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Harley-Davidson Strategic Analysis
Transcript of Harley-Davidson Strategic Analysis
H-D's core US customer (40 - 49) is set to decline 2.5% between 2010 to 2015
Global market lead, Honda introduces 2 new engines every year; Japanese rivals' average is 1; European average 1 every 2 years.
Increasing importance of fuel efficiency, reduced emission, safety and agility.
Market Based View
Compiled using SEC 10-K reports, January 30, 2013.
Resource Based View
Organization Based View
Strategic Issues Prioritization
Key Strategic Issues
Future Strategic Options
Harley-Davidson Case Analysis - Group 27
Strategy Evaluation - SAF
Key Strategic Issues
Economic downturn since 2008
Asian competitors have wider global distribution network
Unable to keep up with industry technological advancements
Lack of focus on new generation safety and environmental conscious customers
Inability to share R&D costs across SBUs
New pollution and safety regulations
Individual Competitor Analysis
Higher cost of production
Rivals have multiple SBUs and share resources
Competitors have better customer-service record
Narrow product portfolio compared to competitors
History of recalls tainting brand reputation
Declining growth in mid-aged to old customer segment
Competitors own significantly more patents than H-D
Excessive commitment to tradition
Steady decline in consumer spending on luxury products especially in North America and Europe (H-D's major markets)
HOG's image as an "all-American" motorcycle cult; lack of connection to younger buyers
Buell exit, a strategic mistake as it was well known for its innovative capacity
New EU and North American regulatory barriers on emission, safety and recycling
Porter's 5 Forces
Changing customer taste in an industry where bargaining power of buyers is high
Japanese manufacturers have cost advantage from economies of scale.
Intensity of competition is very high as the industry is fragmented
Insubstantial spending on R&D, NPD
Poor distribution channel quality
Manufacturing capability dependent on cheaper component imports from Asia
Poor sales support
Lagging behind on design and technology
Financial Result Analysis
Resources & Strategy Analysis
Value Chain Analysis
History of recalls affecting reputation: 2008 (47,579), 2011 (300,000), 2013 (29,000)
"Club" like mentality of HOG
Highly market focused
US dealerships- poor stock and indifferent customer service
Acquisition failures- 2008 (MV Agusta for $105 million, sold in 2010 for $3.9 million; Buell exit in 1998
Product development efforts are limited to styles changes, new paint designs, and engineering improvement.
Strong American style culture is not suitable for international expansion.
Extremely high Total Debt/Equity ratio, 2013: 163.23% (Source: NASDAQ)
Current ratio lower than industry average; implies high inventory
loyal customers are losing interest because everyone has a Harley bike
Younger customers less interested because of Harley's aging rider image
Japanese manufacturers imitate engine type, releasing similar cruiser motorcycles at lower price, as they have cost advantage
H-D parts are bought from many suppliers and small manufacturers increasing manufacturing cost due to lack of bargaining strength
Customization option increases production cost due to lack of economies of scale
Tension between management and trade union
CSR & Ethics Analysis, Mission, Vision & Objectives Analysis, Cultural Web Analysis
H-D motorcycles are recognized as loud, gas-guzzling and heavy
Management culture is reactive, i.e. strategies based on current situation or lessons learned
Mission statement doesn't stress on sustainability & technology focus
Acquisition failures, net loss discourages stakeholders & affects stock price
Lack of focus on younger riders, women and ethnic minorities.
Falling behind on investments in R&D and product innovation.
Declining market share and impact of economic crisis in Europe and NA.
Narrow product portfolio
Increase investment on R&D/Product Innovation
H-D's dominance and experience in heavyweight segment, international brand awareness can be leveraged if these strategic plans are implemented.
Strategic drift from tradition to market focus is necessary to utilize dynamic capabilities for future growth.
Key to success will be product differentiation strategy, introducing new and innovative designs suited for regional demand in developed and emerging markets.
USA - 2010
Source: MSN Money