Harley-Davidson

William Harley and his three brothers started Harley Davidson, an international company, in 1903. Therefore, so a family business has started. This company gained its grip after the closure of a motorcycle factory that was Indian based. This meant that Harley Davidson dominated in the market; though in comparison with other companies in Europe such as BMW it was lagging behind. The market was enormous that it could not meet the demands of its customers that were all over the world (Sandulli, F 2006). This demand was met through the importation from other companies elsewhere. This enabled the company to keep its customers. This had not lasted for long as in 1969 Honda jetted into the market with its four-cylinder CB750 that increased the competition, thus, drastically lowering Harley-Davidson’s earnings. In 1969, the company changed the hands to the American Machine and Foundry. There were the expansion efforts to increase its production that led to lowering of quality and a sub sequential loss in finances and its US market leadership (Bloss, S 2004).

The AMF used the tactic of slashing the workforce in order to streamline the production (Ryall, J 2008). The labor strike and the lowering of quality resulted into a decline of sale. The company was almost becoming bankrupt. This was also coupled by the lack of a stable management team. Its operations became inefficient. The AMF practice of purchasing other companies resulted to huge losses in almost every year. One of the managers, Vaughn Beals, succeeded in buying out Harley Davidson as a subsidiary company from the AMF, though it was heavily laden in debts. The company became privately owned and began rebuilding its production methods as well as the working practices (Sandulli, F 2006).

The new management was determined to improve the quality and to reduce the operational cost. For the first time, the relationship between the workers and the management had been improved. There was an increase in the sales and the profitability of the company. Its market share continued increasing each year. The company witnessed the growth, and its challenge now became meeting the demands of its products. This continued until 2008 when there had been the decline revenues and motorcycle shipments since 1984. In 2009, the new management under the CEO of Harley Davidson began the process of restructuring by lying off some employees and amalgamating plants to cut the capacity (Sandulli, F 2006).

Harley Davidson’s Company has survived for over a century in the motorcycle manufacturing industry. The records have shown that it was one of the two major companies in America specializing in the motorcycle manufacturing that managed to survive the Great Depression of 1933. The company’s distinctive design of its products has enabled its motorcycle market to be very successful over the years. The company has managed to sustain its loyal brand through clubs, events and its museum (Bloss, R 2004).

The company has a number of models that includes: Sportster, Dyna, Softail, Touring, and VRSC among others. Sportster models have such engines that have evolved from the ones used in the 1980s (Schembri, S 2009). They are designated to use the prefix XL; for example, XL883, XL 1100, XL 1200, and XL 883. Dyna models are designated with the prefix FXD; for example, FXDWG (Dyna Wide Glide), FXDL (Dyna Low Rider).

Target Market

Harley Davidson’s Company has segmented its market and produced the motorcycles designed for urban males and females in congested cities. After its rebirth, the company had shifted its market target from low-income earners to higher income individuals. This helped the company to increase its sales (Schembri, S 2009).

Company’s Strategy

Harley Davidson’s Company has used various strategies to overcome its challenges, meet all the demands of its customers and to remain relevant in the market. This has included the market diversification. It has broadened its market for the product policy and design. After the rebirth, the company has specialized in super-heavy weight bikes. This has reduced the competition with other companies because of its distinctive features such as frames, fuel tanks, seats and handlebars. The company has also upgraded its distribution network. In the 1980s and 1990s, the company employed a transformation strategy. The company shifted its market target towards mature and upper income individuals (Bloss, R 2004). To increase its sales’ and customers’ satisfaction, the company has provided pre- and after- sale services. Another strategic priority has been the improvement of the relationship between the company and its customers. In addition, the company has also engaged in the sale of motorcycle parts, accessories, and general merchandises such as the men’s, women‘s and children’s clothes. To expand its market, the company has also opened many secondary retail outlets. Another growth strategy for Harley Davidson is its expanding its sales outside the USA (Schembri, S 2009).

