Challenges and Opportunities Faced by Harley Davidson

This case study discusses the challenges and opportunities faced by Harley Davidson, a renowned American motorcycle company. It explores the impact of socio-cultural changes, trade barriers, and the company's international expansion. The CEO's dilemma in the current political context is also analyzed. Recommendations are provided to increase sales and stock value.

Marketing Case Study
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Table of Contents
Challenges and Opportunities Faced by Harley Davidson 3
Global and Domestic Context Being Faced by the CEO 4
Recommendations to Increase Sales and Stock Value 6
References 8
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Challenges and Opportunities Faced by Harley Davidson
Founded in 1903, Harley Davidson can be considered as one of the most iconic American
Motorcycle company in the world. It company is known for its rich history, incomparable
craftsmanship and extremely loyal fan following. Though known for its heavyweight
motorcycles that have engine dimensions of more than 700 cm3 the company has broadened its
product offerings in order to remain competitive in the id and smaller motorcycle segments
(Catulli, Cook & Potter, 2017). Followers of the Harley Davidson brand are known to be
extremely passionate about their motorbikes the company enjoys an extremely premium brand
value in the market but in order retain this brand identity the company has to update their designs
and innovate there technology continuously.
The company like every other American company has been adversely affected y te recent socio
cultural changes that have taken place in their primary market, the United States, and the
international and domestic trade barriers that have come into existence. The brand has also taken
a hit from several severa media giants like The Guardian who identified he motorcycles as “Fuel
Guzzling Gods” and noted that the company is not appealing to the younger consumers anymore
and the ocre community of harleys are gradually ageing out (Coutinho, de Mesquita\ & de
Muylder, 2018). The company has also faced several trade tariffs while attempting to intensify
their presence in several international markets. In an attempt to sidestep such tariff rates the
company opened several assembly plans in India and brazil, taking advantage of the free trade
zone. Recently they faced challenges from their own domestic market in the form of steel tariffs
that amounts to a cost of 30 million.
With the election of Donald Trump as the new President of the United States and his America
first agenda the company faes new odds as its tries to keep its production in the United States.
The countries that are developing at a rapid pace have introduces new opportunities for the
company as they represent an increasing market of greater dead and improved infrastructure and
the allowing of better distribution and usage of motorcycles. By opening factories in India and
Brazil the company has attempted to utilize this ourtunities and by opening new stores in these
countries the company sees a whole new market that can be explored.
Harley Davidson has recently announced that it will close its Kansas City, MO factory, which is
one one the five factories that company operates in the country (Albareti, et al. 2017). The
timing being simultaneous with their opening opening of the Thailand factory has garnered a lot
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of attention and critical reactions from the government and media. Though many blame the
company shipping jobs offshore n the steel tariffs that have been imposed by the new President
as a result pulling out the United States from the Trans Pacific partnership, the company has
stated that the factory was closed as a result excess capacity in the States and is completely
unrelated to the opening of the Thailand factory. They also stated that the decision of opening the
Thailand factory was made to avoid 60% import tariffs and to gain further tax breaks when
exporting to neighbouring countries.
At this juncture of a changing domestic socio political scenario with a President vehemently
criticising their own domestic companies, Harley Davidson, an iconic American brand finds
itself in a difficult position while trying to grow in the international market, which is crucial for
its survival while simultaneously retaining their domestic brand value (Trendafilov, 2015). The
market for heavyweight motorcycles in the US is shrinking while the international demand for
Harley’s is increasing and thus domestic operations are becoming less and less profitable.
Branding itself as a strictly All American entity throughout its years of operation the company
finds itself in a precarious position. Harley Davidson expects a 50% growth in their international
sales by the year 2027 and they believe that their Thailand factory will play a crucial role in
establishing themselves in the Southeast Asian markets. But the company’s loyal domestic
following on which the company has relied on for creating and retaining its brand value has
criticised their new policy of shifting jobs and operations from America.
