Harley Davidson SWOT Analysis and Case Solution

Here is the Harley-Davidson case study link. In this article we will only discuss its solution and perform a SWOT analysis of the case. Lets begin with the introduction;

Introduction to Harley Davidson Inc.

In 1901, William Harley and Arthur R. Davidson experimented with ideas and build their own motorcycles. They were joined by Arthur’s brothers, William, a machinist, and Walter, a skilled mechanic. They started with a production of 3 motorcycles in 1903 and then the production got increased from 3 to 8 in 1904. In 1907 the company was incorporated. In 969, AMF acquired the Harley Davidson. In a time period of 5 years the production got expanded from 15000 to 40000 motorcycles. During AMF ownership the company had very strong competitors like Honda and Japanese companies like Suzuki and Yamaha. The company faced may quality issues in their products but the maintained a strong sale of motorcycles that time.

In 1981, the company had a leverage buyout. Management focused on the reduction of inventories and improvement of the quality. For bringing improvement to the quality of products the management invested in CAD system and made a good payoff and break-even went from 53000 motorcycles in 1982 to 35000 motorcycles in 1986.

Harley Davidson acquired 49% interest of Buell Motorcycle Company. In 1996, the company concentrated its financial and human resources on its core motorcycle business. This meant eliminating the Transportation Vehicles segment which sold for about $105 million. In 1997, Garry Berryman joined Harley Davidson, he found the supply-chain management neglected.

Berryman wanted to form strategic alliances with Harley’s top suppliers, bringing them into the design and planning process. Berryman felt that new technology and the Internet would make it easier than ever to form these bonds and collaborate.

The Harley Davidson name had been finding itself in places like Forbes “Company of the Year” and ranking on Business Week Annual Rankings Top 100 Global brands and on Fortune’s list for “Most Admired Companies.”

They are best known for Harley Davidson motorcycle products, but also offer a line of motorcycles and related products under the Buell brand name.

 Sales from the company’s Motorcycle segment generated 93.2%, 93.8%, and 94.2% of the total sales during 2007, 2006, and 2005, respectively; with the remainder coming from the Financial Services segment. Of those purchased, 88% were made by men, while only 12% were purchased by women. Buell was off to a good start in 2000.

PROBLEMS:
  • Harley Davidson must consider the fact that customer sees the firm’s product first as a leisure items. Investing in motorcycle and performance parts and high dollar apparel is a luxury rather than a necessity.
  • Davidson name has been shattered into pieces. A decline in the demand of the products was very much alarming for the management of the organisation. The product quality mainly has deteriorated significantly that leads to the low demand for the Harley Davidson product.
  • Employees were not thoroughly trained in management and different problem-solving techniques.
  • In early years the company was not following Just in Time technique and they were having excess of inventory.
  • The study was focused about just the functionality of purchasing.
  • Due to rapid expansion, the quality control suffered.
  • Demands and the cost drivers for the motorcycle market has been so challenging. Overseas competitors have shifted their focus for being the least expensive and being affordable and providing a wide variety of products to customers.
SOLUTIONS:
  • The employees were not that much trained to control the problems and they were not trained for technical work as well. The company should provide training to the employees to get the best expertise from the workforce.
  • Consider an effective procurement process.
  • The company should also focus to create product for the young generation and women as well. They should target this market and this can lead them to high profits.
  • Uniqueness is another important factor for the branding among young generation. So, the company should focus on its brand positioning.
  • The product quality of Harley Davidson is one of its weakness. They should stay fixed on good quality and try to improve it as well.
  • Harley Davidson will have to develop marking programs for every age group of customers. New customers and old customers both have a different depth of relationship with brand but both need tailored communication plans.
SWOT ANALYSIS:
STRENGTHS:
  • Harley Davidson competitive advantage is always been its major strength than its rivals.
  • Brand image and good customer relationship.
  • Programs to train employees well an develop their skills.
  • A wide range of services is offered such as service and repair, financing, test ride facilities and consulting services for customised bikes.
  • Strong brand image
  • Strong base of loyal customers
  • Expertise in custom/chopper motorcycle production
WEAKNESSES:
  • The major weakness of the company is its high quality products because they are high in price and at the time of recession the consumers avoid high priced products.
  • Product differentiation is another fact of weakness for Harley Davidson because in 2012 they offered 34 models and much of the changes were in style and design changes.
  • Narrow product mix
  • Limited market reach
  • Limited supply chain
OPPORTUNITIES:
  • A major expansion that Harley Davidson can avail is expansion in Asia and America.
  • The company has an opportunity to expand product line and introduce new products and bring product differentiation.
  • The company has an opportunity to target women and bring a product range specifically for women.
THREATS:
  • Increasing competition is always been a threat for Harley Davidson.
  • The more diversification and more finances are always been a threat for company.
  • Aggressive competition
  • Imitation
  • Increasing preference for electric vehicles
RECOMMENDATIONS:

