The Operations of Harley Davidson and Its Technological Innovation - Book Report/Review Example

Introduction The report seeks to critically analyse the key contribution factors of the transformation undertaken by Harley Davidson. The report is divided into two sections. The first part deals with the analysis which seeks to explore if the transformational process has contributed successfully or other wise to the operations of Davidson in view of the existence of other competitors such as Kawasaki. It has been noted that the key transformational changes implemented by Davidson greatly contributed to the success of the organisation. The second section also observed that there is need to embark on market research by Davidson so as to be better positioned to know the needs and interests of the customers to be able to satisfy them. Case study analysis Founded in 1903, Harley-Davidson grew through different stages to become a formidable force to reckon with in the motorcycle industry in USA. It can be seen that the Post World War II period witnessed a decline in the company’s sales though Harley Davidson managed to remain profitable by introducing more powerful and larger motorcycles. The V-twin engine was the most distinctive feature of Harley since it had greatly contributed to the overally good reputation of the organisation in the market. However, the entrance of other competitors in the market marked a turning point in the operations of Harley Davidson. Competition from Kawasaki for instance changed the market structure. It penetrated the untapped market of small, portable bikes and this segment was mainly comprised of older people particularly male and young woman who could not afford these heavy bikes by Harley. The smaller bikes were very easy to maintain and they were portable compared to Harley’s big bikes. The entry of the Japanese manufacturers significantly changed the structure of the industry in the USA. In the 1960s, Japanese manufacturers accounted for more than 85 % of the U.S. motorcycle sales. Later the Japanese manufactures such as Kawasaki also unveiled technologically sophisticated heavy weight motorcycle and this negatively affected Harley Davidson whose segment of heavy bikes began to decline and in the 1980s where it can be noted that its market share had declined by more than 80 %. It can thus be noted that the entrance of low cost service providers may lead to growing competition resulting in other businesses loosing customers to rival competitors as customers would tend to switch to lower priced products. For instance, the recently introduced lower priced portable bikes competitors such as Kawasaki has seen a shift in the buyer behaviour of customers resulting in a fall of sales for Harley compared to other competitors. Though this is a healthy situation in a competitive environment, it did not go down well with Harley’s operations. Overally, the market is open where new entrants can enter into business without much hindrance and this serves to promote competition among competitors in the same industry. There would be need for the organisation to keep up pace with all the changes taking place in the market. Harley lacked technological innovation compared to its Japanese competitors and their market share began to decline. After the company went public, it was acquired by AMF and their emphasis was on increasing production while overlooking the issues of quality which resulted in Harley’s reputation for reliability and quality further declining to reach bottom low. Against this background, Harley Davidson sought to transform its operations by embarking on a number of initiatives to turn around the fortunes of the company again. This transformation was done on the mould of Japanese manufacturing which was efficient and emphasized on quality contrary to quantity. The adoption of the productivity triad sought to be characterised by employee involvement, just in time (JIT) inventory systems and statistical operator control (SOC). A critical analysis of the case study as going to be discussed below shows that the transformation exercise greatly contributed to the success of the organisation given that Harley re-emerged from the wilderness after its demise to reclaim its lost glory in the USA motor cycle industry despite the fact that there were other competitors. Apart from the issues related to inventory and incentives for the workers, after the IPO, the company sought to transform from an informal to a formal organisation by emphasizing organisational and individual learning. Knowledge management is a virtue in the running of an organisation. The employees must be equipped with knowledge or given the opportunity to acquire the much needed skills to perform various tasks expected of them. Learning in an organisation In their bid to gain knowledge, members of the organisation ought to engage in collective learning that creates norms, shared assumptions and beliefs that become organisational culture. An organizational culture is created by the members who learn and gain experience of doing things from those around them in a given situation. To enhance an organisation’s cohesion, it is imperative to create a culture that promotes innovative ways of identifying a problem and finding a solution (Locke and Kirkpatrick, 1995). Thus, open communication between members of that particular organisation should be built on the basis of creating mutual trust and an atmosphere of respect. Thus, learning can be effective where organisational culture can integrate with individual’s values, perceptions and capabilities in the workplace. It has been noted that this initiative to promote learning greatly improved the overall performance of the organisation since the employees were given the autonomy to be part of the decision making process. Employee involvement First line managers were encouraged to contribute to the decision making process. This is very important as far as motivating the workers as well as creating a sense of belongingness to the company is concerned. The effectiveness of the organisation is mainly determined by the performance of the employee. There is every need to treat the employee as a valuable asset to the organisation