What Is Harley Davidson Competitive Advantage

Harley-Davidson’s Annual Report (2009) indicates sales from motorcycles and related products on a continuing basis decreased 23.1 percent to $4.29 billion compared to 2008 and income from continuing operations decreased 89.7 percent from the prior year to $70.6 million (Harley-Davidson, 2010a). These losses can be attributed to HDFS and the impact of restructuring (Harley-Davidson, 2010a). However, by eliminating excess capacity, reducing administrative costs and non-core business operations, Harley-Davidson believes these steps of restructuring will reflect between $240 million and $260 million in annual ongoing savings (HD1, 2010). Nonetheless, excusing the decline in numbers, Harley-Davidson’s Annual Report (2009) states, since 1993, the company has paid a dividend every year (Harley-Davidson, 2010a).

The motorcycle industry is a consolidated industry. The U.S. and international heavyweight motorcycle markets are highly competitive. The major players, such as Yamaha, Suzuki, and Honda, generally have financial and marketing resources that are substantially greater than the non-major players. Competitions in the heavyweight

The Harley Davidson brand has expanded not only in the United States but also globally, it has transformed its manufacturing, product development, and retail capabilities over

Harley-Davidson has been operating as a U.S. motorcycle manufacturer since 1903. Throughout its life, it has been through many hardships, but just as many successes. Throughout the 1970s and 1980s Harley-Davidson experienced tremendous difficulties and almost went bankrupt in 1985. To its dismay, in the 1990s Harley-Davidson experienced several years of record growth and was ranked in 1990 by BusinessWeek as one of the top U.S. companies with a market value of $515 million. As a sign of their success, they remain the only U.S. motorcycle manufacturer still in business.

In 1929, the Wall Street Market crashed causing many businesses to close their doors. Although the Harley-Davidson motorcycle company did not have to close their door, they did suffer major setbacks because of the Wall Street Market crash of 1929. The Wall Street Market crash caused many people to lose their jobs. Thus they would not afford to purchase motorcycles. Then in 1937, the Davidson motorcycles began having engine issues, leaving customers deserted. However, the brothers soon detected and diagnosis the problem with the engines, fixed the engine issues and gave the motorcycles a fresh look.

The history of Harley-Davidson began in 1903, in a 10 ' x 15 ' shed located in the Davidson family 's Milwaukee backyard. The Davidson brothers - William D., Walter, and Arthur – and William S. Harley crafted their first motorcycle using the best tools they had available – mostly their hands and their ingenuity.

By 1920, the company was producing almost 30,000 bikes annually and was the world’s largest motorcycle manufacturer, taking the title away from Indian Motorcycle. However, a combination of a mild economic depression and Henry Ford’s Model T began eating away at Harley-Davidson’s profits, and the motorcycle company even had to reject a potential business partnership with Ford Motor Company to protect themselves (“William S. Harley, Arthur”). The partnership involved manufacturing Harley-Davidson bikes with a sidecar to be used to deliver mail, albeit under the Ford name. Harley-Davidson rejected this deal, but later used the idea to sell their own bikes to the Postal Service (Harley and the Davidsons). In 1914, the U.S Postal Service was using 4,800 Harley-Davidson motorcycles to deliver mail. To save their company, Harley designed motorcycles to be used by law enforcement across the United States. By the mid-1920s, roughly 3,000 law enforcement personnel would be riding a Harley-Davidson, a testament to William Harley’s engineering genius. In addition, Harley would design bikes with larger engines and brakes which helped boost sales for a short while before the Great Depression came. To counter the resulting plummet in sales, Harley gave the bikes a facelift, designing new bikes with more appealing fuel tanks and adding both stylized eagle designs and the company logo on the bikes to increase appeal. Around this time, bikes were also designed with different color patterns (“William S.

Historically, how did Harley‐Davidson manage to dominate the US market? How did it do so and what were its sources of competitive advantage?

The overall intensity of rivalry in the motorcycle industry is strong, key players in this industry include the Harley Davidson, Winnebago, Polaris, Thor, Artic Cat and Marine Products. These top performers hold a high percentage of

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.

Harley-Davidson has managed to dominate the U.S. market by investing in research and development, experimenting with its designs and

The strength of Harley Davidson can be seen in its logo and product brand. In the United States, the Harley Davidson is like a cult since it has so many followers, as depicted in the case study whereby in all the rallies, hard core fans of the company, for example the Harley Owners Group was present. This gives the company a competitive advantage since it has a market that is readily available and willing to purchase its products no matter the cost. The other strength of the company as seen in the case study was in the protection by the government since it was a United States company. This helped Harley to recover when the company placed an increase on the tariffs charged on the

The oil crisis in the 1970s prompted the popularity of the smaller motorcycles, mopeds, and scooters that were made primarily by Japanese manufacturers. Dealers sold vehicles to those interested in conserving gas and finding cheap transportation. Harley-Davidson 's market share, already dropping, was further threatened by Honda 's 1969 entrance into the heavy and super heavyweight segment of the market. By the late 1970s Harley-Davidson faced severe production quality problems in addition to stiff competition. A management buyout in early 1981 set the course for the company 's revitalization. It was protection under higher tariffs however, recommended by the International Trade Commission that helped

The success of Harley Davidson (HD) is due to the American motorcycle icon’s effective Strategic Management. HD’s vision, mission, goals and objectives strive to exceed the requirements of its main stakeholders. Although these needs are not always met, the company has unique relationships with is stakeholders. The company stays on course with its strategic plan, despite the economy and the decline of American manufacturing and what might be considered its dwindling U.S. consumer base.

Rivalry Competition: Harley Davidson has a High Rivalry Competition. HD deals with a huge amount of competition in the Motorcycles industry from other motorcycle manufacturers from around the world. These include Honda, Yamaha , Suzuki from Japan; Ducati, Aprilia, BMW and Triumph from Europe; and the Indian as its main rival from the US. The major problem HD faces here is that most of its major competitors are very diversified and have larger financial and marketing resources. For example, Yamaha generates only half of its revenue from motorcycles. The growth rate of this particular industry is forecasted to be 3.4%.