Strategic Management of Harley-Davidson - Research Paper Example

Strategic Management of Harley-Davidson 1.0 Overview The essay is based on the objective to evaluate the external as well as internal environment of Harley-Davidson. The discussion shall further intend to analyze the strategic management initiatives undertaken by the company with due consideration to its business environment. Notably, the company is a US based multinational which specializes on motorcycles. The company was established in the year 1903 and is recognized to possess a strong competitive stance in the current market scenario of the 21st century (Harley-Davidson, “History”). Based on this thought, the essay shall conclusively intend to identify the major opportunities and threats existing in the US market and the strengths as well as weaknesses possessed by the company. 2.0 The External Environment 2.1 Factors of the Natural Physical Environment Affecting the Corporation and the Industry The components belonging to the natural physical environment of the USA, which affect Harley-Davidson and the motor vehicle industry, can be identified as the energy sources and the trend in its consumption and pricing. The energy sources existing in the US natural physical environment are bioenergy, fossil fuel, coal, hydrogen, hydropower, oil, solar, wind, geothermal and others. It is worth mentioning in this context that the economy maintains a strategic reserve of fuels in order to face the future challenges. This provides the company and the industry with the opportunity of minimized threats in terms of lacuna in energy efficiency of the economy and increasing prices of the fuel which in turn can hamper the future prospects of the company and the industry as a whole. On the contrary, it also raises the future threat of stringent legal barriers and increased tax rates due to the reduction in the level of reserve (U.S. Department of Energy, “Strategic Petroleum Reserve Annual Report for Calendar Year 2009”). 2.2 General Environmental Forces Affecting the Corporation and the Industry US economy is observed to be at its recovery stage, after being strongly affected by the recent global recession. The GDP rate is growing moderately with an increase in the unemployment rate. This in turn is expected to reduce the consumer purchase rate and thus prove to be a significant threat for the company and the industry in the current phenomenon (The Economic Times, “US Economy Grows 1.8% In Q1, Jobless Claims Rise”). However, political reforms can be recognized to provide with significant opportunities with facilitated investment in the technology sector (U.S. Census Bureau, “Science and Technology”). With the growing influence of the climate change and other environmental hazards, the US economy has undertaken several strategic measures to reduce greenhouse gas emissions caused by the motor vehicle industry. The measures include strict legal barriers under the regulatory bodies such as, National Emissions Standards for Hazardous Air Pollutants (NESHAP), Clean Air Act (1970) and others (United States Environmental Protection Agency, “Automotive Repair and Maintenance Sectors (NAICS 8111)”; Natural Resources Defense Council, “U.S. Environmental Laws”). Therefore, in legal and environmental terms the company and the industry as well are likely to witness major threats in the future. 2.3 Natural and General Environmental Factors Vary From Region To Region Harley-Davidson is a multinational company operating worldwide from North American Region and European Region to Asia Pacific and Latin America (Harley-Davidson, “Harley-Davidson Reports First Quarter 2010 Results”). Due to the fact that factors related to the natural and general business environment differ from one region to another it can be stated that the company faces different threats and opportunities in different regions. For instance, threats possessed in the North American region shall be more effective in comparison to that of the Asian region. The fact is likely to reward several opportunities to the company in terms of profitability and reduction in overall operational risk. Contradictorily, it is likely to raise the constraint of inefficient organisational operations or develop the organisational structure to be a complex process with varying legal, political and social barriers. 2.4 Porter’s Five Forces According to the Porter’s Five Forces model, the ‘bargaining power of customers’ and the suppliers of the industry and the ‘threats of new entrants’ and substitute products influence the competition and thus creates an impact on the profitability of the company (Hill, C. & Jones, G., “Strategic Management Theory: An Integrated Approach”). In this case, the most crucial factor to influence the profitability of Harley-Davidson and its industry is the threat of substitute products. It is due to the fact that automobile manufacturers including motorcycle manufacturers worldwide are tending to focus on the manufacturing of cheap and energy efficient vehicles. As these inventions also tend to be efficient in minimizing the rate of greenhouse gas related emissions and thus are also being supported by the political and technological factors. In these circumstances the threat of substitute products emerges to be the most crucial factors to influence the competition of the industry in the world market and the profitability of the company at large (KPMG, “Trends and Challenges in the Automotive Industry”). 2.5 Factors in the Task Environment Affecting the Corporation The most influencing factors existing in the task environment of Harley-Davidson can be witnessed as the competitors and the governmental interventions. Due to the increasing competition in the international market the company had been forced to concentrate on the continuous development of its products. Moreover, the intense pressure from the government so as to lessen greenhouse gas emissions, the company has been forced to re-evaluate its sustainability strategies (Harley-Davidson, Inc., “2010 Annual Report”). Due to these factors the company can be observed to gain the opportunity of overall development in the competitive stance of the company. Conversely, it is also likely to raise constraints in terms of organizational restructuring which shall affect the philosophy of the company at large. 