The struggles that is being faced by Harley Davidson is similar to that of many other American
brands who face similar predicaments with the shift in socio political and environmental
scenarios of their domestic and primary market (Guillotin & Kwon, 2018). While the number of
international markets with high demand for their products are increasing day by day due to
economic improvements and socio cultural preferences, their domestic market is deteriorating
due to inefficient and unstable administrative decisions. They all face the same dilemma for
retaining their American brand image while operations to more profitable countries. As more and
more brands utilise international opportunities, one thing that will need to be observed is that
whether the administration will change their policies to cater to domestic brands in order to
remain competitive ad retain jobs in the country.
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Global and Domestic Context Being Faced by the CEO
The Trump's Administration's America first policy has made victims out off several CEO’s with
several damaging social media posts from the President himself. These damaging posts have
affected the share values of several companies that were forced to rethink their existing plans and
align themselves in accordance to the America first policies. CEOs from several other strategic
industries has also fallen victim to the Presidents Wrath with companies like Boeing and
Lockheed Martin losing stock market values over Tweets and their CEOs having to quit.in this
scenario where the president is making inefficient administrative decisions that are not at all
advantageous for domestic companies while simultaneously blaming the CEOs for making
decisions in favour of the company the CEO of Harley Davidson faces the same dilemma that
any other CEO is facing in the current socio political scenario of the country (Roese &
Kompella, 2017). Whether to remain operational in America and loose business and or shift
overseas and loosed domestic credibility.
The current CEO of Harley Davidson was elected on 1st May 2015 and as soon as he acquired
his new position he had take into consideration all the options that he had regarding solving the
problem of declining sales in the domestic market and a downward trending stock price of the
aging company that was losing relevance in the young consumer market. Being a well trained
executive and a veteran in the company he realised that international expansion has been
wrongly portrayed as being the reason behind loss of US jobs in a completely incorrect political
context. After the change of government the CEO attended several meetings at the White House
regarding the US policies of anti globalisation. As Trump continuously made decisions that
affected the bottomline of domestic companies the relationship between the White House and the
American business community strained further. Internationally Harley has expanded their
operations to developing countries in order to avoid tariffs that seem unjustified. They has
shifted production to India and Thailand (Grant, 2018). These factories will produce vehicle that
are meant for European market as well as an emerging Asian market that offers great potentials
for the company. The domestic context of the company still remains perilous and the CEO has
had to weigh the benefits and threats that the company might face when shifting operations from
American soil. The company announced that they will close one of the five US factories in
Kansas city amidst great political and social pressure. The company in order to retain their
domestic loyalty has to justify their actions efficiently and the CEO will have to take point. The
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CO will have to attempt to create policies that will assure their consumers that international
expansion will not be executed at the cost of domestic jobs.
With the President creating paranoia and making victims of domestic companies, these
businesses need to come forward and explain to their consumers the proper business social and
political context that is being undertaken by the administration. The Administration's anti
globalisation policies and new domestic tariffs are the reason behind job loses as companies
struggle to make a profit in unfavourable conditions. They are being forced to ship operations
internationally as a result of being unable to make a profit in a saturated market that is imposing
additional and unjustified tariffs on their own domestic companies. In order sustain sales and
stock prices the companies have to look towards international markets. These markets can
provide a lease of life to the America industry that is in decline (Farris & Gregg, 2017). Though
they are shifting operations that are still at least functional. And if they do not follow this trend
of outsourcing they will lose business ultimately shut down lie so many American companies
from the past. The CEO of Harley Davidson has already made several informed decisions to
make the company relevant again. They have launched several mid and small sized products in
the market to compete in all the segments present. They have buttoned up production in countries
that are in the free trade zone while keeping most of their American factories functional.
