MGT CASE 5
Harley Davidson is a legendary motorcycle manufacturer and a brand with an iconic status. This paper indicates the strategy that made this company successful, points whether this initial strategy was altered or remained unchanged. It gives arguments why the strategy chosen by Harley Davidson fits both the internal resources and competencies of the firm and environment of the motorcycle industry perfectly. Recommendation based on the thorough analysis of the above mentioned strategy is provided to the executives of Harley Davidson Motorcycle Corporation.
Analyzing the milestones of Harley Davidson success, it is essential to point that it is based on the following. Harley Davidson was established in 1981 and starting from that point it chose the right strategy for the luxury market segment representative. The CEO of Harley Davidson, Keith Wandell, states that the Companys strategy is all about doing the best possible job for customers (Harley Davidson Official Website, 2013). The success of building enduring brand is supported by the statistics. In 2012, earnings per share increased by 16.7 percent. Total revenue growth accounted for 6.2 percent worldwide in 2012. Almost 250 thousand motorcycles were sold worldwide; more than 39 percent was the share of Latin America sales.
Harley Davidson established a very strong brand and promotes unique spirit that each customer gets when buying its high-quality motorcycle. Since 1903, unique and bold purpose of Harley Davidson has been to create an opportunity for thousands of customers to fulfill their dreams of personal freedom when they can forget about the routines of everyday life and be themselves.
More than 110 years Harley Davidson has been building a strategy not just being a responsible seller but a central part of its customers lives. Its motorcycles, well-designed and professionally manufactured, allow them to express their individuality and experience a feeling of belonging to the culture of freedom (Harley-Davidson Annual Report, 2012).
Harley Davidson positioned itself as the luxury brand and set a high price for its vehicles. However, this price policy was based on the desire of the customers to be a part of the culture without caves and boundaries, and readiness to pay extra. In the U.S. market, share of the heavyweight (651cc+) motorcycles grew to a record 57.2 percent in 2012 that is a strong argument towards following this pricing strategy in the future (Harley Davidson Official Website, 2013).
It should be underlined that Harley Davidson tries to pursue its strategy steadily. However, recent economic cataclysms and increasing business activities of competitors such as Japanese manufacturers Honda, Suzuki, Toyota as well as American made Indiana and Victory made it necessary to improve a strategy. Together with the ambitious strategy to increase its international presence, Harley Davidson improves companys flexibility, operating efficiency, and responsiveness to its customers. In 2012, Harley Davidson completed the transformational restructuring of product development and manufacturing operations. In the same year, Harley-Davidson obtained $280 million in annual savings from restructuring. In 2013, this figure is expected to be equal to $305 million (Harley Davidson Official Website, 2013).
The top management of the company in a timely manner analyzed a situation at the domestic market and after seeing the saturation of the market and increased competition - turned its attention to emerging market of India, China, Europe, and Latin America. Currently, Harley Davidson strategy is to implement world-class manufacturing and product development capabilities, enrich the retail experience, and grow companys reach among new groups of customers globally (Harley Davidson Official Website, 2013). Analyzing a trend of aging baby boomers as the main customers segment and potential decline in sales, today Harley appeals to its outreach customers. It should be underlined that in the U.S. main Harleys market, the sales to the outreach customers grow faster than to the core customers, which evidences about the great potential that this market segment has.
Regarding the issue of the fitting the strategy chosen by Harley and the motorcycle environment, it is necessary to underline that according to the Motorcycle Industry Profile (2012) competition in this industry is very intense based on the quality, price, design, reliability, and after sales services. Harley Davidson invests huge sums into the research and development of its motorcycles both in manufacturing and design. The company chose a path of being an innovator and trendsetter in the motorcycle industry, constantly keeping the interest of its customers high and thus increasing their loyalty to the brand. Advanced manufacturing system allows the company to be more flexible to the seasonal fluctuations and change in demand relating to the economic circumstances.
Statistics confirms that Harley Davidson with its iconic image increases its market share both in the main U.S. market and in the international market. The sales in the international market account for more than 40 percents of the total sales in 2011, while in 2006 this figure was equal to 20 percent. According to the Harley-Davidson Annual Report (2012), the company opened 31 dealerships in 18 countries including India, China, Russia, Turkey, Malaysia, and others.
It is crucial to underline that the most valuable advantage that Harley Davidson possesses is related to its famous, incomparable, legend, and unique brand. Harley vehicles became a part of life for people valuing individuality and possibility to feel the culture of freedom. Harley Davidson main competencies finding its reflection in the innovative approach to the manufacturing and design of its legendary motorcycles, high quality of vehicles and reliability create prerequisites for enlarging the target audience today. According to the Harley-Davidson Official Website (2013), sales to U.S. outreach customers grew at twice the rate of core in 2012. In each of four demographic groups such as females, young adults 18-34, Hispanic riders, and African American riders that represent new generations of riders and outreach customers for Harley Davidson, the company is a leader in the U.S. motorcycle industry. Motorcycles sales for women amount to almost 12 percent of the total Harleys U.S. sales and are increasing constantly (Harley-Davidson Annual Report, 2012). Fulfilling dreams of personal freedom is a strategy that is successfully implemented throughout all 110 years of operations.
It is crucial to underline that Harley Davidson team conducted an in-depth market analysis and found the way the company could transform its weaknesses and external threats into the opportunity and success. It is highly recommended for Harley to follow the chosen path of business restructuring to cut operational costs and concentrate its attention on the core business that guarantees increase in sales and profits. Moreover, enlarging business scale through international presence will protect the company from the U.S. domestic market volatility and increase Harleys customer base and market share. In addition, it is necessary to produce new outstanding motorcycles that will exceed even the boldest expectations of the customers and try to increase its customers base attracting such outreach customers as females, young adults 18-34, Hispanic riders, and African American riders.
It is essential to point out that Harley Davidson current top management has chosen the right strategic path with incredible opportunities and tremendous untapped potential. Maintaining its strengths such as the famous brand, high quality products, and innovative design, the company switched its attention to the new customer segments and new markets. Moreover, Harley implemented a restructuring policy that allows it to increase the efficiency of its operations. Focus on the international markets will guarantee the new sales markets with a huge growth potential.