Harley Davidson International Management Essay Example For Students

Harley Davidson International Management Essay I.Summary of the case study Harley-Davidson rockers idolSo, this case study is about Harley-Davidson, a brand of motorcycles and more precisely about its development since his foundation in 1903 by 21-year-old William S. Harley and 20-year-old Arthur Davidson. So, in 2003, it was the celebration of the 100th birthday of the Harley-Davidson. And, in order to commemorate it, fans of this famous brand rode until Milwaukee to see the parade of 10 000 Harley-Davidson motorcycles. Through this celebration, we can see how recognized this brand is for the owners, or should I say fans. Indeed, this case also shows how the strategy and the marketing of Harley-Davidson are good; because Harley has fans and they will do all they can for their bikes and their brand. For its 100th year, Harley Planned for selling 290 000 bikes. And in 2002, the firm reported a gross profit of US$ 1.4 billion on US$ 4 billion sales. But, its history has never been so easy. Indeed, after 50 years of growth destroying the local competition in the US, Harley has known almost 20 years of hard competition in his market, and especially with Honda. And seeing a deterioration of its market share (only 30%), Harley has decided to abandon overseas markets. 1969 saw Harley-Davidson merge with the American Machine and Foundry Company (AMF). The merger would last until 1981, when 13 senior executives from Harley Davidson buy back the company. After the buyout is made official, the phrase The Eagle Soars Alone becomes a rallying cry. So, this merger has ensured Harley-Davidson to continue its development and its improvement, and succeeded its come back in the first line. This new team achieved this thanks to a good marketing strategy, in other words creating customer value. This new strategy has ensured to create the feeling for the owners to belong to a family, such as the Harley Owners Group. One of the key issue of the new strategy is thus to accord importance to fidelity. The most interesting point of this case is that Harley has different marketing strategy according to countries. Indeed, in some markets (US, Australia, Japan, Spain, Denmark) Harley-Davidson tries to attract new customers using advertisements, but in other markets such as the Europe, the strategy is more the usage of the promotion in specialized magazines. Another interesting point is that the Harleys market shares in Europe in very low although the Europe market represents 35% of the worldwide large motorcycle market. This case study shows too that Harleys customers are not the metal bikers customers who used to be in the past. Indeed, Harley-Davidson attracts now more profession such as lawyers or doctors about 45 years with a medium income level. And, according to customers, buying a Harley-Davidson, it is like a dream and the possibility to be a part of the myth. The dream is about to escape the bored life riding a Harley-Davidson which is relaxing. But, the brand stretching strategy of Harley-Davidson didnt have the expected effects. Indeed, products such as wine and cosmetics (with a partnership with LOreal) have not a high volume of sales. However, products such as leisurewear and fashion ranges feel better. So, the main issue of this case study is to know why Harley-Davidson has chosen different strategies according to markets, understand the idea of the brand stretching strategy of Harley-Davidson, and also to give some recommendations and ideas for the marketing strategy of Harley-Davidson. II.Strategy of Harley-Davidson1.Marketing environmental analysisFirst of all, Harley-Davidson has realized since the 80s an impressive marketing strategy giving to Harley-Davidson a brand name more than ever recognized, even compared to its first 50 years. Indeed, the strategy was not to focus on reducing the costs, or on the distribution improvement, but the main element was to create customer value. In other words, H-Ds will was to give more credibility, trust, safety, desire, quality of product and service, and thus fidelity to its brand. And in order to reach that goal, H-D centralized its marketing on these topics, creating for example a Harley Owners Group who rallies more than 900 000 members worldwide (www.harley-davidson.com). The main interest of this group is to ensure members to know each other, and become a second family who share the same interests, wills, and thoughts. And this strategy ensures Harley-Davidson to maintain a strong relationship with its customers, and thus a strong brand name all over the world. According to customers, the owners of H-D say that this brand understand them and their needs, and also that they are always there if a problem appears. These remarks can be linked with Harley-Davidsons values. Indeed, according to H-D Our values are the heart of how we run our business. They guide our actions and serve as the framework for the decisions and contributions our employees make at every level of the Company.(www.harleydavidson.com); these values are:Be FairTell the TruthKeep Your Promis esRespect the IndividualEncourage Intellectual CuriosityWe can also link this strategy with the mission statement of Harley-Davidson: We fulfill dreams through the experience of motorcycling by providing to motorcyclists and to the general public an expanding line of motorcycles and branded products and services in selected market segmentsHarley Davidson Inc. So, through these first elements of explanation of Harleys success, we can clearly see what Harley-Davidsons strategic objectives are. Indeed, in order to be successful, organizations must determine clear financial and strategic objectives. Thompson-Strickland, in his book (Strategic Management, eleventh edition), outlined a number of strategic performance objectives and Harley-Davidson applied some of these. Harley-Davidson focused on gaining a greater market share, achieving higher product quality than rivals, maintaining a stronger reputation and a better branding