The Motorcycle Industry 's External Environment

The automobile industry is a capital intensive industry, the players in the industry need high capital expenditure in order to maintain their market position, but the expected returns in the future is quite high. The industry analysis can be carried out under the following heads:

By scrutinizing this information, they could begin to comprehend the relationship between humans’ behavior and their purchasing trends. In addition, comparing CSI (customer service indexes) and perceived quality by industry sector, assists marketers as to why many existing Allstate customers who own motorcycles don’t insure them with Allstate. Money is a discriminating factor and insurance is often a function of income. Many motorcyclists who don’t finance their purchases may opt out of insurance altogether. Short term financial performance indicators are useful in evaluating relative price metrics by formulating the market share participants in relation to market share value.

* KTM benefits from two long time players in the industry that attract investors confidence: Knünz and Pierer

Bargaining Power of Buyers: The bargaining power of buyers is high in the department store retail industry. The volume of buyers is high, and buyers are very price sensitive in this industry. The products are not highly differentiated, and there are numerous stores that offer the same, or similar, products, giving buyers the opportunity to search for the lowest prices and information. The industry has substitutes available in the form of specialty, differentiated products and stores. This increases the power of buyers,

Bargaining power of buyer: 46% percent brand loyalty means product is important to customer and he can pay more for the product – had positive effect. Also a large number of customers minimize bargaining leverage.

The impact of technology affects the market because people are shifting towards the purchase of environmentally friendly cars. The business level strategy at Honda is in line with its enterprise and corporate strategy. In the motorcycle industry, the corporation is striving to build its products and services very close to its customers in a total of 21 plants that are spread across 21 countries (Hu, B.2013).  The corporation also conducts Research and Development (R&D) in a total of six countries. The research and development system is tailored in its approach to producing products and services that are durable and reliable at the same time (Hu, B.2013).  The focus of the Honda foundation is to have three main dimensions; social, economic and environmental issues. Environmental regulations Honda conducts its businesses in Japan and throughout the world (including North America, Europe, and Asia). A continued economic slowdown, recession and the sustained loss of consumer confidence in these markets, which may be caused by rising fuel prices or other factors, could trigger a decline in demand for automobiles, motorcycles and power products that may adversely affect Honda ‘s results of operations (Hu, B.2013).  Regulations regarding vehicle emission levels, fuel economy, noise, safety and noxious substances, as well as levels of pollutants from production plants, are extensive

According to me, the motorcycle industry is very attractive. The main reason to back my claim is the level of competition in the industry. There is a very high level of completion between all the companies present in this particular segment. The main factors that drive this rivalry are different positions of different players within the industry, differences in technical know-how, different marketing campaigns, differences in core nature of the products and differences in strategies. The players in this particular industry don’t fight over price of their products, they rather compete with each other in terms quality of their products and the nature of their services to different segments of customers. Each player had its own unique strategy and nature of the product for a particular segment of customers, this tends to intensify the competition amongst companies in the industry.

When identifying and analyzing the major driving forces for change in the external environment of the motorcycle industry one must look, and identify these forces; they are the economy, national environmental forces, social, cultural, demographic forces, governmental, political forces, legal forces, and the competitive forces.

The major forces for change in the external environment of motorcycles industry are political, economic, social-cultural, technological, environmental and legal factors (Cadle, Paul, & Turner, 2010). The political factors affect the external environment of motorcycle industry by affecting the markets. The government has influenced changes through free trade agreements, ensuring patent protection and encouraging e-commerce. Political influences provide both opportunities and threats, the free trade agreements have allowed expansion into other markets but also has increased the inflow of cheaper substitutes into the market that a company operates in. Political factors affecting this industry has brought opportunities for the Harley-Davidson.

In this paper we will perform a complete analysis of the Harley-Davidson Corporation including their corporate and business strategies, strengths and weaknesses, environmental opportunities, the five industry forces, and financial situation. Harley-Davidson has many attributes, which will be apparent in the following analysis. The paper will attempt to define the different components of the analysis and put them all together in a way that seeks to explain the way that they contribute to the overall success of the company and its stakeholders.

Historically Harley-Davidson to be a Niche Marketer, which is they had focused in on one particular aspect of the market. Kotler and Keller identified the following characteristics of niche marketing; customers have a distinct set of needs, they are willing to pay more to the firm that best suits their needs, it is not likely to attract competitors, gains economies through specialized products and it has a size, profit and to grow. Almost all of these hold true for the “heavyweight” segment of motor cycles that Harley-Davidson produced.

Motorcycles fall into the category called Recreational Vehicle, Motorcycle and Boat Retail Industry. These are companies that retail recreational vehicles, boats, motorcycles, jet skis, and/or related accessories. In Hoover’s classification, based on the North American Industry Classifications System (NAICS) and the older U.S. Standard Industrial Classification (SIC) system, motorcycles fall under a smaller subcategory called Motorcycle, ATV, and Personal Watercraft Dealers Industry. This U.S. industry comprises establishments primarily engaged in retailing new and/or used motorcycles, motor scooters, motorbikes, mopeds, off-road all-terrain vehicles, and personal watercraft, or retailing these

Bargaining power of suppliers is low due to large number of suppliers of raw materials, low switching cost and availability of attractive substitutes. (Jim Wilkinson, 2013) Therefore, we could control the price of raw materials because we can easily switch to different suppliers with lower price and higher quality, increasing our profit consequently.

Motorcycles are one of the most affordable forms of transportation and one of the most common types of motor vehicle. There are approximately 200 million motorcycles (including mopeds and motor scooters) in use worldwide, compared with 590 million cars. Most motorcycles are concentrated in the United States and Japan. The

Now, for a better understanding of the external environment of the industry of motorcycles, we will present Porter’s Five Forces Theory.