Harley Davidson: Preparing for the Next Century

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Harley-Davidson is an American social and business symbol. Frequently imitated, however never copied and that is because Harley-Davison has figured out a way to endure, and has now flourished for a long time; through depression, downturn or recession, World Wars, high innovation improvements, rivalries, imitations, expansions, government intrusion and restrictions and policies. Yet, Harley-Davidson has kept up activities and grown over the years, even after many similar companies have come and gone Guriqbal et al (2013).

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As is the norm in capitalist system, Harley-Davidsons industry encountered the product life cycle. The introduction stage, where it started operation in 1907 with one full time worker; its development through research, venture and advancement, its development when it turned into the world’s biggest motorbike organization in 15 years (1903-1918) having delivered 28,000 motorbikes, then, its decline when it lost 80% of market share to the Japanese contenders. In spite of the extraordinary rivalry from its rivals, aging customer base, the monetary downturn and the high estimation of its product, the organization endured the hardship by staying profitable. Harley-Davidson stamped a niche market for itself being a pioneer in the business and basically in light of the fact that it sold a lifestyle or offered way of life to its customers. It kept on exploring opportunities, offer motivating forces or incentives that rebranded its image, settle on key choices, advancement combined with its emphasis on innovative work in the area of research and development.

Part I: Critical Evaluation of the key features of Harley-Davidson industry

First of all, Harley-Davidson was the major motorbike firm in the United States until the late 1950’s, the point at which the Japanese organizations entered the local market. This created a competitive environment which affected the market share, deals and benefits of Harley-Davidson. Hitt, Black and Porter (2014) opined that a bigger number and decent variety of contenders produce increasingly complex conditions for it to thrive. For instance, Honda’s production of the most technologically advanced or mechanically propelled heavyweight motorbike in 1975 caused Kawasaki, another Japanese organization, to fabricate its own. Harley-Davidson was bit by bit losing its upper hand, and competitive advantage along these lines. Harley-Davidson metamorphosis can be analyzed utilizing Porter’s five forces model. The model is an examination of the business condition and environment; and how to handle the changes in the marketplace to contend successfully.

I. THREAT OF NEW ENTRANTS: This was seemingly low in the Harley-Davidson industry because of the high capital and enormous innovative and technological venture required for new organizations to work or operate, and also, because of the customer base it had.

II.POTENTIAL FOR SUBSTITUTES: Several substitutes like vehicles, and different methods for transportation were accessible to erstwhile bike users. Be that as it may, the dangers presented by this substitute were low since bikers were loyal to the Harley-Davidson brand. Still, there wasn’t significant growth as a result of those substitute.

III. COMPETITVE RIVALRY: This was especially high in the industry. Honda, Suzuki, Yamaha and Kawasaki were copying Harley-Davidson’s products, offering lower costs with technologically innovative motorbikes. Harley-Davidson would needeed to advance more than its rivals to stay relevant.

IV. CLIENTS: Harley-Davidson will need to keep up and maintain an affordable price range of its products, so consumers don’t switch to different competitors.

V. SUPPLIERS: Since supply was generally high for Harley-Davidson, suppliers could order an irrational price which could have influenced Harley’s output.

Since each organization had a differentiation strategy that made their product stick out, Harley-Davidson bikes had a tough appearance and a remarkable sound due to its V-twin engine. Their advertisements contained police and military officials which gave the brand an intense and rough standpoint which then appealed to it steadfast customer base. Therefore, Harley-Davidson’s system depended on quality and style, with exceptional accentuation on styling . In the interim, Honda caught and boosted sales/market shares of the overall industry on the gathering of buyers that didn’t fancy the ‘intense looking’ Harley-Davidson motorbikes through its advertisements. The vast majority of the Japanese organizations settled on littler, stiller and fuel-efficient motorbikes. It has been brought up that product differentiation significantly affected the profit of a firm which is critical to its organizational success (Shao, 2015). However, Harley-Davidson still charged premium value for its autos which the customary customers wouldn’t fret paying in any event, even though the Japanese motorbikes were less expensive. Besides, Harley-Davidson created a community of bikers – a fraternity of sorts, which bonded on shared patronage of Harley-Davidson products.

