2. (a) What resources and capabilities are needed to compete within the motorcycle industry?
(b) In relation to these resources and capabilities, how does Harley-Davidson compare with other leading motorcycle companies?
3. How effectively does Harley’s strategy exploit its key strengths while protecting itself from its key weaknesses?
4. What threats to continuing success does Harley-Davidson face and how is Harley responding to these threats and what more can it do?
The term “Organizational Strategy”, by the sense of the term itself, refers to the set of plans and operations implemented by any organization, especially commercial, for the purpose of attaining its long term goals efficiently. These actions and plans, taken together form the strategic plan of the enterprise and much of the long-term sustainability, profitability and future prospects of a commercial enterprise depend on the efficiency and effectiveness organizational strategic framework of the same (Serra and Kunc 2015).
Case Study: Harley Davidson
In this context, the strategic framework of Harley Davidson, one of the world-known American manufacturers of motorcycles can be taken into account. Aged more than 114 years, this company has sustained in the global motorcycle market and prospered profusely over the years, becoming a cult itself, much of which can be attributed to the robust organizational strategic framework of the enterprise, which itself has been hugely dynamic and integrating (Conrad and Poole 2012). The strategic set up of Harley Davidson can be analyzed with the help of one of the efficient tools in this aspect, the Porter’s Generic Strategies, which is discussed in the following sections.
Porter’s Generic Competitive Strategic Framework
According to the Porter’s Generic Strategic Framework, one of the primary and prominent component strategic frameworks of Harley Davidson, is the presence of a Focus-Differentiation type of operating mechanism in the company, which helps the enterprise to gain comparative advantages and cost effectiveness over its competitors in the industry (Tanwar 2013). The “Focus” aspect of the organizational strategic framework of the company highlights the fact that Harley Davidson has a focus oriented production and a targeted clientele. The company specifically emphasizes on the heavyweight motorcycle market in the two-wheeler industry across the globe. The company does not try to diversify in the lightweight markets as well. The focus of Harley Davidson is to cater to those consumers for
whom their motorcycle is just not a means of transport but also a means of luxury and a representation of their lifestyle. This aspect of the strategic framework of the company helps them to create a separate and loyal customer base for them, thereby creating a brand name in the market (Singh and Sonnenburg 2012).
On the other hand, another aspect of the strategic framework is the “Differentiation” aspect. The commercial enterprise differentiates its productive and selling strategies on the basis of the social and also the psychological needs and demands of its potential customers (Baroto, Abdullah, and Wan 2012). Over the years, the company has gained the status of a lifestyle defining business and a symbol of status among the relevant customers who own their products and take pride in it. The enterprise also maintains product integrity in internal and external scenario. One example of such strategies is the wearing of biking leathers by the management of the company. These traits help the employees as well as the customers to identify and relate to each other (Teeratansirikool et al. 2013).
The success of the company is also attributed to the value creating strategies, which the company implements to attract their clientele. This can be evaluated with the help of the Ansoff matrix, which is elaborated in the following section:Ansoff Matrix for Harley Davidson
Highly successful especially in the markets of the USA
Has been able to retain major share of their existing customers
Has 45% of customers who bring repeat business opportunities to the company
Enjoys huge brand loyalty from the existing customers which can be attributed to the robust strategy of the company which exploits the advantage of the goodwill aspect of the company which it enjoys due to the presence of the company in the market for more than a century
Keeping the basics of their popularity same the company tries to create different products remaining mainly rigid in terms of the markets which they choose.
Over the years the company has increased the scope of customization of their products, thereby keeping the existing customers intrigued when it comes to the products of Harley Davidson
The strategic framework of the company, however, seems to be a little rigid and overtly dependent on the market of the USA and on the upper economic strata of the passionate heavyweight bike lovers
In terms of market development, Harley Davidson, till the recent past remained rigid as they focused almost solely on the markets of the USA only
The company has now realized the need to expand their domain of operations to other markets in face of increasing competition in the heavy weight motorcycle industry
The company now ventures considerably in the new and impressively developing markets of the Asian countries specifically
Has started emphasizing on the needs of different types of customers who used to be outliers initially for the company as well as the motor-cycle industry
Has been d strengthening their diversification strategies
Has launched comparatively light weight bikes taking into account the affordability issues of the young population specifically
Has been competing Japanese competitors in terms of price and brand value
Launched bikes taking into consideration the increasing population of female motor cycle enthusiast across the globe
Among the primary resources and capabilities, which are required for the motor cycle companies to sustain efficiently in the market, are the following:
- Relationship with public-Not just specific to this industry, but also for any commercial enterprise, maintenance of healthy and productive public relations is of immense importance as it contributes to the profitability of the firms itself.
