Analyzing Harley Davidsons Strategy

Universidad Carlos III de Madrid

Master in Human Resources Management

HARLEY - DAVIDSON:

Internal Analysis

1. Identify Harley‐Davidson’s strategy and explain its rationale.

The business’s strategy is based on differentiation reached by brand identity. The company is not only selling motorbikes but ‘’Harley’s experience’’ as its mission. Consumers when buying are mostly motivated by social and psychological needs, such as the desire to find community with others and to reinforce their own identity. The company recognizes that the business is on selling lifestyle, not transportation. The reinforcement of the relationship with its consumers implies creating a sense of belonging to a way of life, to the values of freedom, individuality and adventure. Consumers are loyal to the brand because they feel part of it and this emotional attachment explains why Harley invests a lot in establishing an exclusive relationship with its clients.

The corporate strategy is highly market-focused, focusing on the super-heavyweight motorbikes, what it does best. Investing in one’s strength is the safer path.  

2. Analyze Harley‐Davidson’s resources and capabilities.

Resources

-Tangible

• Creation of new production plants in order to satisfy the huge demand.
• Investment in new models and activeness in launching them.
• Introduction of new services to customers: test ride facilities, rider instruction classes, insurance services, motorcycle rental, assistance for owners in customizing their bikes.
• Product positioning: it offers a wide range of customization options to offer a unique and personalized motorcycle to each of its customers while standardizing on key components.
• Merchandising: clothing and collectibles.
• Harley Financial Services: established to supply credit, insurance and extended warranties to Harley dealers and customers.

-Intangible

• The brand: Consumer’s emotional attachment to the ‘’Harley experience’’ is a highly valuable resource of the company, as it allows a different and exclusive relationship with its consumers. Consumers are faithful to the company. Buying Harley implies buying a style of life, as well as values of individuality, freedom and adventure. The transferability and replicability of this emotional attachment is quite difficult.

• Production scheduling: JIT (Just In Time) system & MAN (Materials As Needed) help to cut costs, as the company only produces what it is demanded.
• Harley creates the cruiser segment of motorcycles, while the rest of competitors only try to imitate it.
• Matching with the culture: the brand is an archetype of the ‘American style’.
• Reputation generated by the brand name, as well as with suppliers and the product perception due to its positioning in the market.

       -Human

• Skills/know-how: Harley is engaged in constant upgrading: the distribution network, the dealer development program.

• Training: Harley provides high level training programs for its employees to add value to the company.
• Open communication and health benefits for employees help to boost the involvement needed to achieve the goals of the company.
• Adaptability: H-D manufacturing plants are capable of producing many different models.
• Commitment: HOG (Harley owner's Group) is created as the organizational link to enhance the sense of community. Employees and managers are involved in organizing and attending social and charity events.
• Loyalty of employees: a new relationship between management and employees is created to achieve employee commitment and job satisfaction. Harley believes in non-hierarchical, team-based structures what boost motivation among them.

Capabilities:

• Differentiation advantage: it is obtained through brand recognition and the Harley experience providing the customers a unique motorcycle. The company has been particularly effective at achieving differentiation advantage through careful examination of the activities that customers undertake in selecting,  purchasing, using and maintaining their motorcycles.

• Employee involvement and retention: there is a commitment at all levels of the organization. Not only is the top management the one taking decisions but also the shop floor. This involvement consists on establishing shared values and vision, shared mission and operating philosophies and agreed objectives and strategies. Employee involvement exists because management and labor can agree that they have a mutual goal and this goal regards the long-term success of the company.

• Manufacturing: Harley´s manufacturing plants are capable of producing many different models. In recent years, it was very active in new product development and the launching of new models.

• Distribution: the quality and effectiveness of its dealer network is a key determinant of the strong demand for its products. Dealer relations have always been a strategic priority for Harley, as dealers play a central role in the relationship between the company and its customers. Dealers also receive training programs to meet the higher service requirements. Besides, the JIT (Just In Time) inventory management needs good transportation flow logistics. H-D has the capability to reduce lead times and ensure pull delivery through its private fleet of trucks.

• Segmentation: the company knows in which segment outstands and focuses effort on it instead of trying to be in many different segments at the same time.

3. What does your  analysis imply for Harley’s potential to establish cost and differentiation advantages?

Ever since the company foundation, it used to have difficulty in establishing cost advantages over its competitors. One reason for this issue can be seen in its lack of bargaining power. As the company produced a small number of bikes, a limited amount of components had to be ordered to its providers and, therefore, the firm could not be granted a discount like its competitors who bought in large quantities. As a result, every single component is more expensive and the mechanism of economy of scales is affecting the company because it is in a disadvantageous position.