Situation Analysis for Harley Davidson Company Essay Sample
Harley Davidson Company is an American company that manufactures motorcycles for sale. It is located in Milwaukee, Wisconsin in the United States. Recently, the company has realized a significant increase in revenue. For instance, in the year 2009, the company recorded total revenue of about $4,781,909, which increased to $5 million in 2010 (Johan 6). It achieved the increment in recorded total revenue after incorporating four strategic pillars to ensure continued success and growth.
Four Strategic Pillars
- The first pillar is strong customer objective that is achieved by applying ethical business practices in order to develop an environmental friendly business and incorporate new technological designs to reduce GHG emissions.
- The second strategic pillar is aiming at improving its production approaches continuously by ensuring that manufacturing processes are being implemented in an effort to make new models of motorcycles and modify the existing models.
- The third pillar that the company upholds is the leadership development, where strong company leaders have the ability to make approvals and suggestions for the benefits of the company’s strategic plans (Huber 11).
- The last pillar that the company utilizes is sustainability in the maintenance of its future success. For instance, Harley-Davidson Company has come up with the environmental sustainability strategic plan that will minimize waste, energy and water use, and greenhouse gases emission.
The paper will provide a synthesis and an overview of the company’s current situation based on its internal performance, industrial perspectives, and environmental factors that are influencing the company’s performance.
Harley-Davidson Company has become successful due to its four major strategies namely: increasing plant efficiency, expanding international markets, creating strong brand loyalty, and selling its products to independent women riders. The company aims to achieve an intense brand loyalty through advertising its products in the market without discriminating the different types of customers it wants to attract. Therefore, the company welcomes all clients, which will enable it to identify its potential customers. It is proud of its motorcycles and works towards establishing a coherent and a long-lasting relationship with the customers (Scott 19). The company has also established a long-life relationship with suppliers, stakeholders, and the society, evident in the establishment of HOG organization. The second company’s strategy is to expand its market and include independent women riders. To achieve this strategy, Harley-Davidson Company has embarked on producing motorcycles that are not high from the ground to suit women riders. As a result, the number of women riders has gradually increased to 7.2 million out of 2.7 million riders hence increasing the company’s revenue. The third company’s strategy is to diversify its market and venture into other international markets. For instance, in 2011, the company expanded its market in Latin America and established a market headquarter in Miami. Additionally, the company is now implementing a multi-cultural and multi-general marketing strategy that aims at increasing sales to non-core customers such as young adults, women, and ethically, diverse adults. The last strategy that Harley-Davidson Company has adopted is reorganizing its plants in an effort to increase their efficiency. In this case, it has eliminated bottlenecks problem in the development process by loading manufactured products directly on the trucks hence doubling the staging capability.
The Harley-Davidson Company’s mission is to fulfill customers’ dreams through motorcycling experiences, by providing riders and the general public with a variety of motorcycles and services in particular market segments. Harley-Davidson Company vision is to be an international, action-oriented company, and a leader in its obligations to improve mutual beneficial relationships with shareholders. The company believes that primary success is achieved by balancing stakeholders’ interest, empowering all its workers and encouraging them to focus on activities that add value to the company. Harley-Davidson’s core values are fair, trust, respect of an individual, keeping its promises, and encouraging intellectual curiosity. It is not easy for the corporation to achieve these values; however, it has achieved its success through employees’ commitment, hard-work, and great leadership.
Harley-Davidson Company has six stakeholders namely suppliers, clients, employees, shareholders, society, and the government. Customers are individuals who cannot adversely affect Harley’s financial positions. Moreover, the company has very few dealers around the world, who also sell motorcycles to individual customers. Shareholders are either individuals or organizations who receive the company’s dividends and take part in making company decisions. As a stakeholder, the government takes part in setting regulations such as pollution policies that affect the business operations (Szymezak 16).
Over several years, Harley-Davidson Company’s revenue increased from $5.3 billion to $5.6 billion. Impressively, it has been able to cut down sales percentage relative to costs of its sold products from 71.59% to 70.69% resulting in a significant revenue growth from $734 million to $844.6 million. Currently, Harley-Davidson Company’s industrial operations are debt free since the company has maintained adequate liquidity profile and strong industrial operation balance that support the company in coping with the cyclicality of the industry. For example, in September 2014, the company’s debt-to-equity ratio was 5.8 to 1. The value of the company’s stock has rapidly grown over the last year, which has largely been attributed to customers’ brand loyalty. Such loyalty shown by the customers has resulted in a stock increase by 2.5%, hence increase the revenue by $1.1 billon.
