NABEEL AKRAMJIBIN BALACHANDRANAATHIRA MOHANDASVAISAKH VTRJOSHEME JOSE Live to Ride, Ride to Live

HARLEY DAVIDSON - HISTORY1901

Arthur Davidson and William.S. Harley developed their own motorcycle.They fixed two-horsepower engines on a modified bicycle frame.They were able to produce and sell three of their motorcycles, at the end of that year.Walter Davidson joined his brother and Harley to help assemble and race company’s motorcycles.

•1907• The company developed pretty good reputation in motorcycle racing with

many wins in Milwaukee races.

•1909• Harley-Davidson developed more powerful seven-horse power motorcycle

engine

• 17,000 motorcycles were produced for U.S. Military, as is had stronger engine and it became the largest motorcycle producer in the World.• Harley-Davidson continued

to win races but its reputationbegan to erode after its acquisition by AMF

• There was no buyers after that and Harley-Davidson struggled under a heavy debt load and was bankrupt within four hours in 1985.• The new capacity allowed Harley-Davidson to set production records

each year during the early 2000s

PESTLE ANALYSISPolitical• Impact of World War 1: US military required a lot of weapons and

vehicles.• Impact of World War 2: US military demanded Harley Davison’s

motorcycles to be stationed again.• US also imposed tariffs on imported 650+cc Japanese motorcycles.

PESTLE ANALYSISEconomy

• 2002: Implementation of Euro currency.• 2003: Many new emerging countries in Asia, such as India, China and

Southeast Asia.

PESTLE ANALYSIS• Society• After World War 2, the demand for motorcycles in various developed

countries grew considerably.• The major customers of Harley Davidson was Baby boomer

generation and these people normally grouped together and formed clubs.• However, there was negative effect to the brand image, in some

cases.

PESTLE ANALYSIS

Technology• There is always a need for technological innovation for new products

in order to make sure that the products are unique in terms of performance and quality according to the growth in technology.

PESTLE ANALYSISLegal• As concern for environment increases, there would be more laws and

regulations to enforce the producers to develop their products to reach the standards.• The difficulty to obtain driving license for motorcycles in many

European nations.• Harley-Davidson is facing some legal problems in Asian countries. In

India there is 60% tariff and various other taxes will cause the price of the bike to double.

PESTLE ANALYSISEnvironment• Motorcycles consume gasoline and release carbon di oxide back to

the atmosphere, which harms the environment. Sometimes, there would be regulations. And this forces the producers to comply with them in order to protect environment.• Noise pollution and some emission standards of Harley-Davidson bike

is not up to the level of some countries across the globe.

SWOTH ANALYSIS

Strengths• Only major American motorcycle manufacturer• Operation in two segments• Strong “ BRAND EQUITY” & “ CUSTOMER LOYALTY BASE”.• Social Media marketing• Good Market Division

Weakness

• Dependence on the US Market• Highly priced compared to other cruiser motorcycles • Losing market share• Ineffective marketing campaign• Lack of opportunity for advancements

Opportunities

• Market share increasing in Europe and Asia• Increasing demand in US markets for bikes.• Industry registration of domestic weight motorcycles are increasing.• Asian economy is booming• Harley-Davidson have strong R&D

Threats

• The rising input costs • Relies on suppliers to obtain raw materials • Hike in oil prices ( Mileage )• International importing Tax & increase in labour cost• Competitors have larger financial & marketing resources.

POTTER’S FIVE FORCES - Rivalry• Four Main Competitors in Heavy weight motorcycle segment:

• Harley Davidson• Yamaha• Suzuki• Honda

• These competitors have there income diversified• Honda eating up Harleys share in US• Suzuki – Kawazaki alliance strengthens both company globally

(product development, design, engineering and manufacturing)

POTTER’S FIVE FORCES - New Entrants• Lot of Capital Requirement

• Economy of scale is low

• Small scale custom made production creating interest among bike lovers.

POTTER’S FIVE FORCES - Substitute Product• Passenger car, sports bikes, scooter bikes.

• In India Royal Enfield can pose as a small substitute.

• Harley-Davidson motorcycles are a luxury vehicle, so that there is only a few close substitutes.

POTTER’S FIVE FORCES - Bargaining power of supplier

• Steel, basic electrical equipment's and shipping of final motorcycles.• Harley-Davidson has a wide span of supplier• Assembly is done within the company

POTTER’S FIVE FORCES - Bargaining power of buyer

• Consumers of Harley-Davidson motorcycles are individual customers finance is not an issue.

• The numbers of dealers around the globe are also less and they are also mainly depended on Single dealer.

• Customers had a lot of choices in the market.

Bargaining power of buyer LOW

RivalryHIGH

New EntrantsLOW

Bargaining power of supplier LOW

Substitute ProductHIGH

VALUE CHAIN

Supply chain management

• Follows JIT process• Raw material from nearby sources• Strategic Sourcing policies were used to prove custom products

Operations

• The famous V-TWIN engine and dual crankpin design gives exceptional power and sound• Only produces motor bikes above 651cc• Do not produce dirt bikes and performance bikes• The product line is classified mainly in to 5 families- Sportster, Dyna

Glide, Softail, Touring, and the VRSC-Vrod.

• Buell’s street-racer type performance bikes were launched in Europe to gain market share

Distribution

• In 2003, 644 dealers in USA• 76 dealers in Canada• 161 dealers in Asia and was sold in 17 Latin American countries • Showrooms also sold acceries

Sales and marketing• After LBO they started using Japanese management techniques and

less reliability on advertisements and more emphasis on motorcycle rallies• Introduction of HOGs( Harley Owners Group) in 1983• Increasing the number of dealers to penetrate to new markets• Harley showrooms offered a large assortment of clothing items and

such accessories

• Around 17000 dealers took training from HDU in 2002• Online training was given to the staff• Third parties like eagle rider and dealers also started

renting out bikes

Service

• Service in USA was good but foreign countries lacked in service quality• 7% increase in sales to women after introduction of 25% training

program in 2003

Profit margin

• In 2004 the company celebrated record shipment, revenue and profit• Annual revenue of $4.6 billion and profit of $761 million

5 Generic strategy• Differentiation strategy ( Harley Davidson is in the business of selling lifestyle , not transportation )• Customized Design and Technology ( latest cutting edge equipment )• Live experience effectively portray Unique selling feature• The origins of Harley Davidson bikes and the apparent dreams and

lifestyle that was sold to customers along with their purchase.

Recommendation• Increase in the no. of market shares in the existing market like US, UK

and Japan.• Expansion in European & Asian market, introducing their products in

new markets like China, India etc. is a good choice.• Bringing in new types of recreation vehicles into the market• Increase in sales of Buell Sport Bike for younger and female

Customer.• Conducting rallies and other promotional activities

Conclusion• Harley Davidson remains to be among the market leaders in the

America• Trend of Heavy weight body is going down• International Exposure is essential as it will open new sources of cash

flow for the company

THANKS TO ALL