Sincetime immemorial Harley Davidson Company in the US has gained fame asone of the remarkable motorcycle industry in the country. Forinstance, in the past 18 years, the company has been the leading themotorcycle industry in terms of retail sales with a 50% market nichein the US and 38% of the global market share(Chan, 2010).It has been ranked among the best performers in the US. The companyhad a celebration in the year 2003 to commemorate its inception in1993.However the company faces a number of pressing issues whichneed to be addressed so as to sustain the competitive advantage ofthe company in the market. This is in regard to the views presentedby Bluestein the leader of the company. For instance, itscustomer base has reduced immensely since 1990.It also faces stiffcompetition from other companies such as Honda, Yamaha and Suzuki(Nolan,2000).In the year 2005, the price of the company stock decreased by 17%though its profits and sales had increased significantly. Hence,there is a need to come up with a strategy which will aim towardsincreasing the customer base and maintain consistency in the sales ofthe company.
Historicalbackground of the company
Thehistorical background of the company is attributed back to the year1903.The main objective of forming the company was to single it outas a center of building the motorcycles in the garage. The mainfounders of the company were Arthur, William Davidson, and WilliamHarley. After the sale of 50 motorcycles, the company demandedincorporation with one full-time employee. It pioneered ininnovations such as internal expansion rare brake, three-speedtransmissions and a twin engine. In 1928 the company became theleading producer of motorcycles as it produced 28000 motor cycle(Nolan, 2000). Despite the challenges the company faced prior to thepost world war, the company remained profitable as more strongmotorcycles were introduced. Since the year 1997, the company hasundergone drastic changes, the annual revenues increased from$1.5billion in 2007 to $5 billion in 2004.Over the same duration, the netincome indicated a growth of $747 million as indicated in exhibitone. The company also realized an emergence of a new motorcycle namedv-rod which attracted a number of customers from rival brands. Thepopularity of the brand triggered the growth of sales from 1996 to2000.Nevertheless, the sales in touring and the cruised marketdropped significantly as from the mid of 2002 to 2004.The babyboomers who accounted for the large portion of the customer base ofthe company have been found to be aging .Statistics show that 60% ofthe motorcycle riders fall between the age of 35 and 54 (Nolan,2000).The age groups numbers show a considerable decrease in 1999 andit is anticipated that the situation will continue throughout theyear 2016.Since 1997 to 2016 the company has undergone drasticchanges.
Thekey product of the company (Motorbikes(
Thecompany specializes in the sale of motorcycles. Due to the low demandof baby boomers the companycame up with the v rod as the firstmotorcycle which joined fuel injections, overhead arms and thecoolant of the liquid (exhibit one). In 2005, Harley made a launch onthe second motorbike categorized under the V-rod. It was named streetrod but its main intention was to attract riders from Japan andItaly. In 2004, the company redesigned the sportster type ofmotorbike in which the prices were reduced to make the bikes moreappealing to the young riders and women (Nolan, 2000).
Themarket for the product
Thetarget market of the Harley Company is the US. On the eve of the year1997, the company had 48.7% market share in the US, 6.1 in European,and 16.5 in Asia (exhibit five). The sportster type of motorbikeswhich were redesigned in 2004 was set to target the young people andfemale riders. Its price commenced at %6500.The women riders haveaccounted for10 % of the total company’s sales in 2004. Over time,the company has continued its efforts of targeting the media andevents which constitute their market segments. For instance in 2004the company held an event which leads the national women’s media.The company also hosted the motorbike launch which was dedicated tofemale journalists. Most motorcycle owners in the US buy themotorbikes to use them as second vehicles. They normally use themduring off times for recreational benefits. The company also targetcasual riders since they are more likely to purchase the motorbikes.
