Harley-Davidson Inc. was established during the first ten years of the 20th century in Wisconsin. It is one of the major motorcycle manufacturers that was not hard hit by the Great Depression. It has also survived stiff competition from Japanese motor cycle manufacturing firms due to its high quality and competitive products and services.
The external analysis of the company reveals that Harley-Davidson Inc. is one of the companies that are highly recognized and admired worldwide. One of its notable marketing strategies entails excellent academy for training individuals who desire to learn riding motorcycles.
Issue I: Competition
On the basis of internal rivalry, the company inevitably faced competition from firms which manufacture similar products as well as enjoy larger market share and stronger financial bases. For instance, Yamaha Company is one of its close market rivals. Consequently, just like Harley-Davidson, the three other competitors also concentrate on production of heavy weight motorcycles.
These competitors include Honda, Yamaha and Suzuki which are all Japanese companies. In addition, Honda Company which stands out as the major competitor of the company in the United States of America enjoys a larger market share (Grant, 2005).
Causes of stiff competition
It is imperative to note that Harley-Davidson products are highly priced and therefore, it locks out customers who are of low-income levels. Additionally, in some European nations, the company has problems in attaining larger market share. In the markets that are considered big and diverse such as India, Harley-Davidson has failed to venture and exploit the same. Finally, the company has not met the requirements of the production process by analyzing the future of their products market segment (Bloomberg business week, 2011).
Impacts of competition
Competition has been heightened by the fact that most of the competitors have larger market segment, diversity and financial capabilities. Following stiff competition the company is likely to experience a fluctuation in its market share if no action is taking to retain and attract new customers. Apparently, los of market share due to increased competition also translates to a decline in the company sales and subsequently a reduction in profitability (David, 2010).
Recommendations
It is highly recommended that the company should penetrate the market by obtaining a larger market share from the existing ones such as UK, U.S and Japan. It can attain this by employing advanced marketing techniques such as online advertising and intensive use of social media. The fact that the company has a well established brand name, it can viably compete with other market rivals. Moreover, due to the fact that there is high level of competition in US market, the company can achieve more as a result of market penetration (Reuters, 2008).
Issue II: Reduced threats from potential entrants
In regards to potential entrants into the market, the company faces minimal threats since most entrants are quite often deterred by high amount of capital investments required in establishing Motorcycle Company. Furthermore, the motorcycle industry has already reached what may be referred to as maturity stage. Therefore, there are only four players in the market segment who are also major competitors.
The small number of players can also be attributed to the fact that optimum profitability may only be enjoyed when manufacturers take advantage of economies of scale.
Causes
One of the important elements in the operations of Harley-Davidson is the presence of substitute products or services. The main substitutes of Harley-Davidson products are cars, scooters and sports bikes.
This is because the company concentrates on production of luxurious motorcycles. Hence, it has fewer substitutes. In addition people who want to purchase heavy weight motorcycles produced by Harley-Davidson do not consider buying the existing substitutes. Consequently, lack of substitutes reduces the threat of entry by potential competitors.
Impacts
Barriers to entry imply that Harley-Davidson operates to nearly oligopolistic competition whereby they the power of suppliers. It has a large number of suppliers and hence if a supplier increases base price, the company has the option of switching to others without necessarily affecting production process.
The only materials that Harley-Davidson seeks from the suppliers are electrical and steel equipments in addition to shipping process (Bloomberg Business Week, 2011). The same significantly impact on the financial position of Harley-Davidson (Pahl & Richter, 2005).
Recommendations
Harley-Davidson should exploit the oligopolistic competition situation to increase customers power. They should not be tempted to exploit customers in terms of prices but they should continue developing attracting offer to their wide consumer base. In addition, they should continue treating their suppliers with utmost respect to ensure a smooth interaction (Grant, 2005). The fact that both young people and women are becoming more and more interested in the bikes should be treated as an opportunity whereby Harley-Davidson can utilize its position to tap into this emerging consumer base. Another aspect is that clients highly value motorcycles which are of high quality so they should continue offering the same. Moreover, the global market has continued to grow and it is wider than the existing market in U.S alone (David, 2010).
Issue III: Strong capital and market base
The strengths of the company can be analyzed on the basis of financial status of the company. Against this background, the company enjoys the wider international market. This has been en attributed to products of the company that are highly demanded in most European markets.
Causes
Harley-Davidson is the only company that manufactures heavy weight motorcycles in American addition to having a brand which is very strong. Consequently, the European market for heavy weight motorcycle is made up of performance and standards of Harley-Davidsons segments which take up to 70% of the market share (Scott, 2008). In addition, the company has two segments in which it operates in. This consists of financial services of Harley-Davidson Company and the companys motorcycles and other related products.
Impact
In 2003 financial year, the net income of the company increased by 30%b as compared to 2002 (Harley-Davidson Latin America, 2011). This data can also be accessed in the appendix below. The company further customizes its products and therefore it makes significant returns from the same as the cost is tied to specifications of customers.
Recommendation
The Company should further strengthen it marketing strategies such as public relations, events for customers, direct mails, use of magazines and even dealer promotions. This enables them to compete productively with their rivals and have a large market share (Harley-Davidson Latin America, 2011). Furthermore, Asian and European markets have been expanding over the years in addition to increasing demands for bikes in United States so Harley-Davidson should consider further investment in these markets (Grant, 2005).
Conclusion
In addition, the leadership should concentrate on product development. For instance, the company should consider expanding its products to females and younger generations who are becoming interested in motor bikes. The leadership should also concentrate on building the existing Asia market which has high population level thus higher market potential (Sandretto, 2011).
Based on the above analysis of Harley-Davidson Inc., it is pragmatic for the company leadership to consider the idea of not only expanding the Asian market but also the European one.
Furthermore, the firm should aim at marketing sales of motorcycles for both females and young enthusiastic buyers. In conclusion, the leadership should embrace both concentric and horizontal diversification as part and parcel of retaining and attracting new customers.
References
Bloomberg Business Week (2011). Harley-Davidson inc. Web.
David, R. F (2010). Strategic management concepts. London: Prentice Hall.
Grant, R. M. (2005). Contemporary strategy analysis. London: Wiley-Blackwell.
Harley-Davidson Latin America (2011).Timeline 1900s. Web.
Pahl, N. & Richter, A. (2005). SWOT Analysis -Idea, Methodology and a Practical Approach. London: Wiley-Blackwell.
Reuters (2008). A complete and comprehensive analysis of Harley-Davidson includes an overview. Web.
Sandretto, M. (2011).Cases in Financial Reporting. Boston:Cengage Learning.
Scott, M. (2008).Harley-Davidson-motor company. London. ABC-CLIO.
Appendix: Financial ratios of Harley-Davidson Company
Harley-Davidson Inc. is a US-based motorcycle manufacturer established in 1903 by collaboration between William Harley and Arthur Davidson. The company was considered worlds leading designer of motorcycles comprising of heavyweight, touring as well as performance motorcycles.
The company also deals with line of motor cycle parts and accessories. The supplies of motorcycles from Harley-Davidson were recognized based on their distinctive design as well as heavy customization.
The brand image of the company based on raw power formed crucial part of its unique selling proposition (Whalen et al, 2010). This made the company to focus on differentiation strategy targeting more specific products within various niche segments in the market (Whalen et al, 2010).
The nature of the powerful brand image HD uses within the market, led to building of deep relationship between the company, customers and matchless riding experiences. This contributed towards massive loyal brand following since the needs of customers using heavyweight motorcycle were catered for.
Marketing strategy of the company focused on company-sponsored events, various dealer promotions as well as advertisements in the media. Target market majorly comprised of baby-boomers who happened to be men above thirty five years of age.
However, the age limit has risen over the years to over forty years. This represented the age group who contributed towards Harley-Davidsons iconic figure within United States of America.
Due to decline of customers within this segment, the company strategized in the year 2010 to re-organize their marketing efforts and at the same time focus on multigenerational and multi-cultural marketing strategy.
Such strategy focused on various age-groups, ethnic backgrounds and also being gender sensitive (Doole and Lowe, 2008).
Impact of new and emerging technologies on transport and it applications is currently evident. Advancement in technology have taken very sharp dimension and on upper dimension within the market.
Such technologies have been identified to include advances in automobile, accessories and computer production. Increase in the number of automobiles having web superior capabilities as well as new display technologies are on the growing trend.
Despite all these, experience within automobile industry reveals that its rather expensive to operate within developed countries due to expensive demands from consumers.
Such reasons should ensure that the identified gaps in knowledge regarding lucrative markets, and identified opportunities are dealt with amicably (Kotler and Keller, 2007).
However, as one of the best managed companies within various regions, HD takes pride on the high technological and modernized level of products and services provided.
Summary of environmental appraisal analysis for the U.K. market
Internal analysis
Harley-Davidson line of production deals with automobiles whereby they retail new and used products. Their market supply has been considered adequate by customers for close to over ten decades.
There is provision of various unique heritage and culture to employees which enables them to offer excellent services within the automobile industry.
HD stands as one of the world leading companies within automobile industry dealing with heavyweight motorcycles, motorcycle parts, accessories, apparel and general merchandise (Whalen et al, 2010).
The company has ensured concrete development within its various business segments. Such segments include that of motorcycles and that dealing with provision of financial incentives. The financial service segment deals particularly with wholesale as well as retail financing and insurance (Whalen et al, 2010).
There has also been much focus on various innovation- related measures which assist in enhancement of differentiation and methods of costing.
At the same time, much difference occurred from economic conditions and finance management within the organization. It is easier to develop performance indicators from the companys financial records.
SWOT analysis
Strengths
Harley Davidson commands a considerable market share within European countries owing to the nature of its products which includes most sorted out heavy- weight motorcycles.
Part of the companys strength emanates from its area of specialization which is narrowed down to two segments; motorcycles and its accessories as well as Financial Services. Harley-Davidson supplies heavyweight motorcycle within various international markets such as Middle-East region and Asia.
Additionally, the company boasts of a strong brand name which at one point was used as trade mark amongst American population. Such nature of strength exhibited enabled perpetual attraction of customers especially amongst baby boomers.
The Harley Owners Group (HOG) association established within the company has enabled expansion of customer base with approximately since they command approximately 750,000 members globally. This makes HD appear sole sponsor of motorcycle enthusiast within the industry.
Buell Riders Adventure Group (BRAG) is one of the affiliate companys granted rights of manufacturing products under HDs brand name.
Further strength can be identified through various market segments dealing with different issues such as promotions, customer events, media advertisements and direct-mailing (Magretta, 2002, pp 86-92).
Weakness
HDs weak points as it gears up for the UK market can easily be identified in the nature of pricing they use on their products. This has made it difficult for the company to extend its market share within Asia and European other countries.
At the same time, there are internal problems revolving around capacity in production which limits HDs supply of heavy motorcycles to future market segments (Whalen et al, 2010).
Opportunities
Theres currently high demand for Harley Davidson motorcycles within regions having high percentage of Middle-Class earners. These countries are found within the European market which at the moment presents the largest motorcycle market in the world.
There is potential market amongst the younger generation as well as sports events within America and Asia with quality being the major concern.
Threat
The loss of considerable domestic market is attributed to emergence of innovative competitors such as BMW and Hyundai which supplies quality but relatively cheap products to the market.
At the same time some of the competitors within the market have stronger financial base and well coordinated marketing network which ensures smooth operations of their diversified products lines.
Potential threat may arise from subsidiary companies using HDs brand name since they can be tempted to compromise quality (Doole and Lowe, 2008).
External factors
External Strategic analysis
The general environment of Harley Davidson will be analyzed by use of PEST analysis model. For the purposes of capturing various changes within the environment, it is important that Degree of Turbulence (DOT) model be utilized.
At the same time, the motor cycle industry within the United Kingdom from which HD is expected to operate will be analyzed by use of Porters Five Forces analysis (Whalen et al, 2010).
The Degree of Turbulence
Strategic analysis of the UK environment requires the application of DOT which reveals on the stability of the industry within the current market situation. The choice of strategy is very important since it will determine the mode of entrance the company uses within various markets.
There are always two main approaches used either emergent or prescriptive approach. However, various factors within specified market environments determine the level of turbulence within the environment. The factors considered in such a case include; changeability and predictability (Whalen et al, 2010).
According to UK statistics, changeability can be recognized through high chances and probability for environment to change. Changes within the environment are brought about by many other factors categorized as either complexity or novelty.
Such factors providing complex impacts include; political, technological as well as social aspects. Global economy represents one of the complex potential factors which might affect penetration of Harley-Davidson Company into United Kingdom market.
This is because HD is a multinational company having most of its operations within the international market. Based on this, various changes on technology, prices as well as overall GDP ultimately affect overall performance of HD within emerging markets (Whalen et al, 2010).
On the other hand, Novelty factors focuses on the frequency of occurrences of new situations towards the company. Harley-Davidson is considered to operate within high technology environment as exhibited by its major competitors from Japan and other such as BMW.
This makes it possible for any company to turn things up-side down within the market based on its level of advancement in technology. Such changes as described above can be determined through application of predictability factor.
Predictability is usually determined based on rapidity of change or anticipation on future impacts . These qualities are used to determine rate of transformation within the market as well as availability and quality of information applied on future prediction respectively.
Rapidity of change within the UK can be evaluated by examining changes on market responses towards products supplied. This can be linked to the nature of GDP within the regional countries which will ultimately determine the level of supply of HD heavy motorcycles, other premium goods and services.
However, with respect to visibility of the future , HD should be capable to predict the trend within the future market of motorcycles within the region. This is since the trend is shifting towards environment friendly automobiles, hence forecastable to predict market inclination.
