.. efore, build up its brand loyalty. Accessories. This category includes a new line of riding and fashion apparel bearing the Harley Davidson insignia. These products are distributed to Harley retailers and outlets in the retail clothing market. Harley is to provide a wide variety of stylish products and aggressively market them.
Financing Services. Harley offers financing through a joint venture with Ford Motor Credit Company (FMCO). Harley due to its lack of capital, avoided forming its own subsidiary providing financing services something that Honda and Kawasaki have already done. Harley is to offer a wide variety of flexible plans to meet this great opportunity that arose due to inflated prices of motorcycles and willingness of people to use credit lines as a way to improve their standard of living. MARKETS Harley is the established leader of heavyweight motorcycles in the North American market, accounting for about 60% of the market share.
The size of its market share provides an opportunity for Harley to exploit. Its customers are the most loyal of any other brand and its products have great reputation. Foreign markets are growing very fast because customers there are obsessed with Harley’s quality and safety bikes and provide a great opportunity for Harley to exploit. The main problem is Harley’s limited production capability, putting customers in a waiting list for a couple of months. To succeed here Harley is to create good customer ties, provide after sales service, build up its customer loyalty, expand its distribution network, and modify its products to meet local customer needs.
DECISION CHART Alternative 1 calls for the manufacturing of all types of motorcycles, current accessories line, and providing financing services through FMCO, targeting all customers in both the domestic (70% emphasis) and foreign markets (30% emphasis). Alternative 2 includes the expansion of the accessory line, offer financing services through a wholly owned subsidiary and manufacture sport and heavy weight motorcycles, targeting men (90% emphasis) and women (10% emphasis) in both the domestic and foreign markets (equal emphasis on both). Alternative 3 says that Harley should manufacture only heavyweight motorcycles, but expand its accessory line and provide financing services through FMCO, targeting men (95% emphasis) and women (5% emphasis) in both the domestic (60% emphasis) and foreign markets (40% emphasis). Decision The first alternative is based on the idea that Harley should capitalize on its current reputation and success by rapidly increasing demand, and by expanding its product line to include all kinds of bikes. This will enable Harley to match its competitors (i.e., Honda and Kawasaki) wide product lines and gain market share from them. This would also create major problems since increased quantity will destroy Harley’s good reputation of producing safe, high quality, high performance bikes, thereby decreasing brand loyalty.
Also, Harley is to produce lightweight, sport, and heavyweight motorcycles and that is to require additional capital that the firm is lacking. Therefore, Harley is to cut down on R and products quality and eventually lose out. Honda and Kawasaki demonstrated well that effect since their market shares decreased significantly. Alternative 2 calls for an expansion of the accessory line that is experiencing an increasing demand. The main focus of Harley will be on men it is to provide lower priced, high quality, safe, stylish products to its customers.
Harley is to try to maintain its brand loyalty, good quality, after sales service, and strong customer ties (all major competitors are lacking these keys to success). The major drawbacks here are Harley’s plan to pay equal emphasis on both domestic (its leading position here gives the firm a competitive advantage over its foreign competitors) and foreign markets. Since Harley is unable to meet demand for its products, and modify its products to meet local demands, it is to fail in succeeding in the foreign markets while loosing out in its high revenue producing domestic market. Also, more capital is needed since Harley is to create its own financing Subsidiary company. That is to cut down on Harley’s ability to invest on R, and produce high quality products. Also, 10% emphasis on women is considered too large, since women account for less than 5% of Harley’s customers. Alternative 3, which is the one that I recommend, capitalizes on Harley’s strengths.
The company is to produce only heavyweight motorcycles, thereby focusing its R on producing safe, good quality products. The company is to guarantee a high resale value and provide good after sales service. Also its decision to stay with FMCO financing gives the company an additional financial advantage to be used in targeting specific marketing niches. Customers under 30 years of age are to be provided with safe, stylish, high quality products at reasonable prices, thereby increasing brand loyalty. Safety issues are not being focused by the Japanese and that gives Harley a competitive edge here though they can provide their products at lower prices. Customers from 30 to 50 years of age are to be provided with high performance, safe products, building up Harley’s brand loyalty that is considered the strongest, especially in the domestic market. Customers over 50 years of age are to be provided with comfortable, easy to handle bikes to increase their convenience.
Foreign bikes are lacking this key and are expected to be outperformed by Harley. Harley’s line of accessories (more emphasis on clothing) is to be expanded by providing a wider product line. That by itself would advertise its products and increase brand loyalty. Its plan to focus on the domestic market with 60% emphasis and on the foreign market with 40% emphasis is both good and bad. It is good in the sense that international demand for Harley products is increasing and that would increase the company’s revenues since it will expand its distribution network, provide after sales service, and appear there with an already established brand loyalty. It is bad though to expand with 40% emphasis in the foreign markets because Harley is not strong in meeting consumer demand that is expected to grow even more and dissatisfy both domestic and foreign customers. Surely, Harley can solve this problem by getting loans, thereby expanding its plant capacity and meeting this increased demand. The future cash flows that will arise due to increased sales will be used to repay these loans and maintain the company’s good credit rating. SWOT ANALYSIS Harley’s high R&D accounts for innovative designs providing Harley with unique product designs that set Harley apart from its competition.
In order to achieve that, Harley is to increase its R&D to improve product designs, quality, and safety. It is also to offer a guaranteed resale value (that most Japanese firms are lacking), offer a high quality after sales service and, therefore, build up its brand loyalty. Harley also, provides a wide variety of stylish accessory products and aggressively market them. Harley due to its lack of capital, avoided forming its own subsidiary providing financing services something that Honda and Kawasaki have already done, and that is a wickeness for the company. That lack of capital also makes the company unable of producing the amount of products needed.
There are some oportunities for the company, For example the expansion of its markets o Asia and Europe. In addition, of having its own financial services is a profitable expansion. Some of the threats are the tarrifs that might exist in other markets, and the immitation of Harley’s products from other competitors. STRATEGIES The strategies that the company might use have to do withe expansion to other markets like Asia, or Europe in order to increase sales and market share. In addition the creation of its own financial services could bring more profit.
Harley should give a lot more emphasis to the male customers and also increase the emphasis on the foreign market close to 40%. IMPLEMENTATION ISSUES Some of the problems that the previous strategies may face depend on the lack of capital. Of course a loan could be beneficial since the returns from the sales would be enough to pay back the loan. In addition, exports in Europe are not that easy since the products are going to be taxed more, since they come from a country outside the Europian community. In the future a subsidiary in one of the European community countries would relax the tarrifs.
TOWARDS THE FUTURE Towards the future the company is expected to do very well and increase its market share. The management objectives is expected to be the same as the current ones. Therefore the company is expected to manufactore only heavyweight motorcycles, but with the use of some loans will be able also to icrease sales in Asia and Europe. Business Reports.