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

Harley Davidson External Analysis 8

Harley Davidson External Analysis

Chatae M Falls

Argosy University

April 8 2015

Harley Davidson External Analysis

Harley presently functions in what is recognised as the heavyweight cycle market. The heavyweight marketplace can be distributed into three diverse sections touring bikes, cruisers bikes, and performance simulations. Cruisers are the bikes that are associated with Harley Davidson’s, big, loud, low riders that are regarded to be mannish cycles. This flair was presented by Harley and makes up for over and above half of the marketplace. Touring bikes are motorcycles that are precisely intended for long journey riding. These bikes usually have structures that comprise of a collaborative means of communication for the driver and passenger, padded seats, heaters, etc. This segment of the marketplace is controlled by car corporations like BMW and Honda, who have constructed their motorcycles to offer the rider with a smoother, more relaxed ride over long journeys. Finally, performance models are modelled after racing bikes only superior. These bikes have the newest in technological engines and put their importance on swiftness and acceleration in place of comfort or designing. These bikes are the ones that dictate the Asian and European marketplaces.

Porter’s five forces model helps analyse the competitive forces of the market by looking at the rivalry between existing sellers and the market, the bargaining power exerted by the customers in the market, how much influence suppliers have with the sellers, the threat of new sellers in the market, and the threat of substitutes (Warner, 2010).

Rivalry: As is with any competitive market that has a low barrier to entry, relatively low cost of production and a high amount of sales return is a very good opportunity for new entrants as well as a breeding ground for strong rivalries. For Harley, there are many other companies’ competing for some of their market shares. Harley currently operates in the heavyweight cycle industry that is comprised of three different types of cycles, cruisers, touring bikes and performance models. There is a relatively low chance of any other company coming in and taking over the cruiser section of the industry from Harley as they currently have the largest foothold in this section of the market. Rivalries in the other two sections of the industry are must more competitive, however. The touring bikes, or long distance bikes, are more engineered to be comfortable and reliable. While Harley does create bikes like this, it is not their main focus, and this industry is dominated by more engineering specific companies such as Honda and BMW. Harley had an opportunity to gain a bigger foothold in the performance bike section of the industry in 2003 when it completed its takeover of performance bike company Buell. However, Harley decided to discontinue this line in 2009 and Buell has since left to create a racing line of performance bikes.

In the international motorised industrial division, the motorcycle manufacturing trade made $74 billion in 2011, in relation to investigation from Market Line. The manufacturing’s 3% annual progression rate amid 2007 and 2011 is predicted to increase to beyond 12% amid 2011 and 2016. Manufacturing production capacities raised at an annual rate more than 5% over the four-year time completion in 2011, and the engineering side of the motorcycle trade is anticipated to create beyond $130 billion before the end of 2016. The international motorcycle trade will remain to profit from increasing claim in Asia-Pacific. Although motorcycles and scooters are seen as an extravagance in industrialised marketplaces like the US, Japan, Germany and Canada, these stuffs are of vital significance for transport in evolving marketplaces such as China and India (Pearson, 2015).

The Threat of Entry: While only actual companies can physically produce products in an industry, both potential and existing companies can influence the profitability of the industry as a whole. Some of the most common barriers for a company entering a market are economies of scale, the cost of entry, distribution channels, government regulations and differentiation. For the heavyweight cycle industry, economies of scale do not play as big a part as in some other industries, like the shipping industry, for instance, as the cost of one unit is far greater and requires far more work on the companies end. Bulk purchases could only be an advantage if the order were large enough to keep Harley busy for quite some time. The cost of entry is what keeps this market safe from potential entrants. In order to be competitive, a company needs large manufacturing warehouses; large distribution channels and connects to suppliers. A new company would also need some competitive advantage that would separate them from the rest of the cycle manufacturers. For this reason, the only real threat of entry would be from an established car manufacturer such as Ford or Toyota who see the cycle market as a new channel for them to expand their company. The Threat of Alternates: The threat of alternates in the heavyweight cycle industry is very similar to that of the threat of alternates in any other transportation industry.

