Harley Davidson appears to be doing well, being financially sound and growing. This analysis will examine whether there are
strategic problems ahead and propose strategies for the future. The standard procedures of strategic analysis, as outlined in Lynch
(2000) will be followed: first an external analysis, from which opportunities and threats will be identified, then an internal analysis,
that will highlight strengths and weaknesses. Finally, some strategies for the future will be proposed and justified.
A full analysis of all the potential stakeholders is shown in Appendix A. From this analysis, two inter-linked stakeholder groups are
identified as the most important: the shareholders and the employees, most of whom are also shareholders. The Shareholders are
looking for growth in profits, the employees for long-term job security and good conditions, and maybe the ‘HD spirit’, at work.
Their interests are similar in seeking growth and long-term success for the business, and ensuring that employment prospects at the
firm’s home base are retained.
Remote and Near Environments
A full scan of the remote & near environments has been undertaken (see Appendix B.) Table 1, below, highlights the most relevant
and important trends.
                                           TABLE 1: SUMMARY OF MAIN TRENDS FACING THE MOTORCYCLE INDUSTRY
                Aspect            Trend
                Political         Lowering tariffs world wide could encourage Japanese & European competition within the US
                Economic          Growing world economy leading to growing demand; Greater use of low cost manufacturing countries to cut costs
                Social            More diverse lifestyles mean that our old customers may be less loyal, but gives potential to new types of customers
                Technological     New materials and other technologies are giving potential for better large motorbikes at the same or lower cost
                Competitors       Increasing consolidation in the industry, resulting in two world player competitors, & a plethora of small ones.
                Customers         Customers are decreasingly loyal to brands or identities; Increasingly like ice cream
                Suppliers         Suppliers of manufactured products are increasingly global rather than local.
                Labour force      Increasingly concerned with ice cream and less loyal to the companies they work for
From this, the most important trends are concluded to be ……..
Industry Analysis
An industry analysis was undertaken using Porter’s five forces framework (Porter, 1980). The full analysis has been given in
Appendix C, but is summarised in Figure 1, below.
                                          FIGURE 1: PORTER’S FIVE FORCE ANALYSIS OF THE MOTORCYCLE INDUSTRY

                                                        New Entrant Threat:
                                                        Medium & Growing

                                                                                              Buyer Power: Medium
                            Supplier Power:              Rivalry: Medium &                    could well increase
                            Low & decreasing             Increasing

                                                     Substitute Threat Medium/ Low,
                                                     increasing from ice cream

In brief, four of the five forces, though currently not strongly prejudicial to industry attractiveness, are moving against industry
attractiveness, in particular because …. .
To conclude the industry analysis, the motorcycle industry is reasonably attractive now, but the future is looking more difficult.
From the foregoing analysis, the following Industry driving forces, Key/Critical success factors, Opportunities and threats can be
concluded, as presented and explained in Tables 3 and 4, below.
   TABLE 2: INDUSTRY DRIVING FORCES                                                      TABLE 3: KEY SUCCESS FACTORS
   IDF                               Explanation & Implications                          KSF                             Explanation & Implications
   Globalisation is cutting          ….                                                  Low cost world sourced          ….
   company costs and increasing                                                          manufacture of reliable quality
   competition in manufactures
   Lifestyles and leisure styles are ….                                                  Strong & adaptable brand           ….
   becoming more diverse                                                                 image
   Technology is improving all       ….                                                  Marketing /distribution strength   ….
   aspects of the motorcycles                                                            globally

                                                           TABLE 4: OPPORTUNITIES AND THREATS
   Opportunities                                     Explanation               Threats                                                          Explanation
   Growing leisure interest in bikes worldwide:      ….                        Growing competition from small companies with                    ….
   continues market growth                                                     lower costs; threat that they could join with larger
   Increasing ease of trade makes the exploiting a   ….                        Strong & effective large globally based competitors              ….
   world market and lowering costs more feasible                               in a consolidating industry;
   Industry concentration gives the potential to     ….                        Decreasing brand loyalty means that purchase                     ….
   form useful relationships with firms in other                               decisions are increasingly being made on the basis of
   countries                                                                   price & performance

In conclusion, HD is facing an increasingly hostile environments with a number of specific threats, particularly ……
  Never the less, there are a number of changes that could represent opportunities, particularly ….

The process of industry analysis will use a number of techniques described in Lynch (2000) and Johnson & Scholes (1999) to
ascertain the main strengths & weaknesses of HD. A resource-based approach will first identify especially unique and intangible
strengths & weaknesses. Then two market-based approaches (functional Audit & Key Success Factor audit) will help compare HD
with 2 competitors (Honda & BMW), important given the increasing competitiveness of the heavyweight motorcycle industry.
Tangible & Intangible Resource Analysis
A full appraisal of the tangible and intangible resources can be found in Appendix D. Table 5, below, summarises this analysis.
                                                   TABLE 5 TANGIBLE AND INTANGIBLE RESOURCE ANALYSIS
   Resource                               Strengths                                   Weaknesses
   Tangible Financial Resources           Currently Financially sound                 Small compared to competitors: limited ability to invest in new areas
   Tangible Physical resources            Good plant and operations in the US.        Probably less efficient than competitors; no assets outside US
   Intangible Technological resources     Only strength is an agreement with Porsche  Very weak technologically; no record/reputation technologically
   Intangible Reputation resources        Very strong brand in the US                 Brand of some but limited value outside the US
   Human Resources                        Extremely loyal and valuable workforce, who No or weak abilities in marketing and manufacture in other countries
                                          themselves strengthen the brand
In conclusion, this analysis highlights …..
Value Chain Analysis
A full description of the Value chain analysis can be found in Appendix E. Figure 2 summarises this analysis.
          Firm Infrastructure: Good senior management has transformed the firm, but it remains small compared to global competitors

