Harley Davidson Pest and Five Forces

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Introduction

Harley Davidson is America’s most successful manufacturing company. It has established itself as market leader for the heavyweight motorcycles and is the world’s most profitable motorcycle company. Harley Davidson has been around for over 100 year and although it sitting on a healthy position in term of profitable, heavy competition and negative trends raises the question on the length that Harley Davidson will continue to be a profitable company. This Strategic analysis will summarise the Macro-environment of the Motorcycle industry as well as summaries the effect of the five forces have on the profitability of motorcycle industry. Also an internal analysis will be conducted which will outline Harley Davidson resources and capabilities and then determine if any strategic capabilities are present as well as a gap analysis to determine if there exist any gaps between the elements of business strategy and then explore future strategies such as Diversification, vertical integration and international strategies.

Summary of Macro-environment PESTE

This is a PESTE analysis is about the impact of environmental influences on motorcycle industry which can be used to guide strategic decision making. The PESTE analysis involving analysing 5 keys factors of the Macro-environmental which includes Political/legal, Economic, Socio-cultural, Technological and Environmental.

There seem to be economic growth in the Asian countries particular China and India and therefore there is increasing disposable income in these countries. However in the US market and Europe market there seem to be sluggish growth and such factors in the US have resulted in decreased in disposable income (see appendix 1).

Disposable incomes will affect the demand for motorcycles. There is a need to determine whether a motorcycle is considered to be a luxurious good or a cheaper alternative to transport. If a motorcycle is considered as a luxurious good therefore increase in disposable income will result in increase demand for motorcycle and vice versa. On the other hand if motorcycle is consider as a cheaper alternative for transport then decrease in disposable income will result in increase in demand for motorcycle and vice versa.

Trade Barriers such as tariffs are affecting number of importation of motorcycle within a country. However there are many countries, who are engaged in free trade agreement as well as a reduction trade barrier in many counties, which will increase opportunity of trade of motorcycle internationally.

Laws and legislation for noise and emission are required to meet the standards within countries therefore motorcycles needs to be developed to comply with these standard within those countries.

There is trend toward certain type of motorcycle which is performance sport-bike and scooters. Therefore there a positive outlook for motorcycle companies who specialise in these types of motorcycles. There has been an increase in demographics for the user of motorcycle as well as increasing number of women riders. However, because of ageing population baby-boomer who was the main users of heavyweight motorcycle are leaving the market and as a result the motorcycle industry has open up to all types motorcycle for the upcoming generations.

Increase technology changes to production method will improve production efficiency and quality. Trends for more performance based model has lead to increase trends in technology these models of bike require high level of technology therefore are opportunity for companies engaged in high performance bikes.

Summary of Industry Analysis Five Forces

The threat of new entrance in the motorcycle market is low because the barriers of entry make it difficult for new entrant, such as high capital requirement and economies of scale which therefore makes the industry more profitable. However the motorcycle industry is growing and if there is potential profit in this industry, high...
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