Thecompany mainly supplies its products both domestically and globally.It supplies its products to Asia and India. Japanese companies arealso suppliers of motorcycles to the US and Asia,
HarleyDavidson Company does not face stiff competition domestically sinceit is the one which is in control of almost 5o % of the market sharein the US. In the global location, the company has a powerfulposition in the Asia pacific market. Since the company has a strongbrand loyalty, it is free from domestic competition. However, thereis a probability that the company will lose some of its clientsfollowing the aging baby boomers. On the global market, the companyfaces many challenges due to the change in the market trends and thestiff competition from the global market. In the US motorcycles aregenerally competitive. The major competitors of Harley Davidson areHonda, Yamaha and Suzuki. The competition in the market is based on anumber of factors such as customer preference, the characteristics ofthe products, and the quality of the products. Harley Companycompetes favorably in the touring and custom segments whichcontributed to 79% of the retail sales in the US.
Competitorone. Honda Company
Thecompany was founded in the year 1948 by Shihundu Honda in Tokyo inJapan .The Company specializes in the production of vehicles whichfits the local conditions and targets the behavior of customers. Italso sells motorcycles and automobile products. The company has anoutput of approximately 20 million .The stock price of the companydoubled in the year 2008 when the economy was undergoing a recession.It has durable and long lasting products. Unlike Harley, Honda doesnot operate as a top-down company instead it operates as anautonomous company. The company does not make use of robots but itevery instance it considers using the in dangerous circumstances.The company’s competitive advantage is obtained through its abilityto design new vehicle models and using techniques which make thevehicles move faster and operate more efficiently than before. Thecompany produces many motors in a single assembly line thus producinga substantial number of motors within a short period of time.Approximately 40% of its products are exported to the US making it amajor competitor to the Harley Company. The sales of Honda havegained favor in Asia posing a great competition to Harley since Asiais one of the company’s target markets. The company is wellpositioned as its financial strength and the use of technicalfacilities makes it stand in a better position.
Competitortwo: Yamaha Company
Thecompany was founded in the year 1955 by Genichi Kawakami in Japan. Itcommenced its competition internationally in 1956 .The company dealsin the manufacture of motorcycles, outboard motors and othermotorized products. The company is more diversified in terms ofproduct offering as it offers a wider range of products than Harley.The company dominates in the metric cruiser model with a traditionalform of style in which the exposed engines and non-joined body panelsare used. The motorcycles manufactured by the Yamaha Company are ofhigh performance with remarkable aerodynamic features.
Thecompany was founded in 1887 by Michio Suzuki. The company started asToyota s it entered in car making in the year 1937.It joined the USmarkets n exporter of motorcycles it ventured in the export ofmultiproduct in 1983. The high quality of the Suzuki products hasmade it stand more competitive position the Harley Company. Thecompany is more diversified in terms of product production.
TheCurrent & Future Challenges
Oneof the major challenges facing Harley Company is stiff competitionfrom other companies outside the US Such as Honda, Suzuki and Yamaha(exhibit four). The other competitor is Polaris which is themanufacture of motorbikes for the Indian and the market of Victory.For instance, Polaris snatched the market share of the company from55.26 % to 54.29% (VanNimwegen & Kleiner, 2000).The Company also faces competition from the oversea market such asAsia. The place is preferred as a motorcycle manufacturer due to itsgrowth ability. The competitors such as Honda are at a position offixing the price points which the company cannot compete effectivelywith.
Theconsiderable problem which the company faces is that it neverdeveloped its bikes to be cost competitive, it only depends on thebrand name of its product and the riding history to trigger sales.Therefore, the competitors draw more customers from the foreignmarkets .Furthermore, Honda and Suzuki manufactures small enginebikes and scooters which pose a challenge for Harley to competeespecially on price.
Geographicallocation is another threat which the company faces. Honda and SuzukiCompany are located in Asia. The country is one of the principalmarkets for motorcycles. Therefore, the competitors are in a betterposition of accessing the customers than Harley.
Theurge to remain a multigenerational brand is a polemic issue to thecompany. The modern generation prevalence is different from the onewhich existed (VanNimwegen & Kleiner, 2000).The company should have knowledge of the type and quality which thenew generations need so that it can design its products to meet thequality needed.
Inthe immediate future, it is anticipated that the company may undergoeconomic challenges, this is because the company had a decrease inthe share price and profits in 2007(exhibit three).This is as aresult of the recession that the US is currently facing as people maynot be willing to spend money on luxurious items.
