Assignment 1: LASA 2 Strategic Plan and Self-Reflection Summary

19 January, 2018

[Title Here, up to 12 Words, on One to Two Lines]

Table of Content

Executive Summary……………………………………………….…………...………….3

Analysis of the External Environment (PART ONE) …………….….………………..…3

Results from Scanning…………………………………….………………………3

Results from Monitoring………………………….………………………………5

Competitive Environment………………………….……………………………...5

Strategic Challenges/ Issues facing the Industry………………………………….6

Internal Environment Analysis (PART TWO) ……………………………...……………6

SWOT Analysis…………………………………………………………………...6

Value Chain Analysis…………………………………...………………………...8

Strategic Plan Summary……………………………………..……………………………9

Conclusions…………………………………….……………………….….…….10

Recommendations……………………………….……………………….………10

Implementation………………………………………………………….……….10

Risks……………………………………….…………………………….……….10

References………………………………………………………………………..11

Executive Summary

There are several challenges that face business ventures which may be labelled as being generated from an internal or external environment. The motorcycle industry along with Harley-Davidson is not immune from in this paradigm. Firms need to adjust accordingly to these environmental changes for them to continue surviving and thriving. Some of these major external and macro-environmental challenges include technology, demographics, and the economic, socio-cultural, political and legal environments. This paper will look at the company’s external and internal environment.

External Environment Analysis

Results from Scanning

Results from Monitoring

From a monitoring perspective, the economic system and structure that is prevailing around an organization need to be comprehended for the business to put in place necessary measures aimed at achieving compliance (Schembri, 2009). For instance, the conditions of a boom or recession within the economic systems which may be socialist, capitalist or a mixture of the two.

Competitive Environment

Porter’s Five Forces Model

Porter’s five forces competition model that shape competition include competitive rivalry, bargaining power of suppliers, bargaining power of customers, the threat of new entrants and threat of substitute products and services in the market (Arline, 2015). Competitive rivalry examines and assesses the intensity of rivalry in the market. It is assessed by the number of competitors in business and their strength. Besides competitive rivalry, bargaining power of suppliers is another competitive force. The force determines how much strength and power a business supplier wields over its competitors and encompassing how much control it has over prices (Schembri, 2009). In addition to the bargaining power of suppliers, the bargaining power of consumers is another force which pushes the power of the consumer towards influencing prices and quality of goods and services. Fewer customers wield more power in the market with more sellers as opposed to many customers with few sellers. On top of the bargaining power of customers, the threat of new entrants into the marketplace is another competitive force. It tends to determine the accessibility of the market by new entrants who intend to join the competition. The easier it is for a new entrant to join the market, the greater is the risk of depleting market share and profitability (Arline, 2015). Also consider that the threats of budding substitute goods and services are equally another significant force. This force is assessed as having the possibility of prospective consumers switching loyalty from the current product or service to that of the upcoming competitor. The threat of substitute products and services is gauged by either long term or short-term costs alongside customers leaning towards the change.

Value Net Analysis

H-D’s value net analysis provides strategic insights which have been at the forefront of the company growth. The company has based its strategy on low production based on the demands of the clients. By so doing, H-D has been able to establish itself as a company that produces high-quality products and one that is not controlled by the market forces like its competitors Honda (Schembri, 2009). The company has also based its value on the traditional V-Twin American bikes which have become the darling of most bikers. The strategic move to concentrate on sports motorbikes has also added value to the company.

Dynamics of Competition/ Competitor Analysis

Competition In the industry is very high, and it is based on the technological environment which is a crucial element in the motorcycle industry. The nature of technology applied during production process matter a lot and contributed to success or failure of an organization. Improved latest technology if adopted by a firm raises productivity and minimizes the unit cost of output (Sheth, 1992). Thus, a competitive advantage over its rivals. The H-D Company tried this during the world war period with remarkable results realized. Obsolete technology should be discarded. The demographic trends and patterns contribute immensely to the sale of products in the market. The population size and growth rate and the level of education, affect supply and demand of goods and services.

