MBA 620 Managerial Economics
Professor: Keith W. Ballantyne
Case 2: Revving up for Relief: Harley Davidson at the ITC
Harley Davidson is an American build and recognized name; they leaded the way for future entrants. Harley-Davidson strong American brand and have dedicated clients that will continue the motorcycle trend. Based on the information in this case, I can’t be reasonably sure that the United States had a comparative advantage in producing motorcycles. If it were, then the U.S would produce the bikes at a lower opportunity cost than Japan. If the United States no longer has a comparative advantage in producing motorcycles, there should be a tariff and quotas to be imposed to ensure the survival of the U.S motorcycles. The Japanese are accustom to competition, and they can excel in product innovation; this is why they can keep their prices low.
To Harley-Davidson, the exchange rates are critical in determining whether they can compete effectively with its Japanese rivals. Based on the International Trade Commission criteria there were enough motorcycle imports to justify restricting such imports. This approval may have had ties to some political influences. On the other hand, there were many other solutions that could have been managed effectively in order for the company to maximize its return. Besides import competition of strong rivals that entered into the motorcycle industry, the rising fuel prices could affect Harley-Davidson and their suppliers. Another possible reason that led to Harley Davidson economic condition was from inefficient production methods and poor management.
If the relief had not been granted, Harley's creditors might have called in their loans, forcing the firm into bankruptcy. (Klien) After all, one of their bankers was one of the references to their case as evidence. Harley-Davidson already downsized, and if not granted relief, many more employees, and its suppliers could have been put out of work....
Cited: Identifying Harley-Davidson. (n.d.). Retrieved December 3, 2014, from UKEssays: http://www.ukessays.com/essays/business/identifying-harley-davidsons.php#ixzz3KuW8kQrq
Klien, D. (n.d.). Taking America for a Ride: The Politics of Motorcycle Tariffs. Retrieved December 3, 2014, from http://www.cato.org/pubs/pas/pa032.html
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