- Research and Development, Manufacturing-A robust R&D department and efficient manufacturing techniques helps the firms to gain huge comparative advantage in terms of cost effectiveness and quality development (Ulhøi 2012).
- Material as Needed- This is one of the immensely required capabilities for a firm to flourish in the motor cycle industry. Getting the materials as needed improves the productive efficiency of the firms and in its turn helps the firms having this advantage to gain competitive advantages over their rivals.
- Customization- In the motor cycle industry across the world, especially in the recent periods, the capability to customize the products according to the different needs and preferences of the customers belonging to different regions, characteristics and socio-economic strata is necessary for the firms.
- Product Diversification-To stay ahead in the already competitive motor cycle industry, it is required on part of the existing firms to keep on diversifying their products in order to cater to the changing demands of the consumers and to compete with the new and innovating companies entering in the market with innovative products (Allwood et al. 2012).
As discussed in the previous section, in the already competitive and constantly inventing and innovating motor cycle industry, to stay ahead in the competition as well as to ensure sustainability as well as increasing profitability, it is important for companies to have the above-mentioned resources and capabilities.
Resources and Capabilities: Harley Davidson
In this context, the resources and capabilities present or absent with Harley Davidson compared to other providers in this market, are discussed below:
Distributional Network- One of the primary plus points in the strategic framework of the company is the extremely efficient and effective distributional network. 85% of the dealerships of Harley Davidson is in the USA, which is considerably higher than any of its counterparts.
Service- Harley Davidson is extremely famous for its pre and post sales services, which is much better than many of the other companies present in the market. This in fact is one of the primary reason of high preference of the brand by the relevant customers, especially who are extremely passionate about their bikes.
Materials as Needed- The advantages of “MAN” is highly present with the concerned company for being in the industry for more than a century and enjoying worldwide demand as well as supply linkages. One of the key capabilities of the company is the ability to implement just-in-time production and scheduling system. This in turn reduces their cost of inventories (Agnihotri 2013).
However, the implementation of “MAN” often created problems for the company in terms of meeting surging demands for their products, thereby decreasing their revenue generation to some extent.
Customization- One of the unique capabilities of Harley Davidson is that it provides its riders to get an entirely personalized vehicle. There are multiple options for customizations for Harley Davidson products in terms of pegs, controls, seat bars, paints and there is also nearly a range of 7000 accessories available for the customers to choose from (Das and Ara 2014).
Product Diversification- This aspect is present in many of the competitors of Harley Davidson, especially those specializing in the low-weight vehicles, including companies like Honda. Honda does not only emphasize on utility motor vehicles but also produces and sells automobiles, power materials and has been recently venturing into areas including robots and others.
However, this is not an attribute of the strategic plan of the Harley Davidson, which plays adversely by reducing and restricting their clientele as well as domain of operations to a considerable extent. Harley, over the years, has been to known to cater to the higher income consumers and elite bike lovers, thereby lowering their opportunities to gain the huge middle-class clientele, which is acquired by the other counterparts like Honda, Suzuki and others.
Harley Davidson has been operating in the global motor cycle market for a prolonged period, which is much higher as compared to most of its competitors. The company has several key strengths as well as weaknesses, which are subjected to the nature to the strategic framework of the company as well as nature of the products they offer. The strengths and weaknesses of the concerned company and the mechanisms in which they exploit the strengths to combat the weaknesses can be analyzed with the help of an integrated SWOT analysis.
Strengths of Harley Davidson
Cult Brand- Over the years Harley has been able to transform into a cult brand itself and now falls in the segment of luxury cruiser bikes.
Customer Pull- The brand name popularity and good will of the brand, clubbed with its unique promotional strategies attract the motor cycle enthusiasts all over the world, thereby increasing its clientele.