strategy than its competitors, increasing levels of customer satisfaction and finally attaining stronger customer loyalty. Thanks to the establishment of the strategic objectives of the company, managers can decide what the main goal of the company is, and therefore decide on the companys strategic intent. When Yamaha challenged Honda in the Japanese market, Honda responded with Yamaha wo tsubusu (We will crush, squash, slaughter Yamaha). Strategic intent gives direction to the company and a commitment to winning. The strategic intent of Harley is based on creating a culture both within and outside the organization. Thanks to this culture a strong bondage is created between the company and its customers. The product takes second place while the emotions associated with the brand becomes the most important value. This separates them from their competitors, as this culture is difficult to recreate. Their approach allowed them to lead the way in the U.S. and Asian marketsAccording to Jeffrey L. Bleustein, Chairman and Chief Executive Officer of Harley Davidson, We have the very important job of providing our customers with more than just motorcycleswe provide a complete motorcycle experience through our products, unique services and memorable events. And we are constantly making that experience better by building relationships with the people who ride our motorcycles (code of conduct). Their business philosophy is built on bringing people together and creating communities. In the 60s and 70s Harleys strategic intent was based on going shoulder-to-shoulder against the predominantly Japanese companies. Harley could not compete on the price level, and the Japanese products were of superior quality, Harley decided to compete in other areas. Their new strategy was to connect with people on an emotional level. They are not selling a product but a way of life, a way of thinking. Harley changed its strategy from selling products to selling community. If theres one secret to our enduring brand and the passion it ignites in our riders, its that we deliver these experiences, rather than merely a collection of products and services, explains a manager from the company. The example of the Saturn shows how successful such as strategy is. The Saturn is a practical, unsexy, utilitarian car, priced for people who do not find joy in haggling on price. But like Harley Davidson, there is a sense of community among owners. People come into the dealership on Saturday morning; they have free car washes, coffee and donuts. They talk to each other and have one thing in common which is their car. This strategy to bring people together builds a sense of unity with the organization and creates strong brand loyalty. And the fact that H-D has developed a Brand stretching strategy can also be an element of Harleys success in developing relationships with customers. Indeed, owners can buy other Harleys products than bikes; it means that they can be more than a biker, they can join Harleys group buying leather accessories or clothes, and even cosmetics. So, the marketing strategy of Harley-Davidson is successful, especially in the US, because US people have more that kind of mind. Indeed, Harleys spirit is a distinct family, a second way of living. And, this is the most important because corporate personality has a big impact on business success (Book of International Business, Stuart Wall Bronwen Rees, 2004, Prentice Hall). And now, the main issue for Harley-Davidson is to find the way for improving its sales in Europe and in Asia. 2.International StrategySince the end of the 80s, Harley-Davidsons strategy has been changed, trying to break into the European market. So, in 5 years the production has doubled (tripled in 8 years). Indeed, according to Jean-Luc MARS, CEO of Harley-Davidson France (www.moto-station.com), the actual growth is the result of all the work done during the last 15 years. According to him, Harley has worked a lot since the end of the 80s (without talking about the H.O.G or other events) on the local market penetration (commercial, network, image/marketing), but also on the improvement of the manufacturing production quality. III.Strategic PlanningIn order to know what are the issues Harley-Davidson has to focus on for its international development strategy, it is important to have more acknowledge about the market, and also about itself. Indeed, strategic decisions can be made only if we have all the information needed about itself (competencies, financial health), and its market (competit ors, forecasts). And, the best way to reach this goal is to do an external and internal Analysis. So, this is all about strategic planning which aims are to define firms missions and objectives, but also to find growth opportunities and what could be a threat in the future. And, according to Kenneth Andrews of the Harvard Business School, corporate strategy is the pattern of decisions in a company that determines and reveals its objectives, purposes, or goals, produces the principal policies and plans for achieving those goals, and defines the range of business the company is to pursue (Book of International Business). 