HARLEY DAVIDSON INC.
The purpose of this kind of report is always to develop a proper corporate aim for HarleyDavidson Inc., a publicly traded, staff owned manufacturer of high quality motorcycles, leisure and industrial vehicles, protection items, and small machines, distributing its products to home-based and intercontinental markets aimed towards all males and females of all ages.
INDUSTRY AND COMPETITIVE MARKET
The industry underneath study is the motorcycle market consisting of five major producers: one American (Harley Davidson), and four Western (Honda, Yamaha, Kawasaki, Suzuki) and some Euro companies (mainly BMW of Germany plus some other Italian companies). Additional market their particular motorcycles and accessories over a worldwide basis, handling foreign trade through foreign distributors and household sales through franchised shops. Industry revenue of motorcycles were downsizing in the early on l990s because of the recession plus the competition by computers and electronic items decreasing buyers discretionary cash flow.
Sales of accessories and parts makeup 36% of total selling sales and is also a viable region for suppliers to explore individuals want some thing to separate their cycles. Previously, motor bikes were viewed as a cheap way of transportation. By 1992, they came to be considered as a leisure, or a extravagance item. This new perception of motorcycles led to the introduction of more expensive models with higher rates. This resulted in the introduction of customer financing, among the fastest growing service areas in the motorbike industry.
Harleys proper objective is usually to continue to provide safe, substantial technology top quality bikes and maintain customer satisfaction in high amounts. This top quality vision more than doubled Harleys market share and increased its brand dedication.
EXTERNAL PLANNING PREMISES
They can be broken into 2 categoriesmen and women.
Guys. A. Males under 31. This group accounts for 44% of all product sales. Therefore , an excellent opportunity exists here because of the groups size. This groups members acquire motorcycles for his or her transportation and recreation requirements. Men from this group buy more of mopeds, scooters and entry level light road cycles.
B. Men between 40 and 50. This age bracket makes up 45k of potential buyers another large area featuring opportunities for firms. The motorcycles most often purchased will be the heavyweight tourers and cruisers. Many buyers are couples looking for a substitute for taking the car out for weekend drives to the country.
C. Men above 50. This group makes up about about 11% of motorcycle product sales. The heavyweight touring school and the middleweight road cycle categories be the cause of most of the sales here.
Females. This group is a segment that is developing at a fast rate, thus representing the opportunity area. Companies to be successful here are to provide smaller sized, easier to deal with, comfortable, and good quality cycles to build up brand loyalty.
Three types of products/services are being offeredmotorcycles, accessories, and financing services, all related to the sale of the primary product motor bikes.
Motorbikes: It includes mopeds or scooters (with engines under 125cc which are used rather than walking), accounting for about 17% of total motorcycle product sales, lightweight motorcyclesroad bikes, dirt and grime bikes, sewing-embroidery bikes (with engines including 125cc to 499cc), accounting for 51% of sales, sport motorcyclesstreet bikes, and superbikes (with engines including 450 to 749cc) accounting for 13% of product sales, heavyweight motorcycles cruisers, tourers (ranging via 750cc to 1500cc) accounting for 19% of revenue.
Accessories: Aftermarket replacement accessories, including saddle carriers, higher windshields, customized chairs, and garments items are made or caught to be produced by all leading manufacturers. Seeing that these items understand high revenue and strengthen customer associations and client loyalty, this place is providing an opportunity for firms. To succeed right here, firms give a wide manufacturer product line, of fashionable items, and aggressively advertise/market them.
Financing Services: Because prices of motorcycles elevated well over a reach of numerous motorcycle fans, manufacturers started to set up consumer credit arrangements falling into several categories customer, dealer, and company financing. Loans services happen to be vital to be successful in the industry and firms not able to provide all of them will lose business. To succeed right here, firms in order to provide a wide array of flexible (in terms of maturity and payment arrangements) plans.
