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INTERNATIONALISATION AT HARLEY- DAVIDSON
(CASE STUDY)
BRIEF HISTORY
In 1901 , William S. Harley , the designer of Harley Davidson motorcycles, created an innovative engine that could fit into a motorcycle. The first Harley was made available to the public in 1901, and over the course of a century, this motorcycle brand has become increasingly popular.
In 1903, Founded out of a small shed in 1903 by William S. Harley and Brothers Arthur and Walter Davidson in Milwaukee, Wisconsin.
In 1909 , Harley-Davidson began hiring employees and by the end of the decade were producing bikes using its signature 45-degree air-cooled V-Twin.
In 1910 , bar and shield logo used for the first time.
In 1914, enter into motorcycle racing.
In 1917 , The American military sourcing Harley motorcycles during the WW1. Nearly One third of the motorcycles produced were sold to US military.
In 1920 , become the biggest motorcycle company with about 1500 dealers in about 67 countries.
In 1930 , The Great Depression began; Harley-Davidson's sales fell from 21,000 in 1929 to 3,703 in 1933. Despite this, Harley-Davidson unveiled a new lineup for 1934, which included a flathead engine and Art Deco styling.
In 1941 , Harley-Davidson again produced large numbers of motorcycles for the US Army in World War II and resumed civilian production afterwards, producing a range of large V-twin motorcycles that were successful both on racetracks and for private buyers.
In 1969 , American Machine and Foundry (AMF) bought the company, streamlined production, and slashed the workforce. This tactic resulted in a labor strike and lower- quality bikes. The bikes were expensive and inferior in performance, handling, and quality to Japanese motorcycles. Sales and quality declined, and the company almost went bankrupt. The "Harley-Davidson" name was mocked as "Hardly Drivable".
In 1981 , AMF sold the company to a group of 13 investors led by Vaughn Beal and Willie G. Davidson for $80 million. Inventory was strictly controlled using the just-in-time system.
In 1983, Introduce Harley owners group HOG.
In 1986 , Listed on stock market. In present HOG share price is 47 to 48 US dollar.
In 2003, 100 th^ anniversary of H- D. Annual revenue reaches to about 6 billion.
In an attempt to attract newcomers to motorcycling in general and to Harley-Davidson in particular, Buell developed a low-cost, low-maintenance motorcycle. The resulting single-cylinder Buell Blast was introduced in 2000, and was made through 2009, which, according to Buell, was to be the final year of production. The Buell Blast was the May 2014, when the company re-branded the training academy and started using the Harley- Davidson Street 500 motorcycles. In those 14 years, more than 350,000 participants in the course learned to ride on the Buell Blast. On October 15, 2009, Harley-Davidson Inc. issued an official statement that it would be discontinuing the Buell line and ceasing production immediately. The stated reason was to focus on the Harley-Davidson brand. The company refused to consider selling Buell. Founder Erik Buell subsequently established Erik Buell Racing and continued to manufacture and develop the company's 1125RR racing motorcycle. IN INDIA,
In August 2009, Harley-Davidson announced plans to enter the market in India, and started selling motorcycles there in 2010. The company established a subsidiary, Harley-Davidson India, in Gurgaon, near Delhi, in 2011, and created an Indian dealer network.
Q.1 what is the nature of the international business environments Harley faces? What types of risks does the firm face?
ANSWER
Harley-Davidson is a multinational corporation that has been able to successfully market its brand of high-powered, heavy weight motor bikes through transformation management, marketing and manufacturing. Harley –Davidson management created a brand that offers a lifestyle that many the world over sought to attain. Prior to the great transformation, Harley- Davidson, founded in 1903 was one of more than 100 companies producing high-powered, heavy weight motor bikes. HD found a niche in the US Government as their bikes were used by the military during World Wars I & II. By the end of the wars Harley-Davidson became the only standing American Manufacturer of high-powered, heavy weight bikes due to their reliability, popularity and prestige.
Q2. How can Harley benefit from expanding abroad? What types of advantages can the firm obtain? What advantages acquired abroad can help Harley improve its performance in its home market?
ANSWER
Harley can greatly benefit from expanding abroad. It can extend its product life cycle and create future brand awareness in other countries. One advantage Harley can obtain is its ability to reduce its costs of R&D, manufacturing, and service by sourcing plants in lower-cost locations such as Brazil in order to minimize distribution costs. Reducing the costs in other countries can greatly help Harley utilize their cash properly in the U.S. perhaps build even better motorcycles in the U.S. Harley could be the example of how internationalization optimizes cost structures, by minimizing expenses, leading to higher profits. Global expansion is vital to Harley’s sustainability.
