Businesses and the Environment: The Success or Failure of the Business - Essay Example

Businesses and the Environment: The Success or Failure of the Business Businesses and the environment in which they operate are strongly related because it is this environment that determines the success or failure of the business (Jain & Trehan, 2009). Each environment affects the business differently in defining the threats and the opportunities. For instance, the economic factors affect the business in terms of the interest rates, the rate of government spending, and taxation (Ndede-Amandi & Murunga, 2009).Where the economic conditions are favorable, consequently there are numerous thriving opportunities for the business but detrimental economic conditions diminishes these opportunities. Similarly, the political, social cultural and technological aspects can also favor the business or hinder it. As much as there are separate explanations of these aspects of the business environment they are different in nature, their intertwinement is evident because a change in one or two could affect the rest as well. Encouraging conditions of these factors opens up great business opportunities for the firms operating in that region whereas when they deteriorates, threats to business operations emerges. Harley-Davidson SWOT Analysis Strengths Harley-Davidson has been in operation for quite a long time and they started trading publicly in 1987 (Hitt, Ireland &Hoskisson, 2014). Throughout the years, they have continuously built a strong brand making them leading motorcycle manufacturers in the United States. Additionally, the company has perfected their diversification from their traditional male clientele to include women by making motorcycles that suit them in terms of color and comfort ability (Hitt, Ireland &Hoskisson, 2014). The company’s ability to create consistent quality products for the customers is yet another reason why it has blossomed. The clients always find satisfaction in Harley-Davidson’s products hence they find value for their money (Hitt, Ireland &Hoskisson, 2014). Weaknesses Harley-Davidson’s main product is the motorcycle, which many view as just for enjoyment instead of it being a medium of transportation (Hitt, Ireland &Hoskisson, 2014). This has led many people to ignore these motorcycles, as they do not consider them as important as other things. The company has not concentrated on other market segment other than the males for their products until recently, which has seen them fail to maximize on their sales. Similarly, the company’s ability to handle the changing demands and the related costs is in question, which might relegate them to produce substandard products and hence will not satisfy the customers (Hitt, Ireland &Hoskisson, 2014). Opportunities The Company’s abilities to expand are very high since they already have a visible brand in the market and as the leaders; their products are more acceptable than the competitors’ are. They have a very green market in the young people and women, which could generate high sales volumes (Hitt, Ireland &Hoskisson, 2014). They can also produce a variety of these motorcycles in cost effective way since they enjoy economies of scale compared to their competitors. Harley-Davidson also has the ability to expand their franchises to more nations to make their product more accessible to customers. Threats Harley-Davidson is currently facing vigorous competition, with threats of other firms overtaking them if they do not put proper strategies in order to beat competition. This however could bring the advertisement cost up further making their products very expensive therefore making current and prospective customers to shy away (Hitt, Ireland &Hoskisson, 2014). Effects of Harley-Davidson’s size, speed of strategic decision making and implementation, innovation, and quality on their ability to take competitive action Harley-Davidson is big company leveled the same way as the wide spread coca cola company which shows how the company has expanded (Hitt, Ireland &Hoskisson, 2014). The company enjoys one thousand, four hundred franchises with over 6000 employees, which clearly depict the company as a multinational company. The company employs highly qualified board member with each bringing a wealth of experience at the table. This has seen Harley-Davidson make quick strategic decisions as well as implementing them faster giving them a competitive edge. The company has faced a lot of competition from high quality and low cost bikes from Japan but despite this, their performance has not dwindled due to their customer considerations and inputs in all their innovations (Hitt, Ireland &Hoskisson, 2014). Despite the high competitive nature in the transport industry especially with the motor cycles, the company has positioned its marketing strategies to keep up with the huge competition. They use televisions, radios and print media to air multicultural adverts in a bid to attract wide range of clientele of all ages and from different parts of the world (Hitt, Ireland &Hoskisson, 2014). Harley-Davidson historical corporate-level strategy The Company’s strategic decisions have not changed much but previous lack of competition made Harley-Davidson make some corporate strategies that declined their performance for some time. Their decision to merge with AMF a sport product company was such move that made them loose confidence in front of their competitor’s eyes. The company had little in common with them hence the merger was doomed to fail from the beginning. In response to the decline the company connived and took the management role from AMF and that is when they restored their glory back (Amason, 2010). The Company then concentrated on the technological advancement and innovation in a bid to be more competitive and as a result, the company returned to public trading since the merger (Amason, 2010). The management has continuously emphasized on more innovative strategies and vigorous marketing tactics in order to remain competitive to their competitors (Hitt, Ireland &Hoskisson, 2014). Additionally, Harley-Davidson’s most recent corporate strategy is diversifying into other markets. This is whereby instead on focusing on traditional target group of men, they are rolling out women