than treat him as a mere person who ought to work under instructions only or just as a profit making tool. Employee performance can be increased by motivating the workers. Basically, motivation is the enthusiasm employees have for their jobs and factors which influence how hard they may try to do the job (Armstrong 1999). The employee must be persuaded and inspired to do the job since he would know that he would get some form of reward for the effort put. Essentially, each organisation is tasked with meeting the organisational goals set and there ought to be proper management to ensure that the organisation achieves its goals. According to the information obtained from the case study, the company managed to introduce numerous innovations in manufacturing and this approached increased line productivity reliability of the bikes produced. The managers ought to create flexible working conditions which can motivate the workers to put optimum performance in their day-to-day operations as away of improving the effectiveness of the organisation’s performance. This was also part of Harley’s transformation drive which also positively contributed to the success of the organisation which had slipped into oblivion. The managers should also be better positioned to develop their employees as well as put measures in place that would ensure staff retention. In this case, it was hoped that lowering the inventory levels would make quality problems apparent and force employees to take action. Workers should meet certain standards of performance so as to ensure that they achieve the organisational goals. Measures such as training the workers to meet the expectations of the organisation’s operations ought to be put in place so as to ensure that the organisation maintains its competitiveness by upholding similar standards of performance. The organisation sought to put in place clearly defined channels of communication so as to promote effective learning among the members of the organisation. Where there are clearly defined and open channels of communication, it would be easier to communicate any important information about any changes that may be effected within an organisation. The main advantage is that communication forms the cornerstone of successful operations of any given organisation. Without proper communication, there would be high chances of conflict and misunderstanding hence efforts should be made to ensure that all the workers are well informed about the developments that would be taking place in an organisation. This immensely contributed to the success of Harley during its transformation period. Organisational structure Another problem that confronted Harley Davidson was its organisational structure which was centralised. In a centralised organisation, communication is top down and it takes time to implement decisions. Where everything is centralised, it is very difficult to learn if not impossible since the order of the day in such an organisation would be characterised by that top down communication style. This type of organisational structure does not promote learning in an organisation since interaction would be minimised by the barriers that may exist between the levels of the model. Since Harley embarked on institutional learning within the organisation, the structure of the organisation was unilaterally changed so as to be able to accommodate this process of learning to take place in a conducive environment. Indeed, in a decentralized organisation, action can be taken more quickly to solve problems and more people would provide input to decision making and the employees are likely to feel less alienated from those who make decisions that affect their daily operations at work. Adaptive organisational forms which emphasize the flexibility to adapt to change can enhance better performance while bureaucratic structures will inhibit it (Kleynhans 2007). There ought to be open channels of communication where there is free flow of information and the employees should take a role in contributing towards decision making as a way of creating a sense of belongingness. The system to be employed ought to be accommodative to a diverse range of values that distinguish people across the globe from one another. This greatly enhanced the organisation to realise the positive results of its turnaround initiative. When Teerlink retired in 1997, Bluestein added the title of Chairman and continued transformation through new product development, upgraded manufacturing technology, capacity and processes, modernized and dealer network. This was conceived and implemented through employees empowered to operate at their full potential. This under the leadership of Bleustein pushed Harley into places it had never gone. Giving the worker full potential is one viable way of motivating him to perform to his best which increases productivity in an organisation. This also allows the employers to particularly focus their resources towards the attainment of the set organisational goals. This transformational strategy immensely contributed to the success of Harley since it can be noted that it grew from strength to strength after upgrading its manufacturing technology, capacity and processes as well as improving its dealer network. There are many successful business organizations in the market that are strategically so viable to such an extent that rival competitors can hardly exceed their performance. Such stable status can be achieved only when they apply certain strategies that can hardly be imitated by the competitors for long-term survival and stability, which is known as competitive advantages. Porter (1980) suggested a framework for competitive advantage through his generic strategies. In order to survive in the long term, Porter (1985) has argued that a firm needs to have sustainable competitive advantages. There are two sources of competitive advantage; cost advantage and differentiation. Competitive advantage-differentiation As part of its transformational exercise, Harley differentiated itself from the Japanese manufactures by offering support to various enthusiasts and social groups. In a differentiation strategy, an organisation seeks to be unique from other