions

are )eginning to )e developed )y HarleyDavidson and

other competitors.

. HarleyDavidson has prided them on having a distinctive

soundE.

"=FI?6=M"=(

. =oise pollution and some emission standards of Harley

Davidson )ike is not up to level of some countries across

the glo)e

2. Girst 5orporation to voluntarily enroll in the one cleanup

program this program is design for the cleanup of the

affected soil and ground -ater at the former york naval

ordinance plant.

$. ,roduce an environmental -arranty their -arranty ensures

each o-ner that the vehicles is design and )uilt free of any

defect in materials and -orkmanship that -ould cause the

vehicles to meet ",A standards

. Motorcycles are primarily used during -armer months

from midmarch to august.

%"A%

. In India and 5hina delayed for several years due to high

tariffs and emissions regulations

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2. (he pollution regulations have recently changed )ut the

tariff pro)lem is yet unresolved

$. (he import duty held up )y 40 and ta#es of $0 -hich

effectively dou)le the sales price.

. (he age restriction on riders is 7 coupled -ith the legal

reJuirement for a motorcycle license. Additionally the

motorcycle must )e maintained: have an M6( ta# and the

rider must -ear a helmet.

In&ustr' Anal'sis

HarleyDavidson is an American motorcycle manufacturer

company that founded in Mil-aukee 1isconsin and -ith the

headJuarters in Kuneau Avenue. It is one of the t-o ma+or American

motorcycle manufacturers that survived in the reat Depression. It is

named after the late 1illiam /. Harley and his friend Arthur Davidson

HarleyDavidson started in a small engine )ut soon variegate.

. #hat is the pro&uctservice/

HarleyDavidson sells different classes of heavy-eight

motorcycles are designed for cruising on high-ays. (hey also have

parts different kinds of apparel and accessories for different ages.

HarleyDavidson allo-s you to customi3e your o-n motorcycle for the

convenience and to sho- out your passion.

(hey also have a financial service that includes the group of

companies doing )usiness -ith HarleyDavidson -hich provides

-holesale and retail financing and as an agent provides insurance and

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insurance related programs primarily to HarleyDavison and *uell

dealers and their retail customers.

A. #hat function &oes it serve/

HarleyDavidson serves as a provider of motorcyclists and to the

general pu)lic an e#panding line of motorcycles and )randed products

and services in selected market segments.

Ginancial services programs to dealers and retail customers.

B. #hat are the channels of &istribution/

(he channel distri)ution uses is ecommerce and -e) design.

0. #hat is the in&ustr' si1e in units an& &ollars/

Harley Davidson is increasingly reliant on international sales

especially in "urope. In 200 only of the companys sales -ere

international. (his figure had moved to $2. )y 200 helped )y a

heavily -eakening dollar. *ecause Harley incurs its production costs in

the ;nited /tates it )enefits -hen the dollar -eakens against the "uro

and the >en.

,eople tend to )uy dollars to )uy ;./. goods or to hedge against

the fluctuation of glo)al currency 8the ;./. Dollar is the -orld@s most

trusted currency!. 1hen people )uy dollars the dollar goes up.

A. 2ow fast is it "rowin"/

Harley Davidson is increasingly reliant on international sales

especially in "urope. In 200 only of the companys sales -ere

come from international account figure had move to $2. )y 200

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helped )y a heavily -eak dollar. *ecause Harley incurs its production

costs in the ;./ it )enefits -hen the dollar -eaken against the "uro

and >en.

B. Are pro&uct &ifferentiate&/

Grom the a)ove mentioned products and services -e can derive

that HarleyDavidsons products and services are differentiated.

%. Are there hi"h exit barriers/

(here is a lo- e#it )arrier )ecause the market is sta)le so the

profit margins do not oscillate along time and also )ecause of many

players in the market industry.

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3. Are there hi"h fixe& cost/

>es -orld-ide independent dealer retail sales of Harley

Davidson motorcycles. ?etail sales continue to )e impacted on a glo)al

)asis )y difficult economic conditions.

+. Are there some of the forces that &etermine the stren"th

of competition amon" existin" competitors/

In its market industry the company had these follo-ing factorsL

5onsumer %oyalty *rand A-areness Ginancial ,osition ,rice

5ompetitiveness Market ,ositioning ,roduct and /ervice uality

lo)al "#pansion 6rgani3ational /tructures and ,roduct Diversity.

4. #ho are the major competitors/

HarleyDavidsons direct e#isting competitors are the po-erful

Kapanese makers Honda >amaha Ba-asaki and /u3uki. ermany@s

*M1 also competes in this segment ,olaris the sno- )ikes maker and

the other minor "uropean makers such as Ducati and u33i )y *ritains

=orton.