Quality Control

Harley Davidson Company has ensured that its models meet the expectations of the customers’ demand. It has consolidated its market leadership by improving the quality of heavy weight motorcycles. It has replaced its big noisy engines with the V-twin motorcycles that are comfortable. They have also improved the design of other models to make them comfortable and increase their speed. The features of its models have outdone its competitors. They have improved the design to cater for long distance motorcycles by making the luxurious ones with audio systems. To improve the quality, they have also used a multi-cylinder, shaft-drive engines as well as the advancing suspension systems (“Cullum & Nightingale's Harley Davidson Showroom”, 1998). 

Challenges

Since the company began to return in the year 1903, Harley Davidson as a motorcycle company has faced many challenges in the course of its operations. To start with, the company has faced a stiff competition from other motorcycle manufacturing companies. Some of such companies included the European and Japan based companies. The fact that the company has dominated the motorcycle manufacturing industry exposed it to the stiff competition (Schembri, S 2009). The vulnerability to the competition was contributed by the customers’ need to seek a new experience in riding. The new motorcycle models provided by the company’s competitors attracted its customers. The European and Japanese manufacturers took the advantage by introducing newer models, which included the sports’ models in the US market. The competing companies imitated the models made by the company and offered lower prices. As a result, the company witnessed a reduced customer share both in the U.S. market and worldwide, which consequently led to its reduced profits (“Cullum & Nightingale's Harley Davidson Showroom”, 1998).

After the First World War, the company faced a challenge of the increased demand that was mainly contributed by the youth culture. This forced the company to import more motorcycles from other countries which included Britain and Japan. The importation opened more doors for the competition from the countries the company had been importing from. This led to the introduction of Honda motorcycles in the US market in the year 1969 (Schembri, S 2009).

The introduction of new products from other countries passed a major technological challenge to Harley Davidson’s company. For instance, the introduction of Honda motorcycles brought the four-cylinder CB&750 motorcycles. This technology was far beyond the technological capacity of Harley Davidson (Sandulli, F 2006). Since the company could contain the pressure subjected towards it by the competitors, it was caused to be acquired by the AMF. As a result, the company faced the huge financial losses and consequently lost its leadership in the U.S. motorcycle market.

In the year 1981, Harley Davidson’s senior manager organized a buyout to rescue the motorcycle company from the AMF in order to regain its market share in the motorcycle industry (Stanfield, P 1992). Though this led to the rebirth of the company as an independent private company, the independence was regained painfully. This incurred heavy losses and debts. The buyout led to a great recession. In 1981 and 1982, the company made the losses totaling to a tune of $60 million (Schembri, S 2009). 

The company is also facing the long –term threats. As once stated by New York Times, “Harley, You’re not getting any Younger”; this clearly indicated Harley’s market position in the years to come. By the year 2009, the company had focused more in making motor bikes for the aged people. The average age of the company’s customers had increased from 42 years up to 49 years. This posed a much greater challenge in terms of competition. Other motorcycle producing companies such as Honda, Yamaha and BMW have in the recent past greatly increased their market share for a younger generation by making newer models that meet the youth’s desires and needs (Schembri, S 2009).

The company also has the problems with its brand. According to Anthony Gakis, a renowned research analyst, Harley-Davidson had secured itself with a very loyal consumer. He observed that the once loyal consumers have lost the interest in the company’s brand since almost everyone has Harley bike. The consumers no longer perceive the company as a club to be associated with. This has negatively affected the market base of the company. Thus, they are ready to try out the products from other motorcycle producing companies (“Cullum & Nightingale's Harley Davidson Showroom”, 1998).

Recommendation

For the company to pull itself from the vast challenges it has been facing, some of which has once led to the downfall of the company, I would recommend that the company takes various cautionary measures as are the following ones:-

  • Conduct the surveys to determine its consumers’ needs. This will enable the company to cater for the customers’ needs.
  • Diversify its products in order to overcome the challenge posed by the upcoming competitors.
  • Develop new products, especially for the younger generation.
  • Consider making lighter motorbikes that are more comfortable and low priced.
  • Consider investing more in advertising its products by the use of the new technology such as the internet and mobile advertisement.
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