Harley-Davidson is a company that despite enjoying nearly 15 years of being a leader in the market place and capitalizing on strong sales growth, find themselves reevaluating their overall strategy. The analysis below goes through the each level of the market-place to determine where, what and how change can take place. At the industry level, it is clear that the mature product life cycle necessitates stronger price competition, further expansion into foreign markets and more diversification of their product-lines. Next at the firm-level, Harley-Davidson needs to continue to capitalize on their strengths like brand equity and supplier relationships, focus on their value adding functional-level practices like quality management and finally, begin to see weaknesses such as high-price sensitivity and narrowly defined target markets as an opportunity to creatively tap into unexploited demographics markets such as women and consider challenging their premium price strategy, if even for brief time. To achieve the corporate-level objective of increasing international sales it is vital that continue to explore markets that can economically support premium priced, luxury products, are politically stable and friendly to foreign investment from the United States. Since this is a tall order for many viable countries, Harley Davidson must be willing to challenge their deeply entrenched status-quos. This will mean lifting off-shore shipment limits and letting go of the reluctance to move motorcycle assembly abroad.
Slowing Domestic Growth
Despite domestic market leadership for the past 17 years and a market share increase of 9% from 2001-2005, Harley-Davidson was experiencing a slowdown in domestic growth. The unit sales growth rate was at 14% in 2001 however by 2005 it had dropped to 2%. Luxury heavyweight motorcycles are rarely sold as primary means of transportation which means sales are susceptible to economic fluctuations. To add to the vulnerability of this niche market Harley-Davidson limits production to maintain high-prices and intentionally avoids technological growth to maintain a nostalgic brand image. There have also been several failed attempts to diversify into related industries. If one Harley-Davidson’s 2006 corporate level goals is to increase sales there needs to be significant amount of change on the business and functional level. It will crucial to identify new ways in which diversification can help them expand in a market that they have been in for over 100 years. 2.2
Untapped Potential in International Markets
Harley-Davidson is a company that relies heavily on their brand identity as an American icon to push sales. While this strategy has been somewhat effective in the global market, it is their reputation for luxurious high-quality, heavyweight motorcycles that has helped them gain considerable market share abroad. Harley-Davidson has experienced considerable challenges during their entry into these foreign markets. Some of the challenges have been specific to the geographical area, such as India’s incredibly high import tariffs and noise regulations, while others have been more general in terms of brand awareness, cost-structure, and market accessibility. While many of these challenges are typical of the struggles companies experience during expansion into foreign markets, it is vital that they are individually addressed in a thoughtful and practical manner. In addition as part of the same aforementioned corporate strategy, Harley-Davidson wants to increase international sales, with a specific goal to double market share within the European market. It should also be noted that the company has experienced difficulty growing in Europe’s competitive market in the past. In order to achieve their objectives and solidify long-term revenue growth in the international market place Harley-Davidson’s ingrained status quo must be challenged.
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