Evaluation of Harley Davidson - Case Study Example

Abstract This study will focus on globalization strategy of Harley Davidson. This company is American motorcycle giant. It has already established their brand name in Europe but now this organization wants to expand their dealership network across Asia. Harley Davidson is known for manufacturing heavyweight motorcycles but now they want to manufacture all types of motorcycles. Later part of the study will explain about internet business model. This study also focuses on application of internet in terms of digital marketing. Harley can use different components of digital marketing to expand their business. Finally this study will focus on competitive advantage that Harley can get by using digital marketing medium. Table of Contents Motivations/Risks Associated with Global Expansion Strategy 4 Motivations 4 Risk 5 Competitive Advantage in Global Market 7 Entry Strategies for Global Expansion 7 Internet Approach Strategy 9 How the Internet Adds Value 9 Internet Business Models 10 Brokerage Model 10 Advertising Model 10 Infomediary Model 10 Merchant Model 10 Community Model 11 Subscription Model 11 Competitive Strategies 11 Leverage e-business Capabilities 12 References 13 Harley Davidson Harley Davidson is an iconic motorcycle brand in USA. It was founded in 1903 by William S. Harley and Arthur Davidson. This organization was one of the major two motor cycle companies that survived in the time of Great Depression. This motorcycle brand was mostly used vehicle by US army in the time of World War II. In 2011, Harley Davidson sold more than 0.23 million units internationally. This company specializes in heavyweight (more than 750 cc) motorcycle manufacturing. . It has achieved more than 10% growth rate for consecutive eighteen years. In 2003, the motorcycle giant celebrated its 100th anniversary with a series of global events like motor cycle rally, street racing etc. Harley Owners Group (HOG) was established in 1983 by the company. In 1991, Harley Owners Group became a global organization. In 2010, HOG had 0.8 million members. Motivations/Risks Associated with Global Expansion Strategy International motorcycle market is dominated by Japanese players like Honda, Suzuki, Yamaha. These Japanese companies produce all kind of motorcycles (Scooters, heavyweight motorcycles and lightweight vehicles) and they also share a large percentage of motorcycle market. There are few motivation factors for Harley Davidson. Motivations Harley Davidson has not captured Asian motorcycle market to a large extent. Recently, this company entered in Indian market with 12 new models. Motorcycle market in Asia was dominated by Japanese vehicle manufacturers (Honda, Yamaha, Kawasaki etc) but Asian customers are not satisfied with quality of the product and after sales service. Many customers in Asia look for a premium motorcycle brand and Harley Davidson has the opportunity to satisfy their need. Harley Davidson can explore global motorcycle industry with their product performance and better sales service. Harley can try to seize global opportunities in a three way manner. Risk There are two types of risk factor associated with Harley Davidson’s global expansion strategy. It may fail to understand customer demand in Asian market. Asians customers like small and lightweight motorcycles with many features but the company is known for manufacturing heavyweight motorcycles. This company does premium pricing for their products. Premium pricing technique will not be successful in poor countries of Asia. This Company needs to spend millions of dollars on R&D work and sometime this strategy fails to produce sufficient profit. Harley Davidson needs to control price and quality of the product otherwise they cannot penetrate in Asian market. Two types of risk factors are mentioned in the following diagram. Competitive Advantage in Global Market 1-Harley Owners Group will help this motorcycle company to create awareness through their loyal customer base. HOG can arrange events like racing competition and rallies across the world. 2-Harley Davidson has strong research and development facility to compete with different global motorcycle brand. This company has opened their assembly plant in India within one year. In a similar manner they can easily acclimatize themselves in different countries. 3. The brand has reputation for their strong after sales service. Harley Davidson can outdo its competitor with better sales service. 4. Harley Davidson has a strong supply chain network which is powered by oracle applications. Manugistics and Oracle is two major network solution providers for this company who maintain supply chain network. Harley will use their superior supply chain management to expand their global business. Entry Strategies for Global Expansion There are four types of global expansion strategy. 1. Exporting- Companies can sell their product in foreign country. 2- Licensing- Companies can use trademark or patent of other organization in foreign market. 3- Joint Venture- Organizations can enter in foreign market with the help of partnership with a domestic player of that country. 