As United States currency weakens; it may be important to focus on countries where currency is more valuable. The SWOT analysis of Harley Davidson reveals the need for reforms in the business. Even global motorcycle market presents opportunities for growth. Company also needs to address the environmentalism trend. Thus, the following are the recommendations for Harley Davidson to further grow its business:

  • Broaden the product mix through innovation and diversification
  • Expand in the developing and emerging markets.
  • Global expansion of the supply chain
  • Make products that are environmentally friendly

Further Discussions

Foreign operations can provide significant investment capital. I was surprised that only 27% of revenue came from foreign markets and I was just as surprised that India was not in the list of foreign operations.

Other countries use motorcycles as a form of transportation, not because they are fun, but because they are simpler when negotiating in traffic and motorcycles have better gas mileage. I had applied for a job position in Bermuda a few years ago and while doing my research on lifestyles and living conditions, it was strongly advised to purchase a motorcycle for transportation.

With the recession and the cost of fuel rising, all vehicle manufacturers are struggling for a way to become more appealing in the marketplace.

My Personal Suggestions

I think using these marketing strategies for motorcycles should not be underutilised. It is a matter of changing the way consumers view motorcycles. They do not have to be seen for merely recreation. Show consumers they are more environmentally friendly, and many will jump on the band wagon. Implementation: I think this finding of fact is primarily a marketing issue for foreign markets and in the United States.

Because the text was unclear about what is currently being done in foreign markets, I would choose now as the time to explore the marketing potential.

This not only changes the way consumers view the product it also reaches into markets outside of the baby boomer genre and address issues from above facts.

Another fact is BRAG was created over 10 years ago, but the 2007 profile only indicates 11,000 members. Development and marketing in this area is neglected. Recommendation/Justification: In the opening of the case, it states “It was a pretty amazing sight, dozens at a time, thousands in a day” to describe the thousands of Harley Davidson bikers from all walks of life who come together for the love of the ride. When H. O. G. organization began in 1983, there were 33,000 members. This makes me question why BRAG membership is trailing so far behind.

Included in Buells’ mission, it says Buell wants to provide its owners with an experience that is not provided by any other brand. Why hold a membership with BRAG if there is not much being offered? I think Buell Motorcycle Company is missing out on a very important opportunity to provide their owners that unique experience.

Limitations:

One way to get memberships up, but plans need to be made to keep it that way. Sturgis is a rally for Harley enthusiasts but there are many “motorcycles” rallies around the globe. Take annual bike week in Myrtle Beach, come to find out there are two because different cultures ride different bikes. The first week is the traditional bike week and then there is a second one for enthusiasts who prefer performance. Implementation:

I would start with research on why the sport/performance market is four times larger in the European market than in the United States. I would also be going to Myrtle Beach during performance week and find out what enthusiasts are looking for. How can we make Buell the star of the show? 11,000 members are not good enough; this is a large marketing opportunity. I feel like a strategic plan should already have been put into motion.

Perhaps it is better to leave Harley Davidson just the way it is because our tastes do change as we get older. We already know half of Buell Blast purchases were from first time buyers and women. BRAG could be marketed on different levels. Buell could be the key to getting people excited about riding and Harley could be where the pros go.

That's all from my side.

You all are welcomed to share your valuable suggestions in comment section. 

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