1.External analysisa.P.E.S.T AnalysisThis analysis means that external factors operates on firms and can be an element to take in account to implement the strategy. Indeed, these factors are Political, Economic, Social, and Technological. PoliticalLaws exist in each marketplace, governing levels of pollution, plant emissions and the working environment. The Harley Company needs to be made well aware in advance of safety environmental standards in order to fully comply, therefore avoiding bad publicity and possible financial and legal repercussions. According to Harleys Code of Conduct, one of the environment responsibilities is Preserving the planet and Consider the environmental impact of business decisions before proceedings. There is an act in France, for example, governing motor noise emissions, and this is naturally quite relevant to Harley as its owners take pride in the engines loud noise. Following the tragic events of September 11th 2001, Americans are said to have become more patriotic which will no doubt have led to them taking increased pride in all things American. Harley is seen by many as one of the greatest U.S. symbols and will have achieved an evermore endearing place in the hearts of Americans. Virtual Reality1 EssayAnother weakness of Harley-Davidson is the narrowness of the product line. Some stock market analysts have predicted that Harley-Davidson is a disaster waiting to happen because the company is a one product company. Competitor brands have more than one product line and in the long run will be able to invest more trying to eat away the market share of Harley-Davidson. IV.Strategy to implement1.Strategic issuesAccording to me, and according to the strategic planning, there are four strategic issues that Harley-Davidson has to face with. The most important is the European market where H-D has to increase its sales, then, linked with the first issue, there is a fierce competition with the Japanese firms such as Honda and Yamaha. The other issues are the women market and the accessories which are in decline. So, as we know, Harley-Davidson is not very famous in Europe where Harleys market share of 650 cc plus motorcycle is less than 7% (6.6%), while in North America Harley-Davidson has a huge market share (46.4%), 21.3% for the Asian market. The main industry competitors are Honda, Suzuki, Yamaha, Kawasaki and BMW. Harley-Davidson is the market leader in the U.S. market with 46.4% market share. Their domestic position is quite secure however the rival companies are all aiming to increase their impact on the North American market. Honda remains the main competitor with a 20.2% market share in North America. Even though they trail behind Harley in the high profit market for heavy bikes, Honda sells more bikes worldwide than Harley-Davidson. Honda provides a wider selection of products ranging from super sport bikes, cruisers, scooters and motor cross bikes. The popularity of cruiser bikes is increasing and last year the registrations for heavy weight motorcycles rose by 22%, but Harleys share fell from 50.2% in 1997 to 46.4% in 2002. This means that companies like Honda are quite successful in taking customers away from Harley. Rival manufacturers such as Kawasaki or BMW have all made a serious attempt to establish them at the heart of Harleys market. The Japanese bikes were often considered to be sissy cycles by Harley lovers. This image is slowly changing and the Japanese companies are trying to out Harley the Harley models. Yamaha motor USA is starting to improve its position in its various markets. The U.S. sales have increased for 47% since 1998. Despite these successes, companies have had a tough time in creating an image for themselves particularly in the cruiser markets. Harley continues to dominate the U.S, market and is also the leader in the Asian/Pacific markets with 21.3% market share. So, compared with Honda, its main competitor, H-D is better in North America and in Asia-Pacific, but certainly not in Europe. What is very interesting, it is the fact that the Asian market is more or less equitably shared. In other words, there is not too much gap between all the competitors, especially between Harley-Davidson and Honda (21.3% against 19.1%). But, this is totally different in Europe for Harley-Davidson who has only 6.6% of market share. So, to my mind, this market is the most promising. Thats why Harley-Davidson has to focus especially its marketing in the European market in order to win market shares, and reduce the gap between its competitors. Moreover, Harley net revenue in Europe is the second behind the U.S. With only 6.6% of market share the European market is already the second net revenue. So, if Harley succeeds in increasing its market share in Europe, its net revenue could be in high growth. Then, in order to fully understand its market, and in order to compete in a more serious way its competitors, Harley-Davidson must identify the distinct segments that their competitors focus on and what distinctive product service benefits they offer. Hondas activities are forcing Harley-Davidson into a niche market. The company is known for its flexibility and is progressively introducing bigger and better bikes. The Japanese manufacturer is starting to increase its competitive pressure by applying some of the strategies implemented by Harley. Honda is beginning to improve its relations with its customers and is also trying to build a sense of community among its customers. The Honda Rider Club of America is Hondas attempt to achieve the same sense of belonging Harley bikers have with their beloved brand. The club allows customers to gain 24-hour emergency roadside services. The club also organizes a number of events and rallies for the Honda fans. Honda is also trying to create the next generation of loyal Honda bikers. Honda organizes a number of Motor-Cross Camps for young riders. Some of the main activities include riding courses races and riding trips and family activities, the main way to gain the loyalty of young bikers wh o will hopefully stay loyal to the brand, as they get older. These community-building strategies are proving to be extremely beneficial for the Japanese firm. The Honda new models such as the Shadow 750, the VTX 1300S are Hondas attempts to steal some of Harleys market share by recreating the Harley feel. Superior technology is the main strategy to achieve this goal. Yamaha is also trying to outperform Harley and is improving its mass customization skills. The Yamaha website offers a section that allows customers to design their own bike and choose the look and functionality they desire. The interface ensures customers to choose from 75 Yamaha accessory items and makes it easy for the customer to purchase the bike online. The Yamaha V Max model, the Drag Star, and the Road Star models attract customers with their slick design and technological tweaks. The Yamaha sports models are also very successful and the