Harley-Davidson: Preparing for the Next Century

A. INTERNAL ASSESSMENTa. Culture

- Strong market position and brand image (S)- Harley Davidson in the only major American motorcycle

manufacturer (S)

b. Structure- Harley Davidson operates in two principal business

segment; motorcycles&related products and financial service (S)- The top Board of Directors for Harley Davidson are all a

men (W)- The Harley Owner Groups (HOG) is the industry largest

company sponsored motorcycle enthusiast organization (S)

c. Resources Man

- Difficult to attract and retain talented employee (W)- Unfunded employee post retirement benefits (W)

Material- Proven product quality (S)

Machine- Harley Davidson is one of the main manufacturer and user

of V-Engine configuration (S)- Harley Davidson have a wide variety of products

according to standard, performance, Touring & custom (S)

Method- Strong relationship built on trust and respect with

supplier and dealers (S)- Harley Davidson has a strong marketing department

(S)- CSR (Breast Cancer Network) (S)- Harley Davidson offers customers the opportunity

to customize their bikers (S)- More diverse lifestyle, creating many Harley

Davidson Clubs and academies around the globe like Rider’s Edge(S)

Money- Robust Cash Flow (S)- Declining financial performance (W)- Poor credit rating (W)- High price category (W)

B. EXTERNAL ASSESSMENTa. PESTEL

a. Political-Legal- Legislation effects of Helmets for motorcyclist forcing all

riders by law (T)- Licensing of motorcycle inside major city in addition

tosuburban- Alliances with Ford Motor Company or other automobile

manufacturers are possible (O)- International importing tax (T)- The expiration of US government initiatives to stabilize

credit markets programs could have a negative impact on capital markets and limit the company’s access to capital market funding (T)

b. Economics- Global recession is effecting economies world wide

therefore HD has to sustain its position in the market (O)- The increase in prices for many key row material in

manufacturing (T)- GDP per capita trend in the past five years is not severe

variation (T)- The international heavy weight market is growing and now

is larger than the U.S. heavyweight market (O)- Asian Economy is booming, China or India is the only

place not effected by global recession (O)- Increasing demand for bikers in US markets (O)- High rise in the oil prices (T)

c. Socialcultural- Average purchaser of a U.S Harley Davidson motorcycle is

a married male in his mid-forties. (T)- New interest from different demographic groups outside

US (O)- Younger riders are increasing becoming interested in bikers

(O)- Customer value perception through a good quality parts

maintaining loyalty (O)

d. Technological- More technological advancements because customer

looking for energy efficient and technologically advanced bikes now a day (T)

b. 5 PORTER’S

Threat of New Entrance - LowWe know that Harley Davidson is a major motorcycle in American. Harley Davidson has a high technology involment. Harley Davidson also always produce their product in small scale, so the Harley Davidson looks exclusive product. And also the switching cost is moderate to high, so threat of new entrance is so difficult.

Bargaining Power of Buyers - LowBecause Harley Davidson is the luxury product so low power of customer as they are individual. The dealers of Harley Davidson also less. So, high of differentiation and customer loyalty to Harley Davidson.

Threat of Subtitutes Products or Service - LowVery low the bike lokks like a Harley Davidson. Because the Harley Davidson is a luxury bike so, there are very few substitute.

Bargaining Power of Suppliers - MediumThe Harley Davidson has consolidate supplier. The Harley Davidson made by steel that’s mean ease for Harley Davidson to switching suppliers.

Rivalry Amongst Competing FirmsThe Competitor of Harley Davidson is high.we know a lot of competitor of Harley Davidson like as Honda, Yamaha, Suzuki, as we know that all product was produce Japanese.

IFAS, EFAS and QSPMIFAS and EFAS that summary showed on Table 1 and Table 2

IFAS Weight RatingWeighted Score

STRENGTH      

Strong market position and brand image 0.04 4 0.16Harley Davidson in the only major American motorcycle manufacturer 0.1 4 0.4Harley Davidson operates in two principal business segment; motorcycles&related products and financial service 0.03 3 0.09The Harley Owner Groups (HOG) is the industry largest company sponsored motorcycle enthusiast organization 0.04 2 0.08

Proven product quality 0.06 3 0.18Harley Davidson is one of the main manufacturer and user of V-Engine configuration 0.1 4 0.4

Harley Davidson have a wide variety of products according to standard, performance, Touring & custom 0.03 2 0.06Strong relationship built on trust and respect with supplier and dealers 0.07 3 0.21

Harley Davidson has a strong marketing department 0.09 4 0.36

CSR (Breast Cancer Network) 0.03 3 0.09Harley Davidson offers customers the opportunity to customize their bikers 0.03 4 0.12More diverse lifestyle, creating many Harley Davidson Clubs and academies around the globe like Rider’s Edge 0.05 4 0.2

Robust Cash Flow 0.04 4 0.16

WEAKNESS      The top Board of Directors for Harley Davidson are all a men 0.03 2 0.06

Difficult to attract and retain talented employee 0.04 2 0.08

Unfunded employee post retirement benefits 0.02 2 0.04

Declining financial performance 0.1 4 0.4

Poor credit rating 0.03 2 0.06

High price category 0.07 3 0.21

TOTAL 1.00  

3.36

Table 1 IFAS

EFAS Weight RatingWeighted

ScoreOPPORTUNITY      

Alliances with Ford Motor Company or other automobile manufacturers are possible 0.05 3 0.15Global recession is effecting economies world wide therefore HD has to sustain its position in the market 0.06 3 0.18The international heavy weight market is growing and now is larger than the U.S. heavyweight market 0.07 4 0.28Asian Economy is booming, China or India is the only place not effected by global recession 0.09 4 0.36