Ultimately, Harley-Davidson and their Japanese rivals concentrated on the socioeconomics or demographics of the market wherein they operated. Harley-Davidson at first focused the production of its bikes on its core conventional customers. The presence of Japanese contenders which concentrated on the more youthful populace and ladies made Harley-Davidson to change its strategy and focus on the youths and female populace, while keeping up with its substantial presence in the customary segments. As Hitt proposes, demographics or socioeconomics assume a significant role in deciding an organization input and position in the local and global market. Harley-Davidson and its administration understood that the moving socioeconomics were negatively affecting its business, so it needed to make new designs of motorbikes to satisfy customer needs.

Part II: Critical Assessment of the Change/Transformation process that took place in Harley-Davidson

The Transformation process of Harley-Davidson started in the 1920’s the point at which it had just one rival in the American market, the Indian. The organization advanced without pressure, henceforth, making it the main maker of heavy motorbikes around then, creating upper hand and competitive advantage flawlessly. This carried customer dependability or loyalty combined with 60% of shares of the overall industry. Harley-Davidson was the undisputable pioneers of the motorbike business. This lead was stopped in the 1950’s with the inundation of Japanese organizations, championed by Honda. The Japanese explored new regions with their designs by starting with one geographic area then onto the next, with the presentation of light-weight motorbikes and heavy ones from there on. Their cost-initiative strategy worked, they controlled 85% of motorbike deals in America in the late 1960’s. Steady advancement from the Japanese, won the hearts of more established males and more youthful women, Harley-Davidson was losing out, and there was no strategy set up to adjust or get together with innovative changes and globalization.

It got so bad that in 1965, Harley-Davidson needed to depend on its ‘cooperative attitude’ to continue sales, however, shares were still falling. The firm required a receptive organizational change, this was actualized by opening up to the world (going public) to raise adequate capital for additional investment and to catch up with outside rivals that currently controlled the market. As a result, American Machine and Foundry acquired the organization and infused it with the genuinely necessary capital, but because of its Authority Compliance style of administration, production improved, yet, quality decreased radically.

During the mid-1970’s, Honda revolutionized the motorbike trade with its trailblazing Goldwing motorbike, the arrival of this weighty motorbike prompted conventional and non-conventional customers to support the Japanese brands. This caused Harley-Davidson’s shares to plummet by over 80%, making AMF to surrender ownership back to the management and causing the debts level to rise. Harley-Davidson was at its lowest ebb, and only a transformational dynamic process and hierarchical change could resuscitate it. Harley understood the need to evaluate the outer environment, consequently, benchmarking the organization against Honda. The leadership of Harley-Davidson displayed its great administration’s aptitudes by understanding the requirement for an alternate methodology in its production process.

To start with, the staff were empowered as stakeholders and this accentuated a successful correspondence across all level of the management, which brought about the achievement of objectives. The organization became adaptable. Harley-Davidson took into consideration the integration or incorporation of all useful level divisions in another decentralized dynamic framework and decision-making system, which were non-existent previously. Miles, Coleman and Creed (2015) are of the believe that, the organization restructured from a vertical to the horizontal was instrumental to the change. Moreover, it empowered and enabled its employees with remunerations and motivating forces, that is incentives, for example the pay for performance system which evidently challenged their staff to surge their productivity; tasks were more improved and there was more emphasis on training through the leadership institute. Furthermore, it executed new inventory and control practices i.e. Materials-as-Needed (MAN) program and Statistical Operator Control (SOC), that subsequently improved its inventory turn, market share, and its profit.

In the 1980’s, Harley-Davidson built up and engaged cultural bodies, for example, The Harley-Davidson Owners Group, by giving motorbike instructional classes and giving to charity. What’s more, a women group was created to catch the growing female customers it overlooked before. These customer relationship methodologies or strategies carried the organization closer to its customers, in this way, understanding customers’ needs and carrying out innovations to fulfill their needs.

