Harley Davidson

MGT 499 Case 3

Harley Davidson is one of the most prominent and successful motorcycle manufacturers in the United States and the world in general. The company was formed in 1903 in Milwaukee, Wisconsin and enjoys a hundred year history of manufacturing quality motorcycles for consumers. To date, competition has grown over time considering entrance of new manufacturers from US, India, Japan, Europe and lately China. During the First World War, the US government was instrumental in giving HD a boost with sales since its military used a lot of them for the war (Gerst & Churchill, 2009). The improvements in engine design (V twin) ensured that the company remained a market leader for a long time to come. In the mid 20th century, towards the end of the millennium, the company experienced tremendous changes of ownership and partnerships and by the time it was celebrating its 100th birthday, most of its ownership had returned to the founding families, Williamson and Davidson. The company operates in two specific segments which are Harley Davidson Motorcycles and Related Products.

Opportunities for HD

One of the greatest opportunities for Harley Davidson is the expansion initiative towards the growing markets for motorcycles in India and China. These are economies which are as large as US markets especially in the case of China. With populations of over a billion people each, expansion into these markets ensures that the motorcycle company and other products has close to 2 billion potential market for its Motorcycles. With strong brand equity out of 100 years of experience and service delivery, it would be easy to find a ground to begin in the markets as suggested by Schembri (2009). On the other hand, there exist competitors in these markets such as the German manufacturers and Japanese manufacturers, which implicates that a market share of just 10% reflects a huge chunk for a population of 2 billion people. The other opportunity which the company enjoys is on research and innovation activities in which the company needs to engage in. From the developing revolution in technology and the internet, the company needs to incorporate these features to its Motorcycles just like the other manufacturers.

Threats to Harley Davidson

One of the greatest threats to Harley Davidson is the new greenhouse emission standards for all vehicles. In markets such as European markets, new standards have been set for carbon emissions in an effort to reduce global warming (Gerst & Churchill, 2009). This means that companies have to start looking away from Carbon as the chief source of energy for Motorcycles and start investing in Green Energy which compared to carbon is very expensive. To date technology has not yet come up with any other source of energy that comes close to carbon in terms of efficiency and cost. Investing into green energy is very expensive and the new emission standards are actually a big threat not only to Harley Davidson but also to all other vehicle manufacturers. The other huge threat to the company is the competition threat from other manufacturers in similar industry as reported in Schembri (2009). Although the company has survived decades of competition in its local market, globalization has opened doors to new competitors into its domestic US market. This means the company may start experiencing shrinking market share and failure to expand may mean reduced revenue.

The natural resources and raw materials are also the other section where Harley Davidson experiences real threats. Procuring raw materials has become very hard for Harley Davidson due to the changing political climate in the countries that are the chief indigenous suppliers. This means that friendly companies are able to acquire the raw materials at highly reduced prices while the other companies are paying more to the same amount of raw materials. This reflects all the way through the supply chain making Harley Davidson’s products more expensive in the market while its competitors are marketing them at a cheaper.

Another great weakness for Harley Davidson is its huge dependence on the domestic United States market (Joans, 2001). Although the market is huge enough for its production, globalization has opened doors making other manufacturers like BMW and Honda Yamaha among others making sure that its market share is shrinking with time. Some of these manufacturers have established a footprint all over Europe and Asia and have a strong financial muscle to bully their way into the US market. This calls the measures mentioned above of expansion, innovation and research a matter of urgency for survival of Harley Davidson.

The Lehman Trikes case

In the Lehman Trikes case, Harley Davidson engaged in a deal that involved it to move away from its flagship two wheeler motorcycles and move to three wheeler motor cycles. In the deal, Lehman Trikes was to be the chief supplier of the three wheelers to Harley Davidson (Looney & Ryerson, 2011). The deal was unveiled in 2008 when the US was at the heart of global financial crisis which was threatening to send the economy to recession. The deal was both a win win situation for the two companies despite the voices of skeptics about the deal.

On considering the first case, Harley Davidson faced with growing competition and the threats mentioned above including the dwindling returns from the purchases of two wheeler motorcycles got an opportunity to break new ground of products. The other advantage for Harley Davidson was that Trike had a healthy balance sheet and was a market leader in its section of manufacturing (Looney & Ryerson, 2011). The company was on an upward trajectory considering the three wheeler motorcycle industry is still on its initial stages of growth. Therefore there was still an opportunity to grow further.  There is a general feeling in the motorcycle industry that a lot has been done on two wheelers such that the three-wheeler has been in one way or the other forgotten (Looney & Ryerson, 2011). Therefore the entrance of Harley Davidson means that the market starts looking at three wheelers differently.

On the other hand, Lehman Trike got a huge boost with striking a deal with Harley Davidson due to the image which the latter projects in the US market. Its public image shot up in strides with the association with Harley Davidson. In addition, Harley Davidson has the capability to put the three wheelers on the shelves of practically every town in the United States and beyond which was a huge opportunity for the small company relatively. This meant that the company would ride on the Harley Davidson name and brand portfolio which would reflect to increased sales and a good platform to grow its own name and brand.

References

Gerst, M., & Churchill, J. (2009). Harley Davidson: all the motorcycles 1903-1983. Sparkford, UK: Haynes Pub.

Joans, B. (2001). Bike lust Harleys, women, and American society. Madison: University of Wisconsin Press.

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.

Schembri, S. (2009). Reframing brand experience: The experiential meaning of Harley–Davidson. Journal of Business Research, 62(12), 1299-1310.

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