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Business analysis of Harley Davidson

This is a presentation about business analysis of Harley Davidson. To illustrate what business model Harley Davidson use and the strategy of their business model, it includes comparison of Honda business value chain, risk faced by Harley, and solutio
by

Effy Wang

on 14 August 2014

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Transcript of Business analysis of Harley Davidson

Recommendation to Harley
1.

2. continue the improvement of research and development
harley has developed production process
Callisto.ggsrv.com (n.d.) Untitled. [Online] Available at:
http://callisto.ggsrv.com/imgsrv/Fetch?banner=4d609cd7&digest=27b6b6d33026b58ef227e0025dda7d42&contentSet=SWOT&recordID=47405_GDAUT29887FSA (Accessed: 28/01/13).
Chan Kim W., Mauborgne R. (1997) "Value Innovation:The Strategic Logic of High Growth". Harvard Business Review,
Jan-Feb
Grant, M. (2010) Contemporary Strategy Analysis 7th edn. West Sussex: John Willey & Sons Ltd
Harley Davidson 2009 - 2011 Annual Report. [Online] Available at:
http://search.harley-davidson.com/?q=annual report (Accessed: 27/01/13).
Harley Davidson (2012) 'What is the value of a motorcycle? ' [Online]
Available at: http://www.youtube.com/watch?v=FcRfTjhA1qE(Accessed: 27/01/13)
The average of Harley-Davidson customer is extremely loyal – but now
47
years old

It is a risk that Harley-Davidson relies on the only suppliers to obtain raw materials

It is a risk that Harley-Davidson culture will become unpopular, lifestyle can change

Increase of competition on Heavy weight motor bikes
Economy recession lead to depressed demand

Competitors have more diversified businesses and they may compete in all segments of the motorcycle market
Short-term
Long-term
Cost leadership and Differentiation
"getting the right motorcycle to the right custom at the right time"
restructure operating system
1.All Touring, Softail and Tri Glide motorcycle are built under one roof

2.Complete Knock-Down(CKD)
5. Potential threats
6. Ways to Sustain
competitive advantage
Cost advantage
Differentiation
in 1986 Harley introduced JIT system to reach efficiency in production

in 2010 Harley&Davidson started modification of the plant in York that will afford production of bikes at lower cost and faster rate, fixed costs are reduced
Today Harley Davidson strategy is

“Delivering Results Through Focus”
International expansion
Continue its brand policy of providing "Heritage and freedom"

Differentiation as close relationship with customers is the most important equity of Harley & Davidson that is a main reason of :

loyalty of existing customers
attraction of new customers
Today HD is focused on promotion its own brand
It focuses on the market of super heavy bikes
several models were created for non-US customers
Harley Davidson's attempt to enter the other sector of lighter bikes was unsuccessful:
Buell product line is closed
brand "MV Agusta" is sold
Dealing with aging of customers
Tools for attraction of young audience
introduction of models for young people
(SuperLow Sportster, Iron 883)
Riders Edge program; Jumpstart roller
Financial services - "you can own your Harley with its Heritage just for the cost of the pack of cigaret a day"
organization of events
connection with young audience through internet
"In fact, we sell more new motorcycles to this generation of young adults than we did to the Boomers when they were young adults."
HD report 2010
Results of the company
2011
Contents

1. Strategy of Harley Davidson
2. Competition Harley Davidson vs
Honda
3. Cost analysis
4. Differentiation analysis
5. Potential threats
6. Ways to Sustain competitive advantage
7. References

7. References
Value chain analysis
Result of differentiation policy
R&D & Design
Purchase
components
manufacture
Quality control
Distribution and Inventory
marketing
Customer service
1. R&D budget $ 5.7bn
2. leader in automotive technology with one of the largest patent portfolio
3. innovative design
4. fast introducing competitors' design concepts
5. diversity of design/concepts
1. little investment in R&D
2. only selective application of modern automotive technology
3. strong understanding within main segment
4. mainly traditional design concept
5. customization
1. 400,000 units offer limited bargain power with suppliers

2. close collaborative relationship with small suppliers

3. standardize components purchasing
1. 10 million motorcycles are produced per year

2. global purchasing function

3. huge bargaining power
1. well-developed capabilities in total-quality management, just-in-time production, and team production

2. efficiency limited by production spread across 6 plants in US

3. low annual output
1. Strategy of Harley Davidson
[WHERE]
Heavy weight motorcycles
Clear focused strategy where Harley has the competitive position
Range of products and services:
- Financial
- Customization
- Entertainment (HOG)
- Rent
- Maintenance & Repair
1. Strategy of Harley Davidson
[HOW]
Differentiation advantage
- Sells experience, not motorcycles
- Image of American style
- Target on wealth, able to pay, people
Tools for achieving the strategy
- Design
- Marketing
- Customer support
R&D
Design & engeneering
Purchasing supply parts
Manufacturing
Paint
Distribution
Marketing
Dealer
services
Customer services
Copying money
Search for motorcycles
Visit to
dealer
Select model type
Customize
Finance
Insurance
Learn to ride
Accessories
Riding process
Maintainance
1. world dealer in high volume production

2. annual capacity over 1 million

3. advanced automation
Company should find other ways to reduce costs (R&D, further standardization, etc.)
1. strong dealer networking in US

2. good at managing dealer relationship

3. limited type of product
1. worldwide dealer networking

2. dynamic types of product

3. high volume of inventory
1. unique image in heavyweight bikes
2. brand linked with american culture
3. advertising is limited($ 89m)
4. Harley events/club
1. strong reputation for quality,performance, value of money
2. brand supported by advertising ($2.8bn)
3. using a single brand across a wide product range
direct linkage with customer
Almost entirely through dealers
Harley Davidson provides broad range of services, that makes value chain activities easier and more satisfying for the customer
Harley establishes relations with their customer that creates loyalty to its product
Internal integrity
focus on high quality product


External integrity
image of independence and individuality

Use role of psychological factor
4. Differentiation
Harley developed a new way of spending leisure time (HOG) for older people, whose life became a routine
Financial resources
revenue: $5.6 billion
net profit: $0.7 billion
VS
revenue: $121.2 billion
net profit: $ 5.1 billion
1. Honda has overwhelming superiority arcoss resources, capabilites, customer service and distribution

2. But Harley is more profitable
Harley Davidson-2013 Products
keep R&D low, concentrated on the technology of yesterday emphasizing heritage.
standardize components purchasing
To save marketing cost: free publicity from promoting events
1. EDI system and bar coding
2. engineers have close relationship with suppliers.
1. huge checking process within plants

2. advanced technology using to point by point check.
merge 6 plants into 3, outsourcing the common operation system in Brazil, India.
Price
Fuel consumption
American
lifestyle
Design
Service
Exclusivity
Speed
High
Low
While Honda Has advantage in technical factors and costs, Harley Davidson is trying to use cost position and differentiation to be competitive
Value curve comparison
vs
Solution of HD
Solution of HD
Solution of HD
Solution of HD
Value Chain of motorcycle production
2. Competition
Full transcript