Research Paper on Turnaround Strategy for Harley-Davidson Company

Introduction

Harley-Davidson stands out as a bastion of motorcycle industry especially the chopper motorcycles. The company is a relatively stable and profitable business with annual revenue of in excess $5 billion (Das, 2014). However, for the low term profitability and to maintain its market share as the global leader in the motorcycle sector, the company needs to constantly conduct keen analysis of the key factors that affect the environment it operates in (Sadhu, 2018). This paper aims at addressing the external forces using the PESTLE/PESTEL analysis, porter's five forces analysis, porter's diamond analysis, and the VRIO framework analysis.

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The Pestle Analysis

Economic Forces

The major markets where Harley Davidson Company operates are economically stable. Its primary market is the United States where the economy is relatively stable. This gives the company a perfect market to sell its products as well as a room for expansion. Additionally, other opening markets such as Asia are relatively stable economically and this thus highly boosts the sales of the company. The rapid economic growth in these fast-developing countries gives the company a perfect opportunity to expand its market dominance (Thompson, 2017). However, the stable credit accessibility by major competitors especially in the US could threaten its market dominance. However, the company can capitalize on its economies of scale to gain a more competitive advantage over its competitors.

Social Factors

Three social-cultural external factors have impacted the growth and market expansion of the Harley Davidson Company. They include the increasing attitude on issues regarding leisure, increasing involvement of women of issues regarding chopper hiking and the pressure on the adoption of green technology (Das, 2014). The increasing attitude on pressure gives the company a perfect opportunity to market its product on the basis of reinsuring through focusing on leisure motorcycles. Additionally, increasing involvement of women in chopper biking presents a perfect opportunity for the company to focus its attention to women through devising marketing strategies that target women (Thompson, 2017). . The increasing focus and attention on green technology present a threat to the company since most of their products use combustions that release a significant amount of emissions to the environment. However, this company can adopt green technologies in the design of their products to address these issues.

Political Factors

The major external political factors affecting Harley Davidson include; Free trade agreements, increasing support on the e-commerce technology and increasing support for patent protection from governments (Sadhu, 2018).

The company enjoys huge benefits from free trade since this facilitates efforts to expand globally and reach new markets. However, this presents a huge threat since it increases chances of an influx of cheaper products as well as substitute products which acts as direct competitors to Harley Davidson. Increasing support on e-commerce gives the company a perfect opportunity to expand its global markets through e-commerce platforms (Thompson, 2017). . Increasing support for patent protection from inter-governments ensures that the company has better patent protection for its products based on these inter-governmental efforts on the issue of patent protection.

Technological Factors

Technological factors are an essential component of the products and operation of Harley-Davidson's company. The following three technological external factors play key roles in influencing the operation of Harley Davidson:

• Increasing availability and green technologies
• Moderate investments on issues regarding research and development(R&D) in the motorcycle sector
• Increasing adoption of computing technologies in the automotive industry.

Adoption of green technology can hugely boost their sales due to the increasing attention on green technology as well as because most chopper motorcycles have low green technology ratings (Sadhu, 2018).

The company can make investments in R&D to develop products with unique features which would present a perfect opportunity as a major selling point for their products. With the increasing evolution of computing technology and the internet of things (IoT), the company can incorporate these technologies into their products to make them more attractive to potential buyers(Das, 2014).

Ecological Factors

Ecological factors relevant to Harley Davidson Company's macro environment include the ever-increasing interest in business sustainability, the change in climate and the shift of focus to low-carbon lifecycles.

Increased interest in business sustainability and low-carbon lifestyles presents opportunities to the company while climate change is a threat as well as an opportunity to the growth of the company. With the current ecological trend that puts great interest in business sustainability, the company can address this by implementing business changes in its operations that will increase its sustainability ratings. To attract and increase customer loyalty on its products, the company must address issues such as the environmentally friendly features of their products to attract customers who embrace low-carbon lifestyles (Thompson, 2017). However, the increasing environmental changes can reduce the attractiveness of these products since they tend to possess huge emissions ratings. Nonetheless, the company can counter this by improving the fuel efficiency of their products to win the hearts of environmentally conscious customers.

