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Harley-Davidson Company Case Study


SWOT analysis

Strengths

The Company has had a strong dedicated and innovative management for a larger part of its operation years.

  • Harley, Davidson and the Arthur brothers saw it through the first years of inception.
  • The group of company executives under the leadership of Vaughn Beals petitioned for the increase in import tariffs and came up with the H.O.G community.
  • The current management under Victor & Spoils is meant to spearhead the modification of their products so as to attract the young generation.

The company has had a substantial capital base that allows it to conduct its business effectively.

  • Most of the motorcycles are sold for over $20000 with the cheapest going for approximately $5000.
  • Before 2000, it spent $1 billion in the maintenance of its leadership in motorcycle design.
  • When Beals took over the company, it was valued at $75million.

The two cylinder design on its motor bikes that sets it apart from other motorcycles appealing it to the customers who wanted unique designs.

  • The company retained the image of the cylinders as its icon for its entire history.
  • The cylinders made the structure simple and thus cut down the production costs.
  • The unique sound produced by the Harley motorcycles was due to the cylinders.

The first mover advantage.

  • Hendee Manufacturing, Harley’s only competitor, went out of business in 1953 leaving the company to enjoy monopoly for more than four decades.
  • Sportster, a brand of the company, was the first heavy-weight motorcycle in the world
  • William Harley’s blueprint of a bicycle engine marked the history of the motorcycle revolution.
  • The future competition from the Japanese industry was only founded after Harley-Davidson licensed its blueprints and equipment to Sankyo Company.

Great performance of the Harley-Davidson engines.

  • The performance of the bikes in the race competitions, endurance contests and hill climbs was legendary.
  • It dominated the racing arena with its official entry.
  • The company’s motorcycles were preferred by the US military.

Creation of the Harley-Davidson community.

  • With the inception of the HOG community, membership had grown to more than 500000 by 2000.
  • More than 140,000 riders received a warm reception in the 95th anniversary celebrations.
  • The online HOG group propelled international sales.

Weaknesses

The company’s expensive price tag that appealed to the rich minority.

  • The Ultra Classic Electra Glide was valued at $20,405.
  • All customized bikes were in the range of $25000 to $30000
  • The product available to the mass market was the Fat Boy valued for $6500
  • Products from China were priced at less than $1000.

The poor management by the American Machine and Foundry (AMF).

  • Under its management the quality of the companies bikes fell
  • The company’s loyal customers were lost and profits fell
  • Dealers were compelled to place cardboards under the bike to absorb the oil leaks.
  • The Company was unable to handle competition from the reasonably priced Honda motorcycle.
  • Poor employee involvement

Targeting one part of the market.

  • The company reached only the baby boomers and did not bother to reach the younger generation.
  • Pricing only targeted the able and left out those with low incomes.
  • The company had to partner with Victor and Spoils in order to reach the young generation.

Opportunities

Ready market.

  • When the first bike was manufactured, the need for a patrol bike by the Detroit Police Department served as a ready market for the company.
  • The occurrence of World War I created a market for more than fifty percent of the company’s products.
  • During World War II the company had to halt production of civilian motor bikes to concentrate on military bikes.

Reduced competition.

  • Closure of Hendee Manufacturing, its major competitor, provided a golden opportunity for growth of the company.
  • The increased import tariffs on Japan’s products reduced the foreign products available to the Americans forcing them to buy the company products.
  • The inception of the H.O.G community made owning the bike a lifestyle.

Ease of expansion.

  • In 1912, the company spread its sales to Japan and grew a network of over 200.
  • By 1920, it was the largest motorcycle manufacturer in the worlds with 2000 dealers in more than 67 countries.

Concerned government.

  • After purchase from AMF, the company petitioned for an increase in import tariffs and the percentage was raised from 4% to 40%.
  • Once it had established itself, it called for the reduction in tariffs and laws were altered considerably.

Threats

Honda motorcycle sales at the time of purchase by the AMF.

  • The company had reasonably priced products
  • Honda also had sophisticated products that competed favorably with the Harley’s products.
  • Harley-Davidson’s products had oil leaks that disgusted the customers.

The Imports from Japan to the US.

  • The products were cheaper than Harley’s products.
  • The import tariffs were favorable allowing the company to sell cheaply.
  • Harley-Davidson had to petition for the increase in import tariffs due to the magnitude of the threat.

End of the baby boomers era.

  • The company’s main market was the baby boomers who felt the bikes fashionable and affordable.
  • The younger generation was not interested in their products.
  • They had to partner with Victor and Spoils in order to find new ways of modifying their products.
  • Factors leading to the downfall in 1960-1980

Internal factors

  1. Poor management by AMF resulted in a reduction in the sales of its products due to poor quality.
  2. Highly priced products made the Honda motor bikes more appealing.

External factors

  1. Competition from the sophisticated and cheap products from the Honda Company.
  2. The low import tariffs encouraged imports as the products sold to the Americans were cheap and affordable.

Company’s position and market challenges

The company has always been in a good position to respond to the market challenges. For instance, when faced by the threat of imported products from Japan, they managed to convince the government to increase the import tariffs that offered the company a chance to grow.

Similarly, on realizing the sales were not very attractive, the company introduced the HOG community and anniversary celebrations that attracted more people to buy the product. Recently, the company has realized its market is shrinking and has invested in crowd sourcing principles to ensure they meet customer desires in their products.

Present concern

Owing to the decreasing sales of its motorcycles with the end of the baby boomer generation, the company has shifted its concern to production of low priced products to attract the young generation.

Moreover, it has increased production of women motorbikes at affordable prices. In order to produce commodities befitting the current generation, the company is applying crowd sourcing principles in order to move in the right marketing direction.

US Market analysis

The US market consists of the rich middle-aged customers that can afford the highly priced products and the young people with an average income. In terms of gender, the men are better customers of the luxurious good than their female counter parts. In addition, this market responds quickly to changes in the quality of products, fashion and incentives offered by the sellers of each commodity.

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IvyPanda. (2020, April 30). Harley-Davidson Company. Retrieved from https://ivypanda.com/essays/harley-davidson-company/

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"Harley-Davidson Company." IvyPanda, 30 Apr. 2020, ivypanda.com/essays/harley-davidson-company/.

1. IvyPanda. "Harley-Davidson Company." April 30, 2020. https://ivypanda.com/essays/harley-davidson-company/.


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IvyPanda. "Harley-Davidson Company." April 30, 2020. https://ivypanda.com/essays/harley-davidson-company/.

References

IvyPanda. 2020. "Harley-Davidson Company." April 30, 2020. https://ivypanda.com/essays/harley-davidson-company/.

References

IvyPanda. (2020) 'Harley-Davidson Company'. 30 April.

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