                                                                                                                                                Margin: Adequate
                                                                                                                                                but possibly insuff-

                                                                                                                                                technology or mar-
                                                                                                                                                icient for financing
                                                                                                                                                major new model,
                                          HRM: Excellent, but no skills or abilities outside the US

                                                                                                                                                ket development
                                Tech Development: Very Weak, so the brand relies on its lack of technology.
             Procurement: Very good relationships with streamlined supplier base, and new Brazil operation can reduce costs further
   Inbound logistics:        Operations:                  Outbound logistics:          Marketing & Sales:          Service:
   good advanced JIT         Excellend highest level      very good because …..        Excellent relationships     Excellent in the US; very
   procedures                US operations                                             and brand strength in US. weak outside….
                                                                                       Very weak outside US
                                                             FIGURE 2: VALUE CHAIN ANALYSIS
This analysis highlights that …..
Functional audit comparison with competitors
A full appraisal of HD’s functional areas can be found in Appendix F. Table 6, below, summarises this analysis.
                                                TABLE 6 FUNCTIONAL AUDIT COMPARISON WITH COMPETITORS
   Function                                         HD                                   Honda                                      BWM
   Corporate management         Proven itself in recent changes        ? Not Known                               ? Not Known
   MIS                          in the US  outside US                in the US and workdwide                in the US ?? worldwide
   R&D                          practically none; dependant on          access to larger motor group           access to larger motor group
                               traditional product
   Manufacturing                very good but limited scope for          access to larger motor group           access to larger motor group
                               further improvement
   Design Marketing            Excellent in traditional niche only       & able to develop in new niches       
   Sales & Distribution         in US;  outside US                   Worldwide                              Worldwide
From this analysis, a number of important issued emerge …..
Key Success Factor audit with competitors
A full appraisal of HD’s abilities in the KSF areas can be found in Appendix G. Table 7, below, summarises this analysis.
                                             TABLE 7 KEY SUCCESS FACTOR COMPARISON WITH COMPETITORS
   Function                                                              HD                            Honda                            BWM
   Low cost world sourced manufacture of reliable quality                                                               
   Strong & adaptable brand image                              Strong ; adaptable         Strong ; adaptable         Strong; adaptable
   Marketing /distribution strength globally                   US;  outside US           worldwide                   worldwide
This analysis highlights some important problem areas ……..
Conclusions: Strengths and Weaknesses
Table 8, below, summarises and explains the main Strengths and Weaknesses that emerge from the aforegiong analysis.
                                                           TABLE 8: STRENGTHS AND WEAKNESSES
   Strengths                                         Explanation               Weaknesses                                                  Explanation
   Adaptable, and change oriented workforce and      ….                        Limited ability do develop new non-traditional and          ….
   manufacturing/management orientation                                        technologically sophisticated products leaves HD
                                                                               very vulnerable strategically
   Very strong brand, marketing, distribution and    ….                        Limited global marketing/distribution constrains            ….
   service ability in the United States                                        growth potential
                                                     ….                        Lack of international orientation limits scope to cut       ….
                                                                               unit costs if the industry becomes more competitive
In conclusion, HD is currently doing OK and has a number of important strengths, but there are a significant range of weaknesses that
could well present major dangers for both the shareholders and employees for the future. If HD does not work out some radical
strategies and visions for the future, now, when it is still doing well, it may well, like Volvo and British Airways did during the 1980s
& 1990s, end up in a very weak position within a few years.
Table 9, overleaf, shows a TOWS matrix which presents a number of ideas for addressing numbers of combinations of Strengths,
weaknesses, Opportunities and Threats. Some things must be done immediately for the immediate survival of the organisation.
These are … Others present great potential for future strategic success. These are ….. Drawing these together, two major strategic
options emerge that the HD management should seriously consider: (Remember, you can suggest anything)
1. Horizontal integration/Concentration, through full merger/alliances/ joint ventures with other motorcycle companies. The
industry is consolidating, and to survive against BMW & Honda, HD need to supply different types of bikes with different brand
images to appeal to different and changing types of customers with different and changing aspirations. Other bike companies in the
US and World-wide face a similar situation, and common problems & interests can be combined to offer new products with strong
individual brands, & to better market HD bikes world-wide. Companies could include CZ, Motoguzzi, Suzuki, Triumph, etc etc.
Stockholder returns will be improved, and the potential dangers to the employees’ futures lessened.
2. Ultimately merging/ being taken over by a major motor manufacturer. Ultimately, both HD & other smaller manufacturers
need access to high level technological capabilities, as Honda and BMW have now. The car industry is consolidating. The right
merger, negotiated now at a time of strength, will be better for shareholders and employees than one forced on the company later due
to competitive difficulties. Likely groups could be Renault/Nissan, who have a record of successful integration and who would bring
Japanese manufacturing skills. and Volkswagen, who have excellent Eastern European and US experience. Both have caring policies
and values towards employees, which is important. Daimler/Chrysler, Ford and Toyota would also bring many skills, but all have a
less caring employee philosophy, and the former is facing difficulties.

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