ENVIRONMENTAL ANALYSIS OF HARLEY DAVIDSON

Introduction
Harley-Davidson, often abbreviated H-D or Harley, is an American motorcycle manufacturer. Founded in Milwaukee, Wisconsin, during the first decade of the 20th century, it was one of two major American motorcycle manufacturers to survive the Great Depression .Harley-Davidson also survived a period of poor quality control and competition from Japanese manufacturers. The company sells heavyweight (over 750 cc) motorcycles designed for cruising on highways. Harley-Davidson motorcycles (popularly known as "Harleys") have a distinctive design and exhaust note. They are especially noted for the tradition of heavy customization that gave rise to the chopper style of motorcycle. Except for the modern VRSC model family, current Harley-Davidson motorcycles reflect the styles of classic Harley designs. Harley-Davidson's attempts to establish itself in the light motorcycle market have met with limited success and have largely been abandoned since the 1978 sale of its Italian Aermacchi subsidiary. Harley-Davidson sustains a loyal brand community which keeps active through clubs, events, and a museum. Licensing of the Harley-Davidson brand and logo accounted for $40 million (0.8%) of the company's net revenue in 2010.

Mission Statement says:

We fulfill dreams through the experiences of motorcycling, by providing to motorcyclists and to the general public an expanding line of motorcycles, branded products and services in selected market segments

Vision Statement says:

Harley-Davidson is an action-oriented, international company, a leader in its commitment to continuously improve [its] mutually beneficial relationships with stakeholders (customers, suppliers, employees, shareholders, Government, and society). Harley-Davidson believes the key to success is to balance stakeholders interests through the empowerment of all employees to focus on value-added activities.

Steps towards export to India

In August 2009, Harley-Davidson announced plans to enter the market in India, where, according to press releases, it expects to start selling its motorcycles in 2010. The company has established a subsidiary to be located in Gurgaon, near Delhi, and has begun the process of seeking dealers. Plans to enter the Indian market have been delayed for several years, due to high tariffs and emissions regulations. The pollution regulations have recently changed, but the tariff problem is yet unresolved Harley Davidson is introducing 12 models in India from the range of five motorcycle families, namely Sportster, Dyna, VRSC, Softail and CVO. The motorcycles are completely built units and will be imported to India, thus attracting a tax over 100% in the price range of 695,000 rupees and 3,495,000 rupees ex-showroom. The bookings might start from April 2010 and the motorcycle delivery will commence from June 2010. To begin with, Harley Davidson would have five dealerships (Delhi, Mumbai, Bangalore, Hyderabad and Chandigarh) with the aim of increasing the dealerships to more than 20 in the next five years. In November 2010, Harley-Davidson said that it will start an assembly facility for complete knock down (CKD) kits of its motorcycles in India by the first half of 2011, making it only the second CKD facility outside the US.

Environmental record
The Environmental Protection Agency conducted emissions-certification and representative emissions test in Ann Arbor, Michigan, in 2005. Subsequently, HarleyDavidson produced an "environmental warranty." The warranty ensures each owner that the vehicle is designed and built free of any defects in materials and workmanship that would cause the vehicle to not meet EPA standards. In 2005, the EPA and the Pennsylvania Department of Environmental Protection (PADEP) confirmed HarleyDavidson to be the first corporation to voluntarily enroll in the One Clean-Up Program. This program is designed for the clean-up of the affected soil and groundwater at the former York Naval Ordnance Plant. The program is backed by the state and local government along with participating organizations and corporations. Paul Gotthold, Director of Operations for the EPA, congratulated the motor company:

"Harley-Davidson has taken their environmental responsibilities very seriously and has already made substantial progress in the investigation and cleanup of past contamination. Proof of Harley's efforts can be found in the recent EPA determination that designates the Harley property as 'under control' for cleanup purposes. This determination means that there are no serious contamination problems at the facility. Under the new One Cleanup Program, Harley, EPA, and PADEP will expedite the completion of the property investigation and reach a final solution that will permanently protect human health and the environment."

Harley-Davidson has also purchased most of Castalloy, which is a South Australian producer of cast motorcycle wheels and hubs. The South Australian government has set forth "protection to the purchaser (Harley-Davidson) against environmental risks."

EXTERNAL ANALYSIS PESTLE

yHarley-Davidson is one of the most admired and recognized companies in the world today. yAcademy of Motorcycling for those interested in learning to ride a motorcycle. y Average purchasers of a U.S Harley-Davidson have a household income of $78,600.

yOnly about 9% of Harley-Davidson U.S retail motorcycles are to women. yConfidence in economy is directly proportional to the purchasing of consumer items. yRepeat business is strong as about 42% of motorcycle purchasers have owned a Harley-Davidson previously. yU.S Government and People are considering Harley-Davidson as an American icon. yOpportunities in emerging economies [India, China] but uncertain

operating situations. yA new assembly facility opens in Manaus, Brazil, the first operations outside of the U.S, reduces taxes, make them more affordable to a larger group of Brazilian customers. yHarley-Davidson is one of the main manufacturer and user of VENGINE configuration. yHarley-Davidsons have a wide variety of products according to Standard, Performance, Touring & custom. yHarley-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. yNoise pollution and some emission standards of Harley-Davidson bike is not up to the level of some countries across the globe.