The companys positioning based on pricing will largely determine their profit margin. Various changes within the environment, calls for adjustments to the strategies applied by Harley-Davidson within other regions. Such changes within the UK environment can best be described through application of PEST analysis (Whalen et al, 2010).
PEST Analysis
PEST analysis is basically built based on historical data, making it more challenging to predict the future form previous events within the market.
Despite the analysis from degree of turbulence which could be used in predicting the future, PEST analysis cannot be utilized for the same purposes making it difficult for the company to predict their future trends from past events. Further, such results cannot be directly transferred to the future.
For the purposes of analyzing UK market, HD will divide its results based on short-term and long-term events which are done based on the provided financial data. Scale of 1 to 5 can be used to quantify events based on most and least favourable environment for HD products.
Using such scales can make it easier comparison between factors. However, HD Company will utilize the most relevant factors within the analysis to predict their performance within the target market.
Political factors
Previously as revealed from the case study, several obstacles in the form of political factors have led to stagnation of HD products within some markets.
This could be seen through enforcement of new laws within countries. However, the most defined area within the market which has attracted several legal enactments is rate of global warming based on greenhouse gas emissions.
Additionally, nature of disposal of old products and durability of the products determines market acceptance within some territories (Whalen et al, 2010). There are tight legislative restrictions on emissions within the OECD member states.
This presents some challenge to HDs heavy motorcycles since they consume much fuel leading to unwanted emissions (Whalen et al, 2010). European countries have enacted their own standard of operation i.e. EURO 5 which gives directions of operations within automobile industry.
The law ensures that all manufacturers are responsible for their products performance for the first five years of operation within the market (Whalen et al, 2010).
This is the same as United States market which has defined rules enforcing regulations on green house gas emissions. Such restrictions on emission have the capacity if increasing costs within various areas of development, testing and manufacturing for Harley-Davidson.
The process of recycling used and old vehicles is also given equal importance within UK, with the laws stating that various automobile manufacturers are under obligation to retrieve back specific components of their gadgets.
Such directives provide additional operational costs on HD, since they are required to be responsible for recyclability of various automobile components. This would make the company to forcefully take into account cost of scraping various components expected from used motorcycles.
Consequently, there are various forms of crises based on political instability within the emerging markets in the region. Such cases affect the companys profitability depending on the size of the market and total revenue collected.
Despite all these, there exist high prospects on companys future based on the nature of the UK market. Political instability results into unexpected outcomes which poses adverse effects on HDs bottom line.
This shows that the state of political stability will have tremendous effect on HDs operations within emerging markets (Whalen et al, 2010).
Economic factors
Statistics reveals drastic fluctuations in the world GDP growth within the last few years. Records reveal that in the year 2008, GDP was recorded to be at a decline of over 2.5%. The successive years recorded growth rate of over 1.5% followed by approximately 2.5% (Whalen et al, 2010).
Such projections are true reflections on the expected nature of recovery within the future anticipated to be over 3% by the year 2015. It is therefore important for various automobile companies such as HD to carefully differentiate their target markets.
This involves analyzing growth within emerging markets and already established markets within western economies. The GDP growth within the European countries is estimated to be at 1.8% (Duval, 2010). However, within the UK region, there is threat based on credit risk especially with big percentage from debt financing.
Based on its financial records, HD should position itself to finance its operations within UK market from matching maturities of bonds to various activities. At the same time, derivatives could be used neutralize risk on interest rates.
The other risk faced within European market involves fluctuations in various currencies used. However, this can be reduced through natural hedging where production facilities of the company are stationed within the major market.
This would ensure that the revenue generated is spent in the same currency leading to reduction on rather anticipated currency risk. United Kingdom market requires specialized facilities capable of serving the elite population present.
This leads to increase in cost of production hence making it difficult to control revenue and operational costs. Currency risks within this market are majorly associated with US dollar and British pound which would account for significant percentage of HDs total currency exposure.
However, deals within foreign countries are neutralized through hedging which happens between Euro and US dollar based on the fact that large revenue is obtained from United States operations which happen to be HDs country of origin (Whalen et al, 2010).
The nature of strength exhibited by dollar against Euro makes currency risk one of the major concerns within the UK market. Current globalization makes operational and manufacturing costs high owing to high cost of raw materials of which in this case comprises of steel and aluminium.
Such trends affect ultimate prices of goods due to scarcity of raw materials and increasing demand for motorcycles.
Socio-cultural factors
The demographics of the market within UK are promising owing to growth experienced within the middle-class. This would represent HD with the desired market segment. However, the market within UK usually demands for products which are environmentally friendly.
Technological factors
There are lots of difficulties when it comes to technology since there is emergence of highly innovative firms hence gaining competitive advantage is not easy task. However, the nature of engines within their heavy motorcycles makes HD to gain significant competitive advantage over other competitors.
Inclination towards environmental issues is creating avenues for the development of environmentally friendly products within the area of transportation.
There are certain peculiar attributes notable within market segments which have been singled out. In this context, it is evident that whenever all these socioeconomic factors get managed, the consumer rates of HDs products might just be equivalent to those high rates observable within other industries.
Therefore, there is an evidence of the increasing importance of the institutional elements of the decisions and performance of motorcycles and associated products.
The role of the marketing department in influencing major decisions and the fate of technologically out-dated innovations is seemingly vital and can never be underscored.
There are also indications that the various underlined cognitive factors act synergistically with other institutional factors to influence buying decisions of most customers within UK (Daley, 1993).
Identification of two new target markets appropriate to HD in the U.K. market
The company has for the past years developed new line of products contributing towards enhancement of their products based on value-added services and at the same time utilizing business customers.
The new target market would be defined as knowledgeable and maturing but very much familiar with older product technologies. This requires HD to lower their prices and at the same time be innovative for the purposes of maintaining their level of relevance amongst consumers within the target market.
They should focus majorly on needs-based segmentation process which provides opportunities for reaching different consumers. Such segments are usually characterized by low pricing, reliability in quality as well as constant supply.
Implementation of new products amongst the younger generation within UK should be accompanied by new branding systems for the purposes of eliminating cases of confusion amongst customers (Whalen et al, 2010).
The recreational industry within UK also provides one of the most lucrative market segments.
One of the marketing strategies that managers should apply for the purpose of remaining competitive within this industry is advanced technology and at the same time upgrading their establishments with the intention of appealing to more customers.
Available literature demonstrates that sports organizations spend considerable sums of money each year to design, build, and elegantly furnish their establishments. The organization should focus on needs of trainees using HDs products such as motorbikes.
Such applications assist in implementation of effective organizations goals and objectives. There should be reinforced elaborate plans focused on establishment of relationship amongst participants within various sporting sections.
The organization should be capable of supplying high profiled riders and their sponsors through application of appropriate technologies within their gadgets.
Such actions enable tremendous contributions towards individual enhancement of skills which at times is necessary for productivity purposes. At the same time, HD should utilize performance ratings for the purposes of establishing anticipated results from various sports segments.
Such performance ratings are based on departmental components and their accomplishments based on organizations goals. The process involves defined planning of activities whereby objectives from various activities are aligned to those of the company for the purposes of efficient management.
Various positive experiences are identified in the process of supervision and major decisions made based on efficiency of applied concepts. Such activities are based on consumers learning processes and ability to match the required standards.
Overall performance ratings are done on annual basis hence making it possible identification of incompetent areas and afterwards implementation of appropriate plans (Chan and Lynn, 1991).
Harley-Davidson as an organization should focus on individual social benefits. This is based on frequent review of articles containing cases on social enterprises within sporting industry which enables them perform various adjustments within some of their respective units such as gymnasium.
However, most of their operations should focus on business prosperity in case of recessions. This acts as strong contributor towards frequent updating of their system based on market trends.
The management should unveil possible trend showing sustained growth and better long-term prospects for such enterprises compared to other for-profit enterprises. This discovery echoes true sentiments for companies operating within such industry.
For example, stories within various articles focus on products and services provided through service industry. At the same time, there are more online discoveries concerning necessary improvements required in making customer experience of executive standards within automobile industry (Whalen et al, 2010).
In the process of allowing access to information, the management of HD should consider operating common website alongside other sports websites within the region. Such operations allows for easy coordination between fans, management and players.
The only lacking facility is that which enables payment to be done over the internet, such improvement would facilitate more online bookings hence decreasing overall transaction costs (Mintzberg et al., 2003).
Management of growth processes with HD focuses on intangible and tangible assets as well as available sports products and accessories. This focuses on providing intended returns based on organizations marketing strategies.
The management at the same time should focus on issues touching vital points such as management of capital investment alongside appropriate working systems.
Smooth flow of processes within HD is influenced by availability of highly skilled and motivated employees, having updated and accurate information on the current marketing trends within UK segments.
Various measures have been implemented by the company some of which include acceptable level of satisfaction from consumers and balancing on various innovations based on gender.
At the same time, HD should incorporate instruments for the purposes of measuring every initiative undertaken in the process of improving level of competency (Mintzberg et al., 2003).
Development of differentiated marketing mixes for each target market identified
Harley-Davidson products and services accommodate economy to upscale class within business, sports and leisure market environment. Various brand names are used under the umbrella of HD depending on the region of operation.
The brand name HD is identified to have strong positioning within the upper and medium scale market range. The brands presence in all the continents is felt through durability and nature of HDs products.
At the same time the hotel has strong positioning within transport sector. There is well developed and established information technology which HD utilizes to attract customers such as online technology.
The younger generation comprising of X, Y- generations as well as millennial can be easily reached through computerized technologies such as mobile phones and social media. Such marketing channels ensure that services are rendered by use of accurate information regarding specific tasks.
Such technological adjustments create possibility of using services creating some sense of attraction amongst users since they expect quick responses. This calls for IT technicians to develop highly accurate and fast search engine software.
Emergence of new technology with the integrated marketing mix has led to creation of new software capable of handling rapidly growing market segments. This enables use of new technologies for the purposes of content management and deliveries.
Development of social networks comprising various groups such as colleagues can possibly be exploited for the purposes of providing efficient and effective marketing services to customers.
However, such new technologies have led to emergence of such activities as abandonment of courses, display of boring content and at the same time difficulties in real assessment of work done by sales team.
Such problems can be dealt with by use of semantic technologies capable of providing new connections and content deliveries suitable for destines occasions. Such progress with new technology has enabled vendors to create messages capable of adapting to the devices content and location (Kruk and Grzonkowski, 2006).
Creation of semantic digital libraries such as JeromeDL assists in software controlled repositories capable of running eLearning content. Due to new technology, it is vital to develop research team capable of reviewing online social projects after every short period during the project cycle.
The audit team should be self- dependent without personal interest in the project. New technology demands that auditing on IT system should be carried out to avoid unnecessary hacking of companys records and data.
New technology has advantages and disadvantages of carrying out the project, achievements and relevance of the managements priorities. Finally, integrative management process that meets the priority, definition, scope, mission, budget schedules, and control are made possible by the technology.
Management within HD is however endowed with responsibility of ensuring that online social enterprise applied in reaching the market set clear conditions for achievable schedule, budget and tasks.
A standard contract for the signature should be drawn for the purposes of allowing various considerations on all necessary obligations.
Such projects allows existence of good auditing which depends on appropriate processes, essential setting priorities, goals, schedules, project definition, supportive culture, and budgetary control for project implementation.
The lessons learned from technological innovations should be stored to ensure that clients are comfortable (Reiter, 2005).
Concept of globalization has led to generation of various changes within every industrial sector and creates a path towards the modernization. Introduction of computers and mobile phones are said to be the first modernized communication system.
There is an agreement that use of computers and use of the information technology can enhance the effectiveness of communication in terms of operation of the organization, therefore, the same effectiveness can be also present in its application in every department.
Computerization can be the most basic yet efficient process that an organization can demand in their every department. In accounting department, it is common for the accountants to commit mistakes in recoding the accounts because of the similarities of most of the accounts.
However, the application of a computerized system in the accounting can only lead the entire processes into obtaining appropriate solution into organizations computerized accounting system (Sharma, 2008).
Integrated marketing mix utilizes existing Information Technology comprising of various elements contributing to their current monetary and non-monetary operations.
To satisfy the shareholders, the continuous change in operations has led towards complete evolution of computerized accounting system (Sharma, 2008). Computerization of the bookkeeping system can assist the financial and cost-accounting system, administration, and over all control in the accounting department.
It is expected that the computerization or the application of the information system provides technical basis for the purposes of developing sound managerial decisions.
In the long-run existing information can be analysed and then applied for the operation of Information Technology based companies. Such computerization methods assist in effective management of all segments and at the same time providing additional support required.
Related studies capturing the intricacies of analyzing nature of market segments within UK with respect to desired consumer needs have been conducted. Particularly, these have been conducted within the ethnographic investigations of most upper-middle-class and the sub-urban Shaker Heights society.
Most studies have also applied the cultural-ecological explanation model to investigate and analyze the many intertwining elements or conditions that may influence buying behaviour of consumers within such segments.
For instance, the cultural-ecological model related to the minority population segment integrates major groups of factors that may easily shift their based on the nature of goods supplied to them.
These include:
the manner in which a particular community manage and handle various transportation means based on culture;
how these minorities interpret and consequently respond to such technological advancements.
It is critical to observe that the first set of factor deals with the general system prevalent within a society. However, the second factor deals with personal or individual predisposition about certain manipulative or affective factors eminent from the major systems of the society.
The last factor is also unique because it majorly relies on the distinct history as well as the minority conditions or status within the larger European market. In general, these factors may be viewed to be the set of conditions originating from the community forces.
The focus of most studies have also intensively reviewed and analyzed the general consumer perceptions based on beliefs and practices. Some of these have potentially included factors such as their fundamental educational convictions as well as behaviours.
