A. What is your assessment of the worldwide motorcycle industry? Use the I-R grid to assess the industry. There are two main kinds of motorcycles which fall in the category of on-road and off-road vehicles. Since 2001 the sales and growth in the motorcycle industry has been relatively steady. The two wheeler model of the motorcycle is very cheap popular in South and East Asia and are bought by those who cannot afford a car. Aside from this, in rest of the world the motorcycle has suffered a bad name due to the negative social factor attached to them.
“Growth rates in the global motorcycle market have been remained relatively steady throughout the 2001-2005 periods. Global growth was driven by the rapid expansion of the Asia-Pacific market, although excellent rates of growth were also experienced in the US. On the other hand, Europe has suffered with negative rates of growth. The average price of motorcycles globally has fallen, and this is set to continue into the forecast period. Growth is predicted to be stable during the 2005-2010 periods, with an expected expansion of 24.
4% by 2010. ” (Motorcycle Industry Profile: Global, 2005) In the future through the motorcycle industry is due to face hard times due to loss of target market and decrease in sales from all around the world but specially from Asia which is the largest market for motorcycles in the world. The industry is at a median point in the IR grid for. The industry motorcycle industry has had to adopt integration strategies globally for its operations as the advancements in the communication technology were making the industry very competitive.
Similarly the industry still strives for managing operation at national and regional level throughput the world as it gives the company in depth understanding of the customers and provides them with substantial links for associating with the target market. B. What are the elements of Harley-Davidson’s strategy for competing in the motorcycle industry? Harley Davidson has its headquarters in Milwaukee Wisconsin and produces superior quality motorcycles specifically for the US market. However recently due to huge demand from the consumers, the company has started to manufacture its products specific to the global market as well.
The basis of the business is its extensive brand image and equity as well as the established connection and links both inside the US as well as in other regions around the world. “The company recorded revenues of $5,015. 2 million during the fiscal year ended December 2004, an increase of 8. 5% over fiscal 2003. The increase was driven by HDMC, which witnessed a 9% increase in units shipped. The company’s worldwide motorcycle sales (HDMC and BMC) generated 79. 9% of the motorcycles segment’s total revenue, and increased by 8. 4% during 2004. ”
The elements of Harley-Davidson’s strategy for competing in the motorcycle industry relate to the brand equity, high degree of customization and forming deep rooted long term customer relationships. The company is also able to make use of the word of mouth promotion from its loyal customers and associates who refer the brand to their peers. On the global scale the company has also invested in customizing the products and services for the local market while still maintaining the original image and personality of the brand. The strategy diamond identifies four elements for strategies which surround the economic logic for the company.
These elements include arenas, staging, vehicles, and differentiators. Analysis of Harley Davidson’s strategies according to the Strategy Diamond depicts the following: Arenas: • The company manufacturers customized heavy bikes with the latest technology. The focus is on the strength and the power of the bike. Other products that are offered by the company include a membership to its excusive club, H-D H. O. G. , exclusive biker memorabilia and branded paraphernalia, motorcycle shipping services, repair and maintenance services, a personalized Harley Davidson Visa card, rider education for beginners as well as bike rental services.
• The company provides products and bikes for all kinds of people, with varying age and gender profiles. Majority of the patrons of the bikes are male. The price for a H-D bike is on the high premium side as a result the customers of HD company are those who can afford it. Aside from this the company also manufactures bikes specifically for police and Fire rescue departments for their official use. • Harley Davidson was initially only catering to the US market but with the increasing demand for its products, the company has expanded its target market to include people from all over the world.
Entering the new millennium, the company continues to improve operations, by its expansion into Europe, Japan, Australia China and Latin America. • The core technology at place Harley Davidson is building customer relationships and providing them with the best quality product for their money. For this the company makes use of R&D procedures as well as adoption of latest technology in the industry to be competitive. Vehicles: The company has made use of joint ventures to promote its products. One such example has been the joint venture with Miller Co. to associate to the beer drinking bikers.
Similarly the company has also employed the franchising/ licensing strategy which has enabled the company to operate and provide its products all over the world through its establishment in the U. S. Differentiators: The company differentiates the brand from others by emphasizing the quality and image of the brad. The high degree of customization provides for the unique customer experience and also results in adding esteem to the brand and its image. The heavy bikes manufactured by the company are styled to be the leader in the market. The bikes however are priced on the high side in order to correlate with the quality and image of the bard.