A. #hat are their mar(et shares/

HarleyDavidson increased market share in the ;./. its )iggest

market for the Juarter and year -hile sales slipped a modest .02.

(he Motor 5ompany stated that ;./. 4Ncc sales -ere do-n .4

for the year -hile Harley sales -ere do-n only .7 for the year.

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(heir ;./. market share in that segment increased to .9 from

$.$ a year earlier and . in 200.

1orld-ide HD sales -ere do-n . from 2009 to 200

though sales increased in "urope and %atin America. And overall

international sales -ere do-n only .9 from a year earlier. And the

-orld market share is $.9.

2arle'53avi&son Motorc'cles

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B. Is the in&ustr' consoli&ate& or fra"mente&/

(he industry is fragmented )ecause there are many players

in the industry and operates not only in their respective domestic area

)ut also operates in the glo)al market.

6. #ho are the major customers of the in&ustr'/

(he average Harley customer is an upperclass 7yearold -hite male

and has )een getting older at a rate of 4 months every year for the last 20

years.

A. Are the' powerful/

=o )ecause most of the customers came from specific

individuals.

B. #hat "ives them power/

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55onsumers of Harley Davidson motorcycles are individual

customers thats -hy they cant seriously affect Harleys financial

position.

(he num)er of dealers around the glo)e is also less and they

are also dependent to the individual customers that cannot affect

HarleyDavidson financial position.

7. #ho are the major suppliers of the in&ustr'/

Garia

A. Are the' powerful/

5=o

B. #hat "ives them power/

/teel is the )asic electrical reJuirement and shipping of final

motorcycles is the main thing HarleyDavidson seeks from the

suppliers.

HarleyDavidson has -ide span of suppliers so that if onesupplier attempted to increase the price they can easily s-itch to the

alternative suppliers -ithout any pro)lem in production.

8. 3o si"nificant entr' barriers exist/

*arriers to entry the motor)ikes market are characteri3ed )y the

high technology mass production and lo- prices in the light-eight

segment.

A. #hat are the'/

Kapanese makers o-n the )iggest market share against other strong

"uropean competitors

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O 5he3ks HusJuaena and the /panish Der)y they manufacture and

customi3ed )ikes

O 5ustomer loyalty and strong image is a )arrier for the makers than

the classic HarleyDavidson Inc. and *M1 +ust as for the super car

segment Gerrari and ,orsche.

O ,roduct differentiation

O /-itching costs on the cost that )uyer has to a)sor) to s-itch from

one supplier to another.

O 5apital reJuirements for entry the investment of large 5apital and

the significant risk to enter.

B. Are the' effective in protectin" existin" competitors thus

enhancin" profits/

>es )ecause of the )rand loyalty that continuing in the mind set

of an individual that if you say HarleyDavidson its has a good Juality

and an adventure e#perience to have this kind of product and services

that HD offered. (he real po-er of HarleyDavidson is the po-er to

market to consumers -ho love the product

9. A. Are the' an' close substitutes for in&ustr' pro&uct an&

services/

=atural su)stitutes of heavy and super heavy-eight motor)ikes

are medium and light-eight motorcycles mopeds scooters and as a

meaning of transportation cars trucks /;F@s pu)lic transportation

and )ikes. *oth suppliers and distri)utors have lo- impact in this

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Different competitors have different market strategy to advertise

and effectively introduce their certain products.

; A. To what extent is the in&ustr' "lobal/

(hey are in the international market segment that includes

America "urope and Asia. HarleyDavidson is one of those e#cellent

companies -hom had challenged traditional ideas.

; B. Are there an' apparent a&vanta"es to bein" involve& in

more than one es )ecause if a )usiness is engaging in more than one 8!

nation you can have some of the follo-ing )enefitsL

P increase level of demand

P *rand recognitionthe product -ill )e easily kno-n to other

regions

P (he customer can easily have access to )usiness in terms of

product maintenance

P Increase of income

P Improvement of Juantity and Juality of the products

> A. Is the in&ustr' re"ulate&/

1ith regards to the e#portation and importation of the products

the la-s of each country applies in order for them to monitor the goods

-hich enter into their territory.

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> B. #hat influence &o re"ulations have on in&ustr'

competitiveness/

It has a ma+or influence to the industry )ecause they cannot

operate )eyond the rules and regulations that are )eing implemented

in each area of operation. Another thing is they can also use the fact of

)eing regulated specially )y the government to )e their competitive

advantage if they follo- the la-s that is )eing implemented to

esta)lish a strong foundation in their respective market.

VI. Alternative %ourses of Action

A5AQL (o introduce ne- and enticing product )ased on local market

preference of the target market -hile maintaining the )rand name.

ADFA=(A"/L

- Innovation can create ne- gro-th segment

- ain ne- valua)le costumer

- It -ould )e difficult for rivals imitate

- 5reate more a-areness of the product e#istence

DI/ADFA=(A"/L

-

Introducing ne- product -ould )e costly and e#pensive.- ?isk for the ne- product not to )e successful.

