Harley-Davidson, Inc.

N’dya Hutty                                                                                   BA 422

April 24, 2017                                                                              Steve McMillan

Harley-Davidson, Inc. January 2007

History & Overview of the Issue

1903, William Harley and brothers William Davidson, Arthur Davidson, and Walter Davidson took America by surprise with their new invention. The first 1903 model was constructed in the Davidson family she, when they only started with a three-horsepower engine. Later in 1909, Harley introduced their first two-cylinder, V-twin engine that featured the deep rumbling sound that Harley’s are known for. Harley-Davidson brand quickly begin to face a new challenge, for substitute products were being created for a lower price and at the time, they were only being sold in the U.S markets. Harley also need to appeal to a younger market, being as though mostly blue-collard mid 40’s men purchased the bikes.

Industry Environment

        There were 5 forces that affected Harley-Davidson industry analysis:        

1. Potential entry of new competitors
2. Rivalry among competition firms
3. Potential development of substitute products
4. Bargaining power of suppliers
5. Bargaining power of consumers

Competitive Strategy

        Harley-Davidson decided to rebuild their competitive strategy by focusing more on customer relations, then anything else in the company. The company was so devoted on satisfying customers, that they developed marketing teams that went out into the community and surveyed customers. To ensure they were creating exactly what the consumer desired. Although competitors such as Honda produced over five million bikes per year, this didn’t change the uniqueness of a Harley-Davidson. On another note, Honda and other competitors produced a V-twin cruisers with more advanced technology and offered at a lower price.

International Expansion Strategy

        In the U.S, the Harley-Davidson brand was having issues with sales and decided to expand international. This was crucial for Harley, because the company needed to adapt their products and customer approach to the conditions in overseas market. Europe became the focus for Harley, as they looked to expand there. However, Europe proposed it’s own challenge because they had to establish their market and compete with existing competitors such as: BMW, Honda, Kawasaki, and Yamaha.

Strengths

• Strong brand name
• Customized bikes (Harley-Davidson seen great revenue because of this key factor).

Weaknesses _        

• Harley Davidson had trouble gaining market share in a few European countries.
• High price products (substitute products were being created, at a lesser expense).
• Didn’t meet production requirements, needed to generate enough revenue.

Opportunities (cost advantage, differentiation advantage, and product expansion):

Cost Advantage: Harley needs to narrow the cost gap between Japanese rivals, by doing the following:

• Increasing their outsourcing of components and technology.
• Improve productivity through a greater form of automation of manufacturing activates.
• Stronger efforts to generate standardized components among different models.

Differentiation Advantage:

• Customers value quality of the Harley Davidson (once again, this create customer value and more consumers are likely to be drawn to the customization of a heavyweight motorcycle).
• Harley’s traditional image isn’t sufficient for sustainable differentiation advantage. Therefore, Harley must continuously generate new means in which they can create more value for their consumers.

Product Expansion: Buell at first was a difficult adventure for Harley-Davidson, because at first the potential riders were thrown for a loop by the design of the motorcycle. Consumers labeled the motorcycle as “hard to learn” and “intimidating,” or even “something an older guy would ride.” Buell was Harley’s biggest challenge, because the company had to design a bike completely from scratch, in order to compete directly with European models. However, Buell didn’t bring much success to Harley, for it was designed to appeal to a younger market. The V-rod motorcycle didn’t become one of Harley’s success stories.