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Harley-Davidson, Inc., Thriving Through a Recession Case Essay (Critical Writing)

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Updated: Mar 4th, 2019

Abstract

Many large and medium-sized companies have found themselves in different situations, some of which result to a great rise in the company’s returns resulting to a great success for the company while others involve very great challenges which result to large losses for a company leading to low profits and in extreme cases, to a recession.

Some of the large and successful companies have at one time or another found themselves in a recession, either emanating from internal factors or more commonly from the effects of the global recessions and financial crisis which have been experienced at different moments all over the world.

Due to all these factors, companies always find themselves in situations where they have to formulate strategies of thriving through the hard situations and hence being able to stand through all situations. One of the most important factors a company needs to implement in their operations so as to realize their current situation and hence be able to formulate better strategies is through the use of a SWOT analysis.

A SWOT analysis is an analysis that is usually aimed at realizing the strengths, weaknesses, opportunities and threats that a company is exposed to so as to be able to come up with helpful and applicable remedies and plan of action.

This study seeks to carry out a SWOT analysis of a company, Harley-Davidson, Inc., so as to determine its position and strategies at the time when it was faced with recession and how it was able to thrive. The study also seeks to give recommendations that could be utilized by the company so as optimize on utilization of its available opportunities.

Synopsis

For a company that had been in operation for 105 years, Harley-Davidson, Inc. was a company that had thrived through a lot of challenges and often had to come up with modifications to its strategies so as to ensure that it maintained its high-profile reputation as a motor cycle manufacturer. The company had been able to increase its market share to an incredible percentage in the US and around the world.

The company had continued to enjoy great returns from the sale of its high-priced bikes. The company had increased its sales over the years up to an incredible amount where it had a large customer base and a high competitive advantage against its competitors in the production of large motor cycles. The company’s capital base had increased tremendously when the company was bought by AMF and the company was able to increase its productivity in a great deal.

However, there was an emanating competition from Japanese motorcycle producers, a factor that led to problems in the company. The company was faced by a challenge since its products were deemed not user-friendly, too expensive and of low quality. Though the sales in the company were high, the profits declined tremendously due to the competition.

However, to respond to the recession that the company was undergoing, the new management came up with new strategies so as to maintain its market share, improve its performance and stabilize production and profits as well as maintaining a competitive advantage against competitors.

The company was to formulate strategies that would ensure that no matter the market requirements and the competition pressure, the company still sailed high in terms of its production and sales and maintained a large market share in the US and around the world.

Through use of different available opportunities, the company was able to finally achieve long-tern and sustainable goals of production of high-profile and competitive motorcycles as well as being able to penetrate the market through meeting the market demands at any one given time. Through invention of a research and development strategy as well as market forecasting techniques, the company has been able to maintain its position as a market leader amidst the stiff competition from other motorcycle producers around the world.

Resources

At the time of the recession, the company invested into acquisition of great resources that would aid it back to its feet. These resources included invention of new designs, labor resources, new company structures as well as financial resources.

The new labor resources for the company included a new organizational structure and an internal make-over where the company acquired a better and more experienced management structure and constitution, better and more skilled workers as well as the demolition of the corporate hierarchy where every worker and members of the management had access to each other and worked with a corporate goal of meeting the organizational goals jointly (Wheelen & Hunger, 2010, p. 16-5).

The company also redefined its sales and supply structures integrating vertical structures instead of using hierarchies in its supply. The company was able to team up with other companies which aided in the sales and supply of the company products as well as realizing the market requirements at any one given time.

Moreover, the company was able to redefine its products so as to meet with the market requirements. While in the past the company had only developed very expensive bikes that usually targeted the older generation, the company formulated strategies to produce bikes that also targeted the younger generation as well as the women. This was a great step since the market needs were changing and the younger generation became the largest market for motorcycle producers.

Finally, the company sought to increase its financial resources using different strategies. First, the company sought funding from bigger companies like AMF and Heller Financial, companies that injected a lot of funds into the company to help it avoid bankruptcy as well as increasing its production.

The company also gained a lot of funds through sale of stocks and buying of stocks from other companies. The funds also aided in realization of better sales and marketing strategies as well as formation of strategic alliances that would boost the production, designs as well as sales and supply of company products.

Capabilities

The company had a lot of capabilities that were developed and redefined over the years making them more sophisticated and superior to those of its competitors and hence always keeping it above the rest due to an increasing competitive advantage. One of the main capabilities of the company was its undying desire and devotion to manufacture and sell high-quality and competitive motorcycles.

While most of its competitors produced bikes and other motor vehicles and even other engine products, the company dropped all its other production lines like the transportation vehicle manufacture sector, so as to concentrate all its resources to motorcycle manufacture.

Hence, the company was able to carry out diverse and intensive research on market changes and requirements, new inventions, technological advancements as well as new strategies for better production, sales and supply of products that were both of high quality and very competitive (Wheelen & Hunger, 2010, p.16-4).

Another of the company’s capability was the invention of new designs and models of motorcycles that was always ahead of technology and new inventions. The company had very skilled and experienced workers who went a step ahead to always seek for opportunities that would be utilized to make the company products better than those of its competitors.

The company was always able to meet with the market needs and even sometimes come up with new products that caught the market and its competitors by surprise, especially when it developed products targeting the young generation, the baby boomers and the female market.

The company was hence noted as always spearhead the development and inventions in the motorcycle industry. This way, the company was able to always stay ahead in invention of better designs and models of motor cycles, hence gaining a good reputation in the market and trust from all its clients.