4-Foreign Direct Investment (FDI) - Different Company can get ownership in foreign country by investing large sum of money. Harley Davidson has recently started their expansion in Asia-pacific region. At initial stage this company needs to focus on limited countries where they can enter via Foreign Direct Investment. In 2005, they founded their representative office in Shanghai, China. It has opened eight new dealership centers in china and they have planned to expand their distribution network in future. Harley Davidson is using foreign direct investment (FDI) model to enter into foreign countries. In china they have started their operation in with a 14 member team and they are planning to increase team size. The company expanded their business in Thailand through FDI. They are trying to expand their business in European countries through FDI model. Harley Davidson can establish dealership network across subcontinents. They recently sold their MV Augusta brand and want to shift their focus on low priced motorcycles. It has established a dealership network of more than 1500 dealers across the globe. Harley needs to increase their dealership network in a following manner. Internet Approach Strategy E-commerce has emerged as a new trend in business within few years. Digital marketers are taking help of social networking sites like Face book, Twitter, LinkedIn to create awareness about their product. How the Internet Adds Value Any business organization use internet as business medium for the following reasons Online advertising does not cost much and company can also design their website in a lucrative manner. A well designed website definitely attracts customer. Digital marketing through social networking site has few benefits and which are mentioned below. Social networking sites are largely used by young people across the globe and digital marketing helps any company to promote their product among them. Companies can get real time feedback about their product through online questionnaire. Product promotion can be done by organizing online game shows, online quiz, using different applications of Face book, creating online forum etc. Companies use ERP system and Electronic Data Interchange (EDI) to maintain business database and all transactional information. ERP can be implemented in online manner. Vendor Management System (VMS) is another type of online software application to maintain supply chain management. Harley Davidson can use internet to promote their brand in aforementioned manner. Harley Owners Group is a concept which can be applied in an online mode. Online stores for different motorcycle apparel can be an effective idea to capture Asian market (Rayport, n.d.). Internet Business Models Brokerage Model This model brings buyers and sellers together in online marketplace and broker charges a percentage of commission. Example- eBay, ChemConnect, PayPal etc. Advertising Model Advertising Model includes Web advertising via website, email, browsers and promoting brands through digital medium. This model is applicable when number of users is large. Infomediary Model Database about consumer purchase pattern, gender ratio, etc is sold to companies by others. This model is mainly acts as market information provider. Merchant Model In this model, retailers operate their business in online mode. Retailers create a virtual marketplace for buyers. Example- Amazon.com Community Model This model is based on loyalty and internet usage of a customer. Group of customers create an online community and then share movies, books or any information. This community can be accessed by anyone. Example- Torrentz.com, torrent charges minimum subscription for their direct movie downloads option. Subscription Model There is periodic (monthly or daily) service charge for the users. Users get paid membership in this model. Examples- America Online and Classmates. Harley Davidson is currently using subscription model for their Harley Owners Group. Loyal customers of this company have created HOG and currently it charges a certain amount for subscription. Competitive Strategies Harley Davidson can use internet business model to create an online customer database. They can outdo their competitors by two types of internet applications: Online advertising like Avatar Marketing is a latest trend in the field of digital marketing (Hemp, 2006). There is website called Second Life and Harley can use this website to create an online avatar for them. This Harley avatar can promote their brand in a chain wise manner across the users of second life website. Japanese motorcycle makers (like Honda, Yamaha and Suzuki) are still not aware of avatar based marketing. Avatar base marketing is a new trend in Asian market and Harley can easily explore this opportunity. Online forums like HOG can create an added advantage for Harley. Online Harley Owners Group can organize different competitions for internet users. Online Harley forum can offer different fun applications for their user. Harley can use online blog as public relation technique. Subscription model should be used by Harley Davidson earn profit from internet business. Online ERP system should be maintained internationally to have better control over supply chain. Leverage e-business Capabilities Harley Davidson is trying to use internet as digital marketing medium to promote their brand. In modern era every company is using internet to leverage their business. This motorcycle brand can use Manufacture Model (another kind of internet business model) for leveraging their e-business capabilities. They can distribute their product directly to their customers through online transaction. This company needs to charge rental fees for their vintage bike models. In this approach customers need to pay a certain amount to use vintage bikes manufactured by Harley Davidson. This e-business model is profitable and also revolutionary. References Capello, M., Chiang, W., Coniglio, J., DeCristofaro, J., Hsu, J., Sony, A.,& Regis, N. (2003). Evaluation Of Harley Davidson, Inc. Retrieved from http://www.stjohns.edu/media/3/4373992a2aa84b29bd43925e27e55999.pdf. Cushman, D. (2008). Reed's Law and How Multiple Identities Make the Long Tail Just that Little Bit Longer. Retrieved from http://dl.acm.org/citation.cfm?id=1929298. Hemp, P. (2006). Avatar-Based Marketing. Reatrieved from http://hbr.org/2006/06/avatar-based-marketing/ar/1. Rayport, J. (No Date). The Truth About Internet Business Model. Retrieved From http://academics.eckerd.edu/instructor/duffja/MNB305/TruthaboutModels.pdf. Read More