Identification of Harley-Davidson's strategy and its rationale explaining its resources and capabilities. After that i compare these to those of Honda. Wfat does my analysis imply for Harley's potential to establish cost and differentiation advantage over Honda. Knowing that, what threats does Harley face? And then how Harley can sustain and enhance its competitive advantage?
Question 1: Identify Harley-Davidson's strategy and explain its rationale.
The fundamentals of the Harley-Davidson business strategy turn around three main points: The products, the relationship between the company and consumers, and the distribution network.
First of all, before I explain these three policies, we can try to see what was the problem that Harley-Davidson had to solve, and why it needed a real strategy to possess a higher competitive advantage. Actually, how the firm could evolve facing an important concurrence, with keeping a strong brand identity?
The main part of the concurrence is Japanese (Honda, Yamaha, ...), which enjoys numerous shares on the market, thanks to its low prices, technology modernity, reliability and comfort. Nowadays, the concurrence is also British with "Triumph" and Italian with "Ducati". So, Harley-Davidson had to change, to revolutionize several aspects of its brand, in order to continue to recruit new customers, but without evolving too fast, otherwise the company would lose its image, and its loyal & traditional bikers. Indeed, if a firm like Harley-Davidson (where the sense given by the brand includes a strong power) changes too fast, this one will lose the reason that gets consumers to buy its products. That's why HD had to adopt a real strategy.
1/ The products policy: is the field where the company took the most significant risks.
On the one hand, this plan was characterized by the "Buell" acquisition in 1998 (Producer of more sportive motorbikes). HD decided to acquire this firm to enlarge its market to the younger segment.
On the other hand, within this strategy, we can stress the importance of constant technical innovations with the launch of new engines like the "Twin Cam 88" engine in 1998 and the "V-Rod" in 2001, which were successful, but included a lot of risks for the image of the group and the traditional brand.
Furthermore, the company tried its best to keep the lifestyle of the brand, and to continue to make it unique. That's why, even if Harley took risks by creating and differentiating its products (new designs, merchandising,...), it managed to conserve the main elements of the traditional motorbike. It paid special attention to respect of the brand, its product, look of the engine, its noise. In other words, the company, despite innovations, succeeded in keeping its personality, the personality of a legend.
Finally, we can mention the important benefit created by the sales of accessories, and "general merchandise" whose clothes, which represent by 20 percents of total sales (500 millions of dollars every year), more than all other competitors on the market.
2/ The relationship between the company and its consumers: HOG (Harley Owners Group): the most important Fan club in the world. There are 750 000 members in the world who pay 60 euros/year and have to buy their motorbike on a HD's dealer. This group is a family. HOG was created to develop the company involvement in consumers' riding experience. Through this organization, Harley tried to deliver to customers, the sense of community, the traditional mentality of the firm, feelings and an atmosphere upon the brand. Actually, throughout the 1980's and 1990's, a key challenge for Harley was to extent the loyalty and passion of traditional Harley owners.
3/ Distribution network: Upgrading HD's distribution network was a key aspect of Harley's development strategy during the 1980's and 1990's. The company imposed stricter rules for dealers of the brand. Indeed, to be closer with needs and wants of consumers, the...
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