Their associations with the general market system and effective products and their explicit convictions and behaviours have also been critically analyzed and investigated.
The manners in which target population interprets and consequently respond to the notable cultural and technological disparities remain significant. This is due to their united identity citation.
In addition, the marketing strategies and approaches applicable and pertinent to these target markets are vital in the analysis and examination of the basic reasons or factors influencing and leading to products success or underperformance.
The information or facts from most of such investigations and studies have been assisting in the comprehension of the existence of performing automobiles not just within the urban setting, but again within the suburban communities.
Thus, it is notable that the class-based inspection of the challenges confronting UK market is still insufficient. Evidently, current studies on rate of use of motorcycles amongst younger generation seem limited and minimal.
Thus, the research will contribute considerably to the mentioned marketing catastrophe currently experienced by HD. It is crucial to consider these provisions within the marketing context. The marketing trends assumed by some competitors within the industry have proved devastating within recession periods.
These require immediate attention from the concerned sectors. This has been evident even within most research cases and study findings in automobile industry.
Therefore, it can no longer be assumed that the prevalence or domineering of some companies within certain market segments has potential influence or manipulation within their performance levels.
Harley-Davidson have to build great brand awareness throughout different international markets in order to play a crucial role in the consumer selection, and that could be achieved by establishing foreign representative sales and marketing offices within their desired target market countries.
International representatives would be divided on 3 main parts:
Asia (Beijing, China) Beijing, the capital of the Peoples Republic of China, is the nations political and cultural centre. It has become a well-developed modern city, an economic centre and being one of the biggest industrial bases in China.
It is the centre of Chinas politics, culture, science, commerce, international interchanging, etc. In addition to that, China has a very large share of business in Chicago.
Hotel Tempus would comfortably accommodate business customers, as well as we would be attractive for leisure travellers due to a current Mad Men hype in China.
In Europe, London is the main business hub and the most cosmopolitan city in the United Kingdom. It exhibits a great cosmopolitan culture courtesy of its endless array of skyscrapers and a bustling city-life.
Having an office in London would benefit HD in terms of strategic location being close to largest companies, establishing corporate connections and gaining more business oriented customers.
In addition to that, London has direct flights to other strategic regions hence providing huge market advantages. In Canada, Toronto serves as its financial capital serving as the cultural capital of English Canada, and the largest city in Canada.
Whereas, Montreal is the most expensive city in Canada, situated in French part of Canada, being very historical and artistic. Establishing representative office and marketing campaign in these two regions, would generate flow of both leisure and business customers to HD products.
Sales and Marketing Department structure and work process (Fill, 2005)
Hiring of sales and marketing staff for an operation comes with the responsibility to provide effective sales management, which is controlled by Director of Sales and Marketing.
Sales team main focus should be reaching out to new and existing customers, through the primary channels that are individual for each particular type of guest, and conducting personal sales. Personal sales are often the most effective means of customer contact, especially in cases where market demand is high.
Personal sales call is used for the purposes of building rapport with clients or potential clients and selling those intended products and services.
Responsibility of a sales team would be equally distributed among employees of Sales division, each member of staff having a personal relationship with a population segment hence providing individual level of service and care in order to accommodate needs of customers.
Sales provide large revenue generating centre, which bring in direct profits.
Marketing
Marketing is a complex process that requires thorough research and focus on customers, marketing staff would provide sales team with a lot more tools to help them know the customer, for example creating a well-organized and professional sales kit.
Only the information pertinent to the clients particular needs should be included, in order to get the business and convince consumers on the quality of HDs products.
Accordingly to a desired target audience (domestic and international), the marketing department should serve as an extensive unit, consisting of small groups of people, especially at the phase of pre-opening marketing and launch.
Such individual employees should be held responsible for: Managing Social media and response, twitter, blogs, maintain and expansion of email database.
Performing creative marketing strategies, direct work with analytics and research agencies as well as engaging in publicity and corporate branding.
In addition to that, there should be an advertising agency serving the purposes of improving media decisions. This enables precise work on target markets and hence making efficient use of stipulated advertising budget.
The selection process of an ad agency should be conducted based on certain criterias, which would include mandatory portfolio experience with automobile firms, reputation, and ability to do a research and work within international markets.
Moreover, outsourcing companys work would provide additional advertisement and marketing of the established network within HDs brand.
Channels of reservations
Being in such aggressive and highly competitive environment HD must consider working with a suitable distribution channels for the purposes of reaching major target markets.
Technology has created a massive change within automobile industry; the days where there were no reliable ways of guaranteeing delivery of goods are gone.
As things move there is no escape from the digital revolution, and as a modern market, HD should consider these changes for long-term strategy based on attracting more customers.
There is a new breed of third party intermediary i.e. Google, Face book, Apple); their power grows, as they gradually become the preferred points of entry for consumers to do purchasing of equipments.
The categories of meta-search (Google, hotel Finder, Room Key), social, (Face book, Trip Advisor) and mobile (mobile apps) European actual economy requires a much more aggressive approach to sales and distribution.
As a matter of fact, the ultimate goal of any motorcycle company is to be visible on all distribution channels so that consumers can easily access the products.
Channel management is about managing a multitude of channels along with optimizing the level of sales and revenue which could generate and additionally manage companys reputation online and offline (Van-Weele, 2005).
Each channel should be audited in an organized manner for the purposes of ensuring efficiency within potential markets. The channel and the processes supporting sales should be designed to be customer-centric where it is best suited to serve, and position appropriately within the distribution ecosystem.
This makes company products accessible and compelling in comparison to other competitors. Online customers would require individual channels of purchase. This would ensure that HDs sales and marketing department reach out to customers through correct channels, foe example women from the target market.
HDs task should focus on satisfaction of different customers having different needs, and ensuring they are satisfied for the purposes of maintaining relationships with existing customers and gaining new ones (Chandon et al, 2000).
Conclusion
From the information contained in the case study, there is necessity of HDs management to develop and implemented electronic management system which enables bringing together of all operations within common network. There should be total improvement in chain management within the entire market.
This can be justified from the overall market performance which makes it possible, the necessary adjustments within consumers trends and market developments. Renovations within the revenue management system has contributed towards development of forecast system meant to optimize sales and pricing strategies.
Such developments enables managers to have easy time in following various developments within the entire market hence making necessary adjustments based on informed decisions.
Efficiency experienced in the operation of revenue management within can be attributed to the technological development within entire market system (Reiter, 2005).
On an annual basis, HD should establish new level of knowledge concerning consumer buying patterns based on psychology. Within this line of thought, it is easier to discover the necessity of developing significant marketing strategies.
Their effort to deliver to individuals, groups and organizations should be prompted by secure and knowledgeable workforce capable of identifying and satisfying consumer needs within different segments.
Harley-Davidson should invest in consumer behaviour research which enables the organization to have the capacity of obtaining extensive data on consumer spending patterns.
This can be very instrumental in strategizing for emerging markets. Consequently, they have improved on their responses and decision-making processes for the purposes of ensuring relevance within motorcycle industry.
There are decisions that are always very important when establishing strong base within potential market segments. In addition, HD should manage to keep their competitors in consideration, since main focus is on finding differences in superiority and taking advantage of such situations.
As an organization they should strive to identify where they record best performances, and at the same time focus on the quality of products within the market. Service branding appears to be a very important factor owing to the fact that consumers normally make their judgment based on their previous experiences.
In such cases HD should maintain an attractive brand name hence prompting an increase in market share.
The management should meanwhile set-up an investigation team charged with responsibility of looking into the various milestones hence come-up with concrete results and solutions capable of countering any form of failure.
References
Camardella, M 2003, Effective Management of the Performance Appraisal Process, Employment Relations Today, Vol. 30, No. 1, pp.103-107.
Chan, Y & Lynn, B 1991, Performance Evaluation and the Analytic Hierarchy Process, Journal of Management Accounting Research, Vol.12, No.1, pp. 57-87.
Chandon, P, Wansink, B & Laurent, G 2000, A Benefit Congruency Framework of Sales Promotion Effectiveness, Journal of Marketing, Vol. 10, No.2, pp. 65-81
Daley, D 1993, Performance Appraisal as an Aid in Personnel Decisions American Review of Public Administration, Vol. 23, No. 2, pp. 201-214.
Doole, I & Lowe, R 2008, International Marketing Strategy. Web.
Fill, C 2005, Marketing Communications Engagement, strategies and practice. Pearson Education Ltd, Edinburgh Gate.
Kotler, P & Keller, K, 2007, Marketing Management, Pearson, Upper Saddle River, New Jersey.
Kruk, D & Grzonkowski, G 2006, Social Semantic Collaborative Filtering for Digital Libraries, Journal on Digital Information, Vol. 24 No. 2, pp. 11-30.
Magretta, J 2002, Why business models matter, Harvard Business Review, Vol. 80, No. 8, pp. 86-92.
McNeill, R 2009, The Go-To-Market Frontier: Global Account Management (GAM), Journal of Global Business and Technology, Vol. 10, No.1, pp.12-29.
Reiter, H 2005, The Contrasting Policies of the FCC and FERC regarding the Importance of Open Transmission Networks in Downstream Competitive Markets , Federal Communications Law Journal, Vol. 57, No. 2, p. 243.
Sharma, U 2008, Accountant as Institutional Entrepreneurs: Changing Culture at a Fijian Telecommunication Company . Web.
Van-Weele, A 2005, Purchasing and Supply Chain Management: Analysis, Planning and Practice, (4th edition), Thomson International, London.
Whalen, B, Santos, G, Kaier, R & Snyder-white, D 2010, Harley Davidson Motor Company. Alpha Dogs, Vol.3, No. 2, pp.1-29.
Harley-Davidson is the company with the prolonged history which started in 1903. The history of the companys development is characterized by the periods of successes and failures because of the companys orientation to producing high-quality expensive motorcycles interesting for the narrow audience (Brown, 2010, p. 295; Harley-Davidson, 1999).
During a long period of time, the companys organization was based on the principle of the strong leadership. Nevertheless, Harley-Davidson changed the approach to the corporate culture and organization in 1998, while building the Harley-Davidson plant in Kansas City.
The Harley-Davidson Kansas City plant is characterized by the focus on empowering employees and developing the natural work groups in 8 to 15 members who work to achieve the companys goals without references to the leaders rules and regulations (Brown, 2010, p. 295). The idea to develop the successful plant based on the principle of natural work groups can be discussed as rather realistic, if all the aspects of this unique structure and organization are stated and fixed in detail.
This approach can work effectively because every employee belonging to the team works to contribute to the companys goal; every employee is empowered to make decisions and discuss them with the other team members; such important issues as schedules, strategies, and budgets are controlled by the teams; all the employees share the same information because of the slight differences in their statuses and positions; the open communication between all the team members is possible; and the employees share the same responsibilities while orienting to completing the companys common goal (Brown, 2010, p. 295).
Thus, the plants organization is based on the idea of the team cohesion which can provide a lot of benefits for the company and contribute to the significant increases in the employees motivation and productivity.
However, this type of structure can be associated with many problems, if the shift from the team interests to the individual interests is realized. From this point, the self-managed work teams can work effectively till the members of the teams become focused on the individual contribution to the work of the team and to the group achievements (Harley-Davidson, USA, 2014). The team members can also observe the problems in communication which can lead to conflicts.
Thus, the employees can become focused on their individual role in the process, orient to pursuing individual goals, concentrate on the realization of the personal ambitions, and begin to demonstrate their leaders qualities. For instance, conflicts can be observed during the decision making process because the decision should be made with references to the vision of the majority.
That is why, definite improvements to affect the organizational structure based on the natural work groups should be implemented at the Harley-Davidson Kansas City plant. It is important to state clearly the functions and responsibilities of the Plant Leadership Group in order to avoid the conflicts between the group members which can depend on the individual ambitions and career plans. Furthermore, all the corporate information should be shared between the employees equally.
The reward system should work equally in relation to all the working teams, depending on their productivity. It is also possible to improve the performance appraisal and reward systems to add to the employees motivation. Moreover, the plants employees should be trained to see the priority of the team goals as the path to the companys high achievements.
References
Brown, D. (2010). An experiential approach to organization development. Upper Saddle, NJ: Pearson/Prentice Hall.
Harley-Davidson: Company history and background. (1999). Web.
Business outlets are inculcating technological changes into their systems to reach their partners and consumers. Wal-Mart, a cargo and food handling company, after getting difficulties in handling large volumes of data adopted the Radio Frequency Identification Device (RFID). This device is more sensitive than the bar-code systems, as it can sense hidden items.
However, implementing RFID has some challenges, which organizations are facing. In this discussion, I will compare and contrast the issues that faced Wal-Mart to those which Harley-Davidson, a motorcycle manufacturing company, may face when implementing RFID.
The first comparable challenge is the high installation cost. When Wal-Mart tried to install the RFID, the suppliers opposed the move citing the high cost of obtaining tag readers and other machineries like computer systems to run the program effectively. Similarly, Harley-Davidson Company had problems with its suppliers who dealt in variety of products and with many companies.
To elaborate further, fixing of RFID tag on all products of low prices is expensive in the end. Consequently, the prices of these products like motor vehicle spare parts will increase, thus, lowering sales. Therefore, the technology is beneficial when used on products of high prices.
The next issue is the lack of global data standardization. Unlike bar-codes, the general operation of RFID is at high frequencies, which varies worldwide. Most of these companies opt for RFID of low frequency to minimize on expenses. Each frequency has its own standards of operation, and within the standards, there are numerous versions and different options per version.
