Harley-Davidson International Expansion

Harley-Davidson, an iconic American motorcycle brand, is considering expanding its international market share. To achieve this, the company should focus on promoting its products in countries with low labor costs and changing its biker's image to appeal to a broader audience. Additionally, Harley-Davidson can launch niche marketing campaigns tailored to specific countries and cultures. The company should also prioritize building customer loyalty through events and activities that create a sense of community among HOG (Harley Owners Group) members.

CASE
STUDY

TABLE OF CONTENTS
Summary..........................................................................................................................................3
Introduction......................................................................................................................................4
Task..................................................................................................................................................4
2. Mission, Objective and Strategies............................................................................................4
3. Harley-Davidson Corporate Governance.................................................................................4
4. Strengths and weaknesses of Harley-Davidson.......................................................................5
5. Opportunities and threats of Harley-Davidson........................................................................5
6. Strategic factors faced by Harley-Davidson............................................................................6
7. Core competencies of Harley-Davidson..................................................................................6
8. Distinctive competency of Harley-Davidson...........................................................................7
9. Development of strategy to increase the sales.........................................................................7
10. Impact of competitors............................................................................................................7
11.V-Rod and Buell bikes can affect future prospects................................................................8
12. Image of a Bike Rider............................................................................................................8
13. Biker image help or hinder....................................................................................................8
14. Fierce customer loyalty of Harley-Davidson.........................................................................8
15. Impact of changing demographics of potential client............................................................9
16. Financial analysis ratio..........................................................................................................9
Recommendation.............................................................................................................................9
Conclusion.....................................................................................................................................10
References......................................................................................................................................11
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Illustration Index
Illustration 1: Ratio Analysis.........................................................................................................10
Index of Tables
Table 1: SWOT Analysis.................................................................................................................6
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SUMMARY
This case study is about the renowned motorcycle company Harley-Davidson which is a
American manufacturing company. This organization has given cut throat competition to the
German and Japanese manufacturers. The company was founded in 1903 by two persons
William S. Harley and Arthur Davidson. They both firstly manufactured the bike in their family
building and later on they grew this company and in present this is a leading company in the
motor bikes industry. The largest market share in the USA has been acquired by this company
which is 65% of total market. The firm is a globalized firm which serves their business in
European and Asian market also. The main aim of the company is to reflect the lifestyle of the
person through this motorcycle. The bike depicts the freedom, coolness, image of a bad boy, etc.
this attracts the people to buy Harley-Davidson motorcycle.
The demand of their product is increasing since 1980s and 1990s. People who like to ride
the bikes are mostly 40 years of age. It also acquired the Buell motorcycle company in 1993 to
expand its market share and in 2001 it started manufacturing V-Rod, a crotch rocket, to meet the
demand of the younger segment. The company has set various objectives in order to accomplish
its mission. The company wanted to increase its sales in the younger segment. about It has
analyzed its internal and external environment by applying tools and techniques to avoid the
hindrance in the success of their business. This firm also have core competencies and a
distinctive competencies which make the company uniquely identified among all their
competitors. The customers of the company are highly loyal. To make them loyal company has
took various initiatives such as HOG has been established to make the owners of Harley-
Davidson feel privileged.
The company has changed their demographics to young groups who seek freedom and
women group who wish to ride a bike. This has made the positive impact on the company as the
firm is concerned towards women empowerment. Profit of the company started declining after
the recession in 2008. the management is worried about the profit maximization but now there is
a constant growth in the profits of the company after assessing the financial status of the
company. Now company has also started investing in the accessories and merchandise of the
Harley-Davidson because young generation are more demanding and according to their lifestyle
the company has got various opportunities to satisfy their needs.
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INTRODUCTION
It is a great fun to drive a motorcycle. This reflects the lifestyle of the person who rides
the bikes of the reputed brand like Harley-Davidson. This company was founded in 1903 by 2
people (Zins, 2014). The major U.S. manufacturer who has acquired the largest market share.
This report is mainly focused on the concentration of the firm on their heavy weight motorcycles
and the level of competition with German and Japanese manufacturers. Further, the reports
illustrates the roles of management team in improving the product and its quality and also the
difficulty faced by the company to sell bikes to the women. Focus has also been made on the
brand and customer loyalty by introducing H.O.G.
