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
Needless to say, that experience has changed over time. It began from a simplistic design in 1904 as a motorized bike. However, as time progressed it brought about the introduction of the biker gang era. These were the bad asses image riding their heavy bikes down the highway, rebels who refused to give in to society’s pressures. It was the time of the Hell’s Angels, with their patches, long hair, and untidy beards that became the symbol of freedom on the road. They created the mantra of the bad ass dude on a bad ass American bike and no one was gonna tell him what to
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. .
Harley-Davidson states their mission as “We fulfill dreams through the experiences of motorcycling by providing to motorcyclists and to the general public an expanding line of motorcycles, branded products and services in selected market segments.” They have performed wonderfully over the past hundred years, and have not forgotten their mission or where they came from. Over the years they have stuck with the things they know, and also expanded into related services and products. Out of the 151 motorcycle manufacturers, Harley-Davidson and Indian were the only two companies to survive the Great Depression. Harley-Davidson was the only one in America after Indian dropped out in 1953, but face Indian again now since they re-entered the market in 1999.
In a capitalistic country with a free market, foreign competition is expected. This is no exception for the automobile industry where America competes with its various rivals. Competition from elsewhere encompasses that from Italy, Germany, and of course, the renowned Japan. The Japanese vehicle industry is especially competitive; according to the Automotive News Data Center, five out of the ten best selling vehicles of the year are Japanese vehicles. This data applies to the U.S. market over the first 9 months of the year. Expectedly, the automobile industry is an important and significant market. Motor vehicles are a major form of transportation as many people in the U.S. own at least one car.
During the 1970's, HD was facing a decline in market share due to increased competition with Japanese companies. By phasing out weak models, becoming more selective, and limiting sales and promotions, HD was able to carve out a niche in the marketplace which it enjoys today. Now again faced with a period of decline, HD is relying on its newly adopted marketing objectives. First, HD needs to expand its potential customer base to include enthusiasts and non-enthusiasts young males, and females into buying HD motorcycles over any other competitor. This thought is accomplished through the introduction of the VRSC’S, and the lower and narrow Sportsters, Dyna’s, Softail’s and positioning them in the market to a younger demographic. Secondly, HD needs to position the VRSC’S, Sporster, Dyna and Softail to also appeal to first time buyers of motorcycles. HD's strong brand identity can help pull in new clients.
There are many ways in which Harley-Davidson can improve its operations, all of which can be found through conducting a thorough analysis of the strengths, weaknesses, opportunities, and threats the company is presently facing. The executives of Harley-Davidson considered the company’s internal strengths and weaknesses by completing an internal factor analysis summary (IFAS). Next, the external opportunities and threats were analyzed by completing an external factor analysis summary (EFAS). The analysis of these two summaries in turn produced the viable strategic alternatives outlined in the company’s strategic factor analysis summary (SFAS). The resources, capabilities and diverse leadership team of Harley-Davidson have provided the foundation for the company’s continuing ability to be both versatile in its product offerings as well as adaptive to consumer desires. The strategies of adjusting pricing, refocusing the company’s corporate culture and targeting a new consumer market will assist the company in fine tuning its operations over the next several years to ensure Harley-Davidson maintains its position as the leader in the motorcycle industry.
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.
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.
Allstate insurance is the second largest property and casualty insurance company by premiums in the United States. Allstate insurance handles about 12% of the U.S home and auto insurance market. (Allstate, 2014). Many of Allstate’s customers fall under what one could refer to as a traditional selection of insurance for automobiles. Recently, Allstate has noticed a major shortcoming in lifestyle insurance, which includes coverage for motorcycles, boats, and other recreational vehicles, in comparison to its competitors. The motorcycle insurance sector is a 10.4 billion dollar industry and growing (PRWEB, 2012). The U.S. Department of Transportation website reports some astounding figures, including that 5,370,035 motorcycles were registered three years before the article, 7,138,476 motorcycles registered at the time of the article, and grew to 9,477,243 registered motorcycles at the end of 2012 (NHTSA, 2013). It is obvious as to why Allstate would identify motorcycle insurance as a worthy lifestyle product to devote marketing research dollars into in order to develop new strategies for cornering a share of the market.
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)
Harley-Davidson was founded in 1903 by William Harley and Arthur Davidson and continued to grow throughout the First and Second World Wars, before being absorbed by American Machine and Foundry (AMF) in 1969 (James & Graham, 2004; Johan Van & Brian, 2000). Facing stiff completion from Japanese motorcycle manufacturers, AMF sold Harley to a group of executives led by Jeff Bluestein and Vaughn Beal (James & Graham, 2004; Teerlink & Ozley, 2000). A tariff on imported heavyweight motorcycles and a public offering put Harley-Davidson on sound financial footing. Richard Teerlink joined the company in 1987 as President and brought about substantial structural change working with consultant Lee Ozley (Teerlink & Ozley, 2000). Today, Harley-Davidson is a cultural phenomenon consisting of Harley-Davidson Credit and Insurance, ...
We think it would be interesting to quote first Harley-Davidson's mission, in order to get a first approach of what is the purpose of the company from their point of view. The mission talks first about dreams, rather than motorcycles, which is what the public has in mind. This mission says:
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.
The motorcycle industry offers products which can be viewed as luxuries or wants as opposed to necessities. When concerning Harley-Davidson, most motorcycle owners have purchased their bikes as a second vehicle, using them more during weekends and off-time instead of during the work week. This implies that the motorcycles serve for recreational purposes and thus are an item which can be expendable at times. This has hurt the industry recently with the slight recession the United States economy is facing. Another interesting thing to note about the motorcycle industry is the different appeal bikes carry in different global regions. In the United States for instance, Harley-Davidson has had much success because of the market trends and tastes people enjoy. Harley-Davidson has benefited from a U.S. market which enjoys casual and recreational riding. This isn’t necessarily the case overseas, as in Europe the trendy pick is a sleeker street bike, with a focus on speed and handling as opposed to power and comfort.
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...