This feature will prompt these companies to implement several RFID standards. The lack of a universal standard may make Harley-Davidson experience customers’ rebellion, as there will be lack of trust in their service provision.
On the contrary, as Harley-Davidson standardized all its purchasing procedures to minimize the cost of operations on its suppliers, Wal-Mart did not streamline their purchasing procedures.
Notably, Harley-Davidson will not face the issue of data management since it had adjusted its communication systems; for example, the launches of websites to ensure suppliers get changes in product information at anytime. Further, the portals aided real time communication between the company and the suppliers. RFID requires well-developed information management tools to ensure proper data capture.
The issue of civil liberty and privacy is a barrier to the implementation of this new tracking technology. Since this device can track a product from a given distance, a buyer’s privacy is at risk. Some customers may be unaware of the attachment of RFID on their goods. This act can result to a legal issue in a court of law.
In the case of Harley-Davidson using the product, scenarios of motorcycle theft instances will also be under control. This will also apply to Wal-Mart. In addition, employees’ acceptance at the motorcycle company will also be a thorny issue that may need due attention. The employees could also rebel to the new technology owing to the loss of jobs.
These companies should outline the range of RFID operation so that all their stakeholders are contented with the technological changes. For instance, the devices embedded on cloths should not be used for tracking purposes. The companies should also allow their suppliers to create their own internal RFID that can directly link them to the management of the companies. It is evident that the RFID technology is revolutionizing the world, with its application in the military, healthcare, and other scientific fields.
Well Made in America: Lessons from Harley-Davidson on Being the Best, gives an excellent case view of Davidson-Harley (HD), the motorcycle company which at one point was in the verge of collapse due to outdated bureaucracies and business practices.
Reid gives a good analogy of what befell the company plus the steps that were taken to salvage it. The book gives a detailed account by using examples of how the 13 managers formerly of the Harley part of the business acted swiftly to restore the company back to its level of performance and market dominance.
From the $83 debt to a star in the current global business platform, taking a notable leading role under stiff competition. This is the kind competition that the managers had to overcome during the period of trouble. A perfect example for managers facing the same situation to draw from, the book contains valuable, real life lessons not only for managers but everyone in general life and career as well.
The firm was founded in 1903 and was owned by a family firm before selling it in 1969 to AMF, a conglomerate that no longer exists in business at present. By 1981, things were so bad for the motorcycle company and it is then that 13 managers of Harley-Davidson acquired it fully from AMF.
By this time, several companies mainly Japanese were gaining ground of the domestic market. Some of these companies included Kawasaki, Honda and other foreign competitors whose products were comparatively better off for the market compared to those of the then dominating Harley-Davidson. The market share dropped sharply with as many as half of the bikes getting out of the production lines having many parts missing thus making it hard for dealers who were forced to have the parts fixed by themselves before being sold out.
Definitely this transcended down to customers in one way or another considering that fixation of parts by dealers and not the manufacturing company would have compromised standards quite easily. The Japanese were gradually gaining growth and it became hard to match them under these circumstances. Nevertheless, the fans of Harley-Davidson continued to maintain their royalty but most consumers did not care much and all they wanted was quality which after all was already being offered by the Japanese manufacturers.
It certainly became clear that if the company had to maintain its business and continue to get hold of the market, then it had to improve the quality of its products, match that of the competitors or surpass it at best. There being no many alternatives to explore other than drastic changes, the company finally acted in 1975 by putting Vaughn Beals in charge of the company. He had an enormous task of transforming the company in order to get it back to its feet (Reid, 1991).
Working closely with the chief engineer Bluestein, Beals moved quickly to have things corrected by implementing several strategies. He executed a program specifically for quality control and inspection. Though at a huge cost, these measures were necessary for the elimination of the company’s problems that had worsened deeply. This involved extra spending of up to $1000 per bike in design reformation. Power plants then in existence were given a boost through improvement with an aim to compete with the efficient, high performance Japanese models.
Managers at the top level got organized and took part in a long-term strategy for new, improved products that would meet the dynamic needs of the market in the future. Reid points out that this was surprisingly the first time the company ever took a chance to look critically into the future in an effort to predict and analyze market behavior. Noise and rules of emission took top priority with possibilities of better performance engines that would respond to the effects of noise and emissions being explored.
In the meantime, the company’s vice president, William G. Davidson had a new model created-the super Glide. This model imitated the Harley fanatics’ choppers which they had in their garages. This was achieved by combining the sporter and the Glide touring, the heavy one. Next, in quick succession were custom engineered cruiser models like the Wide Glide and Low Rider.
However, this was before the other 12 managers had come in and the company still continued to experience a dwindling market share as the competition from Japanese makers intensified. The book indicates that the miracle for the company started when the managers together with Beals paid a visit to the assembly plant belonging to Honda in Marysville, Ohio. They got a chance to understand the operations of the Japanese company by having a ground observation. This gave them the much needed insight.
It was a golden opportunity like no other. They discovered that the secret lied in management and paying undivided attention to detail, high end professionalism. Immediately the managers got down to work first by implementing a pilot system at the engine plant in Milwaukee which succeeded and showed remarkable improvement within a reasonable period of implementation (Reid, 1991).
The book has indeed demonstrated how the company manages to come from rabbles through implementation of new strategies without which the story would have been different today. The drastic measures taken by the new managers are excellent in application and they ultimately come out as unique.
When competition is stiff, it takes a swallow of pride for a defeated leader to seek example from the fiercest competitor in the market and when it happens, it is with a taste of pain but which must be borne by the victims. This is what the Davidson managers undertook in a rare demonstration of courage and determination to succeed. It is always one thing to learn a lesson in business and another to apply it successfully.
The managers passed this test by applying the lessons almost immediately with vigor. Normally, it takes time for managers to believe that a certain way of doing things will work for them and go a head to apply it. This is exactly what the managers did and the results were positive by any measure. Reid shows how the company for example started recognizing employees and involving them in every part of the business especially in the important aspect of planning and detailed analysis.
This entailed engaging them in discussions over the application of the new approaches by explaining to ensure all understood and agreed. After two months of intensive meetings, the employees were well conversant and did accept the changes. Amazingly, the changes were executed on a Monday while the consensus was struck on a Friday. This is another sign of determination and the burning desire to have the company running.
Such a move would be agreeable in any circumstance because it is always a good business practice to execute any measure as soon as it is possible to do so. Time is a factor in implementing any critical decision in management and this is what the managers obeyed. They wasted no time, a characteristic of effective management by the Harley managers.
The other numerous subsequent steps taken by the managers are equally plausible. A good example is the enormous spending they invested in developing warm relationship with their dealers. By recognizing that their dealers are an important component of their business, the managers did acknowledge the fact that no matter what quality of product a company produces, dealers must be valued.
If the dealers present a good image through the services they offer to their customers, then the overall image of the company gets in good shape and every quality product that comes out of the company gets highly appreciated. But dealers cannot achieve this alone in as much as they equally want to make the most out of the business if they cannot be mutually supported by the parent company. The managers of Harley noticed this and executed it admirably as one of their improvement measures.
One lesson that can be learned from this company is that the success of any organization or company in business is purely a subject of management. If management fails, the employees are rendered weak and this reflects in what they produce. Effective management will sometimes involve very drastic, painful changes that must be put in place. With proper execution, these changes are the secret to a success story that lives on to be told for years on like this of Harley-Davidson.
In conclusion, the book succeeds in bringing into perspective what managers need in the current world when business dwindles and the market share is threatened. The author achieves the valuable element of illustration by example. The instances he uses at different times of the company’s struggles are effective tools of relaying the message to stakeholders in different industries.
Managers from different spheres of business can find the David-Harley story a challenging business case that continues to act as one of the best points of reference whenever companies face similar challenges. In a world of stiff competition and challenges, it is a great example to draw from for everyone in business, general life and career. That when something goes terribly wrong, it can still be salvaged to go magnificently right.
Reference
Reid, C. R (1991) Well Made in America: Lessons from Harley-Davidson on Being the Best. New York: McGraw-Hill, 1991.
The rate at which the world economy is growing is making companies to adopt management strategies which will enable them to increase their global market share as well as remain competitive and profitable in the global market. This paper will therefore discuss the various ways in which companies are shifting from their traditional means of production so that they can manage to catch up with the advanced means of production which will enable them to increase their productivity and competitiveness.
The paper will focus on the operations of Harley-Davidson and the manner in which the company has been able to cope with the growing competition in the motorcycle industry. The paper will also illustrate the complexity that is associated with the global market and how it has influenced the performance of Harley-Davidson. The paper will show the manner in which Harley-Davidson has adopted different management strategies that have enabled it to recover from the effects of the 2008 financial crisis.
The paper will also stipulate the inefficiency that is associated with Harley-Davidson production process. It will also show the various strategies that Harley-Davidson should adopt in order to increase its competitiveness in the global market. The paper will also demonstrate how Harley-Davidson understands the competitive nature of the global market and how the company has been able to emerge as one of the most profitable companies in the America.
Introduction
With the rate at which the world economy is growing, companies are being forced to look for strategies which will enable them to increase their market share and hence remain competitive and profitable. Many organizations are being driven out of business because of their inability to adopt the production processes which are being adopted by the modernized companies.
Therefore, in order for organizations to boost their competitiveness, they are implementing strategies aimed at improving their marketing, management, and manufacturing techniques (Dess, Lumpkin, & Eisner, 2009).
With the complexity that is associated with the global market, businesses are implementing measures to enable them learn about effective business management strategies so that they can manage to keep producing products which meet the needs of their customers. Technology is changing together with the global market trends thereby making the tastes and preferences of consumers to change considerably.
As a result, organizations are being forced to design products which meet the tastes and preferences of the modern consumer (Elliott & Percy, 2007). However, they will find this strategy possible if they take time to learn about the needs of the modern customers. Organizations are therefore shifting from their traditional ideas and focusing on developing products that rhyme with the tastes of the consumers in the modern world.
The companies that have been resistant to change are finding it difficult to catch up with those companies which have incorporated technology in their production process. Though shifting from the traditional means of production is an expensive undertaking, it is worthwhile if a company wishes to remain in business for a long time.
There are many companies which have been able to shift from their traditional production processes and they have hence been able to satisfy the needs of their consumers. An example of a company that has been able to shift from traditional means of production is Harley-Davidson.
The company has been in existence since 1963. Since then, the company has been known to provide its customers with products that meet their specifications. The company’s main activities include the manufacture of motorcycles (Gamble & Schafer, 2012). It has therefore been able to design motorcycles tailored for specific markets.
The main classes of motorcycles that the company has been able to produce successfully include cruiser, touring, and performance motorcycles. These classes of motorcycles have been able to meet the different riding needs of the customers (Gamble & Schafer, 2012).
This paper will therefore carry out a case study analysis of Harley-Davidson and illustrate the various management strategies that the company should adopt to enable it to remain a dominant player in the motorcycle industry. The paper will also discuss the various challenges that the company has encountered while trying to take its operations to the international market as well as the effects of the global recession on the profitability and competitiveness of the company.
Harley-Davidson Contemporary Strategy Analysis
Company overview
The revenues of Harley-Davidson declined significantly as a result of the economic recession that hit the US major markets between 2008 and 2009. The effects of the economic recession declared many people jobless while the purchasing power of the consumers also reduced significantly. The international market was also hesitant to purchase products from the US thereby reducing the number of motorcycles that Harley-Davidson sold to the overseas markets (Stermer, 2007).
The effects of the global recession made the demand of motorcycles to reduce by 12.7 per cent. This reflected a 15.1 per cent reduction in the revenues that the company had made the previous year. This is an indication that the stability of the financial market plays a very important role in ensuring that the sales of a company remain constant. With the credit crunch that was encountered in 2008, Harley-Davidson was forced to finance its operations using loans (Schembri, 2009). This made the liquidity of the company to go down significantly.
Harley-Davidson as a very profitable company
Though Harley-Davidson is one of the most profitable companies in the world, the company has not been effective in its production processes. Since its establishment, the company has always been faced with the problem of insufficient production capacity. It has therefore not been able to meet the demands of its customers. This is a major weakness for any business enterprise. Customers of a company should not be made to wait for a long time for the products they demand to be processed (Schembri, 2009). However, Harley-Davidson has been unable to meet the demands of its customers. The delay in the production process has therefore made the company to lose a large number of customers. Harley-Davidson customers are forced to look for other companies that have the ability to supply the products that they demand in time (Stermer, 2007). Therefore, to be able to retain its customers, Harley-Davidson needs to increase its production capacity to enable it supply its customers with high quality products when they demand them.
Consolidating plants
It is important for an organization to ensure that its manufacturing plants are consolidated at a common location in order to reduce the costs of production and also to improve the efficiency of the production process (Smit, 2000). However, the manufacturing operations of Harley-Davidson are dispersed. For example, the company manufactures its engines in Milwaukee and Wisconsin while the engines are assembled in York, Kansas City and Missouri (Fred, 2008).
Therefore, in order for the company to cut down on its costs of production, it needs to develop a single facility which can manage to merge the engine manufacturing and assembly operations. This way, the company can be able to achieve a cost leadership advantage thereby enabling it to increase its market share significantly. However, because of the company’s inability to keep its costs of production down, Harley-Davidson has been unable to expand the sales of its high-priced motorcycles outside the US market.
Participating in riding activities
In order for motorcycle companies to improve the riding experience of their customers, it is important for the managers and employees of different organizations to participate in organized riding activities together with their customers. This gives the customers a feeling that the products they purchase will meet their needs (Hitt, Ireland, & Hoskisson, 2010).
As a result, Harley-Davidson participates in HOG activities to enable it communicate with its customers (Cooney, 2005). This way, the managers and the employees are able to interact with their customers thereby convincing them about the importance of purchasing motorcycles from the company. These kinds of activities therefore serve as marketing tools for the company.
