Harley-Davidson - Factors Affecting Global Economy, Corporate Leadership, Strategic Plan Summary - Report Example

Cover Page TABLE OF CONTENTS PAGE I. Cover page II. Table of Contents 2 III. Executive Summary 3 IV. Global Economy/ Factors Affecting Global Economy 4 a. Motivations/ Risks 4 i. Motivations for Expansion 4 ii. Risks in Expansion 4 b. Competitive Advantage in Global Markets 5 c. Entry Strategies for Global Expansion 5 d. Internet Approach/ Strategy 6 i. How the Internet adds value 6 ii. Internet Business Models 7 iii. Competitive Strategies 7 iv. Leverage E-Business Capabilities 8 V. Corporate Leadership 8 a. Direction Setting 8 b. Organizational Design 9 c. Organizational Culture 9 d. Leadership Traits 9 e. Ethical Organization Characteristics 10 i. Identify elements 10 ii. Identify missing elements 10 f. Learning Organization Characteristics 10 i. Identify elements 10 ii. Identify missing elements 10 VI. Strategic Plan Summary 11 a. Conclusions 11 b. Recommendations 11 c. Implementation 11 d. Risks 11 VII. Appendix 12 VIII. Self-Reflection 12 References 13 EXECUTIVE SUMMARY Harley-Davidson is not a perfect company. Although it has remarkable strengths, it has also weaknesses that require meaningful improvement and considerable enhancement of its existing performance. While the firm is good at setting its general direction, and employing some competitive strategies along the way to its expansion program, there are other aspects of management that the firm is quite weaker. For this reason, even if Harley-Davidson is leading in its industry, a sustainable competitive advantage cannot be fully guaranteed as far as its prevailing condition is concerned. In the case of Harley-Davidson, its corporate leadership in general was found to be at the weaker point primarily on the aspect of financial management. This is a considerable aspect that Harley-Davidson must consider securely in order for it to achieve a sustainable competitive advantage in the long run. As noticed, in order to implement the improvement of the weaker point of Harley-Davidson, the firm must substantially employ a thorough evaluation of its strengths, weaknesses, threats and opportunities. These are essential in order to turn weaknesses into strengths for instance. It was found that the associated risks relevant to the expansion strategy and the achievement of sustainable competitive advantage on the part of Harley-Davidson include its financial status, its existing target market segment, and the prevailing competition and economic environment. GLOBAL ECONOMY AND FACTORS AFFECTING H-D In this section, the motivations and risks linked to Harley-Davidson’s expansion are discussed. In addition, the competitive advantages in global markets, entry strategies for global expansion, and internet approach or strategy are also explicated. a. Motivations/Risks Below are the corresponding data and information as to the motivations and risks associated with Harley-Davidson’s expansion. i. Motivations for Expansion Harley-Davidson Motorcycle Company is motivated by its strong brand popularity among its loyal customers. The company receives strong brand loyalty at present. To prove this claim, based on the data in 2011, 65 percent of the existing customers of Harley-Davidson who purchased motorcycle were found to have owned a Harley-Davidson in their lifetime (Harley-Davidson, 2013). However, this was based on the sales in the US alone. Around the world, approximately 57 percent of the people who purchased a new Harley-Davidson have already used this brand before. In other words, there is a potential and existing demand for the products of Harley-Davidson, and so there is no way that the firm will eventually stop their move for expansion so as not to cater the needs of their existing customers and even the future potential ones. ii. Risks in Expansion Harley-Davidson is motivated to expand due to increase market share and cost savings. In fact, in the US alone, Harley-Davidson holds 50 percent of the motorcycle market (Zacks Equity Research, 2012). This is one of the important things leading to the company’s prime motivation to go for an expansion program. However, there are also potential risks linked to the expansion of Harley-Davidson. One of them includes the potential threat associated with the aging baby boomers. Baby boomers are potential targets of Hareley-Davidson, but baby boomers are aging. In this regard, the primary target market of Harley-Davidson and as the main segment is significantly under a remarkable threat of decreasing every year. That is why Harley-Davidson will need to strategically find for another competitive and promising target market segment. For now, 20 percent of Harley-Davidson’s riders are baby boomers with ages 55 years old and above (Boyd, 2011). On the other