Products- The strongest attribute of the Harley Davidson are the products, which the company offers. Over decades, the company has been famous for producing high-end, premium and customized motor cycles, which not only are of superior quality but has been consistently treated as a symbol of status among the customers. The company also pays immense importance to the needs and preferences of the customers and keeping the same in mind the company has recently launched Street 500 and 750 CC. The company also takes into account the aging issues of the existing customers.
Customer Loyalty- The Company enjoys huge clientele comprising of loyal customers, who are highly accustomed and comfortable with the service of the product as well as the company service policies. These customers, on one hand, does not tend to divert to any other company and on the other hand create more clients for Harley Davidson by contributing immensely to the good will build up of the company through the spreading of their word of mouth (Malär et al. 2012).
Financial Stability- The company enjoys impressive capital and financial stability which gives it the strength to compete with the new-comers as well as the existing rivals in the market.
Productive Efficiency- Being present in the market for over a century, the company enjoys huge efficiency in terms of production and cost effectiveness, which contributes to its strength in the market.
Weaknesses of the company
Manufacturing outside the USA- The company enjoys huge clientele in the USA due to its considerable presence in the market of the same. However, outside the country, the company only has one manufacturing unit in India and one in Brazil, which decreases its cost effectiveness and domain of operations.
Dependence on the market of the USA- The company is hugely dependent on the market of the USA and derives almost 65% of its entire revenue from the market of the country. However, growth is not unlimited in this market and with the entry of the new firms; the chance of revenue expansion of the concerned company is even more restricted in long run (Singh 2014).
Supply side dynamics- Harley Davidson seems to be rigid when it comes to building up the supply side linkages. The company tries to rely excessively on one or limited suppliers for their requirements. This in turn is expected to affect the long run profitability of the company as due to the absence of competing suppliers, the existing ones tend to enjoy price decisive power, which tends to increase the input costs of the firm and also contributed to the capacity constraints and limited production opportunities. This in turn is expected to create dissatisfaction among the customers.
The above-mentioned weaknesses mainly points towards the presence of rigidity and lack of integrating and inclusive attributes in the strategic framework, both in the supply side as well as in the demand side of the company. This in turn makes the company restricted in terms of market venture. The limited clientele as well as limited supply side linkages of the concerned company leads to the losing out of significant market share of the company to the competitive and experimenting companies. However, Harley Davidson has a counter strategy of exclusivity and brand name valuation to combat this weakness. The products of the company are one of a kind. They gain attention from those customers who crave for uniqueness and sophistication in the products, which they invest upon (Siegal 2014).
The SWOT Analysis also helps to study the threats, which the concerned company faces in the corporate environment, which are as follows:
Myopic Business Strategy- The strategic framework of Harley Davidson is to some extent short sighted as the company emphasizes excessively on the market of USA, which limits their future sustainability and expansionary prospects (Aurélia 2014).
Substitutes- The industry of motor cycle being already competitive, in the contemporary period, competitions have been globally expanding, especially in the heavyweight motor cycle sector as along with the presence of companies like Royal Enfield, Indian and Vector Motor Cycles, the new players are also capturing global market. This in turn is contributing to the fear of replacement of the products of Harley to some extent.
However, it will be wrong to assume that the company entirely ignores these threats as the concerned enterprise has been taking into account the threats as well as the opportunities to overcome the same in the global market. Harley has several potential opportunities, which if exploited wisely can help the company to get over the limitations and threats it faces and to attain long-term sustainability in the global market. The opportunities are as follows:
Opportunities for Harley Davidson
Markets outside the USA- In the recent periods, with the development of the Asian countries and with the integration of the global markets, the demand for the products of Harley Davidson has been considerably increasing in the Asian and European markets. With the presence of very few competitors in these markets, this poses as an immense opportunistic way for the company to expand their domain of sales. The company, in fact, has started taking this into consideration (Roese et al. 2017).
Low end heavyweight bikes- The company can gain a significant number of customers, especially young bike enthusiasts, by launching low end motor cycles which can be affordable to these young bikers.
Women Bikers- In the recent periods, popularity of motor cycles and the passion for the same have increased among the female bikers, the section being comparatively untapped. This gives the company an opportunity to take advantage of this increased demand with the help of pro-gender equal marketing strategies (Aurélia 2014).
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