Although in the past the company has experienced growing and continued success, attributed to its trade name trueness, in 2009 Harley Davidson ( H-D ) had to close down and consolidate mills due to the effects of the recession and the autumn of the US lodging market.
Strategic options can merely be developed after the company ‘s strategic place is known. Thus the first subdivision of the study uses tools and constructs to find H-D strategic place. In visible radiation of the company ‘s strategic place strategic options are so formulated ; this is presented in subdivision 2. The 3rd subdivision of the study so uses the success standards model presented by Johnson, Scholes and Whittington in corporate scheme, as a footing to measure the strategic options presented and recommendations are made.
THE STRATEGIC POSITION OF HARLEY DAVIDSON INC.
This subdivision of the study is concerned with understanding the strategic place of Harley Davidson Inc. in an effort to explicate strategic options for the company. It first identifies the alterations that are happening in the environment and how these alterations affect H-D and its concern activities and back the resource strength and capablenesss of H-D.
1.1 The Environment
In order to understand the environment which H-D operates in the undermentioned models are used with the purpose of assisting to place cardinal issues and challenges and ways of get bying with complexness and alteration.
1.1.1 Pestle Analysis
In 2009 H-D stood to derive from the Economic Stimulus Package, passed into statute law by the Barack Obama Administration. “ The federal stimulation bundle gives taxpayers interruptions if they purchase a new auto, light truck, RV, or bike. “ ( Wachter 2009 ) . In add-on, Coachman industries besides a maker of leisure vehicles, and a rival of H-D was eliminated from the New York Stock Exchange.
Harmonizing to the Datamonitor study:
“ the bike industry section has had economic growing for the past three old ages, and has merely late been sing diminution. In 2007 it declined 2.3 % , yet is forecasted to retrieve 4.3 % by 2012. An economic factor in favour of H-D, despite this diminution, is that the U.S. industry generated entire grosss of $ 10.2 billion in 2007, of which 98.8 % were of bikes ( non scooters, motorbikes, etc. ) . Furthermore, within the U.S. economic system H-D holds the bulk of bike gross revenues. Therefore, even while industry growing is worsening, H-D gross revenues and other bike gross revenues are still go oning to increase. ”
Figure 1 shows bike industry growing versus gross revenues.
1 Figure 1
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The Motorcycly Industry Council ( MIC ) discloses that leisure merchandise industries are confronting steep diminution nevertheless the bike section though worsening, is non making so at a steep rate. Tim Buche, President of the MIC says “ Overall bike gross revenues were down 7.2 % , non about every bit crisp a diminution as many other consumer merchandises in today ‘s economy/ ” ( Wasef 2009 ) .
Socially H-D has a competitory border which is owed to its client base, strong trade name trueness and demographic tendencies such as the increse in female operators. “ This trueness is indicated in the mean age of H-D consumers. H-D mean consumer purchasing age is 42 old ages old and increasing ( Gauvin 2005 ) . H-D aspires to increse it consumer demographics, nevertheless “ aˆ¦although the younger coevals below 35 old ages of age has posted the largest additions in owernship, the coevals that is on the border of the babe boomer section will be the chief accelerator of growing for the industry ” ( Koncept 2007 ) .
One societal factor that may negatively impact the sale of H-D motocycles is the stigma that has been attached to these leisure vehicles. Alot of people believe that bikes are unsafe and this belief is strengthened due to the high rate of bike human deaths and clangs. H-D stands the opportunity of get awaying this stigmatization if the public positions their motorcycles as “ patrol cars ” and non “ velocity motorcycles ” .
Technologically H-D can take advantage of antilock brake systems. Antilock brakes could assist riders avoid fatal crases harmonizing to a survey done by the insurance industry.
1.1.2 Porter ‘s Five Forces Model
“ H-D operates within the Recreational Vehicles industry along with five other major rivals: Winnebago, Polaris, Thor, Arctic Cat and Marine Products. The top performing artists within the industry and keep 92 % of the market portion by volume with a market capitalisation of 64.653 Billion of a entire Industry of 7 Billion.Other houses in different industries that are direct merchandise challengers include Honda Motor Company Limited, Yamaha Motor Co, Ltd. , and Suzuki Motor Corporation ” ( Appendix 1 ) .
“ The presence of these big transnational corporations with exceptionally high assets boosts the grade of competition within the industry. Because of the little figure of stuff challengers, the market ‘s gross is shared between fewer houses and enhances the grade of competition for bottom line net income. This competition forces most rivals to seek and diversify their concern theoretical accounts through geographical enlargement or perpendicular enlargement, taking to involvements and investings in a assortment of other sections such as the car, watercraft, industrial and agrarian equipment countries. ” ( Datamonitor 2004 ) .