Although motorbikes are sold internationally, 3 main geographic markets comprise the majority of motorcycle salesNorth America, Asia, and The european countries. The largest is the North American Industry (USA and Canada account for about 60% of this market) accounting to get 60% of worldwide motor bike sales. While using baby generation aging, options exist pertaining to the transmission of new marketplaces.
The Japanese marketaccounting for a wonderful chunk with the Asian Marketis an untrained one to get foreign suppliers. Government rules and transact policies produce it difficult pertaining to foreign suppliers to enter even though. Most Asians consider motorbikes as a basic means of transportation. Major target areas consist of China, Korea, Taiwan and Vietnam.
The European Marketplace is another marketplace with wonderful potentials seeing that Europeans possess a higher disposable income and revel in a higher standard of living. East Europe is not offering a good deal mainly because of its unstable personal and economy.
To succeed in these types of markets, companies are to improve products in order to meet local requirements, provide post sales service, expand distribution systems, create strong customer
Competition in the motorcycle market consists of only a handful of manufacturers worldwide. The Japanese producersHonda, Yamaha, Kawasaki, and Suzukiare creating a full brand of motorcycles which range from scooters to heavyweights, and together control the largest share of the market. Their extensive product line although has also developed some consumer complaints to them (especially true intended for Honda and Kawasaki) for low quality service. This significantly decreased their particular market stocks. Japanese corporations success started with burning other items, but developed to rely upon innovative styles and technology. Harley Davidson is creating heavyweight motor bikes emphasizing good quality product along with sales assistance, thereby gathering brand loyalty.
Honda is the largest business in terms of size, financial backing, and reputation. It can be offering the widest number of styles, classes and sizes within the top quality category. This kind of wide product line hurts Honda since sales agents have limited knowledge of each product. Kawasakis products include a full distinctive line of motorcycles, almost all terrain vehicles, jet skis and other. Is it doesn’t leader in superbikes making but ALL OF US legislation is usually limiting the quantity of sports cycles to be brought in because of protection reasons. Phazer produces Harley davidson clones although lacks Harleys image. Becoming a market fans, Yamaha is to face a large number of problems. AS BMW HYBRID is famous of producing quality products but its high prices hold it via expanding revenue.
INTERNAL ORGANIZING PREMISES
Under 40: This part is growing since men with this category search for a cheaper alternative means of transportation and for pastime purposes. Harley is to generate high quality, safe bikes, with radical designs and provide these people at reasonable prices to build up company loyalty.
3050: Recent market profiles display that the median age of buyers of Harley davidson products is 35 and their customers typical household profits is about $45, 000. These types of customers be the cause of a great marketplace chunk and, therefore , offer an opportunity for Harley, which is to provide them with safe, high end, good quality bikes to increase company loyalty and succeed in this segment.
Above 50: Motorbike lovers want to drive Harleys when they are above 5 decades of age nonetheless they now try to find more comfortable, user friendly bikes. Harley davidson is to give them both of them in order to penetrate the foreign exchange market.
Motorcycles. Harley Davidson produces just heavyweight motorbikes (with enginedisplacements of 750cc or greater) that are categorized into traveling and cruiser motorcycles.
Traveling motorcycles are designed for long range riding and have many car like features (i. elizabeth., trunks), and supply Harley with all the greatest revenue margin. Cruising motorcycles are created after early motorcycles and therefore are the kind frequently associated with Harley. They provide a really low income margin because of their low prices utilized as a means to draw young consumers. Harley is to increase the R, M to improve product designs, top quality, and basic safety. It is also to offer a guaranteed reselling value (that most Japan firms will be lacking), give you a high quality post sales service and, therefore , increase its manufacturer loyalty.
Add-ons. This category incorporates a new distinctive line of riding and fashion clothing bearing the Harley Davidson insignia. These products are given away to Harley retailers and outlets in the retail apparel market. Harley davidson is to give a wide variety of elegant products and strongly market these people.