3.0 The Internal Environment 3.1 Company’s Position on Important Issues With the strategic reforms undertaken by the company in the financial year 2010, the company was able to attain a significant position on the basis of productivity. Although, it was affected by the recent economic down-turn, the company was able to gain a considerable growth in the previous two years of recovery which indicates an enhancement in its quality of performance. The company also provided considerable significant to the aspect of employee growth and learning along with environmental sustainability. Another major issue in the company’s operations was the prime focus on the issues related to innovation and creation which evidently provided the company with an extra competitive advantage in the modern era. This in turn enhanced the adaptability of the company and provided it with efficiency to overcome the challenges raised by globalization (Harley-Davidson, Inc., “2010 Annual Report”). 3.2 Marketing In the preceding years, the company had to take many initiatives to control its profitability issues, such as the recent economic down-fall, changes in customer buying behavior, availability of substitute products and others. In such situations the company performed moderately in the local and the international market. However, the company faces considerable challenges in terms of products, (i.e. narrow product line) and in terms of prices as well (i.e. high price range). The company has significant brand recognition in the local and international market with effective promotional and placement strategies. Conversely, the dependence of the company on limited customers, i.e. core customers, young adults, women, diverse customers, the company is likely to face challenges in its marketing strategies. As the data reveals, the company is tending to lose its market share but at a moderate rate which is controllable (Harley-Davidson, Inc., “2010 Annual Report”). 3.3 Finance A significant decrease in the profit gained by the company in its main division of Harley-Davidson motorcycles indicate that the performance of the company is losing its balance to a large extent. The stock price of the company has also been recognized to grow at a moderate level due to the impact of economic fluctuations occurring in the external environment. Nonetheless, the corporation has been recorded to perform better than its competitors (Hoovers, “Top Harley-Davidson, Inc. Competitors”). 3.4 Research & Development (R&D) During the pre-recessionary period, the company was recorded to invest largely in its R&D operations. But, after the recessionary period the company has evidently reduced its investments in the sector which has considerably affected the performance of Harley-Davidson. However, the current structure of the company depicts an efficient use of value chain alliances to enhance the prospects of innovation and creation. Currently, the company is also considering the value of environmental protection in its development strategies that accumulated enhances the competitive advantage gained by Harley-Davidson (Harley-Davidson, Inc., “2010 Annual Report”). 3.5 Operations Harley-Davidson is entirely a product-oriented corporation. In order to gain effectiveness in its production process the company uses sophisticated technologies in its plants where the equipments are continuously maintained to control the age. Automation plays a significant role in the production process of the company. The company also focuses on the complete utilization of resources in its production process. However, natural disasters and access to resources strongly influences the production of the company. Government policies, employee strikes and other similar factors have limited influence on the process (Harley-Davidson, Inc., “2010 Annual Report”). In comparison to its competitors, the company performs its operations related to the manufacturing as well as distribution of the ready products, are recorded to perform better than its competitors to an extent, but the efficiency requires to be enhanced in the future (Wagner, “Harley-Davidson Strategic Plan”). 4.0 Discussion of Major Findings 4.1 The Internal and External Factors Affecting the Corporation’s Performance Strengths Weaknesses Strong brand recognition Healthy competitive stance Limited influence of competitors Weak research & development strategies Narrow product line and diversification Dependence on limited consumers Opportunities Threats Favorable political and social factors Security in terms of energy consumption Government investment in technological development Increasing competition Environmental interventions regarding greenhouse gas emissions Economic fluctuations 4.2 Appropriateness of Current Mission and Strategy The mission adopted by Harley-Davidson in order to achieve a competitive lead can be witnessed as quite efficient as it tends to be consumer oriented as well as product-oriented. However, the company requires adopting significant strategies with due concern to the aspects of sustainability, competition, and profitability at large. Therefore, it can be stated that not the mission, but the strategies should be revaluated and reformed which in turn shall enhance the competency and the profitability of the firm, rewarding it an accelerated sustainable growth. 5.0 Strategic Alternatives 5.1 Business as Usual The strategies can certainly be improved with more careful implementation of the strategies. It can be attained through proper consideration to the weaknesses possessed by the company and the opportunities existing in the business environment. 5.2 Idea Invest in R&D Expand its product line and its target customers as well Pay consideration to green technology References Harley-Davidson, Inc. “2010 Annual Report”. May 30, 2011. Annual Reports, 2010. Harley-Davidson. “History”. May 30, 2011. Company, 2011. Harley-Davidson. “Harley-Davidson Reports First Quarter 2010 Results”. May 30, 2011. News Article, 2010. Hill, Charles. & Jones, Gareth. Strategic Management Theory: An Integrated Approach Cengage Learning. Hoovers. “Top Harley-Davidson, Inc. Competitors”. May 30, 2011. Harley-Davidson, Inc., 2011. KPMG. “Trends and Challenges in the Automotive Industry”. May 30, 2011. Agenda, 2010. Natural Resources Defense Council. “U.S. Environmental Laws”. May 30, 2011. Laws, No Date. The Economic Times. “US Economy Grows 1.8% In Q1, Jobless Claims Rise”. May 30, 2011. Consumer Spending, 2011. United States Environmental Protection Agency. “Automotive Repair and Maintenance Sectors (NAICS 8111)”. May 30, 2011. Automotive, 2011. U.S. Census Bureau. “Science and Technology”. May 30, 2011. Statistical Abstract of the United States: 2011, 2011. U.S. Department of Energy. “Strategic Petroleum Reserve Annual Report for Calendar Year 2009”. May 30, 2011. Office of Petroleum Reserves, 2009. Wagner, Stacey. “Harley-Davidson Strategic Plan”. May 30, 2011. Spring, 2007. Read More