In a competitive marketplace, the modern global automotive industry encompasses the main manufacturers, such as Ford, GM, Honda, Volkswagen and Harley Davidson (HD). During the 90s, the globalization of the automotive industry has greatly accelerated because of the emergence of new overseas facilitates of mergers between important multilingual automotive manufacturers. In the first decade of the 20th century, the motorcycle marketplace was distinguishingly crowded. Among other motorcycle manufacturers, Harley Davidson founders knew what they were up against. Surrounded by challenges and market threats, HD announced the launch of the new Tri-Glide three-wheeled motorcycle at the annual dealer meeting in Las Vegas, and having Lehman Trikes as its exclusive supplier of the Tri-Glide. In the current report we will figure out whether the alliance between them meets both of their goals on the one hand, and identify the benefits gained by each organization on the other hand, in order to understand the effects of external environment on both of them.
Depending on a customer-centric philosophy, HD founders and board of directors found their path to success by providing extraordinary motorcycles which fulfill the freedom passion of their customers to express their individuality, while creating superior value to all their stakeholders. Company values are the heat of how to run your business; as a leader American motorcycle manufacturer, HD sets certain values guiding the company practices which serve as a framework for decision-making at every level of the company. Working in the middle of high rivalry competitive marketplace acts as a challenge facing HD to commit to its values while achieving customer satisfaction.
Potential opportunities available for HD in motorcycle industry
Overseas Market Expansion: to overcome the crippling economic recession in the United States, HD board of directors made a decision to focus on sales and marketing opportunities abroad, in Europe and Asia, for instance, customer purchasing power was much higher than in the United States, because people in US were unable to purchase luxury items. Germany, Turkey and France presented generous opportunities for market expansion, the large number of residents in these countries with high income rates encouraged HD to expand its sales and marketing there to offset the decreased sales rates in the United States. Moreover, the Asian market is distinguished by having big number of emerging economies. High growth rates can be evident in China, India, Sri Lanka and Bangladesh enough to compensate the lower growth rates in North America Market.
Women and Younger Motorcycle Riders: with the increasing number of female and younger motorcycle riders, HD opportunity for sales to these segments sounds great. HD has a great opportunity to sell tons of its products to these population segments interested in bikes and motorcycles, moreover, conversion kits needed for motorcycle update present great potential sales and marketing opportunities.
Potential threats facing HD motorcycle company
However, marketplace does not present opportunities only; threats facing HD in motorcycle market can affect company performance and add more challenges to face. Some of these threats are:
- Increasing rise in the oil prices may affect the sales of Harley Davidson motorcycles, because they require heavy oil consumption
- Purchasing power presents evident challenge to HD, because younger riders have more choices and substitutes available to them. The increasing number of manufacturers increases the bargaining power of buyers.
- Regulations relevant to noise and pollution standards limit the production of motorcycle and force the manufacturers like HD to modify production physical specification in order to commit to environmental standards
- Increase in labor costs and international importing taxes
Now, let's examine how far the alliance between HD and Lehman Trikes positively affect both of them to determine the emergent opportunities resulting from this alliance.
Opportunities presented to HD and Lehman Trikes resulting from the alliance between them
The agreement of alliance was more profitable to Harley-Davidson than to Lehman Trikes. Revenue records in 2008 illustrates that HD revenues reached more than 5 billion dollars, while Lehman Trikes revenues did not exceed 22.6 million dollars. However, in a difficult time, HD faced a decline in shipments of motorcycles in US up to 13 percent from 2007 which affected HD share price to decline 63.7 percent in 2008. This crisis greatly affected HD performance.
For Lehman Trikes, the alliance opportunities were limited. The agreement with Harley Davidson was critical for the overall business; it caused an increase in employment in HD faced with employees' layoff in Lehman. Lehman's CEO expressed his worry regarding the yearly pricing updates and the threat of HD to not execute the full term of the agreement. Since 2008, Harley- Davidson decided to move the trike assembly in-house to their production facilities in Pennsylvania for 2011 models. Lehman will no longer provide conversion services and components in the manufacture of HD Tri Glide trikes, effective with the end of production of Harley-Davidson’s 2010 models in summer 2010.
This report performs a strategic analysis of HD motorcycles manufacturer and how can the company deal with market challenges while committing to its values in a complex global industry in order to figure out the market opportunities and threats the company deals with. We examined the alliance between HD and Lehman Trikes to produce the Tri-Glide three-wheeled motorcycles and how this alliance was more profitable to HD in gaining more revenues than Lehman that gained only limited opportunities from this agreement.
- Hiroaka, Leslie S. Global Alliances in the Motor Vehicle Industry. Westport, CT: Quorum Books, 2001, p. 1.
- Looney, D. C., & Ryerson, A. (2011). Lehman Trikes: A story within a story. Journal Of The International Academy For Case Studies, 17(7), 45-58. (Available via the Library by way of the EBSCO database).
- Huze, Cyril.. (2010, Jan. 16 ). In Harley-Davidson To Move 2011 Trike Production In-House From Lehman Trikes. Retrieved Apr. 1, 2014, from http://cyrilhuzeblog.com/2010/01/16/harley-davidson-to-move-2011-trike-production-in-house-from-lehman-trikes/