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Strategic Analysis: A Case Study On HARLEY-DAVIDSON
Strategic Analysis: A Case Study On HARLEY-DAVIDSON
Strategic Analysis: A Case Study On HARLEY-DAVIDSON
The Harley-Davidson Board of Directors (the “Board”) and management believe that the
Company, in the interests of its stakeholders, should embrace corporate governance
practices in keeping with our leadership position in our business and current legislation
and rules. The Company’s policies of corporate governance must be rooted in and
consistent with its Business Process.
Process
The Nominating and Corporate Governance Committee of the Board has been
empowered by its charter to continuously review corporate governance practices of the
Company and to make recommendations to the Board to assure the Company’s
leadership in this area. The Nominating and Corporate Governance Committee reports
its findings and recommendations to the Board for action.
Practices
The Company will maintain the following policies to continue its leadership in the
corporate governance area:
• Committee Structure. The Board will maintain four committees: a Nominating and
Corporate Governance Committee, a Human Resources Committee, an Audit and
Finance Committee and a Sustainability Committee. The Board will maintain a
written charter for each committee that will state such committee’s duties and
responsibilities.
• Role of the Presiding Director. The primary roles of the Presiding Director are to
assist the Chairman in managing the governance of the Board of Directors and to
serve as a liaison between the Chairman and other directors. The Presiding
Director will: (i) preside at all meetings of the Board at which the Chairman is not
present, including all executive sessions of the non-management and/or
independent directors; (ii) have the authority to call meetings of the non-
management and/or independent directors; and (iii) serve as a contact for
interested parties who wish to communicate with non-management directors. If the
Company does not have a Presiding Director, but instead has a Chairman who is
an independent director, the responsibilities of the Presiding Director set forth
above will be performed by the independent Chairman.
• Board Meeting Calendar, Agendas and Materials. With input from the Presiding
Director, the Chairman of the Board will establish the annual Board calendar and
meeting dates, establish agenda items and schedules for each Board meeting and
determine the materials and information to be presented to the Board. Agenda
items to be considered by the Board at each of its meetings will be included in the
Board materials distributed in advance to Board members. At each Board meeting,
there will be an executive session of the Board with only non-management
directors present.
• Board Orientation. An orientation program will be provided for each new director
to acquaint the director with the business, the financial picture, compliance
policies, corporate governance and other policies relevant to directors.
• Officer and Director Compensation and Equity Ownership. The Human Resources
Committee annually will approve the compensation of the Chief Executive Officer
of the Company (“CEO”) and the Nominating and Corporate Governance
Committee will annually review and provide input regarding the CEO’s total
compensation and will also periodically review the compensation of directors. The
Human Resources Committee annually will review and approve the total
compensation of the other executive officers. The Board, upon the
recommendation of the Human Resources Committee as to executive officers and
senior leaders and the Nominating and
Corporate Governance Committee as to directors will approve Stock Ownership
Guidelines for directors and executive officers and senior leaders. A director who
is also an officer of the Company and an employee of the Company does not
receive additional compensation for serving on the Board.
2. Ethic Values
These are our values. They are the heart of how we run our business. They guide our
actions and serve as the framework for the decisions and contributions that our
employees make at every level of the Company.
Tell the Truth
Be Fair
Keep Your Promises
Respect the Individual
Encourage Intellectual Curiosity
3. PESTEL ANALYSIS
PESTEL analysis is a strategic tool to analyze the macro environment of the organization.
PESTEL stands for - Political, Economic, Social, Technological, Environmental & Legal
factors that impact the macro environment of Harley-Davidson, Inc.
Competitive Rivalry
This force of porter analysis identifies the competition against a company in the
specific industry. When we talk about Harley Davidson, what are the external factors
creates a high competitive power or competitive rivalry for it?
There are three major factors to consider in this regard, for instance, the large number
of firms manufacturing motorcycles, the high availability of firms as well as the
moderate firm's variety. There are lots of firms with which the Harley Davidson
competes, including local to international markets. Other than this, the high availability
of public transportation also affects the company sales. In this regard, Harley
Davidson needs to maintain as well as improve product quality to stay strong and to
stand out in this high rate of competition.
Conclusion
As discussed above, based on porters five forces analysis, the Harley Davidson
necessitate focusing on the first two forces i.e. high competition in the industry as well
as high bargaining power of suppliers. Both these aspects should be addressed for
sake of maintaining the top position in this market so Harley Davidson needs to take
appropriate steps in this regard. For instance, increasing the developmental efforts as
well as reasonable investment in technological improvement can bring the positive
results for the company.
Information
Dealer Network
Gathering (e.g. price, Selecting Purchasing Customization Maintaining
Visit
f ue l price)
Vision
Harley-Davidson, Inc. is an action-oriented, international company, a leader in its
commitment to continuously improve our mutually beneficial relationships with
stakeholders (customers, suppliers, employees, shareholders, governments 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.
Mission
We fulfill dreams thorough the experience of motorcycling, by providing to motorcyclists
and to the general public an expanding line of motorcycles, branded products and
services in selected market segments.
7. SWOT
Harley-Davidson is the fifth biggest motorcycle manufacturer in the world. The company’s
success is hinged on its ability to address the issues pointed out in this SWOT analysis.
The SWOT analysis indicates the internal strategic factors (strengths and weaknesses)
and external strategic factors (opportunities and threats) most relevant in the business.