- (heir limited edition product can )e replaced in the market.

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A5AQ2L /trengthen Harleys product advertisement.

ADFA=(A"/L

- Increase the firm sales.

- ?aises customers product a-areness.

- /erves as a catalyst to reesta)lish he firm as the prime

dealer of motorcycles.

- "nhance their market competitiveness.

DI/ADFA=(A"/L

- A standout advertisement is costly and e#pensive.

- ;niJue and effective advertising ideas are difficult to produce.

- It may not )e effective to attract local customers.

A5AQ$L Differentiation of the product they are offering in terms of its

features and Juality.

ADFA=(A"/L

- ,roducts that have distinction provide more value for

customers.

- "#pansion of market segment.

- ;niJue products are difficult for competitors to imitate.

- 5ore competence -ill )e enhanced.

- *rand loyalty is increased.

DI/ADFA=(A"/L

- Implementation is costly and e#pensive.

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- ?isk of the product not to )e successful.

- It is difficult to come up -ith advantageous and uniJue idea.

- Harley Davidson not to )e a)le to sustain their )rand image.

Alternative %ourses of Action +valuation

#ei"ht

1eig

ht

(he criterion that -ould have this -eight is not the mainfocus or consideration for the company as of the current time

frame.2 (he factor to )e spotted in this particular -eight -ould have

the companys moderate consideration that -ill affect their

decision making.$ (his -eight means that the company puts a lot of focus and

consideration in this criterion. (hey think that it -ill )e the

companys )est need at the current time conte#t.

!ubrics

5riterion $ ,otential impact

on companys

performance.

(here is a great

positive impact

on companys

performance.

(he company is

seeing an

average impact

on this

(he company

have lo- impact

on the

performance of

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alternative and

-ill not

adversely affect

the companys

performance.

this alternative.

"ase of

Implementation

(he decision of

the company to

implement the

actions needed

is not

complicated.

(he decision of

the company to

implement the

actions related

is not that hard

to implement.

(he decision of

the company to

implement the

action is

comple#.

*enefit


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Alternative 5ourse of Action =um)er 6ne5riterion 1eight ?ating /core

,otential impact

on 5ompanys

performance

$

"ase of

Implementation

*enefit


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performance

"ase of

Implementation

$ $

*enefit


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(his gives HD a competitive edge over its competitors: it -ill also serve

as a catalyst for their eventual dominance of the motorcycle industry.

I). 3etaile& Action *lan

(ime Grame ,erson

?esponsi)le


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development

team for the ?RD

plan on

identifying the

local market

preference4 months Marketing

Department

together -ith the

,roduct

Development

(eam

/tart and

finali3ation of the

gathered data on

the research and

development

-eek Beith 1andell

,roduct

Development

(eam

Discussion of the

ne- product to )e

introduce in the

market and

forecasting of

product

development cost

that -ill )e

possi)ly incurred

)y the company2 days /trategic *usiness

;nit

Ginali3ation of the

needed capital for

the proposed

product

development

S000000

0

months ,roduct

Development

(eam

?esearch and

Development that

-ill )e done )y

the team to start

the formulation of

S000000

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plans for the

propose product

2 days

Beith 1andell

,roduct

Development

(eam Marketing

Department

Meeting to

discuss the

proposal done )y

the team and its

approval$ days Beith 1andell and

the Department

head

Dissemination of

information of the

propose product

development month 5hief Ginance

6fficer

Meeting -ith

possi)le investor

and other

Ginancing services

firm -eek ,roduction Head Discussion of the

materials needed

and the its

incremental cost day ,roduction Head /u)mission of the

report for the

pro+ected cost of

production2 days Beith 1andell Approval of the

pro+ected

production and

development cost2 months ,roduction

Department

5ommencement

of the production

of the ne-ly

develop product

S$00000

0

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2 months uality 5ontrol

Department

(esting

monitoring

evaluating of the

ne-ly develop

product

S2000000

2 months Beith 1andell

Marketing

Department

Meeting for the

launch and

continues

advertisement of

the product$ months Marketing

Department

/tart of product

launch and

advertisement

S000000

uarterly

/emiannually

Annually

Beith 1andell and

(op Management

/ales and ,roduct

performance

"valuation

). ?inancial Anal'sis

3ebt !atio

2009

70700 < 9 T 74.97

200$97 < 7242 T . or 0

2007

20999 < 44404 T $7.2

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%urrent !atio

2009

$99

47 < &87242 N 44404! < 2'

47 < 4724. T 9.7

2007

9$$$&844404 N $20! < 2'

9$$$ < 9$7 T 4.49

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Harley-davidson Case Solution

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