Strategic Audit of Harley-Davidson. Case 16 Strategic Management MGMT 436 Group 5. Current Situation Jw. Current Performance 2008 Revenue 2008 $5.59 billion down from $5.73 billion in 2007 Net Income $654.7 million down from $933.8 million in 2007
Strategic Audit of Harley-Davidson
Strategic Management MGMT 436
2. Corporate Governance Jw
Board of Directors
-North American market is steady and the international market is growing. Numbers reflected that sales in the foreign markets were... 19% in 2005, 20% in 2006, and 27% in 2007 of Harley Davidsons overall sales.
--Constant rising gas prices since the Terrorists attacks on the US in 2001, have a continued impact on sales and the cost of production and overall company profits.
Rivalry High.. Competition Motorcycle manufacturers continue to improve designs and provide a competitive market for Harley Davidson to compete for new consumers.
. Buyers Power High, With many 30 different models of Harley's ranging from $6,695-$20,645 and 8 models of Buell Bikes from $4,695-$11,995, consumers have many options of finding the bike that meets their needs while staying in their price range
Distributors Power High. Harley-Davidson has 684 independently –owned full-service dealerships, 307 of them which are combined H.D. and Buell Dealers. As of 2007, 370 Independent H.D. Dealerships and distributors serving 32 European Countries. 323 of which were combined H.D. and Buell dealers. A new dealership coming to South Africa in 2008.
Threat of Substitutes Medium. Honda is a big competitor of motorcycles from small “crotch rockets” and large cruising and touring bikes.
B. Societal Environment
VI. Strategic Alternatives and Recommended Strategy (ShaveraLeveille)
A. Strategic Alternatives
1. Stability Strategy: Pause/Proceed with caution. Analyze the effects the recession will have on the company then react accordingly. a. Pros: Acknowledgment of areas that are weak and need improvement. The profit strategy would not beneficial it only masks the issues instead of confronting them. b. Cons: Strong Competition from competitors that are larger, established, and more diversified.
2. Growth Strategy: Horizontal growth strategy; concentric diversification, strategic alliance, and joint ventures. Target new market segments by developing products and services for females and younger bikers both domestically and internationally.
a. Pros: New markets would help increase customer base, brand loyalty, and profitability.b. Cons: The new market segments may not be able to afford the products and services offered. Strategic alliances and joint ventures may result in loss of control over operations, conflicts, and higher risks.
3. Retrenchment Strategy: Turnaround strategy; close down unprofitable foreign plants and consolidate operations.a. Pros: Allows for concentration on business segments and plants that are profitable. Prevents further losses.b. Cons: Hinders growthB. Recommended Strategy
Recommend alternative #2 which is growth for Harley-Davidson. The current customers are mainly comprised of the Baby Boomers. Harley-Davidson Inc. may benefit from recruiting younger customers to possibly build lifetime customer loyalty that can be passed down to younger generations. Women are also a great market segment to target because research shows that the number of female riders has risen significantly over the past few years. Concentric diversification, strategic alliances and joint ventures enable entry into foreign markets, knowledge of local conditions, sharing of costs, resources, and assets. Although, the company is facing a recession the costs of Harley-Davidson products and services should not be reduced, but rather competitively priced so that quality is not sacrificed