Harley Davidson products are currently sold in over 67 countries that include the North American, European, Asian Pacific and Latin American Regions. With innovative marketing strategies through research and development HD has implemented tactics to i) ensure brand loyalty and ii) increase international development while sustaining authenticity. It is imperative for Harley-Davidson to retain its “Made in America” high- end brand while penetrating international market as that is the core essence of the appeal in foreign markets. However, HD must be critical in valuing multicultural diversity and differences in national cultures. The strategy that has allowed Harley Davidson products to currently be sold in these countries will allow them to expand anywhere in the world. Harley Davidson has branded itself as not just another product but, an experience and lifestyle. By creating the Harley Owners Group (H.O.G) whereby members receive a bi monthly magazine and a list of services including Harley rentals, discounted products, emergency road service and networking with additional Harley owners ensures brand loyalty and customer inclusion.
Expanding abroad will be the future success of the company because the home market is limited in which the company can do their business. There are some markets emerging at global level in which the company can expand their business. Countries like India, Japan are there I this list.
Expanding abroad will also help the home market because by expanding abroad the company will reduce its cost of production. There is no further cost on R&D again and it will also take less time to produce in abroad due to past experience of production.
- Market diversification- Harley is the heavy height motorcycle producing company. The customers in USA like the brand but now in countries like china
and India, number of people also increasing day by day who want to be the part of Harley owner group. This also reduces the risk of the company by expanding abroad.
- Decrease costs- Global advantages overseas production also means shorter turnover period, because once again, shipping overseas is not needed. Although it would decrease costs and makes production more efficient at global level.
- Competitors- Harley-Davison is a high price product company and it gives the customer a brand with is famous worldwide. Competitor in USA are immerging day by day due to that the revenue of the company not reducing but also not improving in the specific manner. Companies like Honda, Suzuki, Yamaha, and Kawasaki from Japan and BMW, Ducati from Europe are giving a lot of competition in the global market.
- Higher profits- By taking the business to the global level the company will also able to capture more customers in the other countries by which the company can improve their sales and by improving the sale in the other countries the Harley will be in the position of making more profit as compare to the previous home business.
The company had established a distribution network and locale subsidiary in JAPAN and by 2005, the company was selling more than 12,000 units of product annually at a price of more than $18,000.
- New ideas of business- the company can improve its products according to the needs and want of the global customers. The new type of market product may also introduce according to the need of the specific country’s people. The low budget motorcycle can also be produce by the company just to be competitive in the market.
- Distribution network- By doing the business at the global level, the company will also be able to create a network between the countries which will also help the company to create its brand name.
- (^) Image- The real power of Harley-Davidson is the power to market to consumers who love the product ". Harley-Davidson's President and CEO, Richard Teerlink says the bike represents to America, "the adventurous pioneer spirit, the wild
- Leverage global efficiencies in terms of technology, production and distribution- Harley is the oldest bike manufacturing company. So it has the advance technology as compare to other new competitor. The company produces four type of bikes Standard, performance, custom and touring which other company are not able to provide I that manner.
- Customizing motorcycles- Harley is the company which provides new experience of riding a bike with pride. The company produces motorcycle with innovation and also what the customer want in the produce.
- (^) Improved quality- the quality of the product of the company should improve in such way that the more customers can attracted towards the product and be there in the in the competition.
Strategies
- Newer motorcycle designs:
European preference- The people of Europe will not attract with the image of as same as in America. Because in America,Harley provides its product a symbol of freedom. So to capture the market in Europe, the company should come with the local preference.
Tapping into lightweight motorcycle markets- In Japan, companies like Honda, Yamaha and Kawasaki are producing low cost light weight bikes so to survive in Europe and Japan the company should also start producing light weight bikes
- Holding a strong brand- Harley-Davidson is a biggest brand in the field of motorcycles. The brand of HD is very big s compare to the Japan and European companies. So the company should utilize the brand name in these countries.
- Promoting environmentally friendly products.
- Adjusting price while maintaining quality.
Q4. Competitors such as Lifan and Zongshen are beginning to emerge from china, where they enjoy competitive advantages like low-cost labor and extensive experience with emerging markets. How can Harley compete against such firms? Should Harley more aggressively pursue emerging markets such as Brazil, China and India? If so, what strategies will help it succeed in those markets?
ANSWER
The company built on the enthusiasm of its customers by creating the Harleys owner Group (H.O.G) many riding their bikes to work who also participate in Rallies. HOG members receive a bi-monthly magazine, emergency road service, Harley’s rental program for trips and opportunity to meet and ride with other Harleys owners
Competing against Chinese companies
- Improving quality- the quality of the product of the company should improve in such way that the more customers can attracts towards the product and be there in the in the competition.
- Further expending model offerings.
- Updating manufacturing methods- Harley-Davidson is driven by a constant vision of what an excellent company should be. HD is never satisfied with the status but is always searching for ways to do things better. This is best exemplified by a manager's comment, "The day we think we've arrived is the day we should all be replaced by managers of greater vision”. All companies can and should learn from this position and adopt the idea of continuous improvement.
Success in emerging markets
- Harley should pursue emerging markets
- Establishing assembly plants in emerging markets
- Cost reduction due to low cost labor (brazil)
- (^) Operations will be streamlined and cost will decrease.
- Minimize carbon risk and improve energy efficiency