hand, Harley-Davidson is in danger for its expansion because of its prevailing debt. Currently, Harley-Davidson has an estimated $5.36 billion dollars in debt (Yahoo Finance, 2014). The firm must significantly solve this issue in order to eliminate its being highly leverage, which means operating its means more through a debt initiative or program. b. Competitive Advantage in Global Markets If competence is to be considered, Harley-Davidson has lots of it. In the global markets, Harley-Davidson is clearly into expansion. In this market, the firm believes to have essentially generated a higher market share and saving on costs. These are the vital reasons why the firm continuously holds a remarkable competitive advantage. In other words, with the presence of leading market share and saving on cost, Harley-Davidson is gaining a sustainable place in the market for its product and service offerings. In 2011, when Harley-Davidson decided to initiate Sales by Product Line, they were able to generate billion dollars in selling their branded merchandise and accessories (Harley-Davidson, 2011). This can be attributed to strong brand loyalty for their brand, which is a remarkable reason why the firm has been enjoying a substantial market share in its industry. Quality and costs go hand on hand in the case of Harley-Davidson, but the preference of the target market is what counts most upon the consideration of what makes the firm together with its brand as a cut above the other. c. Entry Strategies for Global Expansion The good thing about Harvey-Davidson and its global expansion program is its Financial Services. In 2010 for instance, the firm was able to generate $62 million operating income in the US alone in the third quarter for its Financial Services compared to its performance of only $50.9 million in the last year’s the same quarter (Bloomberg Businessweek, 2011). Financial Services is a good strategy to consider customers’ loyalty in the brand. In addition, Harley-Davidson is also a very dynamic company, by being able to target new segments at present. The firm is targeting women, aside from the market of men. This significantly has been a remarkable turning point in its global expansion considering that there are many women in the world that are waiting to be served. Customization option is another strategy of Harley-Davidson, which allows it to custom-made services and product offerings that will suit to the taste and prevailing specifications of the target customers. It does not only guarantee value to the product offerings, but above all satisfaction on the part of the customers. d. Internet Approach/Strategy In the age of the internet and digital advancement, Harley-Davidson is not that behind in adapting to the prevailing technological advancement over the online world. i. How the Internet adds value The Internet adds value to Harley-Davidson, by integrating it to its ad innovation strategy. With the prevailing trend in the Internet and its being dynamic in allowing firms to reach new potential customers, Harley-Davidson is able to reach wide or diverse customers across the world and send to them a remarkable message about the firm’s product and service offerings. In other words, the Internet on the part of Harley-Davidson is trying to add a remarkable advantage on its part particularly in communicating remarkable information across the world. The Internet adds value to Harley-Davidson’s marketing initiative, primarily in the communication of product and service offerings. The Internet even gives the opportunity to Harley-Davidson to send out a clear message to its target market and even define them. On its Website, Harley-Davidson was able to specifically specific its community, its target segments (Harley-Davidson, 2014). This is a remarkable added value primarily on the promotional initiative of the firm. ii. Internet Business Models Harley-Davidson is definitely something new in the Internet marketing, but what seems to be clearer is that the firm is trying to bring in its traditional commerce approach over the online world. In the advent of Internet, eCommerce is not that extravagant on the part of Harley-Davidson to adapt. In fact, eCommerce is just an extension of the global marketing activity of the firm. In this case, it will be easy for the firm to process transactions, because there are already available services online primarily for purchase and other relevant after-sales services it offers. In this regard, Harley-Davidson is closely making the entire world as its significant market, because of the advancement of technology and the advent of Internet by which it could employ its traditional marketing strategies online. In this case, the traditional approach is no longer as one of its kind, but with the touch of digital advancement, Harley-Davidson has never