Harley Davidson (HD) has enjoyed a lot of success in the US market; however, this has not been without its ups and downs. The company has had to contend with fluctuations in brand value, acquisitions, a volatile economic environment, and restructuring ventures. This report will examine how the firm has coped with such challenges in the past and how it can continue to do so in the future with particular emphasis on leadership qualities needed to do so.
How Harley Davidson managed to dominate the US market historically
This motorcycle manufacturer has always been at the top of its game because it has marketed itself as a distinctly American Brand. It manages to take all the qualities that would make it a local favorite and then incorporates them into the design, production, and sale of its commodities. As far back as 1917, HD became the brand of choice for providing the US military with motorcycles to be used in the war. At that time, approximately fifty percent of their motorcycles were to be used by the Army thus making the brand iconic with the country’s patriotism. In the Second World War, the company was not left behind in demonstrating its patriotic duties as it continued supplying motorcycles. (Hornsby, 2010)
HD had a unique style and technique for their motorcycles. Even when competitors from foreign countries like England in the 1950s and Japan in the 1960s emerged, the company was still able to maintain a wide client pool because of these very characteristics. Frequent design alterations to the company’s motorcycles through research have also made it top of the mark. Back in the 1930s, the company introduced modifications to its engines and made models such as the knucklehead and the pan head. At those points in time, the motor vehicle was distinctly acknowledged as the preferred American brand. This continual need to improve was what got the company through the Great depression as well since the company introduced a new lineup known as the flathead. On top of the latter, it also engaged in the manufacture of engines. (Hornsby, 2010)
It should be noted that everything was not always smooth sailing. During the 1970s, the company’s reputation was severely tarnished. This was because of a combination of factors, first, the company had been accused of restrictive practices by the US commission. On top of the latter, many Hollywood movies began depicting the latter firm’s products negatively. This brand was now associated with outlaws and other non-conventional or negative groups. Furthermore, the company’s productivity was not immune from this crisis. In 1969, the company’s administration changed; it laid off many workers and was therefore left with a smaller group of people in production. The result was the production of low-quality goods that were too expensive. Many well-known personalities mocked this company. In a demonstration of its resilience, the latter firm embarked on a restructuring program where H-D was sold to a handful of investors. This team started the just-in-time production process that ensured quality and resource optimization. It also complained against Japanese importers thus resulting in government imposition of taxes against these products. It sourced most motorcycle parts from foreign nations and stuck to the look of earlier models produced by the company. This led to a slow return of their clients in the 1980s. This spirit has continued into the twenty-first century with frequent model revisions, introductions, and the like.
Major ingredients of H-D’s transformation process
One of the critical factors that led to this company’s revival is its developments in the production sector. As it has been stated before, one of the major problems confronting the company was the diminished quality of its products. It, therefore, needed to respond to this by creating top-notch products and those that were in tune with its earlier reputation as a leader in motorcycle manufacturing. On top of the latter, their goods were overpriced; a direct result of expensive production costs. Any transformation process needed to solve this dilemma, the materials – as-needed or the just-in-time production implemented by the latter firm is what enabled it to achieve this transformation. (Hornsby, 2010)
In the crucial and revolutionary decade of 1980, Harley Davidson was also found a way of involving the public in its development by forming a club. Motorcycle enthusiasts could meet and exchange ideas on the firm.
Another fact that was crucial in transforming this company into a winner was the buying back program where full trade of certain models was offered. This was also closely associated with the offering up of the company’s stock on the New York Stock Exchange. This involved the public in its operations and contributed to its profitability. The latter strategy was also combined by the creation of a revolutionary model. In this transformation, the company, borrowed elements from past generations of its models and then improved on these. By doing so, it still managed to maintain its old magic but engineered its models to suit present tastes as well. For instance, through the springers of a tail, HD had created a classic motorcycle with superior engine capabilities i.e. its 1340 cc engine.