Menace of Substitutes
“ The Recreational Vehicle industry faces menaces from the Automobile Industry, from public transit options and bikes. The menace is mostly dependent on the indispensableness of bikes and other lifestyle merchandises to the terminal user. “ ( Datamonitor 2008 ) .
In most developed states, bikes are leisure points and are non a necessity and are hence mostly dispensable or substitutable by more practical points such as autos or more cost effectual agencies of transit such as bikes. This deficiency of necessity increases the menace of replacements and is one of the major grounds why the external market goes into diminution during economic recession.
Overall, purchaser power is low due to sustainable competitory advantage of merchandise distinction which is impossible for other trade name rivals to fit.
Large transnational corporations such as Harley-Davidson can have stuffs from many different international providers and face low shift costs due to minimum merchandise distinction. This presence within the international market encouragements Industry leaders ‘ power. Overall, supplier power is moderate.
Menace of New Entrants
Overall, this menace is moderate due to high set up costs, high trade name acknowledgment, client trueness and high research and development costs.
1.2 Resources Strength and Capabilities
H-D has a formal construction that works for the company: decentralized, adept squads and leading circles that value employee input. Programs they use to be after, study and track stock list and production include their Supply Management Strategy system ( SMS ) , Vibration Tech & A ; PdM engineering systems, every bit good as their web-based H-D Distribution provider web that provides sellers with a wealth of information about supply and demand within the company.
The “ Harley Triangle ” provides a footing for tracking and supervising the house ‘s physical resources. Location and Sophistication of direction and the expertness of fabrication forces and other employees is the key in accessing natural stuffs, procurance and upkeep related to fabricating equipment. H-D workss are streamlined and well-maintained, which is a nucleus resource for H-D.
H-D has many technological resources: including many different trade name name Patents, Trademarks, and Copyrights which protect its repute and image.
Trust, Knowledge, Managerial capablenesss, every bit good as organisational civilization are H-D ‘s most valuable human resources. The company civilization, gives H-D a major competitory advantage. Employees and providers know their input is valued and take pride in their work. Peoples involved are passionate about the trade name and this adds unseeable value to the company.
Employee and provider, every bit good as direction ‘s thoughts are immense resources for H-D, as these people know the concern and cognize its possible. Since there are such a assortment of inputs, H-D ‘s capacity to introduce and create/develop new merchandise is non capable to stagnancy or groupthink. However, H-D does seek to remain true to its niche market, and this creates some boundaries for advanced thoughts.
Repute with clients, trade name name, perceptual experiences of merchandise, and repute with providers are all really good to H-D ‘s operations, and maintain clients loyal to the merchandise. Interactions and relationships are stressed at H-D in order to guarantee quality craft and reciprocally good engagement in all phases of production.
Intentionally Incorporate Technological Resources
H-D ensures that all procedures and activities throughout its value concatenation are integrated utilizing web based SMS systems, barcodes, and studies that enable its JIT stock list flow. This allows production to flux swimmingly.
H-D ‘s JIT stock list pull system means that it must hold streamlined fabrication abilities. H-D does this by guaranting quality inputs into its fabrication workss, flow production methods, and well-maintained equipment. H-D fabrication workss are capable of bring forthing many different theoretical accounts and establish their stock list off of client pull demand, cut downing costs around the board every bit good as stock list finished merchandises that sit unsold in warehouses ( of which H-D has really few ) .
JIT stock list direction needs good transit flow logistics. H-D has the capableness to cut down lead times and guarantee pull bringing through its private fleet of trucks and contracts with
The designation of possible waies physiques on an apprehension of H-D strategic place. The version of Ansoff ‘s product/market matrix is used for placing waies for strategic development. Development waies are the strategic options available to H-D in footings of merchandises and market coverage taking into history the strategic capableness of the company and the outlook of stockholders. ( Johnson et al 2005 ) . Figure 6, the version of Ansoff ‘s product/market matrix summarizes the strategic options available to H-D.
Figure 6. Strategy Development Directions
Beginning: Johnson et Al ( 2005 ) Researching Corporate Scheme
H-D can take one or more of the undermentioned options:
It can protect and construct on its current place.
It can develop new markets for its merchandises.
It H-D can besides develop new merchandises in new markets and
It diversifies into new markets and develops new merchandises.
These options can be pursued through different development methods which are internal development, amalgamations and acquisitions and strategic confederations. The options chosen has to turn to the cardinal issues and challenges faced by the H-D, the company must besides fulfill stakeholders outlooks but most of import H-D must hold the resources and capablenesss to develop the options chosen. In other words the option must be suited, acceptable and executable ( Johnson et al 2005 ) .