I N T E R N AT I O N A L I Z AT I O N AT H A R L E Y- D AV I D S O N

G R O U P M E M B E R S :

O M E R A J D I N I ( 1 2 2 3 5 6 3 )

M O H D A F N A N N A J M I B I N M O H D H E L M I ( 1 3 2 5 9 2 9 )

N U R F A I Q A H B I N T I A B D R A H I M ( 1 2 2 2 5 8 0 )

F A R A H N A J I H A H B I N T I M O H D H A M I D I ( 1 3 2 4 4 1 6 )

M A R U M E I ( 1 2 1 6 8 6 6 )

N O R H A M I Z A H B I N T I K H A L I D I ( 1 2 1 5 0 5 6 )

SUMMARY• Founded in 1903

• U.S. motorcycle manufacturer (35 models)

• Annual Revenues: $6 billion

• 1500 dealers

• Manufactures four distinctive groups of models:

Standard Performance Custom Touring

¾ of total sales

Sells primarily : Custom and Touring (85% of sales of “heavyweight” sales”

Competitors: Honda, Suzuki, Yamaha etc. New ones emerging from China- HQ

outside US

US MARKET

• Marketing Strategy:

• High end motorcycles

• Harley Owners Group (HOG)

• In 1980s Harley almost went bankrupt

• New CEO revived the company

• Japanese-style management

• Updated manufacturing methods

• Improving quality

• JIT inventory system

• Mid-1990s Harley repositioned more strongly

INTERNATIONAL EXPANSIONEstablished subsidiary and distribution network in Japan (in 2005 sold 12,000

motorcycles, $18,000)

In 2012 1/3 of total sales were from international markets (2006 only 25%)

European market

Diverse

Performance bikes sold most (>1/3)

Freeways high speed limit-need high performance bikes

Not rebellion, individualism

Launched HOG club

2008 bought the Italian MV Agusta Group $109m. Divested interest in 2010

• Harley’s fastest growing market

• 4% of total Harley sales

• Japan same-but stagnant economy

• Australia- promising but small market

• Millions of households income

more than $80,000

• Competitors already have presence

• Established subs in Delhi- no entry

yet: high trade barriers and

• 1.3m people

• Low wages, but growing

• Restrict usage of bikes in

highway(noise and theft)

• Piracy

• mentality: bikes for commuting

only

• High import tariffs-doubled

prices

• Established local assembly

Brazil china

Canada

Japan

Australia

India

• Vulnerable to regulations because big bikes pollute a lot

• Reforming the strategy=> catering to the needs of the environment

• In Japan launched motorcycle recycling program

ENVIRONMENT

THE FUTURE• Recession hit income levels all around the world

Strategies

focus on foreign

markets

appeal to

lighter weight

markets

strategic control

of distribution

expand dealer

Q1: WHAT IS THE NATURE OF THE INTERNATIONAL BUSINESS

ENVIRONMENTS HARLEY FACES? WHAT TYPES OF RISKS DOES THE

FIRM FACE?

NATURE OF INTERNATIONAL BUSINESS

• Intricate and varies due to cultural and regional needs of the diverse markets its

establishment competes in.

• Diversification of sales in its two major markets, one at home in the U.S and the

other in Europe.

• The reason Harley faces such diversification is clearly due to consumer

preferences.

• Asian and Latin America market - a low cost bike

• While there already exists a big presence of low cost competitors such as Honda,

Suzuki and Yamaha as well as counterfeiters

TYPES OF RISKS IN INTERNATIONAL BUSINESS

Cross-cultural

Risk

Country Risk

(political risk)

Currency or

Financial Risk

Commercial

Risk

Q2: HOW CAN HARLEY BENEFIT FROM EXPANDING ABROAD? WHAT TYPES

OF ADVANTAGES CAN THE FIRM OBTAIN? WHAT ADVANTAGES

ACQUIRED ABROAD CAN HELP HARLEY IMPROVE ITS PERFORMANCE

IN ITS HOME MARKET?

HOW Harley benefit:

Increased sales revenue

To suit demand & local preferences in Europe

Establish distribution network and local subsidiary in Japan

Product Diversification

Creates new market opportunitiesBrazil - biggest potential market in Latin

America China- 1.3b people India- Households income over $80k

Advantages that Harley can Obtains:

Increased

market

share

Reduce

Cost

Brand

Recognition

Not only depending on US

market

Assembly plant in Brazil help avoid import tariff and

access of low cost workers

Creates brand that offers a lifestyle

& can suit different market

Q4:COMPETITORS SUCH AS LIFAN AND ZONGSHENARE BEGINNING TO EMERGE FROM CHINA, WHERE

THEY ENJOY COMPETITIVE ADVANTAGES LIKE LOW-COST LABOR AND EXTENSIVE EXPERIENCE WITH EMERGING MARKETS. HOW CAN HARLEY

COMPETE AGAINST SUCH FIRMS? SHOULD HARLEY MORE AGGRESSIVELY PURSUE

EMERGING MARKETS SUCH AS BRAZIL, CHINA, AND INDIA? IF SO, WHAT STRATEGIES WILL HELP

IT SUCCEED IN THOSE MARKETS?

WHAT SHOULD HARLEY DO?

• It should have control over its factors of production in those three countries.

Land Labor

Capital Entrepreneur

Purchasing

power

Buying

Behavior

Sales

Price Adjustment

• Adjust prices

according to

regions.

• Introduce its

products at the

lower and

competitive prices.

Image Makeover

• Introduce

‘lightweight’

models compared

to its ‘heavyweight’

models.

• Change its design

to more stylish and

modern that will

suit younger

generation.

Investment in new

regions

• Different factor of

production in

different regions.

• Start to build an

assembly plant in

Brazil because of

lower labor cost.

• Adapt JIT inventory method.

• TQM Management method.

Company’s

Improvement

• Invest large amounts in R&D

to produce product that will be

accepted by local.

R & D