Harley-Davidson is among the companies in the United States that are focused on implementing their innovation processes purposed to produce a bicycle that requires less physical effort to ride. However, there are patent rights and legal issues that affect motorcycles production processes. For instance, the company protects its intellectual property, including trade secrets and patents, and other rights related to propriety technology and innovation. The company believes that innovative patents are crucial to its operations as they constitute valuable assets that contribute to the business success. Harley-Davidson Company’s activity is subject to supervision and regulation by the federal administrative agencies, state agencies, and foreign government authorities. Mostly, these agencies impose statutory and regulatory requirements to protect clients against the exploitation pertaining to the sale of products and services. Therefore, Harley-Davidson Company’s operations are subjected to regulations and laws that may affect its credit granting operations, regulate interest rates and other financial charges, govern secured transactions, regulate customers, insurance coverage, and establish customer’s credit terms among others (Verweire 17).
Harley-Davidson Company operates in the global motorcycle industry. Over the past years, the industry has realized an exponential growth, which is anticipated to continue growing at even a higher rate and achieve approximately $93.7 billion by 2017. However, the growth of this industry has faced challenges over the last years that have lowered its growth rate. For instance, the 2011 earthquake in Japan and the disruptions that occurred in Europe caused severe shrinking margins and pricing pressures. Higher interests rates and rising fuel prices barred the industry’s growth for some time. In the future, the global motorcycle industry is expected to face technical challenges in its effort to achieve cost effectiveness, cope with pressures from domestic, industrial players and uphold emission regulations.
Harley-Davidson Company is the world leading company in the motorcycle industry. The company specializes in the manufacture of heavyweight motorcycles and motorcycle accessories, parts, and general merchandise like collectibles and apparel. The company stands a better position to compete favorably with its industrial rivals. Harley-Davidson performance is relatively higher than that of Yamaha and Suzuki. For instance, the firm recorder $760 million net income in 2003, which was a 30% increase compared to the previous year. In fact, Harley-Davidson Company’s standard and performance segment are approximately 70% of the global heavy-weight motorcycle market. Additionally, it has a strong brand name and an excellent marketing division namely customer events, direct mail advertising and magazine, dealer promotions, and public relations (Huber 5).
However, Harley-Davidson Company faces stiff market competition from Asian companies that manufacture cheap products compared to its products. It has forced the company to produce smaller motorcycles to attract both the international and local markets. Additionally, the company is facing a threat from the Europe that that has introduced tariffs on its products. The three major Harley-Davidson company’s competitors in heavyweight motorcycle segments are Honda, Suzuki, and Yamaha all are Japanese companies. Some of these industrial rivals have larger marketing and financial resources and are more diversified. For instance, half of Yamaha’s company revenue is raised from motorcycles. Secondly, Honda Company has diversified its motorcycles sales in the United States and taken a part of Harley-Davidson’s market shares. Lastly, Suzuki formed a strategic alliance with Kawasaki in fields of design, engineering, product development, and manufacturing of motorcycles in order to strengthen both firms’ global motorcycle business.
The external factors that influence Harley-Davidson Company’s operations are legal, technological, environmental, social, and political. In particular, political factors influence this company’s operation because the Americans and the federal government view Harley-Davidson as an American icon. Moreover, U.S government does not tax Harley-Davidson heavily compared to foreign and other emerging companies. Economic factors affect the company’s operation since the consumption is influenced by current fluctuation. Social factors also influence purchase rates of Harley-Davidson. Its products are mostly purchased by married men of about 47 years and above.
Technology influences Harley-Davidson Company’s operations in that technological segment requires more advancement in technology since clients purchase energy efficient and technologically advanced bikes.
Environment factors affect Harley-Davidson company’s operations in that industrial activities are influenced by environmental activists who fight for better environmental laws, though they vary from country to country. Legal issues are the external factors that affect the Harley-Davidson company’s operations. For instance, it is experiencing some legal constraints in Asian countries, especially in India, where there are taxes and a 60% tariff that doubles the price of the motorcycle. Moreover, Harley-Davidson Company’s motorcycles do not meet some emission and noise pollution standards of some countries across the world; it is difficult for the company to diversify its operations in these countries.
Expanding the HOG to European and Asian countries is a significant change that may be seen in the future. It will allow the firm to provide clients with the same satisfaction level as they offer to the United States customers. In the future, the company can increase Buell’s market share by producing new motor bikes (Verweire 13).
New hybrid bikes are a technological advancement that might affect the company’s operation. These are energy efficient and low-cost street bikes that are environmental friendly; hence, they may compete with Harley-Davidson Company in the in the event the company fails to improve its current technology. One of the social groups critical to the firm’s practices consists of females and young generation because the company’s current customers are mostly old married men. The two above social groups are entering the market segment; hence Harley-Davidson Company should consider manufacturing products that suit their tastes and preferences.
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