Harley-Davidson: Response to Globalization
Despite its image as a quintessential American company, Harley-Davidson (HD) has been an international company since shortly after its founding in 1903. In 1912, HD began exporting to Japan; eight years later in 1920, it was the world’s largest motorcycle manufacturer with 2000 dealers in 67 countries (Gardiner, 2014). Beginning with their dealings in Japan HD has had to navigate the hurdles associated with international trade, including having a major export market (Japan) on the opposite side of a war. With HD looking to expand in foreign markets as a growth strategy, it encounters additional obstacles to market entry in each country.
Harley Davidson’s International Business Environment
Economic,
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The concept of recreational riding is new to the Chinese; therefore, HD has had to promote leisure riding to move their heavyweight bikes. Toward this end, HD established its Harley Owner Group (HOG) chapters in Beijing, Chengdu, Qingdao, and Shanghai; these owners clubs sponsor rallies and bike rides that promote leisure riding (Miller, 2012). Furthermore, they cooperate with local governments when planning their rallies, demonstrating benefit to the community and instilling confidence in Harley.
Political
As mentioned earlier Harley Davidson has dealt with the international political environment since the 1930s when Japan its chief foreign market became increasingly military, ultimately opposing the allied powers in WWII. It still faces political challenges today though not as severe.
When considering entry to China piracy was a concern. Thus, HD serves China as an import market rather that producing motorcycles inside China. In country manufacturing would reduce costs allowing greater market penetration but at greater risk of counterfeit
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Customers often brand their clothing, automobiles, and themselves with the familiar Harley eagle logo. Through the HOG chapters, HD sells the adventure as much as the bike which makes cutting into HDs market share difficult for foreign competitors (Cavusgil, Knight, & Riesenberger, 2014).
In the U.S., Harley is best known for its heavyweight touring and cruiser motorcycles. However, in Europe there is demand for high-speed, high performance motorcycles that can navigate their higher speed limit highways. In Europe, HD sells a more diverse line of motorcycles to meet the markets demand (Cavusgil, Knight, & Riesenberger, 2014).
HD is reducing production cost for motorcycles by moving some production offshore. In India, a low cost manufacturing center, HD is building bikes for the Indian and European markets. Similarly, assembling motorcycles inside Brazil reduces cost for that market (Harley, 2014).
Conclusion
Harley-Davidson has weathered difficulties in international business from almost its beginning. It is positioning itself to compete in foreign markets using analysis of the cultural, economic, and political environment of the markets it is seeking to enter. By diversifying worldwide HD is reducing the risk inherent when operating in a single
Harley-Davidson owns a twenty percent market share followed closely by Honda, Yamaha, and Kawasaki. One thing they have had to overcome in the marketplace is the stereotypical image associated with motorcycle owners. It seems the publ...
...es how powerful of a symbol it has become. You wouldn’t consider the fact that someone drives a Honda Accord a defining characteristic of his or her identity but somehow that changes when it becomes a Harley Davidson Heritage Softtail. "Four wheels move the body two wheels move the sole" (Harley Davidson Ad/ 1992). It becomes clear that the motorcycle is much more than a vehicle; it is a manifestation of American values. When you break it down nothing seems more American that freedom, and brotherhood. Film has fully capitalized on these characteristics helping make the motorcycle a powerful image that has had a defining impact on American culture.
This case study is about “Specialized Bicycle Components Inc.” known as Ride the Red “S”. Specialized was founded in 1974 by Mike Sinyard. According to Chris Murphy, director of marketing for Red “S”, specialized is for serious riders. He says, “The customer is buying the ride from us, not just the bike.” The company began to produce its own bike parts by 1976, and introduced the first major production mountain bike in the world in 1980.
These same sorts of systems could easily be added to, or modified as needed, to track the new motorcycle lines HD will produce to attract both women and young adults. These systems have been an invaluable means for HD to reevaluate itself in the past and thus are ‘tried and true’ making it a moot point to replace them. HD, however, needs to concentrate some effort on implementing a system to determine the most appropriate locations for future dealerships. This new evaluation system will aid HD in determining effective locations for new dealerships and assist in providing further market share penetration for the company in essentially ‘untapped’ consumer areas.
BMW soon realized that many threats impacted its market share in U.S. The Japanese auto manufacturers started building plants in the U.S. to deal with the increased U.S. demand at a lower cost than importing their cars. BMW's U.S. export situation was made even worse by the appreciation of German mark and additionally the higher German labor costs. As a result, the decision was made in 1991 to bui...