Five Forces Internal Rivalry

yFour major competitors are mainly concentrated on these heavyweight motorcycle segments: in addition to HarleyDavidson the other three are Yamaha, Suzuki, Honda all are Japanese companies. ySome of the major competitors of Harley-Davidson have larger financial and marketing resources and are more diversified (Example: Yamaha, half of its revenue is only from motorcycles). yPolaris (American snowmobile/ATV manufacturer) producer of Victory motorcycles priced its motorcycles below the HarleyDavidson motorcycles. yStrategic alliance between Suzuki and Kawazaki in the areas of product development, design, engineering, and manufacturing of motorcycles, this alliance strengthened both companies global motorcycle businesses. yHonda, the main competitor of Harley-Davidson in U.S eat up some market share of Harley-Davidson.

Potential entrant
yEntry barrier is very high is this segment, because this segment needs a lot of capital investment and the industry is on a maturity stage, so that there is only four main competitors. yThe economies of scale are low in this segment, which is the reason why there are only four major players. yThere is some small scale producers, who are making these custom made motor cycles but the amount of their production is not at all a threat for Harley-Davidson, and they are increasing the interest of motorcycles among the general public.

Substitute products
yHarley-Davidson motorcycles are a luxury vehicle, so that there is only a few close substitutes for heavy weight motorcycles that could seriously affect the market. yPassenger cars, sports bikes, scooter bikes are the main substitutes of Harley-Davidson motorcycles. yThe people who are thinking of buying a heavy weight motorcycle are not seriously considering one of these options, scooter, sports bike. yIn India Enfield can pose as a small substitute.

Power of suppliers
ySteel, basic electrical equipments and shipping of final motorcycles are the main things Harley-Davidson seeks from suppliers. yHarley-Davidson has a wide span of suppliers, so that if one supplier attempted to increase the price, they can easily switch to the alternate suppliers without any problem in production.

Power of Customers
yConsumers of Harley-Davidson motorcycles are individual customers, so that they cant seriously affect Harleys financial position. yThe numbers of dealers around the globe are also less and they are also dependent to the individual customers, that cant affect Harley-Davidsons financial position.

OPPORTUNITIES
The European demand for Harley Davidson is the highest in the international market and represents the single largest motorcycle market in the world. Women and younger riders are increasing becoming interested in bikes The international heavy weight market is growing and is now larger than the U. S. heavyweight market Market share increasing in Europe and Asia for the last two years Increasing demand in US markets for bikes Customers value quality parts

THREAT
Harleys ongoing capacity restraints caused a shortage supply and a loss in domestic market share in recent years Harleys average buying age is 42 years old and increasing The European Unions motorcycles noise standards are more stringent than those of Environmental Protection Agencies in the U.S and increased environmental stand Some competitors of Harley Davidson have larger financial and marketing resources and they are more diversified Environmental protection laws Buell division needs to continue to produce a quality motorcycle under Harleys brand name.

STRENGTHS
The standard and performance segments of Harley Davidson make up 70% of the European heavy weight motorcycle market Harley-Davidson operates in two segments: Harley-Davidson motorcycles & related products and HDFS (Harley-Davidson Financial Services). Harley-Davidson is the only major American heavyweight motorcycle manufacturer. Strong brand name. The HOG (Harley Owners Group), which have a 7,50,000 members world wide is the industrys largest company sponsored motorcycle enthusiast organization. Buell Riders Adventure Group (BRAG) was also formed recent Customization of the bikes, this is Harley-Davidsons major revenue maker. Harley-Davidson have a good marketing division and its divided

as dealer promotions, customer events, magazine and direct-mail advertising, and public relations.

WEAKNESS
High price Harley-Davidson has problems in gaining more market share in some European countries (Thats one of the main markets for Heavyweight motorcycles outside U.S). They didnt yet start its sales in India, one of the biggest markets. Required production is not met, analyzing the future of Heavyweight motorcycle market

STRATEGY RECOMMENDATION & IMPLEMENTATION

MARKET PENETRATION Get some more market share from the existing market, like U.S, U.K, and Japan etc through more marketing techniques like advertising. Harley-Davidson has a good brand name so its easy for them to eat up the competitor market share if they can provide some more customer benefit. Competition is high in this segment mostly in U.S so market penetration can be a good choice for the company. Expand the HOG (Harley Owners Group) to Asian countries, if the company can provide the customer satisfaction that they are providing to the U.S customers to the Asian customers they can increase the sales. PRODUCT DEVELOPMENT Younger generation and female are now coming to this segment so expand the motor cycle segments to younger generation and females. In Europe they can increase or expand the Buells market share by introducing new motorcycles. MARKET DEVELOPMENT Harley-Davidson can bring in their vehicle to Asian countries like India and China, because these countries have a high population and the market potential is also high. The cost to bring in the old vehicles (old product) to India is so much difficult because there are so much environmental laws are there which wont allow that type of vehicles to come to India, and its difficult that taxes and levis are high in India so starting new plant in India can solve this problem. Negotiations with the Government can solve these problems.

DIVERSIFICATION Bring in new vehicles to new markets like India and China is a good choice, but its too costly. Bringing new types of recreational vehicles is a best choice.

RECOMMENDATION
Expand European and Asian market. Increase the sales of Buell sport bike and Harley-Davidson to younger customers and females. Horizontal diversification: acquires or develops new products that could appeal to its current customer groups even though those new products may be technologically unrelated to the existing product lines. Concentric diversification: Bring in new recreational vehicles.