been afraid to go try for eCommerce or eMarketing. iii. Competitive Strategies A well-design website is a considerable competitive strategy of Harley-Davidson. This is a way for the firm to be able to clearly send its message across the world. However, more than this, Harley-Davidson is trying to locate its dealers across the world through its website. This is a remarkable secret to its success to distribute its product offerings successfully to its target market not only in the US, but to the entire world. Having varying dealers in many parts of the world, and with the implementation of online business design, Harley-Davidson is not only making its transactions faster, but adding more value for its customers by satisfying them with a fast-paced service and product offerings. iv. Leverage E-Business Capabilities Talking about e-business capabilities, Harley-Davidson has a substantial amount of them. Its renowned brand does not only offer a trademark for its successful e-business initiatives, but above all it gives the firm a remarkable credibility for the firm to promote its product offerings on a wider scale online. Harley-Davidson substantially gains trust, which is a remarkable component for its success. The presence of e-business strengthens this trust and which is the prime mover why there are continuing loyal customers supporting Harley-Davidson and its product and service offerings. Instituting online business for Harley-Davidson and its product offerings is a remarkable advantage, because it ensures higher opportunity for successful expansion in the future. CORPORATE LEADERSHIP In this section, the leadership potential and capability of Harley-Davidson are discussed accordingly. a. Direction Setting This is the prevailing vision of Harley-Davidson. “We realize dreams, inspired by all the roads in the world, by providing exceptional motorcycles and customer experiences. We encourage our customers’ passion for freedom so they can give vent to their own individuality.” In the above vision statement, one can substantially depict the direction set by Harley-Davidson for its business. The firm’s inspiration is the existing needs of the world for exceptional customer experiences. In this regard, its direction is primarily for giving higher customer experience, which can only be unveiled by ensuring that they enjoy their freedom to express their own individuality. In this case, it is substantial to point out that Harley-Davidson primary direction is to greatly satisfy its customers, while considering expansion as a greater leap for them to fulfill their vision. b. Organizational Design Just like any organizations that have been successful in their respective industry, Harley-Davidson is one by which it believes that design in organization is important. In fact, based on its website, the firm is significantly one that depicts a good organizational design. This can be observed by how it tries to organize its membership and identify its community. There is a prevailing sound design in this case, which is a significant component of its leadership in its industry. In other words, Harley-Davidson is not just an ordinary company with no existing good organizational design. It is a firm that adheres to the value of organizational design for it is the only way on its part to become clearer and good at serving its target market. c. Leadership Traits For sure, Harley-Davidson is a visionary firm. Its vision is remarkably observed at present as properly implemented in its industry. Without this vision, Harley-Davidson would not be able to find for a new target market or ensure that the prevailing customers are satisfied with its innovative product and service offerings. Innovation is another fundamental component of Harley-Davidson’s leadership. This act is observed in its ability to customize its product and service offerings for its customers. Customization does not offer a substantial advantage on the part of the firm, but this one allows it to establish a meaningful thread mark from the customers’ perspectives. Harley-Davidson is therefore a leading innovator in its industry. d. Ethical Organizational Characteristics The following are important ethical organizational characteristics of Harley-Davidson. i. Identify elements High value for customers is something that will be of great interest to any target market. This one significantly relays a message that a certain firm serving to provide high value for its customers is doing the good thing. Harley-Davidson is considerably into this idea a long way already. It is a good thing to serve the customers and feel them they are special. This one adds to their loyalty to a certain brand or firm. In this case, Harley-Davidson is not only doing what is good for itself, but above all to its target customers. ii. Identify missing