Harley Davidson Case Study

Founded in 1903 in Milwaukee, Wisconsin, Harley Davidson is a major American motorcycle manufacturer. With dedication and hard work, Harley Davidson survived amidst ups and downs such as the Great Depression. Today, the business maintains its status of one of the leading branches in the motorcycle business after over one hundred years. What makes Harley Davidson such a sustainable company in order to become one of the world’s largest motorcycle manufactures in the world? In my following Case Study report, I will analyse Harley Davidson’s resources and capabilities, and identify its key strengths and weaknesses. Furthermore, I will also analyse and evaluate Harley Davidson’s competitive and development strategies including how it achieves competitive advantage. This analysis will maybe give us the chance to have a deeper understanding of how Harley Davidson managed to still be a market leader.

In general, the resources and capabilities of a company are essential for the long-term survival. Determinating these resources and capabilities are the internal analysis part of the SWOT analysis, which are needed to further identify the strengths and weaknesses of a company. Referring to the Harley Davidson case, I differentiated between tangible and intangible resources.

First, I want to talk about the tangible resources. Harley Davidson had a market share of 55,7 per cent (2011) for retail sales of the super-heavyweight and heavyweight motorcycles in North America, as well as 13,7 per cent in Europe, 21 per cent in Asia-Pacific and 7 per cent in Latin America (Grant, Table1). The heavyweight motorcycle market includes three segments: the cruiser motorcycle, the touring motorcycle and the performance motorcycle. Furthermore, as of 2011, Harley Davidson’s dealership network consists of 635 full-service dealerships in the US, 69 in Canada, 369 in Europe, 230 in Asia Pacific and 44 in Latin America (Grant, Table 5). Not only the motorcycles itself, but also the sales of parts, accessories and general merchandise including clothing and collectibles contributed 14,8 per cent of the total revenue in 2011. In addition, a 12 per cent of operating profit in 2007 contributed the Harley-Davidson Financial Services (HDFS), which is supplying credit, insurance, and extended warranties to their dealers and buyers.

When analysing H-D’s resources, we also have to include the intangible resources. The most important intangible resource is the brand and the reputation. With creating the unique brand image with having the ultimate “Harley experience”, the company managed to build a loyal customer base. Also, another intangible resource is the Harley-University, which was established to “enhance dealer competencies in every area, from customer satisfaction to inventory management, service, proficiency, and front-line sales” (Grant, p. 528). Furthermore, enhancing team-based structured management up to top management level, helped H-D to run its company more efficiently and effectively. In team- based organisations, all employees participate in decision making and they feel that they are more involved in the company. At last, the numerous patents H-D holds to its name can be counted as part of its tangible resources.

After pointing out the resources of Harley Davidson, the next step in the internal analysis is pointing out the key strengths and key weaknesses of the company. From my point of view, Harley Davidson’s greatest strength and asset is its brand image and its customer loyalty. The Harley’s Owner Group helped build a community to help customers have a unique driving experience and connect with each other. For these loyal customers it is not only a brand, but also a connected lifestyle and culture. Not only the customization, but also the sales of other products, accessories and merchandise as well as financial services, gives H-D a wider scope for making profit. Additionally, the focus on individualism through customization of the bikes is a key strength, as it gives every biker the opportunity to own their unique bike and also keep upgrading it. Management and Distribution improvements through implementing programs like the Harley-Davidson University, helped the company to provide good services for their buyers.

Of course every company, including Harley Davidson, also has its weaknesses. One Harley Davidsons key weakness is the manufacturing and Research and Development sector. Due to low production volume compared to its rivals, Harley Davidson especially suffers cost disadvantages in the purchase of components. Furthermore, technologically speaking, H-D is far behind from its competitors. The company’s commitment to the traditional design features and the focus on bike customization bothers the ability to invest in technology and new products. As a result, for instance, Honda is able to sell a similar bike with more advanced technology for a cheaper price. Another weakness of H-D is their poor international exposure. Even though Harley Davidson tried to adapt its products, image and marketing to the overseas markets, Harley is not able to establish a major position in Europe and other foreign markets.

After the internal analysis of this case study, I want to get into the second part of my report, where I will be talking about Harley Davidson’s competitive and development strategies and also including how the company is able to gain competitive advantage.

In order to be successful, obtaining competitive advantage is indispensable for every business that wants to compete in the worlds market. Having an advantage over your competitors allows your business to outperform the others. This leverage is usually gained by a good competitive strategy, which plans out different ways of achieving this competitive advantage.

According to Porter’s Generic Strategies model, there are two fundamental ways of obtaining competitive advantage: either cost leadership or differentiation. This model was described by Michael Eugene Porter, an American academic, in 1980. Cost leadership simply means to be cheaper than your competitors. Differentiation on the other hand is concerned with having special products or services, which are to greater value to the costumer. These premium products or services come at a higher price. If choosing to narrow it down, a company could also just have a focus cost or differentiation strategy, where they focus on these matters only on segments of the company. (Johnson G, p. 210-211)

Harley’s product strategy is an example of a focus differentiating company. It is targeting customers interested in heavyweight and super-heavyweight motorcycles that includes cruiser motorcycles, touring motorcycles and performance motorcycles. Harley Davidson retained the traditional designs which characterized Harley Davidson for over one hundred years,