Increasing demand for bikers in US markets 0.08 3 0.24

New interest from different demographic groups outside US 0.06 3 0.18

Younger riders are increasing becoming interested in bikers 0.07 3 0.21Customer value perception through a good quality parts maintaining loyalty 0.07 2 0.14

THREATS      

Legislation effects of Helmets for motorcyclist forcing all riders by law 0.05 3 0.15

International importing tax 0.07 4 0.28The expiration of US government initiatives to stabilize credit markets programs could have a negative impact on capital markets and limit the company’s access to capital market funding 0.05 3 0.15

The increase in prices for many key row material in manufacturing 0.06 4 0.24

GDP per capita trend in the past five years is not severe variation 0.07 3 0.21

High rise in the oil prices 0.09 4 0.36Average purchaser of a U.S Harley Davidson motorcycle is a married male in his mid-forties 0.04 2 0.08More technological advancements because customer looking for energy efficient and technologically advanced bikes now a day 0.02 2 0.04

TOTAL 1.00   3.25

Table 2 EFAS

From the result above (table 1and 2), we can see that the IFAS method total score 3.36 and the EFAS total score is 3.25 we can plot this result to the directional strategic matrix. The result can see from the picture 1(gambar yg directional strategic matrix belum dimasukin soalnya ngerjain dr ipad maaf )

From this result we can conclude that the Harley Davidson corporation is a growth company. We must take the alternative decision for the growth company. The alternative for the Harley Davidson is :

1. Concentration growth; if we choose the concentration growth, we would do two option, that are vertical growth or horizontal growth

2. Diversification; if we choose the diversification,we would do two option, that are concentric or conglomerate

    option 1 option 2

  Weight RatingWeighted

Score RatingWeighted

ScoreSTRENGTH          

Strong market position and brand image 0.03 4 0.12 3 0.09Harley Davidson in the only major American motorcycle manufacturer 0.06 4 0.24 4 0.24Harley Davidson operates in two principal business segment; motorcycles&related products and financial service 0.01 3 0.03 2 0.02The Harley Owner Groups (HOG) is the industry largest company sponsored motorcycle enthusiast organization 0.02 2 0.04 2 0.04

Proven product quality 0.03 3 0.09 2 0.06Harley Davidson is one of the main manufacturer and user of V-Engine configuration 0.05 4 0.2 3 0.15

Harley Davidson have a wide variety of products 0.01 2 0.02 2 0.02

according to standard, performance, Touring & customStrong relationship built on trust and respect with supplier and dealers 0.04 3 0.12 4 0.16

Harley Davidson has a strong marketing department 0.05 4 0.2 4 0.2

CSR (Breast Cancer Network) 0.01 3 0.03 2 0.02Harley Davidson offers customers the opportunity to customize their bikers 0.01 4 0.04 4 0.04More diverse lifestyle, creating many Harley Davidson Clubs and academies around the globe like Rider’s Edge 0.02 4 0.08 4 0.08

Robust Cash Flow 0.02 4 0.08 3 0.06

WEAKNESS         0The top Board of Directors for Harley Davidson are all a men 0.01 2 0.02 2 0.02

Difficult to attract and retain talented employee 0.02 2 0.04 2 0.04

Unfunded employee post retirement benefits 0.01 2 0.02 3 0.03

Declining financial performance 0.05 4 0.2 4 0.2

Poor credit rating 0.01 2 0.02 2 0.02

High price category 0.03 3 0.09 4 0.12OPPORTUNITY         0

Alliances with Ford Motor Company or other automobile manufacturers are possible 0.04 3 0.12 4 0.16Global recession is effecting economies world wide therefore HD has to sustain its position in the market 0.03 3 0.09 3 0.09The international heavy weight market is growing and now is larger than the U.S. heavyweight market 0.03 4 0.12 4 0.12Asian Economy is booming, China or India is the only place not effected by global recession 0.05 4 0.2 4 0.2

Increasing demand for bikers in US markets 0.04 3 0.12 4 0.16New interest from different demographic groups outside US 0.03 3 0.09 2 0.06Younger riders are increasing becoming interested in bikers 0.04 3 0.12 2 0.08Customer value perception through a good quality parts maintaining loyalty 0.04 2 0.08 2 0.08

THREATS         0Legislation effects of Helmets for motorcyclist forcing all riders by law 0.02 3 0.06 3 0.06

International importing tax 0.03 4 0.12 4 0.12The expiration of US government initiatives to stabilize credit markets programs could have a negative impact on capital markets and limit the company’s access to capital market funding 0.02 3 0.06 3 0.06The increase in prices for many key row material in manufacturing 0.03 4 0.12 3 0.09

GDP per capita trend in the past five years is not severe variation 0.03 3 0.09 4 0.12

High rise in the oil prices 0.05 4 0.2 3 0.15Average purchaser of a U.S Harley Davidson motorcycle is a married male in his mid-forties 0.02 2 0.04 3 0.06More technological advancements because customer looking for energy efficient and technologically advanced bikes now a day 0.01 2 0.02 3 0.03

TOTAL 1.00   3.33   3.25

Table 3

From the result from table 3. we choose option one. Harley Davidson choose concentration growth. Harley Davidson must expand their business and maintaining the American focus.