The Analysis of H-D's Current Strategy: Two Views

Harley-Davidson will be able to deal efficiently with its duties demonstrated by the current ratio and the quick ratio. Regularly, the current ratio should be close to 2, and the quick ratio should be close to 1, and the industry averages are consistent with those statistics. Harley's current ratio is somewhat under the industry average while the quick ratio is beyond it, which point out that Harley will have no problems paying its duties. These ratios have been justly steady for Harley through the earlier years though there was a small decline in the ratios from 2008. The 2009 ratios still show that Harley is in a robust financial place to sufficiently shelter its temporary duties. Concerning debt, Harley has an awfully high debt-to-equity ratio for 2009. The ratio is beyond the industry average. It shows that Harley has borrowed a greater percentage of its funding than numerous of the regular corporations in the industry. In the earlier years before 2009, Harley's debt-to-equity ratio was very close to the industry regular, but in 2009 it amplified intensely. The extraordinary debt percentage might have backed decreasing incomes in 2009 and a decelerating economy. Harley has made profits well above the industry regular for 2007 and 2008 founded on its profitability ratios. Though, the ratios have been gradually decreasing since 2007. In 2009, all of the profitability ratios had dropped under zero. The ratios are also under the industry average, showing that Harley's profitability is unstable. Due to these ratios, Harley is not displaying its capability to make profits with the funding it obtains from shareholders, its resources, or its trades. The income for the Motorcycles and Related Parts section of Harley has been gradually decreased since 2007, which might direct a deeper concern with Harley than just the sluggish economy. The revenue from ongoing processes has been decreasing since 2007 also (Annual Reports, 2009). Harley is very operational at gathering receivables, as shown by its day’s sales in receivables. While the industry average was high with averages around 55, Harley had a collection period averaging 20 days.

The Balanced Scorecard for H-D goes outside normal financial procedures, and it comprises the following extra viewpoints: the customer viewpoint, the internal process viewpoint, and the learning and growth viewpoint. Financial viewpoint - comprises procedures for working income, return on capital engaged, and economic value added. Customer viewpoint - comprises procedures like customer fulfilment, customer holding, and market share in target sections. Business process viewpoint - comprises procedures like throughput, quality and cost. These are for business procedures like order fulfilment, procurement, and production. Learning & Growth viewpoint - comprises procedures like employee gratification, employee holding, expertise sets.

Competitor Analysis

Harley-Davidson deal in the productions motorcycles in Canada, Asia, the US, and Europe. Its competitors(Honda and Yamaha) can compete in the motorised market or all segments of the motorcycle market as they have more expanded businesses.

Industry Analysis

		Harley	Honda	Yamaha
Critical Success Factors	weight	Rating	Weighted score	Rating	Weighted score	Rating	Weighted score
Product Selection	0.15	2	0.30	4	0.60	4	0.60
Product Quality	0.1	3	0.30	4	0.40	3	0.3
Price competitiveness	0.10	1	0.10	3	0.30	3	0.30
Management	0.05	4	0.20	4	0.20	4	0.20
Financial position	0.05	4	0.20	3	0.15	3	0.15
Customer Loyalty	0.20	4	0.80	2	0.40	2	0.40
Global Expansion	0.2	2	0.40	4	.080	4	0.80
Market Share	0.15	3	0.45	3	0.45	3	0.45
Total	1.00		2.75		3.30		3.20

References

Annual Reports. (2009, April 8). Retrieved from harley-davidson.com: http://investor.harley-davidson.com/phoenix.zhtml?c=87981&p=irol-reportsannual&locale=en_US&bmLocale=en_US Pearson, L. (2015, April 8). http://www.reportlinker.com. Retrieved from http://www.reportlinker.com: http://www.reportlinker.com/ci02301/Motorcycle.html Warner, A. G. (2010). Strategic analysis and choice: a structured approach. New York: New York [N.Y.]: Business Expert Press.