company is still maintaining a strong position in world markets. European rivals are also trying to make an impact on this lucrative market. Italys Moto Guzzi recently introduced the V11 EV custom cruiser. BMW introduced 3 models of its R1200C cruiser and thanks to clever advertising is beginning to improve its position in the U.S. and Asian markets. According to the website www.moto-station.com, only 12% of the Harleys customers are females. But female bikers are more and more interested by bikes. And Yamaha and Kawasaki are trying to take advantage of this growing interest of female bikers and many of their ads feature women on motorcycles. Harley has already understood this new opportunity. Indeed, Harley has made an advertising showing a woman on a Harley-Davidson. Here is the main topic of the publicity: A man is admiring a Harley-Davidson motorcycle thats parked on the street. An attractive woman passes by and says nice Harley, which is all the guy needs to start flirting, boasting that he likes to live on the edge, etc. Unfortunately for him, the real Harley owner chooses that moment to arrive and climbs aboard her bike. His reaction is to try to convince the object of his affection that the bike is being stolen right in front of them in broad daylight. And, another key issue for the future is the problem of the accessories. Indeed, those products such as perfumes or cosmetics are decreasing a lot. So, Harley-Davidson should take a decision about this unsuccessful strategy of brand stretching. But, this strategy has a lot of success regards to the leatherwear and fashion area. According to me, Harley-Davidson should continue to improve this brand stretching and not leave the market of cosmetics and perfumes. Indeed, this is this strategy that has ensured the customers to be able to belong to a second family, and has allowed to Harley this reputation to be closer to the customer. If you remove the cosmetics and perfumes, some fans could lose something and could change their mind about Harley-Davidson. Indeed, the History of H-D is all about fans. Furthermore, the female market is growing a lot, and is for sure the best way for Harley to regain some market share in this brand stretching. 2.RecommendationsFirst of all, Harley-Davidson should find a new approach to its European marketing campaign in order to conquer European markets. Indeed, in Europe, Harley-Davidson is not yet a culture as it is in the United States. Maybe, the design of the bikes, or the size, are not adapted to the European market where roads are not as big as in the U.S., and where the circulation in big cities does not allow to ride a big cruiser bike, and for sure does not ensure pleasure in riding such a bike with a lot of cars all around. But, it is maybe the same in the U.S. cities but there are much more possibilities to enjoy riding a Harley thanks to big and large roads such as the famous road Route 66. And, in order to face with this problem, Harley has developed a new bike particularly adapted to the European market (www.moto-station.com), presented the last 24th of January. But, this is not the main problem. Indeed, Harley has to face with a lack of this culture, group, family, and pleasure, which are present in the U.S. So, in order to give these sensations in Europe, and establish a stronger image, Harley should realize an advertising campaign putting forward those elements of recognition of the Harley Group. Here are some ideas about what could be the advertising campaign: A bike is going very fast, not a Harley-Davidson. Another bike, a Harley-Davidson, is not going fast with the new Harley. The man on the first bike makes fun of the second bike and passes it. But, they meet each other on a red light. The scenario continues in this way and each time they meet each other on a red light, more Harley-Davidsons bikes are present. Its like they know each other, shaking hands and talking So, the message of this ad will be the pleasure to ride with a Harley, without stress and relaxed. So, at the end, the message could be Ride without stress, let yourself be guided by your instinct. And above it we could see the slogan The Eagle Soars Alone. Other promotions could be present in specialized magazines. Indeed, this strategy could ensure Harley-Davidson to touch more people in the target. This idea could be present in different kind of magazines in order to touch specified targets. So, magazines for women can be used in order to contact the female market, non-bikes magazines in order to touch non-bikers, and bikes-magazines in order to keep the brand name and the recognition of the owners. Then, to my mind, another problem of Harley-Davidsons strategy is the fact that H-D is only present in one segment, the cruisers. Indeed, its competitors such as Honda or Yamaha are presents in all segments (sport, cross-country, cruiser, ). According to me, this is the reason why the median age of Harley riders is growing up. So, Harley-Davidson should try to go to other segments, in order to diversify its customers. Harley has well understood this promising gap in the market, buying back the firm Buell, famous for sport bikes. And, according to Jean-Luc Mars, CEO of Harley-Davidson France, Buell ensures to conceive radical bikes without endanger the foundations of Harleys brand. Buell also ensures to develop internally Harley-Davidson France and its network, our entire acknowledge of the bikes market, and to innovate on original marketing techniques. But, this is the first step in this promising segment, where young people are for sure the more present. Honda and Yamaha, for instance, are very well recognized in this market. And, according to me, the reason is the fact that they are present in grand prix doing races and winning championships, and thus becoming famous all over the world. Indeed, races can prove the quality, the competitiveness, and the reliability of a brand. It is not a hazard that Honda won from 1994 to 2003 the 9 championships in the biggest and the hardest class, 16 championships won in total.