Efficiency in the manufacture of different types of products
A company should be efficient at manufacturing all types of products which can enable it to capture a substantial share of the market (Hopkins, 1999). However, Harley-Davidson is only efficient at manufacturing super heavy motorcycles but it is not able to design small bikes. This is an indication that the company is weak in terms of implementing certain production processes.
In addition, it has been noted that the company is not able to incorporate research and development in its production process. The company also limits its ability to invest in new technology. The recent drop in the market share of Harley-Davidson can therefore be attributed to the technological backwardness of the company (Neghina , 2009). Technological backwardness is therefore a major issue that the company needs to address in order for it to increase its market share.
Importance of technology
In order for a company to emerge successful in the global market, it needs to make use of the advancements in technology to enable it design products that are appealing to the customers’ eyes. Technology also facilitates the manufacture of quality and efficient products. It is therefore important for Harley-Davidson to invest in up-to-date means of production to ensure that the products it produces are efficient and that they respond to the needs of the customers.
For example, it is true that the market share of Harley- Davidson motorcycles in Europe was the lowest in the year 2007 compared to the market share of Honda, Kawasaki, Suzuki, Yamaha and BMW (Hopkins, 1999).
This is because the customers in Europe are more sensitive to technology while the consumers in the US market believe that Harley-Davidson incorporates the American culture in its manufacturing process. Therefore, in order for Harley-Davidson to increase its market share in the European region, it needs to make use of technology to enable it customize motorcycles for the European market.
New Models
A company can secure a significant market share by providing its customers with new models. Once new products are introduced in the market, the existing customers are the first to purchase the new models (Hitt, Ireland, & Hoskisson, 2010). Harley-Davidson is well known for introducing new models in the market. As a result, it is able to increase its sales revenue and market share. However, this is not a very effective strategy because not all customers stand ready to replace their old models.
Therefore, the introduction of new models alone may not enable the company to increase its revenue and market share to the levels that is desires. To increase its market share therefore, it is important for the company to ensure that the new models it introduces into the market incorporate the latest technology. This would motivate the customers to purchase the products and hence boost the company’s profitability.
Emphasis on comfort
The products that consumers purchase should be able to offer them comfort. It is therefore important for companies to design products which offer customers comfort while using them. Companies should therefore customize their products in a way that meets the specifications of the customers (Schembri, 2009).
To increase the sales of its motorcycles therefore, Harley-Davidson customizes products for the customers who need certain specifications. Customers are therefore able to gain maximum satisfaction while riding the motorbikes. This strategy has enabled the company to win over a significant number of customers.
Distribution networks
The distribution network of products plays a very important role in determining whether an organization can manage to deliver products to its customers on a timely basis and at an affordable price. The channels of distribution used determine whether the customers can manage to gain access to the products that a company produces.
Therefore, it is important for an organization to ensure that the distribution network it adopts makes it easy for the customers to access the products at a cheaper price. It has been noted that Harley-Davidson competitors implement distribution networks which are less costly and more efficient in Europe.
As a result, the competitors have been able to acquire a larger market share in Europe because of the efficacy of their distribution networks (Cooney, 2005). Therefore, in order for Harley-Davidson to market its products in Europe successfully, it needs to carry out a study about the European market and determine which distribution network to implement.
After sales services
There are certain services that a business is supposed to offer in order to make people trust in the products that the organization produces. To ensure that customers keep coming back for more products, the management of Harley-Davidson ensures that the customers are accorded pre and after sales services. This way, the customers are able to get all the information and help that they need to begin using the products.
In addition, Harley-Davidson offers test-ride services as well as rider instruction classes. The company also rents motorcycles to its trusted customers (Stermer, 2007). As a result, the company has been able to win the confidence of the customers thus making the customers to trust in the products that the company manufactures. This state of affairs has led to an increase in the market share of the company especially in the US.
Addressing complexity
The process of manufacturing motorcycles is complex. To address this complexity, Harley-Davidson created the Harley-Davidson University whose goal was to ensure that the employees within the organization became competent in dealing with all the products that the company manufactured. Since then the company has been able to boost the knowledge of its employees by showing them how they can come up with high quality products that would meet the needs of the customers.
The company has therefore been able to manufacture motorcycles which are very competitive in the world market. It is therefore the responsibility of an organization to invest in projects which can boost its production potential. Customers are therefore confident in the motorcycles that Harley-Davidson manufactures because they are sure that the motorcycles are manufactured by experts.
Diversification of business practices
Before the credit crunch which hit the US market in 2008, Harley-Davidson used to give financial services such as supplying credit, insurance and extended warranties to its dealers. This activity used to generate huge profits for the company. For example, the profit that was generated from this activity was approximately 12 per cent of the total revenue. However, the credit crunch made it difficult for the company to securitize its customers loans (Neghina , 2009).
Therefore, it is true that though diversifying in various profit generating activities in a business enterprise is a commendable idea, it is important for an organization to ensure that it can manage to secure its customers from uncertainties. This way, the customers would be confident in the operations of the company and hence trust in the products it produces.
However, the inability by Harley-Davidson to secure the loans of the customers made the customers believe that the company was not strong enough to address their needs. This state of affairs made many people to stop believing in the quality of the products that the company offers thus leading to a reduction in the company’s sales.
Expanding operations to overseas markets
Any company that wishes to gain recognition in the global business environment should expand its operations to overseas markets. This would increase the market share of the company and its sales revenue. However, Harley-Davidson has concentrated so much on the American market.
The European market share is very small. To make it easy for Harley-Davidson to acquire a substantial portion of the European motorcycle market, the company should establish headquarters in Europe which would be responsible for monitoring all the activities that the company undertakes in the region.
The company should also expand its overseas dealership network. For example, Harley-Davidson made $1.75 billion non-US sales in 2008. These sales reflected 31 per cent of the revenue that the company had earned globally (Elliott & Percy, 2007). This is an indication that the markets which are based out of the US also have potential to make the company become competitive.
Company operations should rhyme with objectives
It is the duty of every manager in any organization to ensure that the operations that the organization undertakes are in line with its objectives. For example, Harley-Davidson engages in practices such as Just-in-time scheduling, Total Quality Management, Computer Aided Manufacturing, and devolution of responsibilities to ensure that its productivity and efficiency remain high (Hopkins, 1999).
Such practices are effective in that they make it possible for the manager to detect any flows within the organization and hence implement corrective measures before any serious damage can be realized.
Positive relationship between employees and managers
The manner in which employees relate with their managers determines whether the productivity of an organization rises or falls. The most successful organizations are known to facilitate effective communication between the employees and the managers. The employees are given the freedom to express their opinions on how they feel that their organization should be operated.
Therefore, to ensure that the employees remain motivated, Harley-Davidson ensures that the managers and the employees are able to exchange ideas freely regarding how the productivity of the organization can be improved. This process has been effective in fostering cooperation between the employees and the managers thereby enabling the organization to increase its productivity and efficiency.
Understanding competition
Any company that wishes to succeed in the global market should understand what is meant by competition and how it can cope with it. For example, Harley-Davidson is well known for increasing its product range and geographical scope to capture a large market. However, the major challenge that is facing the company is the rate at which its products are being imitated by its competitors.
In addition, competitors such as Honda, BMW, and Suzuki are known to share technology, marketing skills, engineering capabilities, and distribution knowhow thereby making it difficult for Harley-Davidson to successfully diversify the products that it offers to its customers (Hitt, Ireland, & Hoskisson, 2010). This scenario is more prevalent in the European market because this is where Harley-Davidson has less impact.
Conclusion
From the analysis therefore, it is evident that Harley-Davidson is one of the most successful motorcycle companies in America. Though the company is one of the most profitable companies in the world, there are various key measures that the company should implement to enable it compete effectively in the global market.
The company should ensure that it embraces technology, foster positive relationship between the employees and the managers, diversify its products range, expand operations to overseas markets, give the customers pre and after sales services, lower costs of production, seek loyalty from customers, and ensure that it offers the consumers new products and models. This way, the company will be able to increase its competitiveness in the global market.
Reference List
Cooney, J 2005, Why and How Harley-Davidson has Maintained Consumer Brand Loyalty. Web.
Dess, G G, Lumpkin, G T & Eisner, A 2009, Strategic Management: Creating Competitive Advantages, McGraw-Hill Irwin, London.
Elliott, R & Percy, L 2007, Strategic Brand Management, Oxford University Press, Oxford.
Fred, A 2008, Harley Davidson Case Study – Building Brand Communities. Web.
Gamble, J E & Schafer, R 2012, Harley-Davidson. Web.
Hitt, M A, Ireland, R D & Hoskisson, R E 2010, Strategic Management: Competitiveness and Globalization Concepts, Cengage Learning, New York.
Hopkins, H D 1999, Using history for strategic problem-solving: The Harley-Davidson effect, Business Horizons, vol. 42, no. 2, pp. 52-60.
Schembri, S 2009, Reframing brand experience: The experiential meaning of Harley–Davidson. Journal of Business Research, vol. 62, no. 12, pp. 1299–1310.
Smit, P J 2000, Strategy Implementation: Readings, Juta and Company Ltd, New York.
Stermer, B 2007, Harley-Davidson Motorcycles: Everything You Need to Know, MotorBooks International, New York.
This is a company situated in America and majors on manufacturing process of motorcycles. The company was founded in Milwaukee, Wisconsin during the 20th century (Wagner, 34). This was the period during which the great depression was recorded in major parts of the world but the company stood the intense shock of the years.
Its main competitor includes the Japanese companies manufacturing Honda, Kawasaki, Suzuki, and Yamaha. However Harley Davidson Motorcycle Company has managed to out beat these products consequently maintaining its market niche. Harley Davidson Motorcycle Company participates in the manufacturing and selling of 750 cc motorcycles which are designed to be used on the American highway system.
The motorcycles therefore are heavyweight in nature. In addition to this, Davidson Motorcycle Company sells parts of the motorcycles, its accessories, and general products related to motorcycle (Howard, 108). Buell Motorcycle Company which is a subsidiary of Harley Davidson Motorcycle deals with production of sport motorcycles. Harley Davidson financial services, is also a subsidiary company of Harley Davidson, Inc.
In the year 2009, Harley Davidson Company considered joining the Indian market in a bid to expand on its market niche. This was facilitated by trade agreement between India and USA to allow importation of mango. Harley Davidson Motorcycle therefore managed to establish a subsidiary company in India located in Gurgaon. In the resent years the value of the HD brand reduced by 43% a value associated with a drop in profits by approximately 66% in the previous years (Doug, 56).
Organizations marketing mix
In recognition of the fact that the company encountered major problems related with its marketing in the year 1980s, the management explored the possibility of new innovative plans to increase its market share.
Teerlink Richard, who was the former CEO of Harley-Davidson, came up with a strategy of management circles aimed at converging dealers and workers together to formulate specific critical decisions. Products were also manufactured to suite the needs of the customers. This paper presents four marketing mix used by Harley-Davidson Company in its marketing criteria.
Product
This makes up the decisions to ensure continuity of the development of the brand of the company while shaping the outlook of the brands so as to attract more customers. During the formation of the company, motorcycles with grey color were offered to the customers but have continuously developed its brand in order to maintain its profits at a higher level.
V-Ron was a new product developed by the company in an attempt to capture the young population and ultimately increase its share in the market to a proportionally greater extent (Edge, 42). So as to sharpen more the product, HD considered reshaping its production criteria by improving the production process and facilities. Another point to note is the inculcation of statistical controls in quality improvement procedures.
While recognizing the customer as an important person in business, HD found it good to importune customers during their rallies. As stated by Howard (107), HD plans to hit the market with new and sophisticated makes during the year 2010. The products will give customers a real taste.
Promotion
There are several approaches to promotion available to HD Company in its distinct promotional program. The use advertisement beautiful images of female gender are seen to capture the attention of the target group who in this are the male gender. Cyber cafes located in most of the outlets have served a great advantage to the company by exposing its product to a variety of internet visitors.
Its website has an aspect of interactive therefore bring the customers to the point of care. Visitors to the site can get detail information about the variety of products and services. One of the key promotional programs is its brand outlook (image) of being a real American product. This image orients a person to a position of self-importance in an American environment. Subsequently, formation of HOG closed the gap between the company and the customers.
Price
After the financial crisis which had reduced the asset base of HD, cutting on cost remained the objective of the company. This necessitated reducing on the capacity of the company and subsequently slashing the salaries of the employees. With an aim of fighting products from Japan (Honda, Kawasaki, Suzuki and Yamaha), HD participated in delivering its products in real time basis. Furthermore, introduction of tariffs on imports came as advantage to HD since it managed to offer competitive prices.
The company uses low-end method of targeting its customers. The price of V-Ron is the second highest after MSRP. Some of the factors which have contributed to the pricing of V-Ron in its 22% market niche are is the inability of the company to be in congruent level with demand, the low priced motorcycles and the market available from the used motorcycles (Edge, 42). These factors offer an aspect of competition to the company consequently shaping the price technique.
Place (distribution)
HD has seen its branches infiltrate the international market like India. Some of the promotional magazines available in international market have substantially elevated the company’s products to an internal recognition. The availability of dealers in most of the parts of America with largest focus of customers offers a good distribution network.
The dealers mainly indulge in distribution of HD products to an extensive customer base. In the same vein, HD expands its distribution network by the use of dealership programs, shows, and PR. It is also in its distribution programs that Demo bikes are availed at proceedings like Daytone (international convention). Some of the outlets of HD are designed to target customers with low enthusiasm. Such departments include: Costco’s and BL’s (warehouse clubs located in the USA) which are non dealer network.