TASK
2. Mission, Objective and Strategies
Harley Davidson is the oldest American motorcycle manufacturer and it was founded in
1903. The mission statement set by the company is that the company fulfills the dreams of the
bikers through the experience of motorcycling, by providing the bikes to motorcyclist and also to
the general public the expanding line of motorcycles and branded products and services to the
selected market segments (Siomkos and et.al., 2010).
When the profits and sales of the company started declining in 2008, the company sets
various objectives:
1. Increasing sales for younger population.
2. Creating lifetime customers at a younger age.
3. Avoid isolating the current customer base.
Strategies determined for meeting out the objectives are the company acquired the Buell
Motorcycle Company and also decided to manufacture V-Rod to appeal the youth who were
interested in riding crotch rockets.
3. Harley-Davidson Corporate Governance
Corporate governance means the rules and policies decided by the board of director in
order to direct or control the corporate. It essentially balance the interest of the stakeholders of
the company. Although the business of motorcycle such as Harley-Davidson business is a great
fun but the company takes the corporate governance very seriously (Esposito, Freda and Bosco,
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2015). The board of directors of the firm is composed of leaders from the range of industries.
They meet on a regular basis and review the objectives of the company and then do the planning
of the future growth. The plan I drawn on the basis of their diverse backgrounds and experiences.
These accomplishes leaders work together to ensure the the decisions made at the meeting of
Harley-Davidson should promote fairness, financial transparency and accountability to all the
stakeholders.
4. Strengths and weaknesses of Harley-Davidson
Table 1: SWOT Analysis
Strengths Weaknesses
 Market position and brand image is
strong.
 Relationships built with suppliers and
dealers are strong and have trust and
respect.
 Major American manufacturer which
strongly compete the German and
Japanese manufacturer.
 Provides an opportunity to customers
for customization of the bikes.
 It has proven product quality (Corey
and Millage, 2014).
 The company has a strong marketing
department which sponsors in all major
shows an rallies.
 The financial performance is declining.
 Credit rating has become poor.
 Post-retirement benefits for the
employees are unfunded.
 They are less efficient in attracting and
retaining talented employees.
 They sell the costliest bikes so the
market segment is only the higher
income group.
 Due to poor marketing technique,
customers are not getting attracted in
international market.
 Loss of market share steadily in
European market.
5. Opportunities and threats of Harley-Davidson
Opportunities Threats
 Increasing demand in Asian  High number of substitutes available in
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aArimo;arialnd European market.
 The company can launch lower CC
bikes for the young group.
 Harley can target the young and women
riders which will increase the customer
base.
this competitive market which may
reduce the sale of the Harley-Davidson.
 Myopic approach in the market can
lead to internal distress as the 65% of
the sales come from U.S market
(Rehme, Kowalkowski and
Nordigården, 2013).
6. Strategic factors faced by Harley-Davidson
There are various strategic factors faced by the company to survive in this competitive
world. Some of them are discussed as follows:
1. Competition: This firm is facing high level of competition from the companies like
Yamaha and Honda which sells the crotch rockets to the younger group in lower prices
than that of V-Rod.
2. Profit Potential: In 2008, when recession hit the US and Europe market the company
were highly affected by this because 65% of the sales is in US market. Due to this the, the
profit of the company started declining. Now the company is worried about its potential
profit.
3. Prospects: The company has shifted it’s focused from 40 above to younger group and
females. Due to which the current customer base in alienated. But the firm is facing
difficulty in selling the motorcycle to the women group (Fernando, 2009).
7. Core competencies of Harley-Davidson
Harley-Davidson has three core competencies which make the company competent in the
present world. These competencies are discussed as follows:
1. Human Resource and Capital: Organization possess trustworthy and talented human
resource. It also have managerial capabilities which manage to retain the pool of talent
among the employees. The culture of the company is quite positive due to which human
resource work very efficiently.
2. Reputational Resources: Company have good brand reputation and image so that
customer get attracted towards the company and buys the product. Firm has maintained
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good reputation with the suppliers and dealers which have good perception about the
product.