Financing Providers. Harley presents financing by using a joint venture with Ford Motor unit Credit Business (FMCO). Harley davidson due to its deficiency of capital, averted forming its very own subsidiary featuring financing servicessomething that Honda and Kawasaki have already done. Harley is always to offer a wide variety of flexible plans to meet fantastic opportunity that arose due to inflated prices of motorcycles and readiness of people to use credit lines in order to improve their quality lifestyle.
Harley is the founded leader of heavyweight motorcycles in the United states market, accounting for about 60% of the market share. The size of their market share provides an opportunity for Harley davidson to exploit. Their customers are definitely the most dedicated of some other brand as well as products possess great reputation. Foreign market segments are growing very fast mainly because customers you will discover obsessed with Harleys quality and safety bikes and provide a fantastic opportunity for Harley davidson to exploit. The primary problem is Harleys limited development capability, adding customers within a waiting list for a couple of a few months. To succeed in this article Harley is usually to create great customer jewelry, provide post sales service, develop its buyer loyalty, increase its circulation network, and modify usana products to meet neighborhood customer demands.
DECISION GRAPH AND OR CHART
Alternative you calls for the manufacturing of most types of motorcycles, current accessories line, and offering financing services through FMCO, targeting almost all customers in both the home-based (70% emphasis) and foreign markets (30% emphasis).
Substitute 2 comes with the expansion of the item line, present financing companies through a wholly owned subsidiary and make sport and heavy pounds motorcycles, concentrating on men (90% emphasis) and ladies (10% emphasis) in both domestic and foreign marketplaces (equal focus on both).
Alternate 3 says that Harley should manufacture only top quality motorcycles, but expand it is accessory range and provide financing services through FMCO, targeting men (95% emphasis) and ladies (5% emphasis) in both the domestic (60% emphasis) and foreign marketplaces (40% emphasis).
The first substitute is based on the idea that Harley should certainly capitalize in its current reputation and success by simply rapidly increasing demand, through expanding 4-seasons catalog to include a myriad of bikes. This will enable Harley to match their competitors (i. e., Honda and Kawasaki) wide products and gain market share from them. This would also create major problems since increased variety will damage Harleys great reputation of generating safe, top quality, high performance cycles, thereby reducing brand devotion. Also, Harley davidson is to generate lightweight, sport, and heavyweight motorcycles and that is to need additional capital that the organization is missing. Therefore , Harley davidson is to reduce R&D and products quality and eventually miss out. Honda and Kawasaki demonstrated well that effect since their market shares decreased significantly.
Alternate 2 calls for an enlargement of the item line that is certainly experiencing an increasing demand. The main focus of Harley davidson will be upon menit is to provide lower priced, high quality, secure, stylish goods to their customers. Harley is to try to maintain its company loyalty, good quality, after sales support, and solid customer jewelry (all main competitors lack these keys to success). The major drawbacks here are Harleys plan to shell out equal focus on both home (its leading position in this article gives the firm a competitive advantage more than its foreign competitors) and foreign marketplaces. Since Harley davidson is unable to encounter desire for its items, and modify its products to fulfill local needs, it is to are unsuccessful in making it in the international markets when loosing out in its excessive revenue producing domestic marketplace. Also, more capital should be used since Harley davidson is to create its own auto financing Subsidiary business. That is to cut down on Harleys ability to commit on R&D, and create high quality items. Also, 10% emphasis on girls is considered too large, since women account for less than 5% of Harleys clients.