Reference List
Doug, Mitchel. Harley-Davidson Chronicle – An American Original. Lincolnwood: Publications International Limited, 2009.
Edge, Dirck. ‘‘ 2009 Harley- Davidson Touring Models and V- Ron Muscle- MD Firstrides’’. Web.
Howard, Wilson. “The Encyclopedia of the Motorcycle”. London: Dorling-Kindersley Limited, 2005.
Wagner, Herbert. At the Creation: Myth, Reality, and the Origin of the Harley-Davidson Motorcycle, 1901–1909. Madison: Wiconsin Historical Society Press, 2003.
In the 21st century, the ability of organizations to surmount the myriad of challenges that exist will sorely depend on how they are able to transform their processes to be in harmony with a host of fundamental variables such as technological advances, redefined values, cutthroat competition, and uneven customer demands. Assiduous and conscientious managers must always critically analyze the market trends and have the right kind of information at their fingertips if they are to capture the opportunities for growth (Morgan, 2008).
It should be within the realm of understanding of such managers that, not only does proper understanding of market trends and organizational frameworks dictates the business strategy, but it also dictates the success or failure of the organization since a well implemented business strategy results in success (Poole et al, 2000). This paper aims to critically evaluate how Harley-Davidson strategy of transformation dictated its success in a tumultuous and almost saturated motorcycle market.
The idea to establish Harley-Davidson was envisaged in 1903 by three entrepreneurs, Arthur Davidson, Walter Davidson, and William Harley. Since then, the company has experienced a lot of challenges, but has been able to safely navigate its way to its present state. Harley-Davidson achieved tremendous growth during the decades following its inception, becoming the world’s leading motorcycle company in 1918 after it produced and sold 28,000 motorcycles (Nolan & Kotha, 2007).
During the early phases of its existence, the company was also known for its innovative ideas and value-added products. But overall, the business environment has not been any rosier for the motorcycle giant, especially after Japanese motorcycle makers penetrated the American market. The Japanese companies, namely Yamaha, Honda, Suzuki, and Kawasaki, came up with efficient business strategies that left Harley-Davidson with no choice other than to transform its processes.
Harley-Davidson Transformation Process
Before evaluating the Harley’s transformation process, it is imperative to note that change is inevitable in any organization, and it heralds the transformation process (Sushil & Rifkin, 2010). This significant process, however, must be handled with diligence and professionalism for it can work against the strengths, objectives, and capabilities of an organization if mishandled, often resulting in eventual collapse of the entity.
In equal measure, lack of cognizant and well synchronized efforts in ascertaining which business strategy needs to be preserved and further managed to influence the change process have been accused of not only returning low levels of change success within the organization, but also for initiating deficiencies in effective strategy development and implementation (Kotter, 1996).
Such a scenario happened to Harley-Davidson in 1965 when the company was acquired by heavy-industry conglomerate AMF. The new management, formed after the friendly takeover, introduced changes that almost sent the Harley into permanent oblivion (Nolan & Kotha, 2007).
The competition from Japan motorcycle manufacturers, more than anything else, heralded Harley-Davidson transformation process. Honda was the first to enter the US market in the 1950s, bringing new management strategies, hence threatening the market share that Harley-Davidson enjoyed for decades.
According to Kotter (1999), organizations are forced to adjust to new ways of doing things due to stiff competition in the market place and reorganization of Business strategies. In this perspective, Harley-Davidson had to come up with ways to stop the Japanese manufacturers, especially Honda, from entrenching themselves into the large unexploited customer base of aging males and women.
The indecisiveness on the part of Harley-Davidson’s management team on what type of transformation to adapt in the face of adversity cost the company dearly during the decade of the 1970s when Japanese motorcycle manufacturers, with full knowledge of Harley’s indecisiveness, were able to manoeuvre their way to the top, accounting for more than 85% of U.S. motorcycle sales in 1973 (Nolan & Kotha, 2007).
According to Murray & Richardson (2002), organizational transformation must be orchestrated in a planned and systematic manner.
Harley-Davidson initial transformation process was done haphazardly, especially after the acquisition of the motorcycle manufacturer by AMF. According to Murray & Richardson (2002), organizational change and transformation should be all-inclusive, and managers must never concentrate on changing some systems at the expense of others. This, however, is what the new owners of Harley did; concentrating on expanding the production of motorcycles using less-skilled labour force to fend off stiff competition from the Japanese.
This strategy, however how well calculated it was, fell flat on its face as another subsystem of Harley-Davidson – quality – was highly compromised (Nolan & Kotha, 2007). It should be noted that in organizational change and transformation, “…because all parts of the system are integrated, if there is lack of fit, a change in a subsystem creates imbalances or disrupts other systems” (Sisaye, 2001).
Congruity in all Harley-Davidson’s organizational and technical subsystems should have been taken into consideration before AMF effected the changes. Their changes didn’t see the light of the day due to the stated objectives, and Harley-Davidson sunk back into perpetual loss making.
The real positive transformation for Harley-Davidson started in the decade of 1980s when the Company’s new owners, led by CEO Vaughn Beal, visited Honda’s Ohio plant to access why Honda remained at a competitive advantage in the market. The visit was an eye opener as Harley’s senior managers realized that they had to undertake a complete overhaul of their systems.
According to Nolan & Kotha (2007), Harley-Davidson’s managers were particularly pleased with Honda’s neat and uncluttered assembly line; smooth flow of work processes that required minimum paperwork; a cheap and efficient Just In Time (JIT) system used to control inventory; and a working philosophy that involved designing and building motorcycles for order rather than for keeping in the showrooms.
In a sharp contrast, Harley-Davidson had invested heavily in a computerized inventory that ended up using huge resources for work-in process (WIP) (Nolan & Kotha, 2007). Better management and an emphasis on production of high quality goods were some of the other benchmarks that Harley-Davidson managers learnt from Honda.
Employing Japanese production models as a blue print, Beals and his management team developed and implemented adaptive systematic changes comprehensively set out in what the managers referred as the productivity triad.
Sisaye (2001) postulates that organizational changes must be undertaken in a systematic manner using well laid-down strategies and processes that have been aptly informed by, among other things, the market forces, organizational values, drive for success, and retaining competitive advantage. In the triad, Harley’s employees, especially the line workers, were encouraged to become active and dynamic contributors to the organization’s decision making process (Nolan & Kotha, 2007).
According to Rickards (1999), such an arrangement not only allows innovative and creative ideas to be inculcated into the organization, but it also motivates employees to become better performers in their work environment. The employees were also required to participate in the newly created quality circles to improve the quality of motorcycles.
Second, Harley-Davidson engaged in a complete transformation of its core processes, dismantling its WIP inventory system and replacing it with a clone of Honda’s JIT inventory system known as materials-as-needed (MAN) program (Nolan & Kotha, 2007). These enabled the company to significantly reduce its inventory, thereby freeing up the much needed capital.
Reduction of inventory also impacted positively on the quality of products. In the transformation of core processes, employees were taught to investigate how quality issues developed, including how the problems could be traced and corrected early in the production process through a newly developed program known as Statistical Operator Control (SOC).
The management’s hope was that such transformation of processes would ultimately result in significantly improved product quality. They were not disappointed. Harley-Davidson approached the U.S. government seeking to be offered with a five-year, self-liquidating tariff to protect itself from stiff competition, especially from the Japanese motorcycle makers. The request was granted. The company engaged in extensive research and development (R&D) activities in the hope of developing new products.
The company also undertook to transform itself from an informal to a more formalized organization, and came up with a program known as the Leadership Institute to assist in the process of formalizing its structures. All redundant positions existing in the company were done scrapped since they seemed not to add any value to the overall growth or strategy of the company.
What’s more, the company inculcated the concept of developing teams rather than individuals to assist in running of its processes, including efficient time management. The company didn’t stop there but went ahead to initiate new rewards and incentive systems strictly aimed to pay for performance and increase employees independence. It was also the purpose of Harley to transform its operations wholly by exposing and educating its staff, including line workers about the interrelation between products, cash sales, and profitability.
The company also prepared non-technical explanations on how various processes such as cash flows and flexible production processes impacted its financial success. All these efforts aimed to prepare the workers for effective decision making processes. According to Murray & Richardson (2004), workers should be part and parcel of the change process, and an informed workforce is always viewed as an asset to the organization.
The Transformation’s Contribution to the Success of Harley-Davidson
According to Morgan (2008), “…businesses that are constructed around a strong formative idea that resonates with both staff and customers grow up to the point where the original idea runs out of steam” (p. 27).
This is what precisely happened to Harley-Davidson, igniting a flurry of acquisitions and restructurings purposely aimed to re-establish the company’s former domination in the market. Harley-Davidson came very close to annihilation, but the transformation processes spearheaded by CEO Beals and his team of managers saved the company from turning into yet another statistic in organizations that either wrongly initiated the change process or failed in total to adapt to a changing business environment.
The visit to Honda’s Ohio plant, in particular, made the management to put their priorities in order. According to Morgan (2008), “…a careful evaluation of how transformation relates to the existing organizational core can significantly reduce transformation time” (p. 28).
For Harley, the transformation undertaken in the 1980s brought success to an entity that was so close to total collapse. Under the new system, the company’s inventory turn increased drastically, reaching 17 times a year in record time. In equal measure, the WIP inventory, obviously one of the weakest points for Harley, was dramatically reduced by 75 percent (Nolan & Kotha, 2007). The productivity triad put a lot of emphasis on quality production of motorcycles.
Within a few years of its implementation, scrap and rework on the motorcycles went down by 68 percent. The sealing of the above operation lapses through undertaking a complete transformational process saw Harley’s U.S. revenues increase by over 80 percent, with revenues received from international sales rising by 1.7 times. These figures demonstrate the fact that the transformation undertaken under the productivity triad was beginning to return positive results for Harley.
On its part, Kawasaki, a Japanese competitor incorporated in the U.S. in 1967, engaged in intricate and sustained campaigns aimed to curve a market niche for the motorcycle manufacturer in the U.S. as well as internationally.
Kawasaki was one among four Japanese motorcycle manufacturers that entered the U.S. market in the 1970s, bringing with them quality, cost-effective, faster, and value-added motorbikes. According to an industry expert, Kawasaki motorcycles could generate 100hp/liter, and had the capacity to exceed 130mph in speed (Smith, n.d.). The competition for the shrinking market share was one of the triggers that made Harley-Davidson embark on the above discussed transformation process.
Kawasaki, however, could not match the comeback initiated by Harley-Davidson in the 1980s up to 2000. First, it is imperative to note that Harley-Davidson enjoyed a special bond with the American society, and as such, it was readily welcomed back after undergoing the transformation process aimed to streamline its operational processes.
According to Gale (2002), “…that the health of motorcycle sales is dependent on one generation of consumers is illustrated by the rising average age of U.S. bikers. From an average age of 34 years in the 1980s, by the early 2000s, the average Harley rider was approximately 46 years old” (para. 3). This could be interpreted as a distinct advantage for Harley to the disadvantage of Kawasaki in that, as people age, they tend to have more disposable income and hence are likely to purchase more products than youngsters.
Harley’s aging population was well endowed with deep pockets that helped to propel the company back into the limelight. Kawasaki dealt with motorcycles that found appeal from youngsters, implying that the manufacturers could not benefit from the shifting age trends of motorcycle riders unless it’s too transformed its processes.
The transformation process initiated by the senior managers in line with the productivity triad continued to pay great dividends for Harley-Davidson. According to Dale (2001), the manufacturer’s sales climbed 113% between 1988 and 1996. The company was also able to increase its market share by an estimated 97%, not mentioning the fact that, in 1987, the company requested the U.S. government to dissolve the import tariff protection it had initially requested.
This request was sent one year ahead of schedule, implying that the transformation process had achieved tremendous success. As a further demonstration of the transformation’s success, Harley-Davidson was listed on the New York Stock Exchange in 1989 through a well received Initial Public Offering (Nolan & Kotha, 2007). In 2001, Harley-Davidson controlled an estimated 44% of the U.S. motorcycle market (Dale, 2002).
The import tariff protection requested by Harley Davidson immediately after the 1981 management buyout plan was intended to shut other motorcycle producers out of the U.S. market, Kawasaki included. The Japanese, however, are a resilient lot, and responded by setting up an assembly plant in Nebraska (Brown, 1997).
This implies that Harley’s transformation process triggered an independent entity – Kawasaki – into action to reorganize the way it conducted its business in the U.S. According to Morgan (2008), most changes in the organizational systems and processes occur as organizations attempts to react to sudden environmental stimulus. Failure to change the processes to coincide with the requirements of the stimulus may ultimately condemn the organization into oblivion.
But despite Kawasaki interventions, Harley’s market share continued to grow due to its increasingly popularity, outstanding marketing initiatives, innovative and creative ideas, enhanced dealer-customer communication networks, and outstanding customer service. It should be remembered that these variables had been inculcated in Harley’s transformation strategies included in the productivity triad.
A Different Management Perspective
Against all odds, the management buyout team led by Vaughn Beals had done an awesome job in successfully turning Harley-Davidson from eminent collapse into profitability. For this, they deserve a part on the back. Some issues, however, could have helped the firm to return much faster into profitability if they had been done a little more differently.
First is the issue of Identity. According to Morgan (2008), “…identity is the concept of an organization that describes what the company is, and it is the central element in the concept of branding” (p. 28). Harley-Davidson had established for itself a well-known identity in the American motorcycle consumer market before problems in the form of stiff competition started cropping up in the late 1960’s (Nolan & Kotha, 2007).
