Harley Davidson is the world’s leading manufacturer of heavyweight motorcycles. The company is based in Milwaukee, Wisconsin and has been producing motorcycles for more than 100 years. The company provides wholesale and retail financing and insurance programs principally to its dealers and customers. It operates in two business divisions: motorcycles and related products and the financial services. The company undertakes strengthening its marketplace position through launching new product, reorganization programs and tactical alliances. The company operates in an industry characterized by fierce competition. Its main competitors include Yamaha and Honda. Initially, the company operated in the United States and the European markets but of late it is venturing in the emerging markets (Scott, 2008).
Strong brand image, operational efficiency and wide range of products and services on offer are the company principal strengths. The company boasts of one of the strongest brands in the world that has helped the company in attracting and retaining a loyal customer base. The company managed to establish a powerful brand image with its motorcycles attaining iconic status and being ranked among the most valuable brands in the world. Harley Davidson is permanent feature among the top 100 brands in the world. The high level of innovation and heavy investment in research and development has enabled the company to build motorcycles known for resilience, superiority, design simplicity and long-established styling. The creativity of the company has enabled it attain industry recognition for superior quality, robust performance, best design and unwavering customer confidence as well as loyalty and trust in its products. The company controls over 50% of the North American heavyweight motorcycle market while it is highly rated in a number of European markets taking the first or second position (Scott, M. (2008).
Secondly, the company offers a broad range of exclusive products and services to its dealers and customers. There are diverse products designed to meets the needs of various customers including heavyweight customs, performance and touring motorcycles in addition to motorcycle parts, accessories and general products. The company provides wholesale and retail financial services for its products through the company’s financial services division giving the company a competitive edge in the lucrative North American market. Some of the financial services to its dealers include floor plan and open account financing of motorcycles and their parts and accessories. In addition, the company’s operational efficiency is on an upward trend through successful cost-cutting measures that has boosted its operating income and margin. For example, the company recorded a 5 percent increase in revenue in 2012 compared to 2011 while the operating income recorded an impressive 20.5% growth. The low cost of operation has played a critical role in enhancing its margin (Harley-Davidson, Inc., 2013).
Nonetheless, the company has major weaknesses that it has to handle to compete effectively in the competitive industry. Foremost, the company has a limited customer base. The company solely relies on the US market as the major source of revenue. In the financial year ended 2012, the company generated around 68% of its total revenue from the US followed by Europe at 14 percent. This presents business risk since the company will be more vulnerable to any change in demand side factors. An economic slump in the US and Europe markets would adversely affect the company’s operations. For instance, the company experienced reduced earnings due to the global financial crisis and the Euro zone crisis. The changing demographics in the two markets imply that the company will have to adapt into new strategies to survive (Harley-Davidson, Inc., 2013).
Next, the company has low level of diversification compared to its competitors. Yamaha and Honda have products targeting customers with varying income levels thus less susceptible to economic changes. On the other hand, Harley Davidson concentrates in the heavyweight motorcycle market where premium prices are charged. Economic changes as experienced in 2008 will have a greater impact on the company. Lastly, the company products are regarded as being expensive which can only be afforded by a limited number of customers. Harley Davidson believes that premium may be charged for its motorcycle due to the brand image but the company will find it hard to attract new consumers unless it offers competitive prices (Scott, 2008).
In response to overreliance on the US market and the risks involved, the company is targeting the emerging markets to expand its market share, increase sales and revenues. The rising income levels in countries like India, Taiwan, Brazil, Thailand and Vietnam and the low market penetration offer huge potential for growth. The company has also altered its marketing efforts in a bid to appeal to the young people and women. Previously, the company market initiatives targeted middle-aged men only. The company has also outsourced its manufacturing processes to reduce the cost of production enabling the company to offer its products at better prices. In addition, the company is planning to introduce low cc motorcycles that are relatively cheaper as it endeavors to diversify (Dyck & Neubert, 2010).
Harley Davidson future outlook is bright. Its decision to enter emerging markets presents growth opportunities as the income levels in these countries rise. An increasing number of people in these countries have sufficient to afford luxuries such as motorbikes. Similarly, outsourcing would permit the company price its products competitively thus it gaining a competitive edge in the industry.
References:
Dyck, B., & Neubert, M. J. (2010). Management: Current practices and new directions. Boston, MA: Houghton Mifflin.
Harley-Davidson, Inc. (2013). Harley-Davidson, Inc.: Annual Report.
Scott, M. (2008). Harley-Davidson Motor Company. Westport, Conn: Greenwood Press.