Alternative three or more, which is one which I recommend, capitalizes on Harleys strengths. The corporation is to create only heavyweight motorcycles, therefore focusing its R&D about producing secure, good quality goods. The company is always to guarantee a higher resale worth and provide very good after sales services. Also their decision to stay with FMCO financing gives the company yet another financial benefits to be found in targeting specific marketing niches. Customers beneath 30 years old are to be provided with safe, stylish, high quality goods at inexpensive price points, thereby raising brand commitment. Safety issues are certainly not being concentrated by the Japanese and that gives Harley a competitive edge here even though they can present their products for lower prices. Consumers from 30 to 50 years of age should be provided with high end, safe goods, building up Harleys brand dedication that is considered as the strongest, especially in the domestic marketplace. Customers over 50 years of age are to be provided with comfortable, easy to handle bikes to improve their ease. Foreign bicycles are lacking this kind of key and therefore are expected to end up being outperformed simply by Harley. Harleys line of equipment (more emphasis on clothing) is usually to be expanded by providing a larger product line. That by itself might advertise its products and boost brand dedication. Its intend to focus on the domestic marketplace with 60% emphasis and the foreign marketplace with 40% emphasis is usually both negative and positive. It is good at the feeling that international demand for Harley davidson products is increasing and this would increase the companys profits since it will expand it is distribution network, provide post sales service, and appear there with an previously established manufacturer loyalty. It truly is bad although to broaden with forty percent emphasis inside the foreign markets because Harley is not strong in meeting consumer demand that is expected to expand even more and dissatisfy equally domestic and foreign consumers. Surely, Harley can solve this problem simply by getting loans, thereby broadening its herb capacity and meeting this kind of increased demand. The future money flows that may arise as a result of increased sales will be used to repay these types of loans as well as the companys good credit history.
Harleys excessive R&D makes up about innovative designs providing Harley davidson with unique product patterns that collection Harley in addition to its competition. To be able to achieve that, Harley davidson is to enhance its R&D to improve product designs, top quality, and protection. It is also to offer a guaranteed reselling value (that most Japanese people firms are lacking), give a high quality after sales service and, therefore , increase its company loyalty. Harley also, gives a wide variety of trendy accessory products and aggressively industry them.
Harley due to its deficiency of capital, prevented forming its own subsidiary providing financing servicessomething that Honda and Kawasaki have already performed, and that is a wickeness intended for the company. That lack of capital also the actual company unable of producing the quantity of products necessary.
There are some oportunities for the corporation, For example the expansion of it is markets o Asia and Europe. Additionally , of having its very own financial services is known as a profitable expansion.
Some of the dangers are the tarrifs that might can be found in other market segments, and the immitation of Harleys products from the other competitors.
The approaches that the company might employ have to do withe expansion to other markets like Asia, or The european union in order to enhance sales and market share. Additionally the creation of a unique financial services can bring more profit. Harley should offer a lot more emphasis to the guy customers and also increase the emphasis on the foreign market close to 40%.
Some of the conditions that the previous strategies may deal with depend on the possible lack of capital. Naturally a loan could possibly be beneficial considering that the returns in the sales will be enough to pay back the loan. Additionally , exports in Europe aren’t that easy because the products will be taxed even more, since they are derived from a country beyond the Europian community. In the future a subsidiary in one of the Western community countries would unwind the tarrifs.
TOWARDS THE UPCOMING
Towards the foreseeable future the company is usually expected to do very well and maximize its market share. The administration objectives is usually expected to end up being the same as the current ones. Therefore the company can be expected to manufactore only heavyweight motorcycles, but with the use of a lot of loans will have the ability also to icrease sales in Asia and Europe.
I ) DECISION DATA
Kind of DecisionsAlternative 1Alternative 2Alternative 3
Item Kind*Lightweight, sport, *Sport and heavyweight *Heavyweight motorcycles
and heavyweight motorcycles. only.
motorbikes. *Expand the line of acces- *Expand the line of accesso-
*Stay with current sories to include even more ries giving increasing em-line of components items. phasis on garments.
*Financing Services*Financing services through*Financing services through
through FMCO a wholly-owned subsidiary. FMCO.
Consumers*Target every customers*Concentrate in males*95% emphasis on male cus-
from young to old. (90% emphasis) tomers and 5% emphasis on
*10% emphasis on females females.
Ownership*Keep while is*Keep because is*Keep being
Markets*70% emphasis on*Equal emphasis on the *60% emphasis on the dome-
the home anddomestic and foreign stic and 40% emphasis on
thirty percent on the international markets. the other market.
Management*Keep because is*Keep since is*Keep as is