Harley-Davidson's - Case Study Example

CASE 6 Return on Equity 28.4% Return on Assets 10.6% Return on Invested Capital 16.4% Gross Profit Margin 41.7% #2 The company is declining,according to the case example. There are worries about the applicable future demand of heavy motorcycles outside of the US which are not high performance track-style bikes. In terms of cash flow, Harley-Davidson faces challenges because, “A large proportion of Harley’s sales were financed by its own financial subsidiary company. Unable to secure some of its customer loans, it was forced to keep these loans on the balance sheet” (Case, 2010). However, the company faces a mixed future. #3 Porter’s Five Forces shows there is a lot of competition internationally among motorcycle manufacturers to offer the best service with the most options and performance. Competition is a force in the general environment, and it is likely the force that is going to impact companies within this industry the most, as it continues to change and grow in the next few years. “The nature and degree of competition in an industry hinge on five forces: the threat of new entrants, the bargaining power of customers, the bargaining power of suppliers, the threat of substitute products, and the jockeying among current contestants” (Ireland et al., 2006). In this industry, even though barrier costs are high, substitute products are a real threat. “If a supplier can either increase the price of its product or reduce the quality while selling it at the same price, the effect on established firms profitability is negative. A supplier that can do one of these things is said to be a powerful supplier” (Ireland et al, 2006). This rule holds true for the motorcycle manufacturing industry as well. There is also a particularly strong domestic market in the US with strong and sustained growth. #4 In terms of competencies and resources, possessing the first mover advantage in relation to its core competency allows a business like Harley-Davidson in the case to set the paradigm for future operations in the new market and also capitalize on all of the intrinsic benefits of this market in a way that will set a standard and leave a lasting impression. This is why many companies are willing to take the risk that being the first mover entails. There are also drawbacks to this situation: this hearkens back to Porter’s force of substitute products, which are increasingly available in an increasingly globalized international marketplace. #5 From a perspective of strategic fit, Harley-Davidson is not in a bad position at the end of the case; it still has a centralized command structure, however. This is a common form of business organization in many settings, including the setting of the current setting. Businesses can also organize by product and customer. In a product method, the business can have different product lines led by different managers. In a customer-oriented method, a business can have different types of customers whose needs differ. This is an increasingly salient option in a market in which customer attenuation has become a watch-word, and customer attenuation is another facet of business that tends to unify rather than divide. At Harley, it is the geographical and customer oriented model that reigns, with teams separated by location. The establishment of core competency is a prerequisite of strategic management decisions, and this is an important part of Harley-Davidson’s current business-level strategy. #6 In terms of what can be done about the implementation problems, Harley-Davidson regards the Open Source implementation as highly successful, despite the case’s presentation of the time directly after implementation as problematic. The new system in fact could not handle Harley Davidson’s supply side needs in terms of simultaneous tasks and the size of the system’s capacity. In the immediate aftermath of implementation there were arguably more problems than before implementation, when Harley-Davidson was undergoing challenges in terms of dropped sales. #7 In terms of competitive advantages, generally, the businesses that seem to thrive best in a dynamic external environment of changing conditions are the businesses that can take manufacturing to the next level in terms of implementing technological solutions, whereas the motorcycle company that is less based on dynamism may struggle to overcome management threats of perceiving stability in this external environment. The continued implementation of new performance and comfort innovations is a solution that can affect the general environment of management functions as well, not just in terms of companies dealing directly with motorcycle technology manufacturing, but also influencing other sectors. There are many solutions that focus on the customer as a way of predicting success for the proactive business working in this environment. #8 In system initiation, the system project is determined in terms of its goals and schedules. In system analysis, the project becomes more complicated and the goals are contrasted to a more real-world setting as the project moves on, and changes and additions are made. In system design, there are less changes and additions, and it is more about sticking to a plan that the other stages have shown to work. In system implementation, the system is finally introduced in a real world context of use. #9 S-- Strong internal culture Loyal customer segment in the US and Canada History of strong market dominance W— Current financial performance Internal incentives failing O— External market change-- “Already the credit market and macroeconomic factors were pointing towards America booming out and recovering from the crisis. Even with sharply reduced profits, Harley Davidson was still the world’s most profitable motorcycle company” (Case, 2010). T— Competition from Japan and Europe #10 B— Leveraged competition S—Stasis vs. change in the external industry G—market forces vs. stock performance #11 Key success factors: Willingness to change HOG target market for heavy motorcycles Willingness to commit to international expansion Continued strong performance in North American markets #12 Paradigm: focus on hard elements Hard Elements Soft Elements Strategy Structure Systems Shared Values Skills Style Staff #13 P— In terms of political factors, the impact of government emissions standards is one way in which politics may affect Harley-Davidson. However, since motorcycles generally have superior mileage to cars and trucks, the interference of this sector may be very minor to the company. E— Economic factors are important to consider. In terms of internal and external economic factors, many companies also use internal scanning in this manner as a risk assessment tool. It is often hard to align risk assessment with the true feelings of managers, however, because of their unique perspective coming internally and meeting the problem of risk management. S— Social factors may affect Harley-Davidson managers who show Groupthink symptoms. When a group becomes too socially close, they lose some degree of their professionalism. This facet of groups also relates to subjects of conformity, compliance, obedience, and other relations among groups of people, including how they relate to what could be called the authority of the collective. The concept of informal groups is also interesting because it relates with the issue of Groupthink, which is a type of conformity focused up on in many management areas. T—Technological factors at Harley-Davidson should focus on the customer implementation of data. The company’s sense of their consumer base attention works from the inside out to supply information about the internal workings of a company to those within the company who may be missing it. In this way, technology can help out managers as well as employees by providing a good idea of customer attenuation that helps the company in general. Technological factors could also be contributed to the process of change in terms of Harley-Davidson’s engines, which the case shows to be a slowed sort of development. REFERENCE Case: Harley Davidson (2010). .pdf file. Ireland, Hoskisson, and Hitt (2006). Understanding Business Strategy. New York: Thompson. Read More