The HD case study is a comprehensive case showing management issues that may lead to company or organization failure and ultimate dissolution. However, the turnover and change in management with a positive strategic business approach evident show the role of diversification and visionary leadership a significant component able to make struggling investments to have positive turn around in productions.
The HD’s management strategy failed in its market acquisition and capturing the window opportunity available because of various management incompetence. Honda, the main competitor developed a new and highly competitive approach to marketing the none traditional motorcycle models. The focus was shifted to lightweight models and brands quite attractive to new customers that did not have an attachment and loyalty to previous products provided by the Harley-Davidson brand. Despite the incursion by the new product provider, the company did not have a strategic business and competition counter strategy (Hartley, 61).
Harley-Davidson assumed the preferred giant status of the century, but with complacency eating through its roots, a "smallish Japanese" intruder was encroaching on its backyard with little attention (Hartley 61). With a market dominance of 70% that it had gained through six decades of building loyalty and instilling the American pride of home-made merchandise, it seemed like it continued to wield a heavy hand in the motorcycle industry with negligent competition. It took only half a decade for Honda, curved out of the war-torn ashes of the Far East, to drive Harley-Davidson to 5% total share of the market.
The scrapbook from which this small firm crafted cycles proved to be one that HD had missed in its timeline. HD's comeback in the 1980s may have been the resurgence of the old-time American model, but even though, it must have been too late. With the motorcycle industry exponentially growing in the mid-1960s, HD's sales remained relatively similar while the enthusiastic newcomers such as Honda went lightweight. Probably, by pocketing loyal customers and the “U.S. Police department that used its machines”, there was little to worry (Hartley 62). Not quite, as it turned out. The question that lingered before the comeback was where had HD gone wrong?
The delayed and late reaction to the new problem in the market was late as the competitor had done significant incursion hence any new strategy had to produce counter effects on existing established marketing strategy. The complacency and comfort exhibited by the company by being comfortable with their market base that included government customers made it not to focus on new and available client bases, especially in the public domain. The focus on these sectors of the customer base made the company not to focus on new and available client bases. Their absence in the wider market provided a ripe opportunity for their competitors to capture and retain new clients, hence creating a wider and sustained clientele.
Also, the greatest factor that leads to the inability of the company to grab and sustain the opportunity was the fact of not accepting that the lightweight motorbikes had a role in the American market. For a longer duration, they had self-denial that lightweight motorcycles would be a necessity in the product chain. Their reason that it can not have application in the scenario gave their competitors a cutting edge advantage, hence giving them space to capture clients and develop long-term customer loyalty. Moreover, their reaction lacked strategy as the product they imported lacked the quality and customer satisfaction that was associated with the Japanese products in the market at that point. Hence it played to their disadvantage failing to capture the highly elusive market by then (Hartley, 62).
The CEO could have prevented the impacts through visionary management approach backed with in depth research and development. Management and leadership of the company out to have applied visionary approaches to ensuring the future is not at stake. Despite the market share changes and great competition from the new entrants, little was done to counter the insurgence. There was a need for immediate and urgent research into the competitors' strengths followed implementation of lessons learned at the HD.
The company should have invested in the market and research production section. The approach could have ensured that their products were meeting specific client requirements, hence ensuring sustained customer loyalty. Quality control mechanisms should have been correctly applied to the key points of the production process, hence providing high outputs and better quality. Also, tariff protection played a significant role in resuscitating the operations of the company in the short and long term (Hartley, 63).
The market moves should have targeted the key players and motorbike enthusiasts from the initial stages. Management should have taken a front line in facing their concerns, hence attracting empathy and sympathy from their traditional and new clientele. The approach could have sustained their market share and significantly expanded into a potential client base, ensuring the continued expansion plus lifeline for operations.
IBM did not factor the changes applicable in the fast moving industry and primarily applied by its competitors hence did not develop an edge cutting management design. The approach is contrary to the style at HD that ensured that its key competitors formed one of their primary research points of focus. Moreover, IBM gave away some of its principal suppliers hence handing golden opportunity to its competitors. By focusing only on its initial product, the mainframe without reviewing the current market needs to make the company not to capture new products currently utilized in the industry. The approach formed a significant difference with HD that invested in new products in demand, including lightweight motorcycles that were in high demand but not their traditional products. Finally, HD had a core focus on satisfying customer needs, whereas IBM did not put the massive emphasis on this aspect as they were slow in converting laboratory prototypes into commercially available products.
The study provided significant lessons in management of operations in large organizations. One of the key lesson was that planning, operations and management have to weigh decision risks. The main purpose of organizations is to remain in business and be profitable. Hence, business strategies have to be careful to meet client needs through quality products backed by research. However, the research must be market based, companies must not be in too much debt, products must be unique, and importance must be placed on the differentiation of goods to ensure capture of key customers. In addition, diversification of products must be a key strategy, even if the business is performing well within a subset of the market. Finally, the management must face key problems head on and be involved in understanding production processes.
The company status has shown positive and significant sustenance over the years. In 2014 the company posted a share price increase of 18.3%, hence recording double-digit EPS increase for five consecutive years. The company net income has a 15% increase, operating margin increased by 18% and gross margin of 36.4%. The company has continued to post profits to the shareholders. The financial information is available on the HD website (Annual Review 1).
Work Cited
Annual Review. Harvey Davidson Financial Annual Financial Review. 2014. Web . http://ar.harley-davidson.com/letter.php
Hartley, Robert F. Management Mistakes & Successes. 10th Ed. Hoboken: John Wiley & Sons, 2011. Print.