elements While Harley-Davidson is good at tracing and following its vision, this at some point does not assure its ability to substantiate core values to follow. While excellence may be obviously one of its core values, there is no other clear or meaningful core values that Harley-Davidson is following based on the information it presented on its website. e. Learning Organization Characteristics i. Identify elements As observed, Harley-Davidson is not afraid to learn, because of its expansion goal. It requires higher level of information necessary for expansion strategy. For this reason, product knowledge and acquiring more knowledge for the entire business is reasonably a good consideration on the part of Harley-Davidson. In the first place, the customization effort of Harley-Davidson is geared with a crucial knowledge and information relevant to its existing market and external and internal market environment. ii. Identify missing elements As already stated, Harley-Davidson is experiencing higher debt. This case substantially showcases how the firm might have poorly deal with its financial management. Although the firm is quite good in other aspects, it must need a considerable improvement in its financial management at some point. STRATEGIC PLAN SUMMARY a. Conclusions Harley-Davidson is not a perfect company. Although it has remarkable strengths, it has also weaknesses that require meaningful improvement and considerable enhancement of its existing performance. While the firm is good at setting its general direction, and employing some competitive strategies along the way to its expansion program, there are other aspects of management that the firm is quite weaker. For this reason, even if Harley-Davidson is leading in its industry, a sustainable competitive advantage cannot be fully guaranteed as far as its prevailing condition is concerned. b. Recommendations In the case of Harley-Davidson, corporate leadership in general was found to be at the weaker point primarily on the aspect of financial management. This is a considerable aspect that Harley-Davidson must consider securely in order for it to achieve a sustainable competitive advantage in the long run. c. Implementation In order to implement the improvement of the weaker point of Harley-Davidson, the firm must substantially employ a thorough evaluation of its strengths, weaknesses, threats and opportunities. These are essential in order to turn weaknesses into strengths for instance. d. Risks The associated risks relevant to the expansion strategy and the achievement of sustainable competitive advantage on the part of Harley-Davidson include its financial status, its existing target market segment, and the prevailing competition and economic environment. VII. APPENDIX Figure 1. Market share based on Polk 2013 U.S. new motorcycle registration data from IHS Automotive (Harley-Davidson, 2013). SELF-REFLECTION I learned many things in this program, including but not limited to direction setting, organizational design, ethical considerations, strategies and leadership in general. Upon learning this, I learned that these are vital ideas that need to be learned if one will want to explore the business world further. Understanding or learning these ideas allow me to consider the possibility of engaging in the actual business that aims to expand not just in the local or national context, but international. I learned therefore that there are still many things I need to learn about leadership and how to integrate it in the actual business. Though I may have personal bias about business in general, such as its ethical consideration, I learned that if it is done the right way and could satisfy everyone, then I would have been good at doing what is the essential or necessary. References Bloomberg Businessweek (2011). Harley-Davidson Incorporated. Retrieved from http://investing.businessweek.com/research/stocks/financials/ratios.asp?ticker=HOG Boyd, T. (2011). Louis adds Dharma Construction; building long-term care industry hub. Retrieved from http://insiderlouisville.com/news/2011/02/02/louisville-adds-dharma-construction-building-long-term-care-industry-hub/ Finance Yahoo (2014). Harley-Davidson Inc. Retrieved from http://finance.yahoo.com/q/ks?s=HOG+Key+Statistics Harley-Davidson (2013). Demographics. Retrieved from http://investor.harley-davidson.com/phoenix.zhtml?c=87981&p=irol-demographics&locale=en_US&bmLocale=en_US2 Harley-Davidson (2011). Annual Report. Retrieved from http://media.corporate-ir.net/media_files/IROL/87/87981/HD.pdf Harley-Davidson (2014). Community. Retrieved from http://www.harley-davidson.com/content/h-d/en_US/home/community.html Zacks Equity Research (2012). Harley-Davidson Remains Outperform. Retrieved from http://finance.yahoo.com/news/harley-davidson-remains-outperform-153018666.html Read More