Executive summary
Matt Levatich took over as the C.E.O of Harley-Davidson.inc in the mid-2015 having generated the skills as a management trainee. The company he was overseeing was not large enough in comparison to others in the industry. However, its success story was remarkable due to high sales margins recorded after the prior financial crisis had settled in the earlier season (2008/2009). The concern raised about the motorcycle riders changing the taste and seeking different experience. These fears were fuelled by a changing demographics of the consumers. The huge impact was evident in 2015 season. Harleys specialized in baby-boomers generation while the trend for the products taste seemed to take a different course. This was evidenced in the stats in the books shaken financial position of the company. To continue in the industry, there was the need for in-depth analysis of the competitors. Employing of current technology and fulfilling the customer's taste were some of the solutions towards the challenge.
Statement of the problem
The major problem facing the managerial team was the competition from the industry. The players in the industry posed a threat to the Harley-Davidson company. The competition rose higher when company concentrated on marketing investment. The competitors were well versed in the adoption of the technology. They had a competitive advantage for producing the market-oriented bicycles that suited the Millennial. While competition may be addressed through shifting supplies and concentrating on the market niche, the long-term challenge for the company stands to be coping with the emerging trend in technology. The management must, therefore, fix the problem of competition to before dealing with technological one (Wepman, 2014).
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Causes of the problem
The broad market share is taken by the company only widened the scope of direct competition. The Honda, Suzuki, Kawasaki, and Yamaha had been offering the V-twin cruisers for an extended period, a product that was similar to the Harleys. In fact, it had more pronounced features than that of Harley. Moreover, these competitors did it at a lower price. The Japanese employed scale economies that resulted from vastly huge volume production. This competition heightened in the year 2015. “Our market share in the U.S stabilized as we started to ramp up the marketing investment. Also, stabilization resulted when we lapped the initial effect of stiff competition and price discounting that showed in late 2014,” said Levatich. Most of Harley’s competitors employed diversification. These competitors utilized technologies widely in a bid to diversify. There arose imitators of the product both from the domestic market and outside the country. New entrants in the industry sold their products at prices at prices more than those of Harley. They shared brand awareness across different divisions of vehicles.
Decision criteria and alternative solutions
The first half of the company’s results in 2015 ignited fear over the company’s sustainability in that the profits had dropped by 8% from the previous year. The sales revenue were 6% lower. This drop in figures was due to the expansion of sales to ‘non-core’ segment of the customers that was predicted to be positive. In the prediction mix was the younger riders in the US. However, the prediction proved otherwise. The need to attract younger riders was fuelled by the unfavorable demographic trend. “The younger customers are being attracted by the newly classy BMW, Honda, Yamaha who seems less interested in the riding what their older men rode,” noted the New York Times .
The international market presented another different challenge altogether. The shifts in the world currencies also dragged the growth of the company. After the unsuccessful incursions from the manufacture of the smaller motorcycles, Harley’s management was indifferent between sticking to the traditional bicycles and otherwise adopting new market’s requirement.
The demographic shift from baby-boomers to Millenials should be considered in the further production of the bicycles in the industry. Since the Millenials are the major co-occupant in the market sector, production should target them as the potential market. The baby-boomers are retiring, thus shrinking the market as their physical ability to handle motorcycles is getting lost.
Recommended Solution, Implementation, and justification
Intenal analysis
According to Contemporary Strategy Analysis (2015), internal analysis of the company’s financial state is a critical component in determining its performance against the rivals. Ending 2011, the Harley-Davidson had the highest gross margin in comparison percentage (42%), a figure that was 7% higher than that of Yamaha (35%) and a margin of 14% in comparison to Honda, in favor of Harley. Rivalry from the existing market players tends to be on the rise. The major heavyweight players that include Yamaha, Honda, Suzuki, and Ducati have a significant market share. Their brand recognition is equally high.
Turn around
The European economy has been negatively impacting the heavyweight motorcycle market in the recent past. Harley-Davidson Company has felt this impact. It is high time to turn around and grow the market share in other markets apart from the European region to refrain from the mercy of European market.
Diversification
The company is obligated to diversify its products in the market. The company will be at a sharper competitive edge upon increasing its market in countries rather than northern America. This will only be solved through market expansion in the global market. The narrow products mix prevents it from reaching more markets segments.
Matching the technological pace
With the emerging technology, there is a need for the company to adopt the growing technology. Apple and Google have dropped some hints to produce automated driving technology. The technology is still underway, thorough research being carried out to scrap the need for human operation. Models have already been produced. When considering the technological advancement and capabilities, the competitors must be put into consideration. Bargaining power suppliers
When a company employs preferred supplier’s method, it creates more power to the suppliers. This is because the contract allows for long-term agreements that tend to raise the quality of suppliers. Consequently, trust is built between the supplier and the company.
References
Grant, M. (2015). Contemporary Strategy Analysis: Text and Cases Edition . (2015). New York, NY: John Wiley & Sons.
Wepman, D. (2014). Harley, William S. (1880-1943), entrepreneurs and founders of the Harley-Davidson Motor Company. American National Biography Online . doi: 10.1093/anb/9780198606697.article.0700838
