Competitive Strategy and Innovation Case: Harley Davidson Inc. (2015)

This case study examines Harley Davidson Inc.'s competitive strategy and innovation in 2015, analyzing its resources, capabilities, and market position. The analysis includes an assessment of the company's strengths, such as its brand image, customer loyalty, and strong distribution channels, and weaknesses, such as slow manufacturing and a lack of product diversification. The study utilizes Grant's model, the BCG matrix, and Porter's Five Forces to evaluate the competitive landscape, threats, and opportunities. Recommendations include investing in effective marketing, expanding into new markets, and increasing the use of technology in manufacturing to address current and future challenges. The conclusion emphasizes the importance of the company's differentiation strategy, positive brand reputation, customer loyalty, and the need to adapt to changing market preferences and technological advancements.

Competitive
Strategy and
Innovation
CASE: HARLEY DAVIDSON INC. , 2015

Introduction
 Harley Davidson (HD) was founded in 1903
 Survived many ownership agreements, poor
economic health, subsidiary agreements and
fierce competition (Hinchliffe, 2017).
 Matt Levatich become the CEO in 2015.
 Competitive advantage through resource and
capabilities (R&C).
 Key threats will be analysed which provides
future and current challenges.

Resources and
Capabilities
 As per the Porters Value chain, “engines” are
key resource for HD.
 Support activities includes technology
development by improving engines capability.
 Air-cooled B-TWIN engine is a sustainable
resource (Cameron, 2016).
 Brand image of one of the oldest motorcycle
companies.
 Leading brand in super heavy weight bikes.
 Not a sustainable resource since customer
perception could change

Cont.…
 Positive customer relationship
 Part of primary activity relating to service
delivery.
 Harley Owners’ Group (HOG) programme for
customer involvement which is a sustainable
resource (Singh, 2014).
 Customer loyalty is another resource which is
sustainable.
 “The Harley Experience” and relationship with
American culture (Koul, 2015).

Cont.…
 Strong distribution channel of 620 US
dealerships is a sustainable resource (Gorelik,
2018).
 ‘Dealer development program’ to support
dealers.
 “MAN” (material-as-needed) approach for
procurement is the sustainable resource (Diaz,
2019).
 Sold over 300,000 motorcycles in 2004 and
revenue increased from 1983 (Grant, 2016).

Grant’s Model
 As per Grant’s model, HD’s strategy is
successful
 Long-term goals are well-defined due to
international expansion
 Appraisal of the environment is ensured based
on customer preferences
 Knowledge of own resources and capabilities
due to focus on engines, suppliers relationship,
and brand image.
 Integration between these elements ensure
effectiveness in HD’s strategy.

Effective Implementation of
Harley Davidson Strategy
 ‘Differentiation strategy’ is used through
product differentiation.
 Main focus on heavy weight motorcycles as a
luxurious product.
 Integration between internal and external
products achieved through employees’ abilities
(New Atlas, 2014).
 Test drive facilities, sponsored events and
owners club activity creates customer value.

(Source: Hanlon, 2019).

BCG Matrix
 HD’s products are in Star category
 High rate of market share and market growth
rate
 Dominating luxury motorcycles market
 Expansion at international level
 Exponential growth in sales from 1983 to 2004
 Successful implementation of product
differentiation strategy

Cont.…
 Focus on quality in HD’s strengths which
overcome weakness of slow manufacturing
process.
 Brand image is another strength exploited
through effective marketing strategy.
 Low quantity manufacturing is a weakness
compared to its competitors such as Suzuki,
Honda and BMW (Taylor, 2012).
 This weakness is overcome by focus on quality,
positive customer relationships and strong
distribution channel.

Threats faced by Harley
Davidson
 Political
 Lack of international exposure due to regulatory
constraints.
 Strict market entry laws in Europe and Asia
 Customers prefer sportive, low-priced, light weight
and high technology motorcycles (Debord, 2018).
 Economic
 Higher prices than competitors due to exchange rate
 Acquired Buell to expand in Asia and Europe
 Social
 Exclusivity of the brand is lost.

Cont.….
 Social
 Customers are losing appeal
 Change in customer preferences such as
popularity of sport models (Kramer, 2017).
 Technological
 Lack of diversification of products.
 Portfolio mainly consists of cruiser motorcycles.
 Increasing demand for performance motorcycles
(Wagner, 2019).
 Lack of reliability on technological advancements.

