Strategic Management - Coursework Example

? External analysis of motorcycle industry David Harley Motorcycle Company is among the leading producers of custom motorcycles with parts and accessories. It has been in the competitive market since its initiation over a century ago and has been improving ever since, despite of some few downfalls it might face from time to time. The company has come across and made use of opportunities that encourage it to move forward in the business despite it also facing some major setbacks. For Harley Davidson Motorcycle Company there are several opportunities that have presented themselves to the company to promote its continued growth in the ever so competitive motorcycle industry. In a bid to ensure future development, the company has sought to expand its business and extend its markets globally. In the year 2011, the company extended its horizons to the Latin America by opening up a permanent headquarters in Miami. Due to this expansion, the company has made an aim to target potential customers in these regions and therefore to set up some kind of foundation in the area. Towards the end of the same year, the company witnessed a rise in their international sales in retail increasing the demand of its products in Europe, Australia, and Latin America. This rise gave a challenge to the company executives to further refine their marketing and business strategies so that they may increase their international markets. Apart from expanding globally, the company has come up with new product launches that have been a success in the provision of new and improved products for its users. These new products have given Harley Davidson an upper hand in the market over the other global competitors. In the year 2012, the Seventy Two and the Softail motorcycle models were launched and they were received as great products by their customers. In the previous year, the company had also produced new set of tools and accessories which were also widely accepted. These annual improvements have led to the company gaining trust from its customers and a reputation that ensures its growth in the industry. The company also has taken upon some restructuring measures aimed at lowering its administrative costs, doing away with excess capacity as well as leaving the non-core operations. It has successfully achieved these goals by merging some of its production plants, for example the engine and transmission plants and the vehicle test facilities. This has greatly reduced the production cost of the company’s products thus ensuring more income than expenditure and hence creating a profit. This restructuring plan has extended to some of its employees whereby, new contracts have been drawn that are set to take effect upon the expiration of the current contracts. The new contracts will be renewed every seven years. This will ensure that the employees deliver quality work and more efficiently. This restructuring has taken a huge step in promoting flexibility and easy management of the company. This will further enable efficient production of high quality products to the markets that will be able to sustain the market. The company however faces some threats to its business. According to the SWOT (Strength, Weaknesses, Opportunities, and Threats) analysis, the company faces challenges in terms of its new emission standards for two wheelers, the procurement of raw materials and the competitive landscape. There have been standards that have been provided by the ACEM (Association des Constructeurs Europeens de Motorcycles) posing strict rules towards emission by the David Harley motorcycles. The rules have been put forth requires the company to introduce newer standards of motorcycles that have less emissions. The company has been given up to 2015 to come up with the new models and comply with the requirements of the association failure to which they will be faced with stiff penalties which could affect its profits. For the company, the implementation of the new design model will greatly increase its operational costs because it will mean to redesign its already designed models. In terms of raw materials, the company depends on one supplier for certain parts that might be required to make the finished product. This dependence has proved to be dangerous because their effectiveness relies on the delivery of the materials in time. If the materials are late, then the production becomes late and finally the delivery which may distort the relationship the company has with its customers. The quality of their end products will also be affected by the quality of the raw materials provided by the supplier, such incase of a defective batch, and the products may also be defective leading to huge losses being incurred. Critics of the company have went on and claimed that the company is failing to keep up with its competitors in Asia, for example the Kawasaki in terms of quality and productivity. The Kawasaki, same as the Honda has been praised to be more efficient than the Harleys, creating bad publicity for the company. This note by the critics could lead to customers losing trust in these motorcycles and seek better products in other markets. It hit worse when the State Police in Michigan announced its replacement of their Harley Motorcycles with products from BMW basing their replacement on performance (Taylor, 2012). They proved that the latter was faster, easier to handle than the former, and hence the Harley’s would only be used in parades. In the competitive landscape, Harley’s motorcycles have higher retail prices than its competitors. In an event the customers take huge consideration in price as a factor to purchase bikes, the company would be at a great disadvantage and would face very stiff competition. The company also faces stiffer competition in its financial services from other institutions, for example banks and insurance companies in that they offer lower rates than Harley’s financial institution. Its ignorance to these pressures would pose a serious problem in its global market share in the event a shift occurs. The alliance between Harley and Lehman emerged during the great recession, in 2008 when Harley introduced the Tri Gide three wheeled motorcycle. Lehman agreed to be the sole exclusive supplier of the Tri Gide with the price of supply undergoing negotiations every contract year. The agreement between the two definitely presented an opportunity for Harley because it helped the company in achieving its goal of ensuring that the three wheeler hits the market and is well received by its customers. In the same year they went into agreement, Harley received 5.65 billion in terms of revenue while Lehman received 22.6 million dollars. This was taken a success by Harley. Also Lehman being the sole supplier to Harley was also seen taken as a benefit by the former company whereby it would take advantage of the smaller company in terms of receiving all credit and popularity for the good products it manufactures. Lehman was responsible for the manufacture of the parts, and then loads them into Harley’s trucks for transportation. The constant supply of the components of the glider, paints and assembly parts would ensure that Harley maintained its business despite the recession. Lehman being a well noted and rapidly growing supply company became an advantage to promote the name of Harley’s products because Lehman’s products from which they were manufactured were already trusted and rapidly expanding. This was would lead to the wide spread demand of the gider thus increasing the customer margin of Harley Davidson. For Lehman, the agreement was an advantage to it in terms of growth because it lacked the necessary resources to promote itself. The motorcycle market was very hard to penetrate and form ground due to its highly competitive nature, and Lehman being a growing company needed a way to push in. Thus the agreement with the much larger company gave it a means into the large market such that Harley acted as a platform for Lehman to further make advertise its business because it already had a ready market. It acquired the ability to penetrate into the large highly competitive market. A year after the agreement, in 2009, Lehman showed an improvement in its financial status (Looney and Ryerson, 2011). Its revenues had shown an increase of 48% as compared to the previous year due to the business venture it has entered with Harley. The continued promotion of Lehman through Harley will see to the future growth of the company. References GlobalData, (2012). Harley-Davidson, Inc. – Financial and Strategic Analysis Review.  Retrieved from:http://callisto.ggsrv.com/imgsrv/Fetch?banner=4d609cd7&digest=27b6b6d33026b58ef227e0025dda7d42&contentSet=SWOT&recordID=47405_GDAUT29887FSA Looney, D. C., & Ryerson, A. (2011). Lehman Trikes: A story within a story. Journal Of The International Academy For Case Studies, 17(7), 45-58. Marketingteacher.com (2011). SWOT Analysis. Retrieved, from http://marketingteacher.com/lesson-store/lesson-swot.html Taylor, A., (2012).  The Hurdles at Harley-Davidson.  CNN Money – Fortune.  Retrieved from: http://money.cnn.com/2012/10/03/autos/harley-davidson-polaris.fortune/index.html Read More