competitors in the industry where it offers products or services that are valued by the customers. An organisation strives to select one or more products with attributes that are perceived as important by the customers and it attempts to uniquely position itself in the market in order to meet such unique needs. Ultimately, the firm will be rewarded with a handsome price for being unique in the services it provides. Compared to competitors such as Kawasaki, this was a major breakthrough for the organisation since it grew from strength to strength compared to the performance of the mentioned competitor. Involvement in offering support to various social groups such as sponsoring motorcycling sport created mutual trust between the organisation and its customers. Theoretically, the concept of differentiation is advantageous in that it makes the organisation unique from the other rival competitors operating in the same market. A unique service is ideal for the positive development of an organisation since it would be completely different from other organisations also competing in the same industry. In most cases, customers are primarily interested in getting products with unique features compared to the other products in the market. In the same vein, it can be noted that Harley operates in a competitive environment but its involvement in social activities differentiates itself from the other rival competitors. The ladies of Harley which was aimed at promoting the lady riders is another social support programme that was rolled out by Harley so as to attract ladies into bike riding. Such programmes immensely contributed to the turnaround of the organisation as more and more women riders began to identify with the regular occasion. T-shirts promoting the event were even designed to attract more participants. This combined with the rider’s edge and rental programmes greatly stimulated the sales of the bikes particularly to those who would have participated in the programme. Kawasaki had no such programme besides boasting on technologically good bikes which were also portable. Participation in other social programmes is advantageous in that it would promote the creation of mutual trust among the society. Social responsibility is the concept that maintains that businesses are part of the larger society in which they exist and are accountable to the society for their performance,” (Strydom 2004 p. 11). In other words, there is need for marketers to strike a fine balance between the needs and interests of customers, needs of the environment and the need for business to realise their profitable financial goals. This goes hand in hand with the concept of ethics, which is loosely defined as an attempt to differentiate between something good and bad. The success of any product would therefore depend on the amount of respect that exists between the two. It must be noted that by being socially responsible to the community, the organisation stands better chances of succeeding in attracting more customers since they would have trust in its products as well as programmes that are earmarked to benefit the society as a whole. Programmes that are meant to benefit the local community as part of its goodwill are advantageous to the organisation since it is also important to cultivate back to the communities rather than just reaping profits from the people. If an organisation gives back part of its profits to the society it would be operating in through involvement of social activities, there would be likely chances of creating mutual trust among the stakeholders involved. Essentially, business is not all about generating profits but it is also about promoting programmes which are meant for goodwill to the members of the community at large. As a result of changing demographics, Harley realised that there was need to lower costs in production while at the same time improving in quality commonly known as cost leadership. Thus, cost Leadership is where a firm seeks to be low-cost producer in its industry. In this regard, Harley launched a V-rod and New sports liner to target women and younger riders. These were affordably priced while retaining the handsome features that had become a household name for Harley. A firm can ensure its viability as well as profitability if it embarks on a drive to lower the costs involved in production of its products. Having lowered its products, there would be also need to retain quality and consistency. It can be noted from the case study that the Harley managed to beat its competitors such as Kawasaki in that it was able to lower the cost in production while at the same time managing to retain the desired features of its bikes such as portability rather than just focusing on expensive and very big bikes which could not appeal to young riders or women. Part 2- Recommendations Given that I am a senior manager at the organisation, I would consider various initiatives from a marketing perspective. It seems that from a critical reading of the case, study little effort is put in marketing related activities. It should always be borne in mind that organisations are now operating in a dynamic environment that is characterised by unprecedented changes such as competition. Indeed, competition as is the case with Harley is inevitable hence the need to embark on market research so as to be able to be better positioned to respond positively to factors such as competition. Basically, marketing is concerned with bridging the gap between the organisation and the customers where the firm would seek to satisfy the needs and interests of the customers profitably. The essence of any business is to satisfy mainly the needs of the customers as well as those of the organisation and this should be done in a win-win situation. Harley should take into consideration the marketing mix which includes the four Ps namely; product, price, promotion and place (distribution). Pricing The issue of pricing of the product such that it can be profitable is a bit contentious issue given that very high prices would deter the customers from buying the product while at the same time very low prices would result in losses. In this regard, the firm ought to steadily reduce the price as a