HARLEY DAVIDSON AND THE INTERNATIONAL MARKET FOR LUXURY GOODS
Once a company decides to expand in emerging international markets, it faces a stream of decision making sequences and marketing strategies. The criteria to select entry market exclusively depends on country infrastructure, political risk, market access and potential, shipping considerations, foreign exchange, service requirements, timing, product fit and factor cost, conditions etc.
Type A company:
Identifying a country
Since the appeal of developing economies is their rapid growth, I have identified India as a new market for Harley Davidson, the Milwaukee- based motorcycle manufacturer.
Importance of location
India is the second-largest motorcycle market in the world
Twelfth largest economy in the world, fourth largest (GDP $3.528 trillion, 2009) by purchasing power parity. Rising middle class and significant investment in construction of new highways have opened the door to leisure motorcycle riding. Company’s objective
To import its motorcycles, accessories, riding gear and evaluate how best to evolve its approach to the new market.
To find local dealer, partners who can share the passion and commitment to building customer relationships, the Harley-Davidson brand and business in India for the long term
• Global leader in cruising and touring motorcycles with sales in more than 70 countries
• Good marketing division, dealer promotions, customer events, magazine, direct-mail, advertising and public relations.
• HOG (Harley Owners Group) having 7, 50,000 members world wide.
• High price, costly bikes in this category
• Required production is not met, analyzing the future of Heavyweight motorcycle market • Harleys average buying age is 42 years old and increasing
Factors affecting attractiveness:
Rapid development of India’s economy and physical infrastructure
Establishment of dealer financing relationship to ensure dealers can provide the full Harley-Davidson selection, experience and support to customers
Women and younger riders are increasingly becoming interested in bikes.
Factors affecting risks:
Small, inexpensive bikes used as basic transportation.
Noise pollution, Environmental laws, Lack of prescribed emission norms for motorcycles with an engine capacity more than 500cc.
Tariffs on imported motorcycles as high as 60 percent coupled with tax rate of 30 percent. Automobile market dominated by Japanese and Indian manufacturers. Hero Honda, Honda, Suzuki, Kinetic, LML India, Royal Enfield, TVS Motor, Yamaha and Bajaj Auto are major players.
Existing prospective customers for super bikes with large engine facility around 1,000cc that ranges from Rs9 lakh to Rs12 lakh in India.
Type B company:
Harley Davidson has been operating in UAE since 1989 at two locations, Abu Dhabi and Dubai as the leading dealership in the Middle East.
Evaluation of company’s decision:
Identifying UAE as global market for Harley Davidson is very much justified and appropriate.
UAE has liberal environment towards foreign cooperation, investment and modernization
Free trade zone for manufacturing and distribution in which all goods for re-export or transshipment enjoy a 100% duty exemption.
Factors affecting attractiveness:
Recognition as high income developing economy by the International Monetary Fund
The GDP per capita ($ 38,283 based on PPP) is currently the 14th in the world and 3rd in the Middle East.
Factors affecting Risks:
The cloudiness of public sector and private company financial data hampers risk analysis. Though diversified, the economy is still dependent on Abu Dhabi's oil revenues, high rise in the Oil prices Regional geopolitical volatility
Abu Dhabi store offers a full line of motorcycles, spare parts, accessories and high quality lines of Harley-Davidson clothing.
Harley shipped 32 percent...
Bibliography: Strategic management case analysis by Hari Prakash.N.V
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