In addition, the company had very reliable and effective strategies for acquisition and managements of its financial resources. The company had been able to form very strong alliances that helped it stabilize its incomes and acted as its financial security.

Through offering of stocks, the company had been able to raise a lot of money and hence become more financially stable. In addition, the company had bought stocks from other stable and successful companies so as to increase its sources of income. On the other hand, the company was able to prioritize on the allocation of financial resources to its different sectors.

Rather than investing all its money into production of motorcycles, the company chose to invest more into the research, design development and sales departments, a factor that further ensured then stability of the company as well as allowing the company to meet the market demands at any time. This way, the company was able to overcome recession and avoid instances of occurrence of another recession in the future (Wheelen & Hunger, 2010, p.16-5).

Core Competencies

The company had many core competencies that gave it an increased competitive advantage over the rest of its competitors. One of its main competencies was its application of information gained from the research and design development departments.

The company was purposed to divert its attention from increasing its production units to production of high-quality and very competitive products. This, as well as the information on the market demands and market forecasts, enabled the company to reach an optimal production and sales point at which its profits were maximized (Wheelen & Hunger, 2010, p.16-6).

While most of its competitors worked to increase their production units and sometimes experienced losses especially if their sales fell too low compared to their production, the company was able to increase its performance through producing units that were all consumed by the available market. Moreover, the products were very competitive and hence attracted more buyers hence increasing the company’s market share.

Strengths

The company had a lot of strengths especially in its operations structures within the organization. In its operations, the company was able to form strong alliances with other successful companies and financial institutions so as to increase its capital base, obtain an increased financial security as well as improving the quality and effectiveness of its sales and supply channels.

In the company structures, the company had two major structural strengths that increased its performance and competitive advantage. On one side, the company had a very strong and well-organized organizational structure that allowed all the staff in the company to work together for the common goal of realizing the organizational goals of the company.

This way, the company was able to offer a good working environment for everyone which gave room for more productivity and increased efficiency of the workers. This in return increased the quality of the products manufactured offered the company an improved performance as well as increased overall productivity.

On the other hand, the company adopted very effective and informed financial structures that helped in increasing the sources of income for the company as well as better management of the available financial resources. This way, the company was able to inject funds into all the departments in the most reasonable and beneficial manner, a factor that resulted to lowered expenses as well as increased returns (Wheelen & Hunger, 2010, p.16-6).

As one of the recommendations I give towards the improvement of the company strengths, the company should also consider adoption of outsourcing of work, especially for design development, sales and supply of its products so as to be able to move in consistent with the current market demands as well as have an easy market penetration especially in market abroad.

Though the company has been very successful in the US market, competition from other companies especially those from Japan has forced it to register lower sales abroad. There is therefore a need to invest in establishment of alliances and outsourcing services abroad so as to enable the company to penetrate better in those markets and hence increase the company’s market share further.

The company also needs to redefine its organizational structure again so as to ensure that every employee’s needs are met hence improving on their working conditions further. This may help the company not only to be a market leader in terms of its production and sale of motorcycles but also to become a leading employer in the labor market.

Weaknesses

One of the main weaknesses of the company is that most of its products are highly-priced and hence are not affordable by most of the potential customers. This has forced most of the customers, who are usually the young, to buy products that are cheaper, which again lack variety. This has forced some of the potential buyers to opt for products from other companies such as Japan, whose products are usually cheap and have a larger variety.

In addition, the company needs to establish better strategies for more application of technology into the company processes. Though there is application of technology in its manufacturing processes, most of the other processes lack a good blend of technology, a factor that has forced the company to face very stiff competition from its competitors like Japan who use technology in almost all their company operations.

There are some recommendations that I would give in the aspect of the company weaknesses. First, the company should seek for different strategies that may be used so as to help in reduction of the cost of production hence reducing on the price of the products. This may help in ensuring that the company offers products with a competitive pricing.

In addition, the company needs to adopt more technology-intensive strategies of research, design and also monitoring of its products so as to ensure more effectiveness while on the other side reducing on the costs of production. This may also help in the life-cycle pricing of the products so as to ensure the company offers higher quality products at a lower and more competitive price and hence increasing its competitive advantage.

Opportunities

The company has not yet been able to comprehensively utilize its available opportunities. One of its main opportunities is the large market outside the US. While the company has concentrated most of its efforts and products to the US market, there is a large and unsatisfied market abroad.

At the current state, the company may not be able to meet with the needs of this market since its products are not consistent with its needs. However, strategies should be laid down so as to reach this market and satisfy its needs (Wheelen & Hunger, 2010, p.16-5).

Moreover, the company still has not fully utilized its opportunities in establishment of alliances as well as outsourcing of work. There still are more competent and successful companies that the company can team up with so as to improve on its capital base as well as enjoying other related benefits.

In the aspect of the unrealized opportunities, I wish to make some recommendations. First, the company needs to come up with better ways of fighting against the stiff competition from its competitors especially abroad. The company has been offering products that fit in the US market and other specific markets. However, there is a need to realize the general needs of the markets abroad so as to be able to come up with products that are competitive there hence increasing the company’s market share even outside the US.

Also, the company should aim at increasing its alliances base to more companies abroad as well as outsourcing work to companies abroad. This will help in better research in the markets in those areas as well as easier supply and sales of the products.

References

Wheelen, T. & Hunger, J. (2010). Strategic management and business policy: Achieving sustainability (12th ed.). Upper Saddle River: Pearson.

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