In Harley-Davidson’s case, these factors support potential expansion and a stable
performance in the global motorcycle market. However, this SWOT analysis indicates
changes in expansion strategies to improve the company’s standing. Harley-Davidson
can benefit from more aggressive expansion to negate the effects of aggressive
competition.
Harley-Davidson’s strengths are primarily linked to the company’s brand image and the
chopper motorcycle market culture. This element of the SWOT analysis identifies the
internal strategic factors that contribute to the firm’s capabilities for growth and
development. In Harley-Davidson’s case, the following are the most significant strengths:
Harley-Davidson has one of the strongest brand images in the motorcycle market. This
brand image is especially notable because of the custom/chopper biker culture, which is
strongly associated with the Harley-Davidson brand. This condition has also established
a stable base of loyal customers. Moreover, more than a century of experience creates
the company’s strength of expertise in the business. In this element of the SWOT
analysis, Harley-Davidson’s strengths ensure business stability despite aggressive and
low-cost competitors.
Harley-Davidson’s weaknesses are based on the current limited focus of the business.
This element of the SWOT analysis tackles the internal strategic factors that prevent the
company from maximizing its performance. The following are Harley-Davidson’s most
notable weaknesses:
Global expansion
Product diversification
Alliances with complementary businesses
The threats facing Harley-Davidson are based on market trends and legal structures. This
element of the SWOT analysis covers the external strategic factors that could reduce the
company’s performance. The following are notable threats against Harley-Davidson:
Aggressive competition
Imitation
Increasing preference for electric vehicles
The SWOT analysis of Harley-Davidson reveals the need for reforms in the business.
The global motorcycle market presents opportunities for growth. However, Harley-
Davidson has a narrow product mix, a limited market reach, and a limited supply chain.
The company also needs to address the environmentalism trend. Thus, the following are
the recommendations for Harley-Davidson to further grow its business:
Focus
Differentiation Cost
Advantage
Focus Strategy
Focus on Heavyweight market with customers who consider their motorcycle a luxury
product.
“Basically, we do not believe in the lightweight market. We believe that motorcycles are
sports vehicles, not transportation vehicles. Even if a man says he bought a motorcycle
for transportation, it’s generally for leisure time use. The lightweight motorcycle is only
supplemental.”
Differentiation Strategy
The BCG matrix classifies business-unit performance on the basis of the unit’s relative
market share and the rate of market growth.
Products and their respective strategies fall into one of four quadrants. The typical starting
point for a new business is as a question mark. If the product is new, it has no market
share, but the predicted growth rate is good. What typically happens in an organization
is that management is faced with a number of these types of products but with too few
resources to develop all of them. Thus, the strategic decision-maker must determine
which of the products to attempt to develop into commercially viable products and which
ones to drop from consideration as Harley did with the Buell Blast. Question marks are
cash users in the organization. Early in their life, they contribute no revenues and require
expenditures for market research, test marketing, and advertising to build consumer
awareness.
If the correct decision is made and the product selected achieves a high market share, it
becomes a BCG matrix star. The Harley-Davidson company is made up of multiple
business units, its corporate strategy focused on decisions which can increase sales and
allow the company to gain competitive advantage by maximizing the potential of their
core competencies and the resources both financial and non-financial.
As stars have high market share in high-growth markets they generate large cash flows
for the business, however they also need large inputs of finances to maintain growth.
They required large expenditures for advertising, research and development continuously
improve the product which would enable it to establish a dominant position in the industry.
The company’s strategic arrangement with the US Army together with the exceptional
features and capabilities RoadKing and Sportser allowed the company to gain high
market share and high market growth.
The diversity of their products is considered in terms of its related and unrelated
diversification. However, performance at the business level of the company suffered
leading to workers striking as a result the company was then sold to thirteen investors
strategically lead the company.
The “Fat Boy” though in the 1990’s was a market leader and cash cow for Harley
however, its market share was high and low-growth as the product reaches its maturity
stage of the product life cycle. This product was a well-established product with wide
consumer acceptance and as a result sales revenues were high.
The strategy for such products is to invest little money into maintaining the product and
divert the large profits generated into products with more long-term earnings potential,
i.e., question marks and stars which Harley did with their FXR models.
Dogs are businesses with low market share in low-growth markets. These are often cash
cows that have lost their market share or question marks the company has elected not to
develop. The recommended strategy for these businesses is to dispose of them for
whatever revenue they will generate and reinvest the money in more attractive business
such as into the Fat Boy.
A more stringent approach, but still one with weaknesses, is a competitive assessment.
A competitive assessment is a technique for ranking an organization relative to its peers
in the industry. The advantage of a competitive assessment over the BCG matrix for
corporate-level strategy is that the competitive assessment includes critical success
factors, or factors that are crucial for an organizational to prevail when all organizational
rivals are competing for the same customers.
11. STRATEGIC PARTNERSHIPS
Ford and Harley-Davidson delivers a new standard of "custom cool," combining the
smooth handling and legendary durability of America's best-selling truck with the
authentic styling of Harley-Davidson.
(Alliance Strategy) Bell & Ross and Harley Davidson
Luxury watch maker Bell & Ross have teamed up with British bike customizers Shaw
Harley Davidson (the most distributing) to create this custom chopper: the Bell & Ross
inspired Nescafe Racer.