way of attracting more customers. The strategy of lowering prices is very effective especially in attracting new customers as well as retaining the old customers. The case of Harley shows that it had somehow a fixed price regime which is not health when it comes to doing business in a competitive environment. The price must be determined by the market factors rather than putting a fixed price which may deter the customers from purchasing the products offered. Promotion On the other hand, I would try to offer various promotional incentives as a way of trying to minimise the threats that may exist to the company. It is important that the customers know that the firm’s bikes are the best price. Since this company has been facing viability problems as a result of competition, promotion through lowering prices on specific occasions is likely to attract more customers. In the process, product awareness would be promoted which would spruce up its chances of drawing the attention of many clients. When this strategy works in favour of the company, it can be used as the center stage of establishing the product onto the market. The company would have the support of the people to substantiate its claim that the products are really popular. Later, the firm may consider increasing product PR efforts in a bid to raise awareness of the products offered so as to appeal to a large number of people. Place Consideration also ought to be given to increasing distribution outlets in the form of opening more retail outlets across the country. The organisation ought to do this through conducting market research and see the areas that would need to be penetrated so as to make availability of the product easier. Market research also helps the organisation to timely respond to the needs and aspirations of the consumers. Instead of inventing new products, I would advice Harley to embark on the process of reengineering, modifying the existing product to have a lower prime cost every second year. This will support the basic cost advantage as it would seek to lower the cost while modifying the product while at the same time paying particular attention to the aspect of quality. All this effort will help the firm to improve the quality of its product. Market research Market research would also help the organisation to increase its production capacity in order to maintain a good level of responsiveness to the identified needs and interests of an identifiable segment. This would be recommendable since the organisation would likely to appeal to a diverse range of customers since the products offered would be tailored to meet the demands and interests of the customers in the market. The market is a sensitive phenomenon in the success of an organisation hence the need to be aware of the interests of the customers. It is advisable to use new information and communication technology (NICT) to market the products. It must be borne in mind that during the contemporary era, new information and communication technology has revolutionised the ways of communication and doing business. The advent of the internet has brought about new features that make communication relatively easy and can reach a wide range of people located in diverse geographical areas. Electronic communication via the use of the internet is very fast and effective. In terms of Marketing, Kotler (1998) calls this online marketing. Various companies have set up their online channels where marketing information about their products can be readily available from time to time. Thus, the internet is a medium that uses broadcasting and publishing with the aid of connectivity of computers that are online. Unlike other traditional forms of media, the use of the internet can facilitate a two way communication between the participants involved. Compared to other forms of communication media, online marketing through internet use offers a variety of benefits to both the marketer and the customer. It is convenient, lots of information can easily be accessible without much hassles. It does not limit especially advertising space and can reach multitudes of people at the same time. It allows marketers to communicate with both new and existing markets in an integrated way that is beneficial to both the customers and the marketers. The internet can play a cost effective role in the communication mix where direct selling can be made possible through engaging dialogue between the marketers and customers. Advertising is also aided where awareness of product can be easily done through interactive involvement. In view of the argument outlined above, the most effective communication plan for the company in question involves the identification of the target markets. This is then followed by the selection of communication channel that can be used to convey the message to the customers. The message is then tailored in such a way that will make a distinction between the company and old rival competitors already in the market in line with the company’s vision of becoming a unique brand name. It can be concluded that the success of the marketing strategy employed by the company is determined by the effective use of modern communication technology such as the internet. Conclusion Over and above, it can be noted that various factors influenced Harley to transform its operations particularly after its sale declined as a result of the entrance of the other rival Japanese competitors such as Suzuki, Honda and Kawasaki among the others. A critical analysis of the case study shows that the transformation initiatives by the organisation greatly contributed to its success. However, market research for the organisation is very important as a way of attempting to keep pace with the changes constantly taking place in the market. References Armstrong M.(1999), Human Resources Management Practice, 7th Edition, Kogan Page Limited, USA. Cant M.C. (2000), Marketing Management, 4th Edition Juta and Co Ltd, SA. Carrell, R. et al (1995), Human Resources Management: Global Strategies for managing a diverse workforce, 5th Edition, Prentice Hall, USA. Porter's Generic Competitive Strategies (ways of competing)(N.D.) 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