HD’s current sources of competitive advantage
Product engineering and design are some of the strongest points for this company. It still pursues the just-in-time model of production where products required to make a motorcycle are sourced from different parts of the country or the world and then assembled into motorcycles. This ensures that they prioritize only what will be bought and that they price commodities that have a high demand. However, it should be noted that the firm avoids over-relying on foreign countries as it is trying to maintain a truly American image. When making their products, the company frequently ensures that the distinctive elements of its products are maintained. For instance, Harley’s chrome is one of a kind and this look is what makes it stand out. Additionally, the sound of the engine is something that the organization prides itself in. This is because of the sought of design adopted by the company. Engineers assert that Harley’s engine twin-piston alterations have a somewhat functionless need but the firm has stuck to them because it believes that the latter structure is significant to their history as it helps to create the typical Harley Davidson engine sound. (Hornsby, 2010)
Another important asset for this company is the loyalty of its consumers. Die-hard Harley fans are rarely prevented from purchasing their favorite HD motorcycles by this firm even when they are highly-priced. The latter normally occurs because their major client base has a stable income. However, if I was Honda, I would think that this is an aspect of Harley that makes them most vulnerable. Honda should therefore focus on other demographics of consumers that do not fall within Harley’s current demographics. As a competitor, I would also take advantage of the fact that this company’s overreliance on the American market makes it susceptible to economic downturns within the country. Therefore, competitors should strive to diversify their markets by expanding to different parts of the world.
Harley Davidson has also maintained profitability because it has ventured into other areas of production other than motorcycles (Hornsby, 2010)To this end, the latter organization can mitigate the problems in the motorcycle industry with profits from its ‘related services’. Most companies that fail to diversify into other product types often find that they are too susceptible to environmental factors.
HD’s major challenges as it enters the 21st century
Over the past year, H-D’s brand lost value by over forty percent. This was mostly because of the continual decline in profits. The company must face up to such challenges as it proceeds with its plans. One of the short-term challenges facing this organization is the poor state of the economy within the United States. Consumer confidence has drastically diminished as employment rates are at a minimum today; this implies that people cannot buy as many commodities as they used to. Credit is no longer easy to come by and motorcycles are ranked as luxuries. However, there is a strong possibility that the latter organization will get back on its feet once the US economy has stabilized. Therefore Jeff Bluestein needs to keep his team’s eyes on long-term goals while working towards overcoming the recession problem.
As if this issue is not enough, the latter firm must contend with price competition by its competitors such as Honda. The latter organizations are reducing excessive inventories. Consequently, they have ensured that they only make goods available when needed and they can afford to engage in price wars with other manufacturers. It would be advisable for Mr. Bluestein to desist from following such a path because it would only be undermining the value of Harley’s commodities.
Another short-term issue surrounds restructuring adjustments that the company must carry out. Substantial shares of its budgetary allocations must be devoted to these activities and this has eventually eaten into their profits. It might take some time before the latter mechanisms begin demonstrating some positive results.
A long-term hurdle that the firm should deal with is its commitment to its client base which mostly consists of the baby boom generation. The latter individuals were quite crucial to Harley’s success in the past and continue to do so presently. In the nineteen-eighties and nineties, the latter consumer base was in their forties – a time when they were enjoying the fruits of their hard work through promotions. This meant that they had a lot of money and could therefore indulge in their passion for motorcycles. As they entered the twenty-first century, they continue to remain loyal to Harley Davidson. Statistics show that the average HD purchaser is one year shy of fifty. Harley has been focusing on this consumer group throughout their life cycles but they are now getting older (Hornsby, 2010) There will come a time when members of the latter generation can no longer ride motorcycles as their health or physique will not allow them and this could spell doom for the latter company. Failure to market to younger riders is what has put the firm in such a position. Matters are further compounded by the fact that trying to do so now could alienate these core consumers. Besides, people in their twenties are bound to be more interested in carving out their identities by buying different motorcycles from their parents’ choices. It would be advisable for the latter firms to start studying the younger generation in detail to find out what they value the most and to create a strong bond with them in the same manner that they did with the baby boom generation.
Harley Davidson’s market leadership has been demonstrated through its restructuring programs, its smart innovations, and changes in production. However, to survive future problems, the company must start working with the younger generation and it must also focus on its long-term vision even if the state of the economy is not that promising.
Hornsby, A. (2010). Harley Davidson reports. Wall street journal, p 5.