Legal Factors

Legal requirements greatly influence the regulatory conditions on which a company operates. For Harley Davidson Company, legal factors that influence its operations include; increased focus on emission regulations, formulation of environmental protection laws and the issues regarding loopholes in the international laws on patent rights. Emission regulations and environmental protection laws present opportunities for the company while loopholes on international patent laws present huge threats to the expansion of the company (Thompson, 2017). The company has a great opportunity to embrace the emission regulations as well as environmental protection. Its huge economies of scale gives it has an opportunity to satisfy or even exceed these requirements. (Sadhu, 2018). Loopholes in the patent protection laws can greatly affect the company in their remote environment.

Porters Diamond Analysis

Factor Conditions

Factor conditions refer to the natural, human and capital resources available in a certain country (Sharma, 2005). With Harley Davidson being located in the United States, there are plenty of human resources such as skilled labor force, highly developed infrastructural connections as well as a pool of skilled labor with a huge scientific knowledge base (Smit, 2010).

Additionally, the presence of great education and research institutions gives Harley-Davidson a competitive advantage over their competitors from outside countries. In general, the United States huge emphasis on factor creation gives Harley-Davidson a competitive edge over its competitors from outside countries

Demand Conditions

The demand for Harley Davidson products is very high in the US market. The locals in the US are known for their luxurious lifestyles, and thus demand for Harley-Davidson products is relatively high. As per 2017 statistics, the company accounted for 61% of Motorcycle sales in the US. Striving to satisfy the local markets has propelled the company to greater heights in the international markets since it has given the company a competitive edge due to the unique and high-quality products they produce(Smit, 2010).

The biggest challenge facing the company is the aging of the Baby Boomers generation which formed the biggest customer base (Roese &Compella, 2013)

With this generation continuously aging, Harley-Davidson is finding it hard to replace them especially due to the nature of the millennial being more price-conscious and thus preferring cheaper brands (Hoffman & Gold, 2014).

Thus for the company to keep hold of the market share, it must address the issue of millennial being price conscious.

Firm Strategy, Structure, and Rivalry

Despite the company enjoying the largest market share in the United States, it still faces fierce rivalry from some of the well established local producers such as victory motorcycles, Polaris motorcycles, arctic cat motorcycles and triumph bikes companies. The strong domestic rivalry between these and other companies in the local market pushes the company to remain innovative and always provide quality goods to ensure they remain the market leaders (Smit, 2010). The fierce competition enables the company to effectively compete with strong international companies through constant improvement of its products (Claessens, 2016)

Related and Supporting Industries

The company benefits greatly from the presence of a huge variety of the supporting industries in the US. With the US being a global leader on issues of manufacturing, it gives the company a wide choice of related companies to choose from especially the suppliers (Claessens, 2016). The supplies companies enhance the innovation of the company through the provision of more efficient and high-quality inputs as well as being timely in supply and communication (Smit, 2010).

Porter's Five Forces

The Extent of Rivalry of Competitors

The motorcycle market that Harley Davidson operates in is characterized by fierce competition. External factors that create the competitive rivalry includes; the high number of manufacturing firms in the industry, the ease of availability of substitute commodities as well as the moderate variety of firms that operate in the industry (Young, 2017).

Harley-Davidson faces huge competition from both large and small companies in local and international markets. Yamaha, Honda and Suzuki present the heavyweight rivals of Harley-Davidson. Substitute commodities that threaten the dominance of Harley Davidson include private cars and public transport sector. With a moderate variety of firms in the industry, products with unique features continue to get into the market daily (Young, 2017).

Thus based on these factors, Harley-Davidson must ensure high quality and unique feature products. To improve its competitiveness as well as maintain dominance in the market.

Bargaining Power of Suppliers

This factor affects the operation of Harley-Davidson since the company relies on external suppliers for the supply of its raw materials. The factors influencing this are:

• Low forward integration
• The high stability of the supply
• The existence of a moderate number of suppliers

The minimum forward integration of the Harley-Davidson suppliers makes them a weak force due to their low level of control on the issue of distribution and sale of products to companies such as Harley-Davidson. Additionally, the relatively stable supply makes it hard for the suppliers to exercise any substantial level of leverage regarding their demands (Young, 2017). However, the moderate number of suppliers enables to exercise a moderate effect on the company (Krishnamurthy, 2010). Based on this analysis, it is evident that suppliers bargaining power is a very weak force with close to no influence in market prices.

The Threat of Entry

On the case of Harley-Davidson, this factor is a weak force and thus has a weak influence on the market (Admkasi, 2017). The factors associated with the threat of new entry include:

• Moderate costs of switching
• High costs associated with brand development
• Moderate economies of scale
• The economies of scale make...