Market Performance of Harley Davidson - Essay Example

Strategic Management & Business Policy | Dr. Muzamil Contents Current Performance 3 Strategic Posture 3 Mission: 3 Objectives: 3 Strategies: 4 References 12 Appendix 13 Current Performance The recorded performance by the year 2014 is as follows; An improvement of 11.83% in Return on Investment by 2014, which had improved from 10.64% recorded in 2013. The improvement is due to the net income of 15.07%, with an annual investment of $7,139 million and income $845 million. Growth in revenue for the last five years averages to 5.43% Profitability has increased by 35.35% in gross profit, with 17.04% reported in operating profit and 10.3% reported in net profit. Free cash flow margin was improve to improve to 14.68% as compared to the 13.03% in 2013 Strategic Posture Mission: The company’s mission is about fulfilling on dreams of the motorcycling experience. It is possible to achieve this mission by providing to the motorcyclists and the general public with vast line of motorcycles, accompanied with branded products and services through the selected market segments. Objectives: The first objective is attracting customers from the vast younger generation and women. The second objective is achieving a balance existing through empowering the brand and the rising of value. The next objective is engaging in the production of high-quality products and aim at reducing on the customer complaints. Finally, Harley Davidson aims at enhancing operational efficiency while putting focus on the Global Market through engaging towards raising the company’s market shares. Strategies: The strategies for growth are as listed below; 1. Growth through Open Harley Davidson Museum 2. See growth on both H.O.G & BRAG organization that is operational under new community 3. Engage in building a strong global trademark and engage in strengthening on the value of the product and services offered by the company 4. Be able to grow into a global enterprise and be able to maintain on the operation basing on a strategic international market with the purpose of supporting the company’s worldwide dealer and distributor networks. There is need to see expansion on the Rider’s Edge as a measure of experiencing the dream of riding 5. Finally, there is need to concentrate on collaboration through engaging in the establishment and maintenance of the long term relationship with vast population of suppliers Policies: The company adopts an Open Door Policy in all of its areas of operations as a measure aimed at encouraging the employee involvement in the initiatives of transforming the company. The second policy is about Protecting Trademarks & Patents. The third policy is Empowering R&D in order to become a leader in the market and develop better products. The final policy is engaging in Climate Change initiatives that are in light with the changing global science and policy. External Environment (SWOT) Opportunities: 1. Engaging in developing products that are environmental friendly. 2. Engage in the expansion of the international market through the initiatives of increasing new share market 3. Issuance of low prices in products and services helps in maximizing the number of buyers. 4. There is a trend of increasing female buyers as a measure of protecting the environment 5. The company provides memorable experiences to its buyers as a measure of developing an intense brand loyalty 6. Engage in building a strong relationship with the suppliers as an initiative of getting quality products and cost reduction. Threats: 1. There is presence of a powerful competitor. 2. There is pleasure from the demanding countries taxes 3. There is a high cost & low-profit margin, together with low-quality products that are easily available. 4. An increase in the environmental regulations is a challenge for growth, accompanied by the restrictions on the standards set by the European market. 5. The economy is weak, accompanied with the presence of a substitute product. There is a need to identify the rivalry in current market 6. The final threat is seasonal fluctuations, whereby some motorcycle cannot perform during the winter season. Societal Environment (STEP) Socio-cultural There was an excessive concentration on aging baby boomers and with some current efforts shifting to women and young generation. The strategy aims at increasing the number of sales by teaching this target population how to ride. Secondly, there is a need for providing training for rider and safety measures. Finally, there is an increased number of competitors in the market. Technological There is an increased demand for the fast speed motorcycle by the new generation and global markets. It is the market where HD employs the use of information technology towards building higher quality and more reliable traditional motorcycles. Harley Davidson has been able to develop the Evolution engine and be able to establish the foundations of the existing line of cruise and toured motorcycles. The company has also spent on R&D as a measure of developing a new V-Rod motorcycle with high-quality standards. Finally, Harley Davidson generates a new product based on needs of its customers with the advanced technology. Economic There is pressure for the transition to a lower carbon economy. The weak Dollar is another challenge. The economic downtime also affects the sales of HD, accompanied by challenges of increase on fuel and gas prices, together with a decline in the interest rate. There is a reduction in production and a challenge arising from an increase in the number of unemployment. Issues of pending recession provide an indication that the global economic activities like shipping rates are declining at alarming rates. Political-legal There is regulation for complying with the U.S. Environmental Protection Agency and complying with the State of California Air Resources Board & National