One thing that Harley Davidson has kept consistent is that they have not compromised with the
quality of their products. They remain the chief innovators in the motorcycle business and
continue to innovate new technologies that has helped them retain their premium value in the
market. But the CEO of the company has to keep in mind the growing environmental concerns of
the young consumer as Harley’s are often referred to as fuel guzzling giants (Zarco & Ben-
David, 2015). They have to shed this image in order to be identified with the environmentally
conscious youth. This will not be something hard to achieve as they have already changed their
ways and are working on more fuel efficient prototypes. In an international that is now changing
drastically with a more informed consumer base the CEO of an iconic company like Harley
Davidson will need to make informed and efficient decisions that are aligned to both the
domestic and international political context.
Recommendations to Increase Sales and Stock Value
With the election of Donald Trump as the new President of the United States and his America
first agenda the company faes new odds as its tries to keep its production in the United States. As
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Trump continuously made decisions that affected the bottomline of domestic companies the
relationship between the White House and the American business community strained further.
Internationally (McKinster, Perry & Hebert, 2019). The company like every other American
company has been adversely affected y te recent socio cultural changes that have taken place in
their primary market, the United States, and the international and domestic trade barriers that
have come into existence. With the President creating paranoia and making victims of domestic
companies, these businesses need to come forward and explain to their consumers the proper
business social and political context that is being undertaken by the administration (Udenio,
Hoberg & Fransoo, 2018). In order sustain sales and stock prices the companies have to look
towards international markets. These markets can provide a lease of life to the America industry
that is in decline.
The main rhetoric that Harley should follow is not to let the political instability affect its bottom
line. Though there are opinions that Harley should streamline their domestic production rather
than shifting operations that have not yet gained traction as the government has imposed
unjustified tariffs of companies like Harley Davidson. The survival of the company is more
closely connected to the product issues rather that the socio political logistics of manufacturing.
The tariffs are just circumstantial but Harley is losing their brand value with less and less
demographic identifying with the brand (Yamashiro, 2017). The company needs to focus on new
markets and not be concerned about the politics letting the politics guide their company policies.
Harley Davidson expects a 50% growth in their international sales by the year 2027 and they
believe that their Thailand factory will play a crucial role in establishing themselves in the
Southeast Asian markets. But the company’s loyal domestic following on which the company
has relied on for creating and retaining its brand value has criticised their new policy of shifting
jobs and operations from America. The domestic context of the company still remains perilous
and the CEO has had to weigh the benefits and threats that the company might face when
shifting operations from American soil. The company announced that they will close one of the
five US factories in Kansas city amidst great political and social pressure (Repenning, Kieffer &
Repenning 2018). The company in order to retain their domestic loyalty has to justify their
actions efficiently and the CEO will have to take point.
Harley Davidson has long held the title of being the quintessential American company that
produces all American bikes. It signified what the US stood for and was essentially a symbol and
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not just a company. But in recent years their consumer base has aged and by shifting production
and not catering to the youth Harley is losing traction in the market (Doyle, 2019). The company
has not performed well in the recent years and profits have declined. Factors that have
contributed to the decline are lower priced competitors and environmental concerns. As Harleys
are known to be heavyweight machines with heavy fuel requirements the modern
environmentally concerned generation is drifting further away from the brand. Harley has to
change this image of theirs by innovating new technology that will change their stereotypical
image (Cyr, 2015). They also have to cater to large consumer base as Harley Davidson
motorcycles are generally associated with white males. New business strategies need to be
employed for the international markets promoting a more new age image that will satisfy the
modern generation who are liberal and racially unbiased.
In order sustain sales and stock prices the companies have to look towards international markets.
These markets can provide a lease of life to the America industry that is in decline. Though they
are shifting operations that are still at least functional. And if they do not follow this trend of
outsourcing they will lose business ultimately shut down lie so many American companies from
the past (Ohmae, 2016). The company has to associate themselves with correct side of the socio
political change that their domestic market is currently undergoing. In order to remain relevant
the company has to change their image or lose relevance to the young consumer who prefers less
expensive and more fuel efficient alternatives. The company has a strong brand value and a loyal
customer base and it has to use these strengths i order to create opportunities for growth in a
tumultuous business environment
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