Case Analysis Harley Davidson
Question 1: What are the strengths and weaknesses of Harley-Davidson?
Strengths of Harley-Davidson
1. Strong brand image.
Over 110 years, Harley-Davidson have created strong brand image in the world. It is not only because of the high quality and performance motorcycles that provides great riding experience, but also due to the special life style that it brings to its customers. It also keeps sponsor and hold national and local rallies and activities to enhance its influence. 2. Innovation.
The development of Harley-Davidson is also the development of innovation. In order to keep the competitiveness, Harley-Davidson focuses on innovation of product (high performance engine and transmission, customized product), manufacturing (MAN program and SOC 3system), management (companywide employee involvement program and quality circles program), and Marketing (Harley Owner Group and SuperRide). 3. Customer Loyalty and acquisition.
One marketing strategy of Harley-Davidson is close to the customers. Thus, the company started the Harley Owner Group (705 chapters and 154,000 members in 1991)and SuperRide Program. The rallies and events that Harley sponsored or held created a social community for its customers and increased the customer loyalty and acquisition. 4. Pricing.
The strong brand image gives Harley opportunity to charge premium-price. Compare with its competitors, Honda, Kawasaki, Suzuki and BMW, in superheavyweight market, Harley’s price is higher, and the market share was keeping increasing to 62.3% in 1990. Harley also set lower price for entry level motorcycles in order to gain new customers, and these new motorcyclists could trade up to a more expensive model later. 5. Advanced manufacturing techniques.
The MAN program and SOC system help Harley reduce manufacturing cost, inventory level and lead-time while keep the high quality. So that it increase the company’s profitability and competitiveness. 6. Strong financial position.
Harley-Davidson went public on American Stock Exchange in 1986, raised an additional $65 million and obtained over $90 million. The great financial position gave them the chance to buy Holiday Rambler Corporation.
Weakness of Harley-Davidson
1. Lack of global expansion
Although 31% of Harley-Davidson motorcycles exported into oversea market and the revenue from these markets increased over fourfold from 1986 to 1990, the markets were highly centralized in Europe and Japan. With the globalization, Harley-Davidson cannot overlook the markets in Asia and Latin America. 2. Narrow product line
Harley-Davidson made a correct decision that is focused all its efforts on the superheavyweight market to carry them through hard times, and it indeed had 62% market share in superheavyweight market segment. However, in long run, the narrow product line limits its customers. That means its products are only for those who like superheavyweight motorcycles. It will be the weakness in the competition with major motorcycle manufacturers, like Honda, Yamaha, and Kawasaki. Just like super sport car manufacturers, Lamborghini, Ferrari and Aston Martin, they are very successful and focused on limited customers, but they all finally were acquired by major auto manufacturers, like Volkswagen. 3. Low Purchase frequency
The period from 1983 to 1990 was the rapid evolution time for Harley-Davidson, the sales increased drastically. However, the market may be saturated in next several years, and due to the low purchase frequency, Harley-Davidson may soon reach its bottleneck
2. What are the opportunities and threats of Harley?
Reflecting on this case study, it is clear that Harley Davidson is faced with many opportunities and threats. One of the most apparent threats is competition amongst other well-established motorcycle manufacturing companies. According to Exhibit 7, in 1989 Harley-Davidson had only around 14% market share, compared to the...
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