ENVIRONMENTAL ENVIRONMENTAL ANALYSIS OF HARLEY DAVIDSON
Introduction Harley-Davidson , often abbreviated H-D or Harley, is an American motorcycle
manufacturer. Founded in Milwaukee, Wisconsin, Wisconsin, during the first decade of the 20th century, it was one of two major American America n motorcycle manufacturers to survive the Great Depression .Harley-Davidson also survived a period of poor quality poor quality control and competition from Japanese manufacturers. The company sells heavyweight (over 750 cc 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 chopper style style of motorcycle. Except for the modern VRSC model family, current Harley-Davidson motorcycles r eflect 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: ³We 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: ³Harley-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:
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"Harley-Davidson has taken their environmental responsibilities very seriously and has already made substantial progress in the investigation and c leanup of past contamination. Proof of Harley's efforts can be found in the rece nt 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 C leanup Program, Harley, EPA, and PADEP will expedite the co mpletion 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
Harley-Davidson is one of the most admired and recognized companies in the world today. y
Academy of Motorcycling for those interested in learning to ride a motorcycle. y
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Average purchasers of a U.S Harley-Davidson have a household income of $78,600.
Only about 9% of Harley-Davidson U.S retail motorcycles are to women. y
Confidence in economy is directly proportional to the purchasing of consumer items. y
Repeat business is strong as about 42% of motorcycle purchasers have owned a Harley-Davidson previously. y
U.S Government and People are considering Harley-Davidson as an American icon. y
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Opportunities in emerging economies [India, China] but uncertain
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operating situations. A 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. y
Harley-Davidson is one of the main manufacturer and user of VENGINE configuration. y
Harley-Davidson¶s have a wide variety of products according to Standard, Performance, Touring & custom. y
Harley-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. y
Noise pollution and some emission standards of Harley-Davidson bike is not up to the level of some countries across the globe. y
Five Forces
Internal Rivalry Four 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. Some 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). Polaris (American snowmobile/ATV manufacturer) producer of ³Victory´ motorcycles priced its motorcycles below the HarleyDavidson motorcycles. Strategic 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. Honda, the main competitor of Harley-Davidson in U.S eat up some market share of Harley-Davidson. y
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Potential y
entrant
Entry 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. The economies of scale are low in this segment, which is the reason why there are only four major players. There 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. y
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Substitute products Harley-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. Passenger cars, sports bikes, scooter bikes are the main substitutes of Harley-Davidson motorcycles. The people who are thinking of buying a heavy weight motorcycle are not seriously considering one of these options, scooter, sports bike. In India Enfield can pose as a small substitute. y
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Power
of suppliers
Steel, basic electrical equipments and shipping of final motorcycles are the main things Harley-Davidson seeks from suppliers. Harley-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. y
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Power
of Customers
Consumers of Harley-Davidson motorcycles are individual customers, so that they can¶t seriously affect Harley¶s financial position. The numbers of dealers around the globe are also less and they are also dependent to the individual customers, that can¶t affect Harley-Davidson¶s financial position. y
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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 Union¶s 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 Harley¶s 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 industry¶s largest company sponsored motorcycle enthusiast organization. Buell Riders Adventure Group (BRAG) was also formed recent Customization of the bikes, this is Harley-Davidson¶s 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 (That¶s one of the main markets for Heavyweight motorcycles outside U.S). They didn¶t 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 & IM PLEMENTATION 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 it¶s 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 Buell¶s 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 won¶t 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 it¶s 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.
