Tas 2015 : Harley Davidson in India

TAS

TAS 2015 In-house Selection ProcessHarley- Davidson in India

TASScheme of the presentation

ORGANIZATION

LEADERSHIP

STRATEGY EXECUTION

SALES AND MARKETING

SEGMENTATION

Harley-Davidson in India

“The Hog”: An American Icon

Recognized for strong masculine, even outlaw image. Best known for Touring Bikes and Cruisers

Survived a period of poor quality control and competition from Japanese manufacturers in the USA in the 1980s

Downturn in 2008 due to economic crisis and production overshooting in US. Revenues fell 30% and loss of $55mn incurred in 2009.

Transformation of Harley Davidson begins with increased focus on international markets particularly India. Anoop Prakash joined Harley Davidson as Managing Director in March 2009 to finalize and implement Harley Davidson India Plans

Source: Logo from www.wikipedia.org


ORGANIZATION Please comment on

the organisational readiness of Harley Davidson for an international business operation.

From the case description highlight specific observations about the organisation’s structure to support your views above.

Source: Image from www.harleydavidson.com

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Four Pillars for successful global expansion

Source: “Making Foreign moves pay off” Bain & Co.

A Strong Core eg Vodafone

A repeatable model for expansion eg Avon, Nestle

Customer differentiation that travels eg Nike

Favorable industry structure eg Razors

Fig : Only 17% companies achieved sustained, profitable international growth

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• Very Small functional teams in subsidiaries.(only one person for P&A and GM in Europe).

• “The T-shirt problem” Decision making still with headquarters resulting in delayed response and lost opportunities.

• The company still has Matrix organization resulting in slow decision making. Need to move from product driven structure to channel and customer driven structure. (The marketing director for Europe reported to a general manager for marketing operations, who in turn reported to the CMO and dotted line to the managing director for Europe.)

• Mangos for Motorcycles: Lobbied India to adopt Euro III standards thereby opening Indian market to heavyweight bikes ( above 800 cc)

• Product clinics in Bangalore, Delhi and Mumbai : 541 potential buyers surveyed ( avg. age 25 yrs., median income $40,000). White space in the Indian Bike market identified ( 500-1000 cc)

• Hired Anoop Prakash as MD in 2009 to set up a subsidiary in India. ( Expertise in growing and developing new businesses, market strategy and sales. Culturally familiar with both Harley Davidson and India).

• Assembled a local executive team by getting top hires from German and Japanese auto companies operating with a “bamboo ceiling” ( Honda, Yamaha, BMW, Honda motorcycles)

• Independent dealers who made substantial investment in Harley Davidson

Marketing/BrandLow High

MerchandisingLow High

Supply ChainLow High

Internal Capability Assessment

Dealership NetworkLow High

Support StructureLow High

Expansion ExperienceLow High

Available CapitalLow High

Available ResourcesLow High

Resource Assessment

Reward ExpectationLow High

Risk ToleranceLow High

Desired TimelineLow High

Strategic Assessment

Regulatory SupportLow High

Source: Various studies by Bain and Deloitte

Organizational Readiness Score for Harley Davidson India: High


LEADERSHIP Comment on the

leadership styles at Harley Davidson – Parent Organisation and India Business.

Is the leadership style appropriate for the business objectives – globally and in emerging markets?


TASLeadership Style in Parent organisation and India

ToughDifficult but necessary decisions taken to right size everything

and build the company back up. Harley Davidson cut costs and increased efficiency by eliminating excess capacity,

restructuring production and labor contracts while exiting non-

core businesses.

Visionary“How many bikes can we sell next year?” To “How many bikes can we sell in the next 10

years with the right approach?”The company has a long term strategy in place. It has planned to enter into the new

market with CBU offering, moving on to establishing CKD units and then developing a new bike suited to the needs of the customer. Passing off everything to customers when

CKD unit started

Understanding Customers and needs of market

Trikes,XR1200, Street 750, country specific sizing of T shirts, two new regional headquarters established

Rebranding and Market Positioning

The company also focused on building Harley Davidson as a brand. Image makeover of Sportster from “girl’s bike” and “Compromise Harley” to an important player in the entry

segment ( $8k - $12k) for yound adults

Communication & Transparency

A lot of Internal communication since Levatich and Wandell joined so that all the employees are on the

same platform with the change in company strategy.

SituationalOnce Levatich got hold of the T Shirt problem he got it sorted immediately

Cultural DiversityUnderstanding that the same formula can not be applied everywhere. Use

of intense market surveys and local leadership teams.