II. The Challenge HD has chosen the strategic direction of targeting women and the younger market that is technologically conscious in order to increase its share in the first time motorcycle owner market space. With the introduction of the new VRSC’S, and the new lowered sportster 833 L and the 1200 L, designed for small riders who want more power, also promoting the already existing HD motorcycle owners to step forward and purchase a bigger model. HD is in a position to attain a sizeable share in the first time motorcycle owners, the young males, and females’ marketplace. To target the women and the young market with the new product line, the company has adopted the following marketing objectives: to expand its current market (market expansion), diversify its product line (product diversification), and modify its marketing mix to target women and the younger demographic.
Since Harley-Davidson is already a big player in cruise market, to be profitable in this sector might be time consuming and difficult for Ducati. Also, Harley-Davidson has a loyal customer base which might make it tougher for Ducati to attract more customers towards its side.
Despite their conception in 1903, Harley-Davidson and the motorcycle industry as a whole didn’t really take off until after the Second World War. Many people rode motorcycles during the war, with Harley-Davidson themselves supplying almost 90,000 motorcycles for the U.S. military during this time. Many veterans chose to purchase motorcycles upon returning home, as they enjoyed riding during the war and wanted to continue riding in their civilian life. This generation known as the "baby-boomers" quickly became the main target audience for many of Harley-Davidson’s marketing efforts. With sales increasing and the industry growing, many "motorcycle clubs" and "rallies" were introduced. Unfortunately, due to the lewd behavior displayed by most people associated with these clubs and rallies, bikers typically had an image of being disorderly and raucous. Harley-Davidson’s image itself took a big shot due to the Hells Angels. This was a motorcycle gang wishing to become notorious for "drug trafficking and other organized crime activities," who used only Harley-Davidson motorcycles. All of this combined to lead to a decline in demand and sales throughout the entire industry during the 1960’s. The industry was really helped out with the release of the Hollywood film Easy Rider in 1969. This film helped change the public’s perception of bikers and sparked an increase in motorcycle demand which has lasted to this day.
Picciotto, Dan and Nishit K Madlani. "The Global Auto Industry Shifts Its Focus To OVerseas And Emerging Markets." Credit Week (2013): 26. Online. 21 May 2014. .
Michael Porter tells us how the life cycle works through stages, first of which is the development phase, into the introduction, growth, maturity, and decline. Hunsk motors didn’t carefully take into account each phase of its product sold, and lacked the ability to connect consumers towards the motorcycles identity. By introducing...
James, W. B., & Graham, B. (2004). Strategic change in the face of success? Harley-Davidson, Inc. Strategic Change, 13(4), 205.
"We fulfill dreams through the experience of motorcycling, by providing to motorcyclists and to the general public an expanding line of motorcycles and branded products and services in selected market segments."
Italian manufacturer Piaggio ranks as one of the world’s top four players in its core business. It has consolidated leadership in the European 2-wheeler market. Piaggio should not miscalculate its competitors. Competition in the industry is very powerful, not only nationally but internationally as well. This is due to two well-established companies in this sector which are the Japanese Yamaha and Honda. Yamaha and Honda strengths are their long-run experience in the sector and the high quality image of products. Due to participations to the motorcycle championships, these two companies constantly receive positive feedbacks to their efforts in researching for first class products. In the future, other kinds of competitors are expected to arise: Chinese companies whose ability to imitate and create similar products at highly competitive prices is getting more and more dangerous (Piaggio, 2008)
In week five we learn about the importance of globalization and how it can help your company’s profits grow. There are many things to look at when selling globally as different cultures need to be looked at differently when making a marketing strategy. If you understand how to market your products to different cultures in different countries you can take advantage of the profits that can be made through globalization.
Honda, like other automotive companies, also came to the conclusion of firming a joint venture. At the moment, Honda was already famous for motorcycles in UK, but it was less well known in terms of the automobiles. While Honda’s cars enjoyed reputation for good quality and durability, the import restrictions limited its success it the European market. However, the European market was essential for the company’s global expansion. With the joint venture, Honda could avoid the restrictions on the import quota by assembling cars locally, because these cars would be considered locally produced. Moreover, a local partner could assumedly offer a better insight of the market.