However, the transformation process didn’t consider the issue of maintaining identity to the depth and details it was supposed to, preferring to largely rely on the blueprint developed after the factory visit to set the companies transformational and competitive strategies. Although it worked favourably for the company, it would have been nice if the identity issue was included, and indeed expounded on since it is a major selling point.
Also, the aspect of long-range intention could have been critically looked into in the hope of ensuring that the transformation process was not merely meant to fend off competition. Morgan (2008) posits that long-range intention is the aspect or feature that vehemently describes what the company is dedicated to in the long run. According to the case, Harley’s both short-term and middle-term aspirations are well articulated in the form of streamlining processes to fight competition and remain relevant in the market.
The company’s long-term intentions, however, are not articulated, and this could bring problems for the company in the distant future. According to Poole et al (2000), organizational change is a continuous process, and although it may appear difficult to outline what may happen in the future due to the ever changing market environment, it is always good to forecast the future by inculcating the organization’s long-term intentions and objectives into the blueprint and any other processes or criteria used to initiate and drive change.
The transformation process initiated by senior managers did extremely well in inculcating to employees high levels of commitment and sense of purpose. Employees are the cornerstone of organizations, and must therefore be actively engaged in the change process (Morgan, 2008; Poole et al, 2000). The management, however, failed to develop a clear vision for the organization to coincide with the changes and restructuring processes by the company.
According to Kotter (1996), a well-driven change process enables organizations to shed its former past in the event that past experiences were negative or build on its past in the event that previous experiences were beneficial to the organization. In equal measure, a clear vision clarifies to the employees the general direction for change, and motivates them to be supportive to the whole process of change.
Harley-Davidson used to enjoy a splendid past, with its traditional Harley motorcycles perceived as an icon of strength and raw power in the American society (Nolan & Kotha, 2007). Such positive experiences should have been used by the management team to trigger positive market reactions through instilling them in the new vision of the restructured company. With an inspiring vision, individuals can envisage exciting possibilities and start to act in harmony with them.
Here, emphasis should have been put on making Harley more vision-directed and value-focused as opposed to being goal-directed and price-focused (Kotter, 1996). This way, the motorcycle giant could have achieved its growth strategies with much ease due to embracing an all inclusive transformation process. Still, Harley’s stakeholders cannot complain that the changes made by the management team were not a step in the right direction.
Justification
No one can ever possibly argue that Harley’s top management team led by CEO Vaughn Beals took the wrong management decisions in transforming Harley back into its former glory. Indeed, all available evidence points to the fact that their blueprint worked wonders in transforming an entity that was headed into oblivion. The above additions, however, are justified based on a number of factors and opinions.
First, the issue of maintaining identity is fundamentally important since Harley used to have its most loyal customers known as baby boomers. Past and present research reveals that this clientele, though in its sunset years, still have a huge impact on the motorcycle market as they have access to huge amounts of disposable income than the youngsters (Gale, 2002). As such, the company could have benefited much more if the issue of identity was given due consideration when the rescue package was being prepared.
According to Morgan (2008), “…if an organization has historically seen itself as an efficient manufacturer of products, it may have a difficult time overcoming the mental models of the staff and the market perception held by customers…” (p. 28). Such a scenario must have happened to Harley during its rejuvenation attempt principally because the issue of its former identity was not factored in.
It can be argued that the company failed to cope with intense competition from Japanese motorcycle manufacturers in the late 1960s and 1970s due to lack of long-range intention. First, the company could have prepared beforehand for the intense rivalry in market control if its long-term intentions and strategies were functional. But it appears to have been caught unawares by the Japanese competitors (Nolan & Kotha, 2007).
Second, the chronology of events in the case demonstrates that such failure could happen again if the company does not state its long-term strategies and work round the clock to develop a transformation process based on what it wants to achieve and where it wants to be in the future.
The case aptly demonstrates that Harley was a market leader before stiff competition dampened its competition strategies. Other players could use the same approaches to win over the market share if effective long-term strategies, including market forecasts, are not put in place. This justifies the inclusion of the company’s long-range intention in its transformation process
Lastly, vision is instrumental in achieving success. Past experiences of Harley, especially in the hands of its first acquirers AMF reveals a total lack of vision and direction. The company’s total earnings plummeted to its worst ever during this period, and AMF had to negotiate a loss-making management buyout plan to save its face (Nolan & Kotha, 2007).
This, however, can be attributed to a clear lack of vision on the part of the AMF management as it wanted to transform Harley into a profit making enterprise overnight. The management enlisted unskilled or poorly skilled labour force and engaged in mass production of motorcycles in the hope of making profits. But this worsened issues due to their lack of vision for the industry. Hence, the decision to propose vision as one of the cornerstones that will guide Harley into the next growth frontier is justified.
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Many large and medium-sized companies have found themselves in different situations, some of which result to a great rise in the company’s returns resulting to a great success for the company while others involve very great challenges which result to large losses for a company leading to low profits and in extreme cases, to a recession.
Some of the large and successful companies have at one time or another found themselves in a recession, either emanating from internal factors or more commonly from the effects of the global recessions and financial crisis which have been experienced at different moments all over the world.
Due to all these factors, companies always find themselves in situations where they have to formulate strategies of thriving through the hard situations and hence being able to stand through all situations. One of the most important factors a company needs to implement in their operations so as to realize their current situation and hence be able to formulate better strategies is through the use of a SWOT analysis.
A SWOT analysis is an analysis that is usually aimed at realizing the strengths, weaknesses, opportunities and threats that a company is exposed to so as to be able to come up with helpful and applicable remedies and plan of action.
This study seeks to carry out a SWOT analysis of a company, Harley-Davidson, Inc., so as to determine its position and strategies at the time when it was faced with recession and how it was able to thrive. The study also seeks to give recommendations that could be utilized by the company so as optimize on utilization of its available opportunities.
Synopsis
For a company that had been in operation for 105 years, Harley-Davidson, Inc. was a company that had thrived through a lot of challenges and often had to come up with modifications to its strategies so as to ensure that it maintained its high-profile reputation as a motor cycle manufacturer. The company had been able to increase its market share to an incredible percentage in the US and around the world.
The company had continued to enjoy great returns from the sale of its high-priced bikes. The company had increased its sales over the years up to an incredible amount where it had a large customer base and a high competitive advantage against its competitors in the production of large motor cycles. The company’s capital base had increased tremendously when the company was bought by AMF and the company was able to increase its productivity in a great deal.
However, there was an emanating competition from Japanese motorcycle producers, a factor that led to problems in the company. The company was faced by a challenge since its products were deemed not user-friendly, too expensive and of low quality. Though the sales in the company were high, the profits declined tremendously due to the competition.
However, to respond to the recession that the company was undergoing, the new management came up with new strategies so as to maintain its market share, improve its performance and stabilize production and profits as well as maintaining a competitive advantage against competitors.
The company was to formulate strategies that would ensure that no matter the market requirements and the competition pressure, the company still sailed high in terms of its production and sales and maintained a large market share in the US and around the world.
Through use of different available opportunities, the company was able to finally achieve long-tern and sustainable goals of production of high-profile and competitive motorcycles as well as being able to penetrate the market through meeting the market demands at any one given time. Through invention of a research and development strategy as well as market forecasting techniques, the company has been able to maintain its position as a market leader amidst the stiff competition from other motorcycle producers around the world.
Resources
At the time of the recession, the company invested into acquisition of great resources that would aid it back to its feet. These resources included invention of new designs, labor resources, new company structures as well as financial resources.
The new labor resources for the company included a new organizational structure and an internal make-over where the company acquired a better and more experienced management structure and constitution, better and more skilled workers as well as the demolition of the corporate hierarchy where every worker and members of the management had access to each other and worked with a corporate goal of meeting the organizational goals jointly (Wheelen & Hunger, 2010, p. 16-5).
The company also redefined its sales and supply structures integrating vertical structures instead of using hierarchies in its supply. The company was able to team up with other companies which aided in the sales and supply of the company products as well as realizing the market requirements at any one given time.
Moreover, the company was able to redefine its products so as to meet with the market requirements. While in the past the company had only developed very expensive bikes that usually targeted the older generation, the company formulated strategies to produce bikes that also targeted the younger generation as well as the women. This was a great step since the market needs were changing and the younger generation became the largest market for motorcycle producers.
Finally, the company sought to increase its financial resources using different strategies. First, the company sought funding from bigger companies like AMF and Heller Financial, companies that injected a lot of funds into the company to help it avoid bankruptcy as well as increasing its production.
The company also gained a lot of funds through sale of stocks and buying of stocks from other companies. The funds also aided in realization of better sales and marketing strategies as well as formation of strategic alliances that would boost the production, designs as well as sales and supply of company products.
Capabilities
The company had a lot of capabilities that were developed and redefined over the years making them more sophisticated and superior to those of its competitors and hence always keeping it above the rest due to an increasing competitive advantage. One of the main capabilities of the company was its undying desire and devotion to manufacture and sell high-quality and competitive motorcycles.
While most of its competitors produced bikes and other motor vehicles and even other engine products, the company dropped all its other production lines like the transportation vehicle manufacture sector, so as to concentrate all its resources to motorcycle manufacture.
Hence, the company was able to carry out diverse and intensive research on market changes and requirements, new inventions, technological advancements as well as new strategies for better production, sales and supply of products that were both of high quality and very competitive (Wheelen & Hunger, 2010, p.16-4).
Another of the company’s capability was the invention of new designs and models of motorcycles that was always ahead of technology and new inventions. The company had very skilled and experienced workers who went a step ahead to always seek for opportunities that would be utilized to make the company products better than those of its competitors.
The company was always able to meet with the market needs and even sometimes come up with new products that caught the market and its competitors by surprise, especially when it developed products targeting the young generation, the baby boomers and the female market.
The company was hence noted as always spearhead the development and inventions in the motorcycle industry. This way, the company was able to always stay ahead in invention of better designs and models of motor cycles, hence gaining a good reputation in the market and trust from all its clients.
In addition, the company had very reliable and effective strategies for acquisition and managements of its financial resources. The company had been able to form very strong alliances that helped it stabilize its incomes and acted as its financial security.
Through offering of stocks, the company had been able to raise a lot of money and hence become more financially stable. In addition, the company had bought stocks from other stable and successful companies so as to increase its sources of income. On the other hand, the company was able to prioritize on the allocation of financial resources to its different sectors.
Rather than investing all its money into production of motorcycles, the company chose to invest more into the research, design development and sales departments, a factor that further ensured then stability of the company as well as allowing the company to meet the market demands at any time. This way, the company was able to overcome recession and avoid instances of occurrence of another recession in the future (Wheelen & Hunger, 2010, p.16-5).
Core Competencies
The company had many core competencies that gave it an increased competitive advantage over the rest of its competitors. One of its main competencies was its application of information gained from the research and design development departments.
The company was purposed to divert its attention from increasing its production units to production of high-quality and very competitive products. This, as well as the information on the market demands and market forecasts, enabled the company to reach an optimal production and sales point at which its profits were maximized (Wheelen & Hunger, 2010, p.16-6).
While most of its competitors worked to increase their production units and sometimes experienced losses especially if their sales fell too low compared to their production, the company was able to increase its performance through producing units that were all consumed by the available market. Moreover, the products were very competitive and hence attracted more buyers hence increasing the company’s market share.
Strengths
The company had a lot of strengths especially in its operations structures within the organization. In its operations, the company was able to form strong alliances with other successful companies and financial institutions so as to increase its capital base, obtain an increased financial security as well as improving the quality and effectiveness of its sales and supply channels.
In the company structures, the company had two major structural strengths that increased its performance and competitive advantage. On one side, the company had a very strong and well-organized organizational structure that allowed all the staff in the company to work together for the common goal of realizing the organizational goals of the company.
This way, the company was able to offer a good working environment for everyone which gave room for more productivity and increased efficiency of the workers. This in return increased the quality of the products manufactured offered the company an improved performance as well as increased overall productivity.
On the other hand, the company adopted very effective and informed financial structures that helped in increasing the sources of income for the company as well as better management of the available financial resources. This way, the company was able to inject funds into all the departments in the most reasonable and beneficial manner, a factor that resulted to lowered expenses as well as increased returns (Wheelen & Hunger, 2010, p.16-6).
As one of the recommendations I give towards the improvement of the company strengths, the company should also consider adoption of outsourcing of work, especially for design development, sales and supply of its products so as to be able to move in consistent with the current market demands as well as have an easy market penetration especially in market abroad.
Though the company has been very successful in the US market, competition from other companies especially those from Japan has forced it to register lower sales abroad. There is therefore a need to invest in establishment of alliances and outsourcing services abroad so as to enable the company to penetrate better in those markets and hence increase the company’s market share further.
The company also needs to redefine its organizational structure again so as to ensure that every employee’s needs are met hence improving on their working conditions further. This may help the company not only to be a market leader in terms of its production and sale of motorcycles but also to become a leading employer in the labor market.
Weaknesses
One of the main weaknesses of the company is that most of its products are highly-priced and hence are not affordable by most of the potential customers. This has forced most of the customers, who are usually the young, to buy products that are cheaper, which again lack variety. This has forced some of the potential buyers to opt for products from other companies such as Japan, whose products are usually cheap and have a larger variety.
In addition, the company needs to establish better strategies for more application of technology into the company processes. Though there is application of technology in its manufacturing processes, most of the other processes lack a good blend of technology, a factor that has forced the company to face very stiff competition from its competitors like Japan who use technology in almost all their company operations.
There are some recommendations that I would give in the aspect of the company weaknesses. First, the company should seek for different strategies that may be used so as to help in reduction of the cost of production hence reducing on the price of the products. This may help in ensuring that the company offers products with a competitive pricing.