3. Innovative Resources: Company has such resources such as suppliers, employees and
management which are highly innovative so that they can generate competencies to
survive in the dynamic market.
8. Distinctive competency of Harley-Davidson
The Harley-Davidson has a distinctive competency which distinguish their products from
other competitors. The firm have adopted the focus-differentiation strategy in few segments.
Company is based on satisfying the social and psychological needs of the customers because
they are selling the lifestyle not the bike. Thus, this quality of the Harley-Davidson differentiate
them from other brands of motorcycle (Tricker and Tricker, 2012).
9. Development of strategy to increase the sales
In 2008, when recession hit the market which affected the sales of the Harley-Davidson's
motorcycles. Due to which the profits of the company declined. Company can develop several
strategies so as to increase the sales. Some of them are listed below:
 Analysis of the internal and external factors.
 Focus on the promotion.
 Expand the distribution channel.
 Maintain public relations.
 Pricing strategy should be reviewed against the competitor’s prices.
10. Impact of competitors
Harley-Davidson is facing intense competition in the European and Asian market from
Yamaha and Honda. The pricing of them are quite lower than that of Harley-Davidson. Thus,
company's sales are gradually decreasing year after year due to adverse effect of recession on the
UK market (3 Ways to Increase Customer Loyalty, 2015). Due to culture diversity in countries
other than US, competitors are taking out benefits as the image of the Harley-Davidson bike
riders is of a people who prefer freedom and hanging out in a group.
11.V-Rod and Buell bikes can affect future prospects
The company in 1993 acquired the Buell motorcycle company in order to expand its
market. When the changing need of young people were realized that time company start their
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manufacturing of V-Rod in 2001 as crotch rockets. Thus, these both range of Harley-Davidson
can highly affect the sales of the future prospects. The company's future prospects are young
generation and women group and young people prefer the crotch rockets which can affect the
company in positive manner (Newman, 2013). But the women potential customer will not be
interested in riding V-Rod bikes so this will create difficulty for the firm to sell its product in
women segment.
12. Image of a Bike Rider
The image of the bike riders of Harley-Davidson is of American cool bad-boy. From past
50 years Peter Fonda and Dennis Hopper riding their Harley-Davidson as an American culture-
long-haired, wild-eyes expressions. Thus, it indicates that Harley-Davidson is driven by those
who have cool lifestyles.
13. Biker image help or hinder
This image of Harley-Davidson is being a cool bad boy may affect the sales of the
company in both negative as well as positive manner. Those people who seek freedom and hang-
outing with a group as a bike rider just like a bad boy will be attracted towards the Harley-
Davidson. But this segment is small and people who are gentle will not like to purchase this bike.
Thus, this image may help or hinder the Harley-Davidson's image.
14. Fierce customer loyalty of Harley-Davidson
Due to the distinctive brand image which reflects freedom, Americana. Adventure, edgy
and cool the customers of Harley-Davidson are extremely loyal towards its brand. As the
company have the mantra of it's a journey, not a destination which depicts the lifestyle of
adventurous people. The campaign of the company HOG has made the customer loyal because it
is the only organization of the bikers which has 7.5 million motorcyclist. Harley-Davidson
satisfies the needs of the motorcyclist by reflecting their lifestyles. This makes the customer
loyal towards the company (3 Ways to Increase Customer Loyalty, 2015).
15. Impact of changing demographics of potential client
Harley-Davidson has changed their demographics for the future. Their focus has shifted
from 40 years of age to younger group and women segment. Thus, this will have a positive
impact on the company. Earlier the company had a small segment and to expand its business in
the young and women segment have targeted to increase its profitability. With changing trend
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the company can get a great opportunity by its future prospects and thus this will enhance their
sales and profitability.
16. Financial analysis ratio
Three financial analysis ratio which is calculated for Harley-Davidson are
The net profit ratio has increased from 2013 to 2014 which depicts that the sales and
customers of the company has increased since 1 year which is a good indication for the
company. Current ratio has also increased which means that the firm can pay off its dept over 12
months in an easier manner. The debt and equity ratio is more than one which means that
shareholder of the company will have more benefit out of it but the creditors of the company will
have a fear of risk which is not good for the company as they will not lend the fund willingly.
