This report analyses the strategy adapted by Harley Davidson. The report focuses on the business level strategies as well as corporate level strategies and how these strategies are important for the success of the firm in the long run. In addition to this, the report analyses the competitive environment of the firm and analyses the strategies adapted by Harley Davidson and its competitors.
BUSINESS LEVEL STRATEGIES:
Harley Davidson is known for the products with differentiation, products which are completely unique and different from others. For the production of its products and services Harley formulates various strategies. One of the key strategies used by the company was to promote 100th anniversary motorcycles in 2003. The company used this anniversary to advertise for their production line on the Open Road Tour. This was a successful strategy for Harley Davidson which featured unique paint projects and special recognition.
Focused differentiation: Harley Davidson focuses a lot on differentiation and it has been the most powerful brand because of this particular reason. Harley Davidson strongly focuses on the production of unique manufacturing as a result of which it has been a premium brand in the motorcycle industry. Harley Davidson focuses on the segments of heavyweight motorcycles with targeting the niche market.
In the year of 2009, Harley Davidson in order to manage the economic downturn which it faced in 2008 announced a program named Delivering through Focus. The aim of the strategy was to make long term improvements in manufacturing, development and the operations of business.
2012 proved to be a growing and highly profitable year for Harley Davidson. Revenues generated from the new motorcycles sales and earnings grew tremendously. The company has been successful with their strategies for instance the management has been successful in improving in operating efficiency, resilience and receptiveness to its customers. Harley Davidson’s strategy is to make improvements in development of products and enhancing their growth globally and these strategies have proved to be well. Harley Davidson has never stopped growing, after having achieved so much it is still moving forward aggressively to raise their functionality, their operations and performance (Harley Davidson, 2012a).
In 2008, CEO of Harley Davidson made it clear that their focus would be on the long term financial and operations. The company has kept its levels of production low for their dealers to have low levels of inventory and the management has decided to continue this strategy for the betterment of not only the company but also for the betterment of its business’s dealers (Harley Davidson, 2009)
Economic Environment Strategy:
The company has focused on three areas where it needs to work on; priority to invest in the brand itself, work on the cost structure and to receive HDFS in order to help its dealers to sell their motorcycles and to make their retail buyers to buy them.
Investing in the brand:
The company has continued its work on innovative products and has focused on the growth of the company by targeting more riders including youngsters. The company has decided to continue their support for the development of product, dealer and marketing activities which helped the company to grow its sales currently.
- Combined the two engines and plants in the Milwaukee area in Menomonee Falls.
- Combined the operations of paint and frame to be in the assembly facility.
- Closed its distribution center in Franklin and combined the parts, accessories and general merchandise distribution through third party.
- Shut down its transport operation (Harley Davidson, 2012c)
Harley Davidson Financial Services:
Harley Davidson Financial Services has helped the company in gaining competitive advantage. HD allows its customers to make their customers insured and financed through Harley Davidson Financial Services. In 2012, not less than half of the new motorcycles were financed by HDFS that were sold in the U.S. $285 million were recorded by HDFS in the operating income; this shows the strength of the company and how successful the strategy has been (Harley Davidson, 2012a).
The cost structure would be the most important factor for the long term success of the company because if the company is incurring too many on its products with targeting a niche market then it would be more costly for the business to run and to make profit in the long run. Cost structure is the main aspect which can make a difference for Harley Davidson in the long run. Cutting down the less added value activities would be beneficial for the company.
Internationally the retail of Harley Davidson has extended. Harley Davidson has invested prudently in the emerging markets as a result a strong brand appeal and various operations and distribution networks have improved. Harley Davidson has expanded its sales by targeting young customers not in America only but in other countries as well including the African American countries. The company introduced new Harley motorcycles to new generation and for new segments. The company expanded its market in 18 countries including India and it is continuously seeking to enter in to those markets where opportunities are present for growth. Spreading Towards Dreams:
Harley Davidson transformed its products towards women and the company fulfilled the dreams women had. Harley Davidson recorded 39.2 percent sales in Latin America and 14.2 in Asia Pacific from this particular segment. Being a rider everyone seems to have a dream of riding something which he/she feels of extraordinary, Harley Davidson gave the opportunity to the global customers to achieve those dreams.
Customer-led Social Media Strategy:
Customer-led Social Media Strategy was developed in 2012 by Harley Davidson. The strategy included recommendations and feedback of the customers globally, this way the company might know the values of its customers and what they perceive (Harley Davidson, 2012b)
Dealer network strategy is the most important as far as the corporate level strategies are concerned, apart from HDFC. As long as the company is growing globally and expanding to those markets where there is an opportunity, it reflects that the company is goingin the right way.
Harley Davidson produces motorcycles in Canada, Europe, Asia and US. Companies like Honda, Kawasaki, Suzuki and Yamaha are selling more motorcycles in numbers in all these regions as compared to Harley Davidson. One main issue that Harley Davidson is facing is that it targets a niche market, while other brands are more diverse in their product lines. Competitors of Harley Davidson wholly exist in the motorcycle market, whereas Harley only exists in the Heavyweight motorcycles. All these competitors have implemented the strategies of using their brand image from the automobile industry and to use it in the motorcycle industry. This is the strategy with which competitors have been successful over HD especially in Asian Countries (Global Data, 2012)
The cost structure strategy is the one where Harley Davidson needs to improve. Being efficient in cost will also help them to be more successful in those markets where they are lacking. Competitors of Harley Davidson have been successful as they have adopted the same product offering strategy which Harley has been known for years. There are competing firms in the industry that are known for manufacturing custom bikes and are known as custom bike specialists such as American Iron Horse and Big Dog Motorcycles. However Harley Davidson has been successful in keeping its brand image over some years.
Companies like Honda, Suzuki and Yamaha could be more successful than HD in a fast cycle market because HD’s competitors would have a relative low cost structure which would enable an increase in production. These companies are more successful in Asia also so they can have a less lead time as compared to HD. Competitors do not target a specific market but they target every class, but as far as slow-cycle market is concerned Harley Davidson has a competitive advantage by focusing on differentiation for a long term, its products uniqueness, which other brands cannot outperform so easily. HD’s competitive advantage is being shielded and its imitation is very costly so other competitors would have to think twice before challenging HD in a slow cycle market (Global Data, 2012).
Global Data. (2012). Harley-Davidson, Inc. - Financial and Strategic Analysis Review. Retrieved June 8, 2013 from http://hbr.org/1988/11/fast-cycle-capability-for-competitive-power/ar/1
Harley Davidson. (2009). Harley-Davidson Reports 2008 Results, Plans Lower 2009 Shipments And Unveils Strategy For Current Environment. Retrieved June 8, 2013 from http://investor.harley-davidson.com/phoenix.zhtml?c=87981&p=irol-newsArticle&ID=1289424&highlight=
Harley Davidson. (2012a). We Are Unified In Purpose. Retrieved June 8, 2013 from http://ar.harley-davidson.com/letter.php
Harley Davidson. (2012b). Freedom’s Global Tour. Retrieved June 8, 2013 from http://ar.harley-davidson.com/marketing.php