Massive organizational tensionDue to complex reporting structures, small decisions require lots of emails back and forth from Milwaukee. Harley's leadership has to find an optimal balance between

centralized and decentralized decision making process by making reporting structures nimble.

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Leadership attributes required for global expansion

Source: various articles published by Bain and Accenture,

Moving from an Autocratic decision model to a Shared decision model

Clarity of Focus

Addressing “creative tension”

A foot in the future

Learning Agility

Harley’s Leadership style is fit for Global Expansion


STRATEGY EXECUTION Please comment on

the operational challenges of Harley Davidson business in India in the initial years.

What would be your recommendations to address the challenges mentioned above.


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Strategy Execution

Very High Tariff Rate on CBU bikes Increasing CKD business. In addition, looking at manufacturing some components in India

Indian bike market is largely utilitarian. Small market for leisure driving in India

Organizing events like HOG rally, social media campaigns, sponsoring college fests, IPL

Customer expectations different from US & European markets

Customizing a bike suitable for Indian conditions – low cost, water cooled, high ground clearance

Poor Customer Service due to lack of service stations and unavailability of spare parts

Improving Customer Service by increasing service stations (by collaboration with other players). Online HOG register the problem, spare will be shipped to nearest service station and will be fixed

Decision making process – less authority at country level resulting in delayed decisions and lost opportunities

Organizational restructuring to allow decision making by country managers in all functional units


SALES AND MARKETING Comment on the sales

and distribution network of Harley Davidson in India.

Highlight the areas of improvement in marketing of the Harley Davidson Brand in India.


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Areas of Improvement in Marketing

• Focusing on the correct customer segment:

► Customers Willing to buy & able to pay : Personalised service and making them feel important

► Customers Willing to buy but not able to pay : Easy EMI and financing opportunities in partnership with banks

► Customers Not willing to buy but able to pay : Low Conversion factor

• 1st Bike Harley Campaign : Targeting Management graduates and undergraduates from good Engineering and

Medical colleges by active marketing and creating a strong fascination so that the 1 st Bike is Harley Davidson

• Digital and social media marketing: Official pages on Fb and Twitter missing

• Improving servicing network by establishing synergy with some existing brand with non-overlapping product

portfolio e.g.. Royal Enfield

• Establishing a country wide Road side assistance program

• Touch, Feel, Experience Harley Campaign : Keeping 1 Harley on Dynamo Rollers in showrooms or Auto expos so

that anyone can get a feel of riding a Harley.

• Custom Harleys market akin to US/Japan

• Only 9 authorized dealerships all across India.• One CKD facility outside Delhi.

• Small team of executives with Anoop Prakash as the country head.

• Poor after sales support.

Sales & Distribution network in India Inadequate


SEGMENTATION Comment on the

market- size and buying behavior of customer segment of Harley Davidson in India.

Would the global products of Harley Davidson succeed in India? Please support your arguments with data from the case.


TAS

• Though India is world’s second largest motorcycle market, the market of leisure bikes is still very small and only 1810 heavyweight (800cc and above) bikes were sold in 2011.

• However, India’s rapidly growing economy, rising middle class and significant investment in construction of new highways have opened the door to Leisure Motorcycle riding.

• The market for premium motorcycles in India is projected to grow at a CAGR of more than 30% till 2019.

Market Size of Harley-Davidson in India

Male

Financially successful

Very committed to brand

35-45 yrs. old professionals & entrepreneurs

Already own car or bike(s)

Wan

t to

Rew

ard

them

selv

es

Lifestyle is the key differentiator

Feature cloud of Harley Davidson India customers

Source: TechSci Research “India Premium Motorcycles Market Forecast & Opportunities, 2019”

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• Indian customers have different expectations compared to US customers. So to succeed on a large scale, Harley Davidson needs some minor design changes in its US models. (Low Traffic speeds and high ambient temperature necessitated water cooling and low quality roads required bikes with higher ground clearance)

• To suit the build and stature of Indian customers minor adjustments would be required in position of Handle and foot pedals so that the arms and legs of the riders are not too strained.

• Style & Look and Brand play important role in premium segment. Harley-Davidson is number one premium segment brand in customer perception survey.

Future of Global Products in India

Source: TechSci Research “India Premium Motorcycles Market Forecast & Opportunities, 2019”

TAS

Thank You

Tas 2015 : Harley Davidson in India

Business

Transcript of Tas 2015 : Harley Davidson in India