Highway Traffic Safety Administration. There is a need for reducing paperwork in the organization by adapting the concept of paperless Environment. Task Environment Threat of new entrants With the slow pace of new entrants in the motorcycle market, it becomes necessary for HD to adapt new strategies to continue maintaining its market share before the competitors gain its advantage. Entry Barriers The presence of high entry barriers in the market requires a new entrant to have a substantial capital for investing in such a market. There is also a flat segment of the economy of scale. The segment comprises of Honda, Japanese (Suzuki, and Yamaha) & European compotators in the market Bargaining power of buyers Currently, there is a weak bargaining power, were the prices continue declining and while the customers demand keeps on increasing on the different quality of services that the competitors are providing. At areas where the price of the HD product is significantly higher than the price of competitors, some customers still show their willingness to purchase HD products due to the unforgettable experience the gain from HD products. Threat of substitute of products or services The substitute in this market comes from the competitors of the motorcycle industry, such as Yamaha, Honda, and Suzuki. These companies give HD stiff competition in areas like quality, speed and prices. The presence of these heavyweight competitors in the motorcycle industry can be substitute with low weight motorcycle, cars, bikes & cruise. Bargaining power of suppliers The company faces the challenge of having a weak bargaining power to which HD purchases itself all products and raw material of the motorcycle and go ahead in providing them to suppliers for designing and developing. In case an increase in prices occurs, it will lead HD into assigning such services to other suppliers. In this regard, HD only has the option of following the vertical growth strategies in backward integration because of the collaborative relationship with the suppliers to which allow them to interact and access to technical and commercial for application directly to product design and development. Rivalry among existing firms The motorcycle industry competition is high and edgy, where the manufacturers of the motorcycle are expanding dramatically in the US, the Japanese, and the European markets. There is also a weak competition in the local market and high competition in global markets. Internal Environment (SWOT) Strength HD has a strong branding image that distinguishes it from its competitors. The company has durable and strong relationship with the employee and supplier to make sure the performance of the organization achieved. There is also a strong market share competitors in the domestic market, approximating to around 48.7% for HD heavyweight motorcycle. Finally, HD targets consumers that like heavyweight motorcycles with the reasonable process for personalization and customization. Weakness The aging baby boomers riders and high cost of product discourage the young riders. Secondly, having an individual product on the waiting list may end up creating the substitute. There is a possibility of consumer interest diverting in the future from heavyweight motorcycle to light motorcycle. Finally, a decline in sales during recession may lead to decline in market share Recommended Strategy HD needs to upgrade the technology to the advanced stage in order to facilitate the customer requirement based on the market segment. There is also need for maintaining the product of high-quality products with lower cost via supplier long term relationship. It is also recommendable to generate and ship number of motorcycle to the global market during the recession period. Finally, there is a need for boosting on the female and younger riders to raise sales revenue. Implementation HD is ready for most of its program for usage such as rental, rider training that are available to the limited scope of dealers. There are present cooperative programs with Buell/HD dealers, TV shows, and the rider edge. HD will give attention to these programs that will cover the largest piece of the market. Financial feasibility based on the above programs, due ROI HD shows ability to raise the revenue. In this regard, HD needs to have eyes on the other program to be successful in achieving this strategy. Finally, there will be a need for expanding on the different kind of segment as a measure of enhancing the Buell & HD, such as customer segment, performance segment, customer and touring segment. Control & Evaluation Current technology used in HD has the capacity of managing the given strategies, with the requirement of concentrating on R&D and improved performance. Due to a high demand for the product, there will be a requirement for advanced technology to help in implementing the system. Due to the risky nature of the business, the control measures that HD follows require to be more accurate. In case the company fails to take care of the issue right away, the objective will be lost utterly. HD can control and run its business while changing the company accurately. Control on performance and distribution of bonuses will help in enhancing the productivity of the company. Finally, HD will monitor at the low end of sales to identify the effects on current generation and usefulness of new rider’s courses. References Ar.harley-davidson.com,. Harley Davidson Annual Review 2014. N.p., 2015. Web. 30 Apr. 2015. INC, HARLEY-DAVIDSON. HARLEY-DAVIDSON INC. Academia.edu. N.p., 2015. Web. 30 Apr. 2015. Wheelen, Thomas L, J. David Hunger, and Thomas L Wheelen. Concepts In Strategic Management And Business Policy. Upper Saddle River, NJ: Pearson Prentice Hall, 2004. Appendix SWOT Analysis Strategic groups in the US Heavyweight motorcycle v.high   HD   Price   Honda Suzuki       Kawasaki Yamaha   Low Innovation v.high Read More