Strategic Challenges/ Issues Facing the Industry

There are several challenges that face motorcycle industry which can be explained by the PESTEL analysis. The socio-cultural aspect of the external environment also comes in as a major factor to be looked into. Members of the society in an organization's people and their cultural and social beliefs and practices ought to be put into account so that the business does not violate them (Sheth, 1992). The possible social and cultural implication the business has on the local nationals is very vital. Social responsibility should be a major concern for the organization. In addition to socio-cultural, the political and legal environment also matters. The political philosophies and ideologies in which a business operates contribute to the shaping of its overall operations. The private sector business activities are both controlled by national and international politics and governance (Dyer et al., 2007). For instance, the H-D motorcycle industry capitalized on the uncertain prevailing political environment during world wars to enhance the sale of its motorbikes to the American government. It turned this global calamity into a cash cow.

Internal Environment Analysis (PART TWO)

SWOT Analysis

Strength

Harley Davidson is the current innovation leader in the motorcycle industry.

Strong brand equity and customer loyalty.

Strong and reliable financial position and manufacture high-quality products.

Use of social media to conduct its advertisements which have popularized the company.

Variety of motorbikes offered by the company.

Weaknesses

Strong competition from other motorcycle manufacturing companies which has resulted in limited market share.

Pollution of the environment has become an issue that has to affect the company productions.

Lack of diversification strategy which has reduced company productivity.

Opportunities

The company has an opportunity o invest I emerging markets globally.

The company has a chance given its huge capital to diversify to services and expand its market.

It should embrace a strategy that expands its demographics as a way of expanding area of coverage.

Threats

High level of competition in the industry from other manufacturers of motorbikes.

Government policies that impact the company revenue through taxation.

Low pricing policy by the company competitors

Availability of substitute goods from competitors at low price

Value Chain Analysis

Primary Activities

The company has ventured heavily into the manufacture of high-quality products throughout its different ventures (Dyer et al., 2007). The company’s primary activity is the manufacture of motorbikes and bike parts.

Secondary Activities

Harley Davidson provides services to its estimate customers as its secondary activities. It also provides consultation services and offers financial services to its valued customers.

Resource-Based Analysis

Internal

The company enjoys the high level of internal resources that include financial and human resource. The company has been able to employ highly qualified technicians who manufacture the company products (Dyer et al., 2007). The human resource at the company is highly qualified, and this has been possible because of its high capital and revenue that it realizes from its sales.

External

The company relies on its reliable suppliers and its chain of supply to meet the market demands. The company also has established distributors who ensure that its products are available globally.

Achieving Sustainable Competitive Advantage

Financial Ratio Analysis/ Five-year period

The financial ratio of the company has been steady for the last five years starting from the full financial report released in 2011 to 2016. The table below shows the financial ratio of the company for the last five years.

Strategic Plan Summary

Conclusions

Harley Davidson has been able to achieve its current competitive advantage because f its strategic business plans. The company has employed internationalization policy which has seen the company open different factories in different regions throughout the world. Innovation has also been at the heart of the company which has helped the company to earn competitive advantage and became the industry leader.

Recommendations

From the company analysis, it is recommended that the company embark on the globalization of its manufacturing plants to increase its market share and cement its place in the motorbike industry.

Implementation

The company will be able to implement its strategy in phases since finance is required here to effectively implement its strategic plan of expanding to other regions (Dyer et al., 2007). Globalization is the only strategies that will help the company maintain its place in the motorbike industry. Therefore, the company should implement the globalization strategy in phases to allow time for monitoring and assessment.

Risks

The risks associated with the strategy include over-manufacturing which may result in overstocking (Dyer et al., 2007). The other risk is the political environment of different countries which may affect the company operations.

REFERENCES: Arline, K. (2015). Porter's Five Forces: Analyzing the Competition. Retrieved October 16, 2015. Dyer, Jeff, Paul Godfrey, Robert Jensen, and David Bryce. "Strategic management." (2007). Schembri, S. (2009). Reframing brand experience: The experiential meaning of Harley–Davidson. Journal of Business Research, 62(12), 1299-1310. Sheth, J. N. (1992). Emerging marketing strategies in a changing macroeconomic environment: a commentary. International Marketing Review, 9(1).