Thecompany is currently facing rivalry from external competitors such asHonda, Yamaha and Suzuku.This is because the competitors price theirproducts at a relatively cheaper price. The seasonal productionmotorcycle has an immense impact on the sales and revenues of thecompany. The aging population in the US is also another threat sincethe motorcycles currently manufactured are for the young people. Therecession also affects the sale of the company products since the lowdisposable income cannot allow people to spend on luxurious products.However, the company has opportunities such as increase of theoverseas market and the segment of female individuals’ and youngriders (VanNimwegen & Kleiner, 2000). The company has also expanded its market towards the India.
Thecompany has more strength which can aid in the future growth ofHarley. A powerful brand image is one of the strengths. It also has astrong loyal customer base which is rated at 55%.The strengths canaid in the present economy since the customers will tend to purchasea brand which they are familiar with. Currently, the company hasstarted to extend its marketing segments to the women and adultriders.
Thecompany also needs to reduce the weaknesses that it has so as tomaintain its success in the future. For instance, in the past years,marketing has been targeted towards the men in the middle age.Another inherent weakness in the company is the failure to fixcompetitive prices. The company has a belief that it may be given apremium due to its brand image.
Thecustomer base of the company mainly consists of men who are aged 35years (VanNimwegen & Kleiner, 2000).The other base is composed of women, adults and other riders. Thepurchase of motorcycles has been increasing since 2007 indicatingthat Harley forms a large part of the market share domestically. Thecompany has diverse types of motorcycles, these are sportster,touring and units.
Thecompany mainly utilizes the stability strategy. However, it hasrealized a decrease in domestic revenues. The company realized a netloss in 2009 in its sales. The company was acquired by Buellmotorcycle company .This was a strategic action as it gave a chancefor the company to enter join the segment of the market which theycould not have accessed. The company enjoyed economies of scale, itsproduction increased as the cost of production reduced. Bothcompanies enjoyed synergies as a result of acquisition. The surplusengines were used by the Buell Company. The acquisition was ofimportance to the Harley Company as it enabled it to increase itssales.
Thecompany can utilize its opportunities by making use of its strengths.For example, the company can ensure the increment of the customerbase by making use of its marketing potential. For instance, in theyear, 2000 female riders were explored to buy 15000 motorcycles .Thefemale contributed to 12% of the sales in 2006 (STANFIELD,1992).Thecompany should double its efforts in directing its products towardsthe young so as to increase its customer base. The company can alsouse its market potentials to reach the young riders and women.Internet marketing can also serve as an attractive tool to thecompany as various people will access information concerning theproducts of the company.
HarleyCompany can also utilize its strengths so as to remain in the marketduring recession times. From the year 200 to 2009 the companyunderwent a reduction in its revenues due to the economic crisis inthat period (STANFIELD,1992).Sincethe motorcycle industry is seasonal, Harley can make use of its brandimage to attractcustomers during the o season.
Sincethe company does not realize competition in terms of pricing, itshould consider reducing its premium and offering the discount to itsloyal clients. Harley Company should work towards increasing thequality of its products .This can be done in coming up with atechnology which will ensure clean emission, improve the equipmentused during the manufacture of motorcycles, and enhance the miles pergallon. These measures are in a bid to concur with the industryregulations such as standards of safety.
HarleyDavidson should adopt a horizontal strategy this will encouragefurther expansion to the oversea market. The company can make use oflicenses so as to increase international sales and production. Inregard to business competitive strategies, Harley should persist inusing the differentiation strategy .Research evidence that thestrategy may be profitable than the cost leadership strategy becauseit forms a barrier for competitors to enter the market (VanNimwegen & Kleiner, 2000).
Summarily,Harley Davidson is an eminent motorcycle company, for the company toprevail in the market in the coming years it should effectivelycontrol its activities. Having a powerful brand and a faithfulcustomer base, the company can trigger high sales. The company canuse the stability strategy to continue the expansion its market. Itshould consistently use differentiation as one of its competitivestrategies. Agreeing in terms of licenses can help the company accessforeign markets with less risk.
("Picturesof Harley motorbikes", 2014)
(Chansler,Swamidass & Cammann, 2003)
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