RECOMMENDATION
 Harley-Davidson can start its production in those country which have low labor cost so
that it can sell its product in European as well as Asian countries.
 Company can promote their products in the international market by changing its biker’s
image so that they get the increasing sales in international market.
 Brand Ambassador should be changed as per the country.
 Niche-marketing concept can be adopted to increase the international sales.
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Ratio Formula 2013 (Million $) 2014 (Million $)
Net Profit 734 845
Net Sales 5990 6229
Net Profit Ratio Net Profit/Net Sales*100 12.2537562604 13.56558035
Current Asset 3989 3948
Current Liability 2510 2389
Current Ratio Current Asset/Current Liability 1.5892430279 1.6525742989
Debt 3417 3762
Equity 3009 2909
Debt-equity Ratio Total long term debt/Total Shareholder's equity 1.1355932203 1.2932279134
Illustration 1: Ratio Analysis

 The company may face challenges in the international market such as cultural variations,
price issue, etc. so recommendation can be made that company should plan their strategy
according to the country's culture.
 International laws and regulations should be followed by the firm in order to avoid any
hurdle while launching its product in other countries.
 Company can launch their products for women in those countries where women are not
empowered. Because of this, company can promote the products as a symbol of women
empowerment and thus, it will increase the sales.
 Marketing techniques should be improvised in international market to increase the sales
in other countries.
 European market share is very little so company should focus and do heavy promotion in
the European market in order to lead the motorcyclist market of Europe.
 Its HOG campaign can be launched in every country and can organize the annual
international event every year in home country where HOG members can participate in
the event. This will definitely make the customers loyal and thus leads to increase in
international sales (What is Customer Loyalty?, 2011).
CONCLUSION
Interpretation can be made after preparing this project report on Harley-Davidson as the
company has offered their products to those people who have lifestyle as a free bird. Apart from
the image as a fun loving company, management are concerned about the corporate governance.
They have high opportunities to expand their business in younger and female segment which
may impact their sales in a positive manner. This company have a distinctive competency which
make the customer loyal towards the brand. Company can follow the above recommendations in
order to increase their sales in the international market.
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REFERENCES
Journal
Corey, J. and Millage, P., 2014. Ethnographic study on the Harley Davidson culture and
community. Journal of Technology Management in China. 9(1). pp.67–74.
Esposito, G., Freda, F. M. and Bosco, V., 2015. Examining perception of competency through
practicum competencies outline. European Journal of Training and Development.
39(8). pp.700–720.
Rehme, J., Kowalkowski, C. and Nordigården, D., 2013. Sales coordination and structural
complexity: a national‐international comparison. Journal of Business & Industrial
Marketing. 28(6). pp.514–522.
Siomkos, G. and et.al., 2010. Opportunities and threats for competitors in product‐harm crises.
Marketing Intelligence & Planning. 28(6). pp.770–791.
Zins, H. A., 2014. Reflections on Destination Positioning Analyses and Identifying Competitors,
in Arch G. Woodside , Metin Kozak (ed.) Tourists’ Perceptions and Assessments
(Advances in Culture, Tourism and Hospitality Research, Volume 8). Emerald Group
Publishing Limited. pp.157–165.
Books
Fernando, C. A., 2009. Corporate Governance: Principles, Policies and Practices. Pearson
Education India.
Newman, F. C., 2013. Core Competencies in Cognitive-Behavioral Therapy: Becoming a Highly
Effective and Competent Cognitive-Behavioral Therapis. Routledge.
Tricker, B. and Tricker, I. R., 2012. Corporate Governance: Principles, Policies and Practices.
OUP Oxford.
Online
3 Ways to Increase Customer Loyalty. 2015. [Online]. Available through
<http://www.entrepreneur.com/article/250378>. [Accessed on 29 October 2015].
What is Customer Loyalty?. 2011. [Online]. Available through
<http://prloyaltymarketing.com/customer-loyalty/what-is-customer-loyalty/>. [Accessed
on 29 October 2015].
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