products by incorporating low seats and color into the product while offering them at an affordable price (Hitt, Ireland &Hoskisson, 2014). How will this strategy stand up against the competition and conditions in the industry? The world of business keeps on changing with more innovation coming up and increased technological development. Therefore, for any business to survive and remain relevant in the market, it must also keep up with these changes. Harley-Davidson’s innovative and technological strategy will be relevant for their continuous success. By continuously inventing new product, with relevance to customer’s requirement, will greatly help them maintain their market share. Similarly, the company strong embrace for technology will ensure they cost effectively produce high quality products and therefore the products will be cheaper and attractive to customers. The marketing strategy will continuously ensure that the company brand is always known and appealing to customers hence raising their volume of sale. The company’s keen concentration on the diversification strategy will enable them remain the market leaders. By producing products that will suit client of all ages will broaden their client base therefore capturing the biggest share in the market. Would an acquisition or merger strategy be a good idea for Harley-Davidson? The concept of a merger and acquisition is commonly used inter changeably although from a legal perspective they are distinct from each other. A merger refers to two companies coming together to form one entity. An acquisition on the hand means one company buying another and becomes the owner but that company remains a separate entity from the one that has acquired it (DePamphilis, 2011). The firms that are increasingly emerging are posing a great threat to Harley-Davidson especially from Japan, which are producing high quality motorcycle and offering them at very low prices. Therefore in this regard it would very wise for Harley-Davidson to consider a merger or acquisition. Merger and acquisition greatly helps an organization to increase its market share since it similarly acquires the market share of the acquired or merged company. The company similarly gains new technological development from the other company. One of the greatest motivations why firm adopts a merger or an acquisition is the benefits of the economies of scale. Harley-Davidson will greatly enjoy through an acquisition or a merger since this will reduce the cost of production greatly enabling them to reduce the prices of their products. Similarly, diversification is very easy with mergers or acquisition due to the availability of a ready built infrastructure. Therefore, with Harley-Davidson’s plans for diversification, an acquisition or a merger will come in handy. Unpredictability and risks of doing business in different regions of the world Different parts of the world hold different views about business and each nation has put in place legislations to regulate business operations. As much as expanding to various parts of the world is usually advantageous to the firm, several risks come with it. Political instability for instance, can affect the business in a negative way that can even lead to losses (Srivanasan, 2011). Some host government may also get excessively involved with the operations of subsidiary firms operating in their countries. In addition, some nations may impose discriminatory regulations that do not favor the business environment disabling the abilities of the foreign companies to make any profits in those circumstances. Some nations also develop a negative attitudes towards foreign investments and their reaction may be throwing the foreign companies out of their countries (Srivanasan, 2011) just like the case in Zimbambwe. Quotas and requirements of political involvement are yet another risks associated with foreign investment, which may not favor foreign companies. With continuous change in regimes in different countries, business environment may change and as these regimes changes they may pose great risks mostly to foreign businesses. Would Harley-Davidson be wise to pursue a cooperative strategy? Cooperative strategy is a situation whereby firms targets to meet their goals in coordination with other firms instead of competing with them (Child, Faulkner & Tallman, 2005). This strategy is more appropriate for firms that have not fully development and want to take advantage of the technological development of bigger firms to thrive in the market. However, large firms could also use this strategy in order to enter into new markets, which have many entry barriers. Harley-Davidson will not benefit from such a strategy being the market leader, since they have already evolved and have built a brand of their own. Additionally, the company uses franchises as its expansion plans and this method is more appropriate for firms that open subsidiary firms rather than franchises. Most cooperative strategies end up in a merger especially in cases where the competition is low (Child, Faulkner & Tallman, 2005). One particular example of a cooperative strategy ending up as a merger is the case of a UK based computer services company that merged with fijistu, a Japanese company that happened after their cooperation of many years (Child, Faulkner & Tallman, 2005). Since Harley-Davidson’s main goal is not to expand through opening subsidiary firms, then this strategy will not be appropriate in their case. References Amason, A. (2010). Strategic management: from theory to practice. New York: Routledge. Child, J., Faulker,D. & Tallman, S.B. (2005). Cooperative strategy. New York: Oxford University Press DePamhilis, D. (2011). Mergers, Acquisitions, and Other Restructuring Activities: an Integrated Approach to Process, Tools, Cases, and Solutions. Burlington: Elsievier Science Hitt, M., Ireland, R.D &Hoskisson, R. (2014).Strategic Management: Competitiveness and Globalization. Stamford, CT: Cengage Learning. Jain,T.R. Trehan, M.& Trehan, R. (2009). Indian economy and Business environment for (BBA). New Delhi: V.K Publishers. Ndede-Amandi, A. & Murunga, J. (2011). Business Studies for form1 pupils Book. Nairobi: East African Publishers. Srinivasan, R. (2011). International marketing.New Delhi: PHI Learning Read More