Cont. …
 Legal
 Difference in laws of US and Asia
 Strictness of regulators in international market
 Non-compliance leads to negative brand
reputation
 Environmental
 High rate of emission caused by motorcycles
 Lack of availability of environmental friendly
products

Porter’s Five Forces
Model
 Competitive Rivalry (High)
 Large number of competitors
 Intense international competition
 Diverse portfolio of competitors
 Bargaining power of buyers (Moderate)
 Different options of luxury motorcycles available
 Low switching costs
 Strong customer loyalty
 Bargaining power of suppliers (Low)
 Strong relationship with suppliers
 Dealership programs to provide support

Cont. …
 Threat of Substitutes (Moderate)
 Different substitutes are available in the market
 Customers giving priorities to performance and
sports motorcycles
 Threat of New entrance (Low)
 High initial investment
 Already established international brand
 Customer loyalty towards existing brands

Recommendations to address
current and future challenges
 Invest in effective marketing to maintain brand
appeal.
 Invest in subsidiaries to offer low-priced and
quality motorcycles in Europe and Asia.
 Investment in research and development (R&D)
to increase the use of latest technology in the
manufacturing process (Harley Davidson,
2018).

Conclusion
 Conclusively, positive brand reputation, customer loyalty,
distribution channels and MAN approach are key resources
and capabilities of the company which provides it a
competitive advantage.
 The company has effectively implemented differentiation
strategy through which it positively market its product and
it offers better services to its customers which leads to its
success.
 Losing brand recognition, lack of international exposure and
lack of diversification in the portfolio are the key threats
faced by the company.
 Increasing use of technology in manufacturing, effective
marketing and introduction of low-priced motorcycles are
key strategies through which Harley Davidson can address
its current and future challenges.

References
 Cameron, K., 2016. Harley-Davidson Twin Cam V-Twin Motorcycles - HISTORY OF THE BIG TWIN.
[Online]
Available at: https://www.cycleworld.com/harley-davidson-twin-cam-v-twin-motorcycles-history-big-
twin/
[Accessed 29 February 2020].
 Debord, M., 2018. Harley-Davidson will be playing in 4 key markets in the future - here they all are.
[Online]
Available at: https://www.businessinsider.in/transportation/harley-davidson-will-be-playing-in-4-key-
markets-in-the-future-here-they-all-are/articleshow/65219744.cms
[Accessed 29 February 2020].
 Diaz, P., 2019. HARLEY DRASTICALLY CUT COSTS. THEY INTRODUCED A JUST-IN-TIME. [Online]
Available at: https://indybedbugpros.com/harley-drastically-cut-costs-they-introduced-a-just-in-
time/
[Accessed 29 February 2020].
 Gorelik, S., 2018. On Competitive Advantage — and Why Harley Davidson Has It. [Online]
Available at: https://moiglobal.com/competitive-advantage-harley-davidson/
[Accessed 29 February 2020].
 Grant, R. M., 2016. Contemporary Strategy Analysis: Text and Cases Edition. 9 ed. New Jersey: John
Wiley & Sons.
 Hanlon, A, 2019. How to use the BCG Matrix model. [Online]
Available at: https://www.smartinsights.com/marketing-planning/marketing-models/use-bcg-matrix/
[Accessed 29 February 2020]
 Harley Davidson, 2018. HARLEY-DAVIDSON CREATES NEW ADVANCED TECHNOLOGY R&D FACILITY
IN SILICON VALLEY. [Online]
Available at: https://www.harley-davidson.com/us/en/about-us/hd-news/2018/harley-davidson-
creates-new-advanced-technology-r-and-d-facility-in-silicon-valley.html
[Accessed 29 February 2020].

Cont.…
 Hinchliffe, M., 2017. Harley Davidson: historic motorcycle manufacturer. [Online]
Available at: https://motorbikewriter.com/harley-davidson-historic-motorcycle-manufacturer/
[Accessed 29 February 2020].
 Koul, V., 2015. Growing The Cult... One Harley At A Time. [Online]
Available at: https://www.outlookbusiness.com/the-big-story/lead-story/growing-the-cult-one-
harley-at-a-time-1197
[Accessed 29 February 2020].
 Kramer, J., 2017. Brand of the Week: Harley-Davidson. [Online]
Available at: https://www.pathmatics.com/blog/brand-of-the-week-harley-davidson
[Accessed 29 February 2020].
 New Atlas, 2014. The top 100 most expensive motorcycles sold at auction. [Online]
Available at: https://newatlas.com/top100-worlds-most-expensive-motorcycles/31958/
[Accessed 29 February 2020].
 Singh, T. D., 2014. It’s a H.O.G. life. [Online]
Available at: https://www.livemint.com/Leisure/Hm0NvWrnaGLNzPvrKg4fTI/Its-a-HOG-life.html
[Accessed 29 February 2020].
 Taylor, A., 2012. The Hurdles at Harley-Davidson. [Online]
Available at: https://fortune.com/2012/10/03/the-hurdles-at-harley-davidson/
[Accessed 29 February 2020].
 Wagner, I., 2019. Harley-Davidson - motorcycle sales by region 2017/2018. [Online]
Available at: https://www.statista.com/statistics/252220/worldwide-motorcycle-retail-sales-of-
harley-davidson/
[Accessed 29 February 2020].

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