In addition, the company needs to adopt more technology-intensive strategies of research, design and also monitoring of its products so as to ensure more effectiveness while on the other side reducing on the costs of production. This may also help in the life-cycle pricing of the products so as to ensure the company offers higher quality products at a lower and more competitive price and hence increasing its competitive advantage.
Opportunities
The company has not yet been able to comprehensively utilize its available opportunities. One of its main opportunities is the large market outside the US. While the company has concentrated most of its efforts and products to the US market, there is a large and unsatisfied market abroad.
At the current state, the company may not be able to meet with the needs of this market since its products are not consistent with its needs. However, strategies should be laid down so as to reach this market and satisfy its needs (Wheelen & Hunger, 2010, p.16-5).
Moreover, the company still has not fully utilized its opportunities in establishment of alliances as well as outsourcing of work. There still are more competent and successful companies that the company can team up with so as to improve on its capital base as well as enjoying other related benefits.
In the aspect of the unrealized opportunities, I wish to make some recommendations. First, the company needs to come up with better ways of fighting against the stiff competition from its competitors especially abroad. The company has been offering products that fit in the US market and other specific markets. However, there is a need to realize the general needs of the markets abroad so as to be able to come up with products that are competitive there hence increasing the company’s market share even outside the US.
Also, the company should aim at increasing its alliances base to more companies abroad as well as outsourcing work to companies abroad. This will help in better research in the markets in those areas as well as easier supply and sales of the products.
References
Wheelen, T. & Hunger, J. (2010). Strategic management and business policy: Achieving sustainability (12th ed.). Upper Saddle River: Pearson.
The onset of the 21st century saw the inception of the Harley-Davidson Motorcycle Company. The motorcycle manufacturing firm started off its operations in Wisconsin, United States of America (Harley-Davidson, 2006). Although it had a small beginning, Harley-Davidson has grown to be a renowned global market leader in the manufacture and sell of heavy duty monocycles.
The company successfully went through the hard economic times of the 1920s, which was largely contributed by its unwavering strong background in leadership, marketing and customer satisfaction (Armstrong & Kotler, 2011).
One of the major challenges faced by Harley-Davidson in its history of successful operation in United States is when the government failed to instituted as well as monitor market forces of demand and as well as quality checks which led to the influx of cheap imports into the U.S market.
However, this just marked the beginning of a long journey for Harley-Davidson bearing in mind that the motorcycle manufacturer continued with the uninterrupted production of motorcycles with engine capacities above 750cc (Harley-Davidson, 2006). Customer satisfaction was and has been key to this overwhelming market presence.
On the other hand, Harley-Davidson is still struggling to penetrate the lightweight motorcycle market. The competition is tough in this line of production and unless the company transforms its value proposition, it may completely miss out on the yet to be tapped profitable lightweight motorcycle market.
In this paper, the case study of Harley Davidson has been discussed in terms of the marketing capabilities of the company (Harley-Davidson, 2006). In addition, some marketing strategies that can be adopted by the motorcycle firm have been proposed using relevant marketing theories.
Harley-Davidson case study summary and marketing theories
One of the outstanding features of Harley-Davidson is the creation of brand loyalty among its chronic customers. As part of its fundamental marketing strategy, the company has developed a culture of consistent liking and consumption of its heavyweight motorcycles among the long term customers.
As a result, it has managed to maintain its clients for a considerably long period of time in spite of the ever prevailing market competition (Armstrong & Kotler, 2011).
The most integral ideal being cherished towards customer loyalty is the ability of the company to critically consider the needs of its consumers. Harley-Davidson has a strong belief that customers from its most valuable asset add therefore should always be given the first priority. The department of marketing has put up efforts of reaching out not only the old customers but also the high end market that has not been tapped yet.
In order to achieve the best customer loyalty, it has taken the marketing department significant amount of time to study and analyze the needs, tastes and preferences of consumers. The ease with which customers can purchase Harley-Davidson products has been enhanced. In any case, the company believes in serving its customers with a touch of their emotions.
In other words, passion drives the marketability of the heavy duty motorcycles (Armstrong & Kotler, 2011). The feelings of customers are studied, their perceptions and reactions towards the company products are also evaluated in a regular customer care initiative.
Due to such an approach in marketing, the management at Harley-Davidson is quite convinced that they will also venture and conquer the light duty motorcycle market. Moreover, the marketing strategy is also viewed as the reason for the success behind the Harley Owners Group (HOG) that has grown to a 900,000 membership scheme.
The sale of motorcycles per se is not the sole duty of Harley-Davidson; the motorcycle manufacturing firm has laid more emphasis on the needs of its customers to experience independence and a free purchasing environment. Customers should feel to be buying Harley-Davidson products without being coerced or technically convinced through advertisement without their own will.
If this philosophy is anything to go by, then it implies that Harley-Davidson has a cultivated a buying culture of its motorcycles, a phenomenon absent in other brands (Armstrong & Kotler, 2011). Therefore, customer experience, according to Harley-Davidson, goes beyond the manufacture and sale of motorcycles; it is a unique lifestyle of its own kind.
Customers do not just buy for the sake of meeting their needs; they also do it as part and parcel of their lifestyle. Marketing a brand as a lifestyle product is an uphill task, so to speak. Harley-Davidson is not naïve of this fact. Consequently, the motorcycle manufacturing firm has set up rigorous marketing tools and devices to enable it maintain and reach out for the untapped markets.
Through its marketing department, the company has imitated a high-powered team of individuals charged with the responsibility of marketing Harley-Davidson brand. For instance, there are quite a number of travel adventures that the firm has organized in the past.
These adventures are meant to develop consumption and liking culture for its products. Both the existing and non-customers are usually invited to take part. The company also offers other after-sale services to customers.
The marketing strategy adopted by Harley-Davidson is not void of relevant marketing theories in daily practice. Firstly, the brand name ‘Harley-Davidson’ has proved to be a very effective auto marketing tool for several decades now.
Customers have been deriving satisfaction out of the motorcycles manufactured by the company. the fact they have built formidable trust around the brand of the company makes it possible for them to remain loyal in their purchases (Harley-Davidson, 2006).
In addition, the consumption experience by Harley-Davidson’s customers is one of its own kind since the firm makes sure that the general and imperative needs of the customers are catered for. it is against this backdrop that the company’s brand name is not only popular, it is also a household name that both active and potential customers would like to identify with.
On the same note, decision making by customers is yet another area that the marketing department has put more focus on. It is crucial to observe that the purchasing trend of customers is largely driven by the nature of decisions they make (Kotler, Roberto & Lee, 2002). This can be explained from the utility theory of decision making.
The utility is paramount in marketing. Consumers will consider the best outcomes as the main driver to their decision making (Gilmore, 2003). The theory tends to perceive customers as rational beings who are not skewed on their choices but would rather settle at a particular brand since the anticipated results suit their needs well. Hence, optimum benefit is instrumental for customers.
The utility theory is pragmatic on the usefulness of the product being purchased rather than the cost price of the product. Indeed, Harley-Davidson has taken this into consideration since the company has ensured that its heavy duty motorcycles are not just within the expected standards by customers but also of high quality.
This has been laced with the marketing philosophy of selling with passion and touching the customers’ feelings right at the point of sale. However, consumers may lack rationality when making purchasing decisions in some cases (Baker & Saren, 2010). Besides, the various intrinsic inputs that may influence decision making patterns when buying may not be easily recognized by customers.
Such a limitation among customers when making decisions may not be fully addressed by utility theory. Hence, satisficing can be used to flesh up the limitations of utility theory. The satisficing model elaborates that the process of decision making does not continues once the anticipated outcomes are met.
Drawing from the Harley-Davidson marketing experience, there is a higher probability that its chronic customers do no longer makes purchasing decisions when acquiring their purchases from the company since they are outside the brackets of utility theory.
At this juncture, it is worthy to note that successful marketing should go beyond utility theory. Consumers can remain loyal to a particular brand irrespective of stiff competition from market rivals.
Similarly, the use of a marketing theory referred to as consideration is a vital tool in marketing strategies. According to the theory of consideration, customers play an equally integral role as the identity of a business organisation (Gummesson, 2002).
The theory further stresses that the decision making process by a firm should consider the relative value of consumers since they form a subset of a firm without which any decisions made may lack utility. The Harley-Davidson video case study emphasizes the momentous contribution and role of customers in the company. All the strategies are developed around the consumption experience of consumers.
The marketing theory of involvement is yet another strong standing point for Harley-Davidson (Kleinaltenkamp & Ehret, 2006). One way of attracting and sustaining the attention of customers is by involving them in most company activities that elicit fun and great feeling.
The management at Harley-Davidson has made every attempt to involve its pool of customers as well as the prospective ones in lively activities like adventurous riding exercises. Sponsorship of such events by Harley-Davidson is a marketing decision I the right step.
As mentioned earlier, the motorcycle manufacturing firm is not merely buying the advertising space for marketing its products; it is also in the process of creating a consumption culture of its heavyweight motorcycles alongside building a lifestyle from it.
Case study questions
How does Harley-Davidson build long term customer relationship?
The management at Harley-Davidson value customer relationship as the foundation of business growth. In achieving this, two main building blocks are used. To begin with, the company employs customer satisfaction in its bid to create long term relationships. Unless customers are satisfied by the services and products on offer, it will be practically impossible to maintain their loyalty for long.
Secondly, Harley-Davidson is very critical on the value of customers. It is common knowledge that customers who are treated with dignity, a sense of passion as well as liberty are highly likely to remain put with a particular brand (Sheth, 2006). The company values the choice, liberty and independence of its customers, attributes that go a long way in enhancing customer value.
Moreover, Harley-Davidson has also made use of the Harley Owners Group (HOG) as a building block for long term customer relationship.
For instance, the company has from time to time organized and sponsored outdoor events to boost the relationship between the company and customers and also among customers themselves. Besides, the numerous publications by the company have been viable outreach tool for harnessing customer relationship.
What is Harley-Davidson’s value proposition?
One of the value propositions for the company is that the price tag is rather on the higher end. The sale of heavy duty motorcycles costs more than the sale of lighter ones with engines capacities below 750cc. although the high price tag may be viewed as slightly disadvantageous to the company; it is indeed the business strategy for Harley-Davidson.
Specializing in this line of production attracts the high end of the market. This may be more profitable than dealing with lighter machineries.
Besides, the motorcycles cannot be used during bad weather in addition to the fact that there are usually non-monetary costs associated with safe keeping of the motorcycles is yet another value proposition for the company. Nonetheless, the best value proposition should be the benefits received by the consumers of Harley-Davidson brand.
Joanne Bischmann in the video case study attempts to emphasize the value received by customers (Harley-Davidson, 2006). As note in the video, customers stand to benefit from freedom, free will, and self-expression as well as the fun and full enjoyment brought about by the company products. Customers are not just buying the motorcycles, they are also interested with the value proposition derived from the purchases.
Relate the concept of customer equity to Harley-Davidson. How does Harley-Davidson’s strategy focus on the right relationships with the right customers? Customer equity is well covered under the derived profits as well as loyalty. There are other numerous possibilities through which Harley-Davidson could derive its profits.
However, the company is not merely focusing on the other varied channels; it has laid more emphasis on building long term customer relationship through authenticated friendship. Its chronic customers who should also be profitable is the core concern for the company in as far as customer equity is concerned.
This profitability is derived from the high-margin products from Harley-Davidson. As part of focusing on the right customer relationships, the company has largely focused on the delivery of three main marketing variables namely customer value, brand stability as well as retention equities.
In order to maintain the brand quality and focusing towards the right customer relationship, Harley-Davidson continually inspects and modifies its products to meet the expectations and needs of customers.
Recommendations
In spite of the global presence of Harley-Davidson in the manufacture and sale of heavy duty motorcycles, the company can still make a few more strides in capturing both the high and low-end markets.
Firstly, Harley-Davidson should devise other competitive marketing strategies that will successfully land them in the light commercial motorcycles bearing in mind that the previous attempts by the company to venture into this market failed. This can be achieved by changing the consumption culture of its long term customers (Baker, Graham & Harker, 1998). They should be educated on the relative benefits of embracing lighter motorcycles.
The value proposition for the company should go beyond passion for its customers. It is vital for Harley-Davidson to focus on new markets through rigorous marketing campaigns like the internet, billboards and other mass media channels (Wierenga, 2008). Relying on old customers per se may not be sustainable for a long period of time.
Finally, Harley-Davidson should also diversify its production portfolio as one way of minimizing market risks. The company can attain this by incorporating the manufacturing of both the heavy and light commercial motorcycles in its plant.
References
Armstrong, G. & Kotler, P. ( 2011). Marketing: an introduction, (10th ed.), New York: Pearson Prentice Hall.
Baker, J.M., Graham, P. & Harker, D. (1998). Marketing: managerial foundations, South Yarra: Macmillan Publishers.
Baker, J.M. & Saren, M. (2010). Marketing Theory: A Student Text, London: Sage Publications.
Gilmore, A. (2003). Services marketing and management, London: Sage Publications. Gummesson, E. (2002). Total relationship marketing, Oxford: Elsevier Science.
Harley-Davidson (2006). Video Case. Web.
Kleinaltenkamp, M. & Ehret, M. (2006).Relationship theory and business markets Journal of business and industrial Marketing, 21(2): 63-64.
Kotler, P., Roberto, N. & Lee, N. (2002). Social marketing: improving the quality of life, London: Sage Publications.
Sheth, N.J. (2006). Does marketing need reform?: fresh perspectives on the future, New York: M.E. Sharpe Inc.
Wierenga, B. (2008). Handbook of marketing decision models, Rotterdam: Springer Science.