Preparing for the Next Century Essay

2807 Words Jul 28th, 2013 12 Pages
HARLEY – DAVIDSON: Preparing for the Next Century

Harley-Davidson (Harley) was founded in 1903 as a small business and became the largest motorcycle company in the world after 15 years of operations. Moreover, by 1950, Harley-Davidson was the leader in the U.S. Market with over 60% market share. Historically, the key success factor in Harley-Davidson combined two important ingredients: several competitive advantages and favorable conditions in the motorcycle industry since the industry was almost new and the barriers to enter or the forces affecting it were weak (see appendix 5.1). After the victory of Walter Davidson riding a Harley-Davidson in a race and the development of unique innovations such as the V-twin engine, Harley obtained
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Harley started producing the V-twin engine which had unique cylinders, design, and allowed owners to tinker with their engines. With its rough image and high prices, Harley-Davidson was just focused on the wealthy men segment.

However, the splendorous period of Harley-Davidson finished in 1970 when the Japanese entered the U.S. market starting with Honda. Using the Blue Ocean strategy (see appendix 5.5), Honda and other japanese companies were positioning in the market with a broad Cost Leadership Strategy (see appendix 5.3-B) trying to focus on an unexploited but potential large market. Through PESTEL (see apendix 5.4), in a political perspective a lack of government support in creating barriers to entry and in an economical point of view, fuel high prices and maintenance costs, contributed to the entrance of the japanese competitors and their inmediately success. Moreover, the social scope in which the motorcycle was considered a leisure product for rough men, was displaced by the success of Honda´s campaign: “You meet the nicest people on a Honda” and the society started to perceive the motorcycle also as a useful transportation vehicle. This fact expand the market and the demand of motorcycles began to increase rapidly (+33% per year). To conclude the PESTEL analysis, in a technological perspective, the japanese arrived to the U.S. with unique technological advances and developed efficient mass-production processes that reduced the production time and

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