During the late 1990’s and 2000’s, leadership of the organization changed from Rich Teerlink to Jeffrey Bluestein. This provoked a total turnaround in the organization’s fortune. New products were being developed, innovation was state-of-the-art, and the firm was working at levels near its maximum capacity. In 9years, revenue soars by $3.5billion and total income by $747million. Harley examined new markets by assembling littler, elite and less expensive bikes, for example, V-Rod and Street-Rod appealed to young people and ladies, while keeping up its style for the older class of riders. It prevails with regards to accomplishing a huge climb in sales among the female riders. To additionally influence the youthful riders and ladies with its products, Harley-Davidson set up a partnership agreement with Porsche to construct new engines; this especially focused on the youthful riders in America and the worldwide markets where BMW was picking up grounds. Moreover, the firm supported events for female journalists, essentially, the starting of another motorbike to acknowledge female-motor writers.

Taking everything into account, Harley-Davidson incited a program that permitted bikers to lease motorbikes in around 52 distinct nations. The quantity of individuals who leased a bike in 6years expanded by 223,733. This was therefore advanced with the inception of the Riders Edge program, where 70% of members purchased a motorbike, (40% were ladies while 18% were more youthful grown-ups). The strategy to catch the youthful ones and ladies was working. The financial related analysis of Harley-Davidson in 2005 uncovered that stock price were declining, yet profit and sales were expanding. The vision of the organization stays unaltered; it gauged an expansion in sales of motorbikes and growth in its earning among more youthful and female riders.

Harley-Davidson hopes to grow its ridership to 4 million riders in the United States by 2027, from 3 million in 2017, although the strategy will require huge investment. As indicated by Wallace D. (2019) Harley-Davidson’s ”More Roads to Harley-Davidson” strategy is wanting to use its image and more profound consumers to support the current development impetus of new products, more extensive access, and more grounded vendors. The activity is relied upon to produce ‘more than $1 billion’ in yearly income in 2022. In 2018, the organization said its new sales strategy was required to produce up to $1.5 billion in extra income by 2022. This strategy or system will require ‘huge investment,’ which the organization hopes to support totally through cost cuts and the reallocation of investment and assets. Harley-Davidson expects working investment of $450 million to $550 million through 2022 and capital investment of $225 million to $275 million.

Outside the United States, Harley-Davidson plans to grow universal business to half of yearly revenue. The growth target was already motorbike unit volume, which was not comprehensive of the entirety of the organization’s endeavors to grow globally, including electric-fueled bikes for children, eBicycles, and apparel. The organization likewise hopes to dispatch a completely electric LiveWire model.

Part III: What I would differently as a leader

As iconic as Harley-Davidson is, its market is still largely restricted to the so-called First world. There is an untapped market with huge potentials in the tricontinent of Africa. Africa is a continent of about 1.3 billion people, and most of them use Chinese bikes; that monotony can be broken by Harley-Davidson if it dares to venture. Furthermore, the time is right because American cars are making in-roads in Africa now – Ford and Chevrolet. This therefore, is the best time for the allure in American automobiles to include Haley-Davidson’s rugged bikes for the African terrain.

Although the American government currently supports made in American products, such productions make such products expensive. That is because the cost of production in the US is relatively high when compared to other places. As a business module, we will liaise with the government to open plants abroad to help in bringing down assembling costs, yet, still keep the iconic image intact. That way, both Americas and non-Americans can get quality products at an affordable price. That in a way is still putting America First, and with a reasonable import levy, the government and the company can benefit.

Since the company will be suggesting a plant be built outside the US, Africa can be recommended as a preferred destination. That in a way breaks the overdependency of American companies on Chinese labor and also breaks the Chinese predominance in Africa. By producing in Africa and also selling to the emergent middle class in Africa, it creates a sense of ownership for Africans to patronize what they have produced are a stakeholder in its production. It is a win-win situation for all concerned.

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